Power to the people and planet: democratising nature finance

Abstract

Market-based nature finance is rapidly expanding, yet many current models risk deepening social and ecological injustices. Democratising nature finance is not only about improving participation, but also shifting who defines values, makes decisions, and benefits. We undertook a study to understand how diverse community-led, market-based nature finance mechanisms (such as bonds, payments for ecosystem services, and nature credits) can contribute to more democratic nature finance. We propose a 4-part framework for assessing democratisation of these instruments and applied it to 11 community-led case studies. Our qualitative methodology combined semi-structured interviews (14 participants) with thematic analysis of 67 project documents, examining the governance, design, delivery and outcomes underpinning more democratic approaches. We found that community-based initiatives are governed by distinct institutional logics, centred on self-determination, local knowledge, and collective decision-making. Three archetypal institutional logics of democratisation—externally-led, partnership, and community-led—derived from the analysis. We show how these logics differentially configure authority, value, and financial control, thereby theorising democratisation as a structural feature of institutional arrangements, compared with a peripheral procedural element. Key enablers for more democratic approaches included securing land tenure, legal recognition of rights, community financial control, and safeguards against elite capture. Yet significant barriers persisted: limited access to capital, funder risk aversion, technocratic conditionalities, and systemic power imbalances. This study contributes to the emerging field of transformative nature finance by offering empirical insights into what more democratic market-based nature finance mechanisms look like in practice and how they begin to reconfigure power and decision rights within the wider financial system.