Blended finance for nature recovery

Delivering nature recovery in England at scale will require mobilising significant volumes of private investment. The UK Government has committed to at least £500 million per year of public finance by 2027, rising to £1 billion annually by 2030.

Yet the estimated funding gap for nature-related outcomes stands at £56 billion per year.

Blended finance — the strategic use of public or philanthropic capital to crowd in private investment — is identified as a core tool to address this gap. But its application to nature recovery remains underdeveloped in the UK. There is an urgent need to understand how blended finance models can be structured to deliver real ecological outcomes, align with public policy goals, and avoid unintended consequences.

Workshop

In May 2025, the Leverhulme Centre for Nature Recovery and Defra convened a two-day workshop to interrogate the state of play, and to identify the mechanisms, partnerships and governance conditions that can make blended finance work for nature.
The aim was to explore the practical application of blended finance in an English context. Participants were invited from the civil service, practitioners and academia, bringing expertise in nature finance, public economics, landscape governance and international finance. They examined:

• The role of the state and alternative models of public-private collaboration
• Lessons from energy transition finance, international development, and US policy
• Risks and governance challenges
• Financing nature recovery at different scales
• Constraints and how to address them

Workshop inputs

We created some materials to support the workshop discussion.

• Podcast
• The UK Nature Finance Ecosystem (report)

Initial thinking on emerging themes

• Blended finance must be purpose-led: targeted to specific outcomes, with strong oversight to avoid dilution of public value or environmental integrity.
• The public sector plays a central role: not just as enabler, but as market shaper, standard-setter, and co-investor.
• Diverse income models are needed: from biodiversity net gain and nutrient credits to co-benefits from water, carbon, and sustainable land use.
• Aggregation and intermediation are critical: to move from isolated pilot projects to investable portfolios.
• Better data and clearer standards are essential to reduce transaction costs and increase investor confidence.
• Institutional capital has a role: longer time horizons and impact mandates align with the nature finance profile.