Key Components of Nature Markets

Nature remains critically underfunded despite its essential role in sustaining economies and societies. Market-based mechanisms, or nature markets, offer promising avenues to mobilise private finance but face challenges due to fragmented and underdeveloped market architectures. In this paper, we develop and apply an architectural framework to evaluate five core components of result-based nature markets: market actors, contractual mechanisms, outcome and transaction tracking, data monitoring, and financial instruments, using horizon scanning. Our analysis shows that contractual mechanisms sit at the centre of nature market architecture but remain highly tailored, difficult to scale, and costly to transact, limiting their ability to mobilise private capital. We identify key design choices which we form the foundation of the core architecture. We further highlight ‘bolt ons’ which can mobilise private capital. Our findings underscore the need for future research to test these key design choices for real-world projects.