With a $700 billion annual funding gap for biodiversity conservation in Southeast Asia, the region’s struggle to sustain its vast natural resources grows ever more pressing. In an exclusive conversation with CarbonWire, Dr. Nophea Sasaki, Visiting Professor in Environment, Social, and Governance (ESG) and Sustainability at the Sasin School of Management, Thailand, discusses the underlying factors driving this gap, strategies to address it, and the essential role of community and private sector involvement in effective conservation efforts.
Roots of the Funding Gap
According to Dr. Sasaki, Southeast Asia’s biodiversity is foundational to climate resilience and public health, providing a wide array of ecosystem services. These include provisioning services, such as food and water; regulating services, like carbon sequestration, water purification, and climate regulation; supporting services, such as soil fertility and nutrient cycling; and cultural services that enhance human well-being through recreation, education, and cultural identity.
Together, these ecosystem functions are essential for sustaining both environmental stability and societal health across the region. Yet, he observes, “these ecosystem services often lack direct economic valuation, which limits the financial support available for their protection.” Dr. Sasaki explains that while forests, wetlands, and other natural resources significantly mitigate climate risks, their contributions remain largely unrecognised in the market, resulting in insufficient funding that places these ecosystems at risk.
Beyond undervaluation, economic and policy pressures amplify the funding challenges. “The COVID-19 pandemic forced governments across Southeast Asia to prioritise economic recovery and infrastructure development,” Dr. Sasaki points out, “often at the expense of conservation.” Subsidies for extractive industries, like agriculture and forestry, favour rapid industrial growth over environmental stewardship, he notes, creating a difficult landscape for conservation efforts to thrive.
Private Sector Participation
The private sector, though aware of the potential of biodiversity for sustainable business, has been slow to act, partly due to limited financial incentives and the long-term nature of conservation investments. “For many companies, the absence of clear, short-term returns and transparent investment pathways makes biodiversity conservation investments seem risky,” Dr. Sasaki acknowledges. Without a mature market for conservation-related assets, private enterprises often hesitate to invest in initiatives like ecotourism (responsible tourism more broader?) or sustainable agriculture that could support biodiversity.
Another major challenge, he highlights, is institutional. Many countries in the region lack the necessary frameworks to embed biodiversity within their national economic strategies. Limited expertise, funding mechanisms, and enforcement capabilities hinder the effective integration of biodiversity conservation in policy-making, making it difficult to communicate the economic value of conservation and mobilise resources effectively.
Closing the Funding Gap
To bridge this divide, Dr. Sasaki proposes several targeted strategies aimed at realigning incentives and broadening funding streams for biodiversity. A first step, he suggests, involves redirecting harmful subsidies away from ecosystem-degrading activities. “Reallocating even a fraction of agricultural and industrial subsidies toward sustainable practices like forest restoration and conservation or regenerative agriculture,” he says, “could generate long-term economic and environmental benefits.” A 25% reallocation of these subsidies, he posits, could increase biodiversity funding and enhance food and energy – many people in the region still use wood as cooking energy and for animal insect prevention – security across the region.
The development of green financial products offers another promising pathway. Introducing biodiversity bonds, impact investing opportunities, and ecosystem service markets—such as carbon credits (and payment for ecosystem services or PES) tied to reforestation—could create alignment between private sector interests and conservation goals. “Carbon credit markets, for instance, allow companies to offset emissions while directly funding biodiversity conservation,” Dr. Sasaki explains, noting that such financial instruments help position conservation as a viable business opportunity.
Establishing a regional Biodiversity Innovation Hub could also catalyse collaboration among government agencies, private investors, and environmental groups, Dr. Sasaki suggests. Such a hub would foster startups in sectors like responsible tourism (sustainable tourism) and biodiversity-friendly agriculture, helping to channel private investment into impactful biodiversity projects. “A dedicated innovation hub can act as an incubator for eco-focused businesses, providing technical support, measurable outcomes, and structured investment pathways,” he says.
Transparency and accountability are equally essential to building investor trust. Dr. Sasaki points out that by establishing clear metrics for biodiversity outcomes, governments and NGOs can attract more funding. “Transparent monitoring frameworks demonstrate the tangible benefits of biodiversity conservation,” he adds, “offering investors a reliable measure of project impact and compliance with environmental standards.”
Incentivising Nature-Based Solutions
Nature-Based Solutions (NbS), which use natural systems to address environmental challenges, can be particularly appealing to the private sector when paired with targeted incentives. Dr. Sasaki advocates for financial incentives such as tax breaks, low-interest loans, and PES to reduce the entry barriers for companies. “By linking carbon-neutral goals to favourable financial conditions, governments can turn biodiversity conservation into a valuable business asset,” he suggests.
Market mechanisms can further motivate businesses by aligning conservation with regulatory compliance, especially as environmental regulations grow stricter. Through platforms like carbon trading, companies can purchase NbS credits to offset their emissions while supporting ecosystem restoration. Compliance with global standards such as the EU Deforestation Regulation (EUDR) could also drive corporate investment in responsible sourcing practices. “NbS projects can help companies meet regulatory requirements, protect biodiversity, and simultaneously enhance their brand image,” Dr. Sasaki adds, highlighting the reputational benefits companies gain by actively investing in conservation.
Amplifying NbS Impact
The role of sustainability technology in NbS investment cannot be overlooked. “Advanced tools like artificial intelligence (AI), Big Data, and blockchain can provide the transparency and monitoring necessary to drive effective biodiversity conservation,” Dr. Sasaki explains. AI and data analytics, for instance, can pinpoint high-priority areas for conservation, enabling companies to allocate resources effectively. Paired with real-time monitoring through Internet of Things (IoT) devices, businesses can track the health of NbS projects continuously, enhancing transparency and demonstrating positive environmental outcomes to investors.
Dr. Sasaki notes that blockchain technology has significantly advanced accountability in environmental and biodiversity conservation efforts. “Blockchain enables transparent tracking of biodiversity credits, supply chains, and investment milestones,” he explains. By integrating smart contracts, this technology can automate and enforce compliance, ensuring that agreements between parties are executed only when predefined conditions are met. This secure, immutable ledger allows companies to verify regulatory compliance in real-time and strengthens investor confidence by providing a reliable record of project impact and sustainability performance.
Empowering Communities
Dr. Sasaki emphasises that community engagement is crucial for NbS success in Southeast Asia, where over 80% of people rely on ecosystem services for their livelihoods. “If NbS initiatives exclude local communities, they risk displacement, conflict, cultural loss, and instability,” he explains. By involving communities as active partners, conservation projects gain local support, reduce conflict risk, and foster sustainable resource management practices.
Successful models in the region have included training locals in sustainable skills such as forest restoration, afforestation and reforestation, agroforestry, and conservation management, creating a sense of ownership and generating income. Benefit-sharing mechanisms, which return tangible profits from ecosystem services like carbon credits, eco-tourism or technology transfer, further incentivise local participation. “These inclusive approaches build resilient partnerships, aligning environmental goals with community well-being,” Dr. Sasaki adds.
Addressing Barriers
Despite these potential benefits, certain structural and perceptual barriers continue to hold back NbS investments. Industries like commercial logging, mining, and agriculture have long relied on resource extraction for profits, creating a resistance to sustainable practices among influential stakeholders.
Additionally, some businesses perceive NbS projects as high-risk due to their long-term horizons and often intangible outcomes, which can make it challenging to gain support from company boards.
“Large land requirements, high transaction costs, political instability, and the challenge of quantifying ecosystem benefits make NbS projects appear less appealing to traditional investors,” Dr. Sasaki explains. Addressing these barriers, he argues, requires a cultural shift and policy reforms that facilitate transparent decision-making and accountability in the conservation sector.
Reimagining Investment
Development Finance Institutions (DFIs) and philanthropic organisations can play a pivotal role in catalysing private investment in NbS by assuming some of the financial risks. “By offering partial guarantees or first-loss positions, DFIs can protect private investors from potential shortfalls,” Dr. Sasaki suggests. This strategy helps close the ROI gap, making NbS projects more attractive.
Moreover, DFIs and philanthropies could fund early-stage projects to build the track record that many investors require. “Nature-based projects often need time to show impact, and by supporting these initial stages, DFIs can de-risk the sector for private investors,” he explains.
For companies considering NbS, Dr. Sasaki advocates integrating these solutions directly into their value chains rather than viewing them solely as carbon offsets. “Aligning NbS with compliance goals, like the EUDR, which requires deforestation-free imports, strengthens corporate ESG commitments,” he says. By embedding responsible practices, companies create resilient value chains that extend beyond regulatory demands, fortifying their brands, increasing consumer loyalty, and reducing long-term risks.
In closing, Dr. Sasaki stresses that reshaping the financial landscape to prioritise biodiversity requires collaboration across governments, the private sector, local communities, and NGOs. By creating the right incentives, leveraging technology, and fostering inclusive partnerships, Southeast Asia can protect its invaluable biodiversity and realise sustainable, long-term and climate-resilient growth. “This is not just about biodiversity conservation,” he concludes, “it’s about creating a future where both people and nature can thrive together.”