Natural Solutions: Valuable or Money Wasted?

In California, homeowners' associations are banding together to bring in robots that clear the vegetation behind the worst wildfires. Home insurance there has stopped working, and every household gains from the clearing. An investor told the story late in the session, and it answered the hosts' opening question. Nature-based solutions find buyers where the loss is acute and local and the people facing it can pay together. Most of nature has no such buyer.

Kyle Teamey of RA Capital Planetary Health began with an old X-Files line, "Natural solutions, I want to believe." For an investor, Kyle said, belief comes hard. People treat nature as free. The rain falls and the fish are in the sea. If nobody owns it, nobody sees why they should invest in it. The hosts traced the attempts to make it pay. Farmland earned base returns but did not stop degradation. Conservation helped but did not scale. Carbon credits and the institutional climate mandates of a few years ago were meant to bring scale, and the mandates have since faded.

Jeff Johnson of B Capital brought the numbers. Natural capital contributes an estimated 4–5% of GDP but draws less than 0.2% of institutional capital. WWF put the annual nature finance gap at about $900bn, and half of GDP is at risk if ecosystems keep declining. A forest investor would have none of it. Saying half the economy depends on nature is useless, they said, because the other half does too. The finance gap mixes public and private money with subsidy reform and was built for another purpose. Framing like that makes good headlines and TED talks and does no good. Investors should look for ways to improve a company's P&L, because that is what brings in capital, and carbon credits have managed it.

carbon market really doesn't function, let's be honest.

A 20% hurdle in a 5% business

Whether money is wasted, Kyle said, depends on who invests. Venture investors look for annual returns of 20–40%. A forestry investor might be content with 5–10% over longer horizons. Building markets and changing policy, another participant said, is work for governments and cannot be done within a fund's four-to-seven-year life. One of the hosts suggested nature-based businesses borrow the defence idea of dual use. Forestry already does, earning mainly from timber while carbon credits add a second income.

An investor in bio-industrial start-ups said what had worked was natural products that are highly valuable at small scale, which they called a slightly disappointing conclusion. New materials compete with petrochemicals made in plants amortised 50 years ago, so being as good and greener is not enough. A product has to be so much cheaper or better that buyers can justify writing off those plants. Otherwise, one of the hosts said, a company stays stuck in pilot mode, producing nice reports.

Carbon credits divided the table. An angel investor called them the only investable way they had found to give nature a value, though buyers are harder to find as big corporations pull back. The forest investor defended credits as a valuable tool and said much of the criticism came from people who do not believe market mechanisms can work. A venture investor with 20 years in the field disagreed, saying the "carbon market really doesn't function, let's be honest." One of the hosts said the South Pole scandal had gutted trust in verification.

When the neighbours benefit too

Everyone already pays for nature's decline, one participant said, only indirectly, through failing soils or storms that make shipping dearer. They asked whether insurance would force change. Many California homes are already uninsurable because of wildfire, one of the hosts replied. Forests show why that rarely produces a business. Fire insurance for forests is so expensive that no non-institutional owner would take it, and any fire mitigation one owner pays for also protects the neighbours. The benefit goes to the many and the cost to the few. The homeowners' associations get round that by paying together.

The most concrete ideas were about connecting payers with doers. The same venture investor wanted full-stack companies that do more than sell data, such as a coastal restoration firm that finds exposed property owners and builds the supply chain to do the work. Another participant took the investor's example of dams losing output to silt. A company could promise a hydropower plant to cut the siltation by restoring the watershed upstream, verify the work with sensors and be paid on performance.

Kyle saw the snag. With silt, as with coastal erosion, the people who cause the damage are divorced from those who gain from the repair, and bridging them has historically been a job for government. A private marketplace to do it would not be easy, Kyle said. Until one exists, the wildfire story holds the practical advice, to look where the situation is dire enough that people will pay together. Such places are rare, although, as someone added, they are getting less so.

This Ripple was hosted by Jeff Johnson (B Capital) and Kyle Teamey (RA Capital Planetary Health) at The Drop 2026 on 16 September.