Making a Case for Investing in Nature: An Interview with Lydia Zemke

As a Predoctoral Research Fellow at the Belfer Center’s Environment and Natural Resources Program and Science, Technology, and Public Policy Program, Lydia Zemke has spent the last two years studying climate finance in developing countries. As she rounds out her time at the Belfer Center, Zemke spoke to Communications and Outreach Specialist Elizabeth Hanlon about her research interests, her experience conducting fieldwork in Kenya and Costa Rica, and her advice for other early-career researchers. This interview has been edited for clarity and length.

How would you describe your current research? What questions are you trying to answer?

My research looks at the challenge of channeling resources to developing countries so they can meet their climate targets under the Paris Agreement. Specifically, I’m interested in financing for nature-based solutions (NBS) for climate action, which can be defined as actions that protect, restore, or sustainably manage a natural or modified ecosystem. 

The UN estimates that up to 37 percent of the necessary climate change mitigation can be achieved with nature based solutions. NBS are often considered “low-hanging fruit” because they can provide triple benefits. Not only can they help with climate change adaptation and mitigation, but they can also help address biodiversity loss and broader societal challenges, such as food security, health and nutrition, economic development, et cetera. 

Mangrove restoration and conservation is a very neat example of an NBS. Mangroves are trees that can grow in brackish waters along the coastlines of certain countries. They can sequester about 4 to 5 times more carbon than terrestrial forests. Besides the obvious climate mitigation benefits, they also support climate adaptation and resilience by helping to protect local communities from severe weather events, rising water levels, and even soil degradation. Mangroves also act as nursery environments for fish, so healthy mangroves mean more fish, which leads to improved livelihoods and nutrition for local communities.

Globally, climate finance disproportionately flows into mitigation rather than adaptation. Something like 80 to 90 percent of global climate finance currently goes toward mitigation efforts, often in the form of capital-intensive energy projects. NBS receive only a fraction of those flows, approximately 3 to 10 percent, of which the majority is financed by public funds – approximately 83 percent. Further, 90 percent of investments in NBS come from G20 countries, and most of those investments are domestic. So the Global South is not getting access to funding for NBS, which is very low to begin with. 

Most investments in NBS are publicly financed. Only about 17 percent comes from the private sector. There is a huge gap. Classic economic theory suggests that because nature is a public good, market forces will do a poor job of providing it, and for that reason it should be primarily funded through public money. That said, interest in NBS from the public and private sector is growing. 

So the questions I am trying to answer are: is there a case for private finance for NBS? If so, what does that case look like in developing countries? How does the private sector interact with other stakeholders working in the NBS space? And what are some of the innovative technologies that can support NBS implementation?

One of the interesting subjects that came up during a seminar you gave at the Belfer Center in April was the challenge of proving additionality for carbon credits. But perhaps NBS projects would still be worth pursuing because of the co-benefits for biodiversity and socioeconomic development. Can you comment on that?

Some would argue that we shouldn't even be calling them co-benefits. Why can’t we design projects in such a way that the biodiversity benefits are of equal importance to the climate benefits? Over half of the world’s GDP is moderately or highly dependent on nature and its services—the air we breathe, the water we drink and the food we eat are all provisions of ecosystem services, like healthy soils, clean water, and pollination.

To your point about additionality - proving additionality is such a crucial component of the voluntary carbon market, right? Carbon is fungible. If you emit a molecule of carbon dioxide in one country, you could sequester a different but equivalent molecule in a different country. But if you cut down a forest and replant the same number of trees somewhere else, you will not be able to get the same ecosystem services out of that forest because it took hundreds if not thousands of years to grow. The whole concept of additionality in the carbon market space is not transferable in the same way to biodiversity. One of the most valuable actions we can take for biodiversity is to protect and conserve rich ecosystems such as the Amazon Forest and Congo Basin. 

How did you come to research financing for nature-based climate solutions?

I first got interested in biodiversity while working at the UN Environment Programme’s Convention on Biological Diversity. I learned how nature, climate change, and development are inextricably linked. You can't really address one issue without dealing with the others. Yet biodiversity gets a lot less attention at the international level. In terms of the UN framework conventions, the UNCBD is treated like the UNFCCC’s poor cousin.

As part of my work for the UNCBD, I helped organize regional workshops. Oftentimes the participants from developing countries would say, “Oh, this is great content. But you know, we just don't have the financial resources to take these measures.”

That made me wonder, how do you make the case for investing in nature? How do you link it to socioeconomic development? Developing countries have so many issues to deal with, so to make a case for environmental protection, you have to link it to broader policy challenges. You have to go beyond carbon and take a more holistic approach to environmental challenges.

After UNEP, I went on to work for a variety of consulting organizations. When I was at McKinsey’s Vivid Economics, I worked on the first The State of Finance for Nature report, which has since become an annual flagship report. I realized there was growing interest in the linkages between nature and climate, not only from the policy and research communities, but also from the corporate sector. I wanted to keep diving deep into those challenges - not just the challenges, but also the opportunities to do things differently. 

You conducted field research in Kenya and Costa Rica in the fall of 2022. How did you select your case studies?

Popular discourse on climate finance has long focused on international finance, and specifically the goal formulated at COP15 to raise 100 billion dollars per year from developed countries to support climate action in developing countries. But that's very much a ‘top-down’ perspective. I decided to complement that with a ‘bottom-up’ case study analysis of two developing countries, focusing on Kenya with supplementary insights from Costa Rica.

The Kenyan case I chose for several reasons. First, Kenya has included NBS in its nationally determined contributions. Kenya has also done an analysis of its climate finance landscape, so the government has a baseline understanding of where finance flows are going and coming from, which is somewhat unique among developing countries. As a PhD researcher, having access to that baseline information was invaluable. Kenya is a regional leader with a relatively stable government and institutions, which made investigating investments significantly easier. Finally, of course, English is one of Kenya’s official languages, so it was easier to identify initiatives that were relevant to this study.

Costa Rica is internationally recognized for its green transition. They won an Earthshot Prize in 2021 for their efforts. Costa Rica is also an interesting counterexample to the prevailing narrative around NBS, which says we need to tap into private finance for NBS. But Costa Rica has adopted a state-centric model that predominantly leveraged public finance for NBS, showing that the opposite could be true.

What advice would you give to students and researchers who are interested in conducting field work?

First, get into the field if at all possible. Talk to people, see what’s happening for yourself. You can read all you want, but it’s a completely different experience being on the ground.

Second, once you’re in the field, be adaptable. When doing field work, things will never pan out the way you expect, so it’s important to be realistic about how much you can accomplish within a set period, and to go with the flow when necessary.

Third, accept that the process of data collection is always imperfect. You are just one person searching for answers, and it can feel overwhelming. I think that's somewhat unique to doing a PhD and not representative of research in general. Later in your career, you will usually be part of a team that will support you. It's not all going to be on your shoulders. In my experience, being part of the Harvard University ecosystem, and getting access to people and data through that ecosystem, certainly helped.

Finally, write about and share your results as widely as possible. As you mentioned, I presented my research at the Belfer Center in April, which was also a great opportunity to get feedback. If you're working in developing countries or marginalized communities, it's extra important to inform the communities you work with about your findings, because they are the ones that may benefit most. I've been actively looking at ways of doing that - by translating my findings into the local languages, for example.

What’s next for you and your research?

Finishing my PhD thesis by the end of the year, to start!

After that, I'm very excited by the emergence of so-called “nature markets.” Corporate leaders are slowly starting to think beyond carbon and to consider nature-positive plans. “Nature accounting,” for instance, is gaining increasing attention as a way for companies to assess their impacts on nature as well as their nature-related risks and dependencies. I’m also interested in seeing how VC-backed startups try to address some of the challenges around halting and reversing nature loss while maintaining profitable business models. So I’m actively thinking about ways in which I can support these industry trends.

I also hope to keep a foot in academia through research and teaching. Connecting what's happening on the ground and in industry with the next generation of students is really important, because that's how more individuals get interested and involved in the space. So I’m excited to be a part of that. 

Harvard Kennedy School fellows and students interested in learning more about nature-based solutions or conducting field research are welcome to contact Lydia Zemke by email. 

A recording of Zemke’s talk at the Belfer Center, “Unlocking Private Investment for Nature-Based Climate Solutions in Emerging Markets,” is available to watch below.