USAID's Climate Finance for Development Accelerator (CFDA), through its Natural Climate Solutions Activity, partnered with CrossBoundary to assess the investment landscape in the Brazilian Amazon. The goal was to identify barriers to financing the bioeconomy and nature-based solutions (NbS) and explore opportunities to increase investment flows in the region.
The report highlights key challenges in the current capital landscape for nature-positive investments, including:
- Scarcity of small-scale financing: Limited availability of equity and debt for projects under $1 million, particularly for cooperatives and community-led initiatives.
- Gap in intermediate ticket sizes ($5–10 million): Many businesses struggle to secure flexible financing at this scale due to larger funds prioritizing higher-value deals.
- Lack of fit-for-purpose guarantees: Nature-based businesses often lack collateral to access loans, restricting their financing options.
The report also identifies several opportunities for donors and philanthropic organizations to catalyze investments:
- Develop tailored working capital vehicles and de-risking mechanisms for smaller-scale NbS projects.
- Provide concessional capital to support early-stage project development and build a pipeline of investment-ready opportunities.
- Fund technical assistance services to cover project preparation costs, such as feasibility studies and technical assessments, with grants refundable only if projects become profitable.
- Subsidize design-stage costs for new blended finance funds to enhance their sustainability, mobilize additional capital, and promote best practices.
