Reimagining Nature Finance with Alice Stuart and David Goodman

Nature finance is often presented as a solution to biodiversity loss but what does it actually mean?

In this episode of the Nature Recovery Podcast, David Goodman speaks with Dr. Alice Stuart, a postdoctoral researcher at Oxford’s School of Geography and the Environment. Alice’s research maps and analyses public, private, and philanthropic finance flows into conservation across the UK.

They explore:

• Why most conservation funding still comes from public sources
• The role of philanthropy and corporate funding
• Why private investors are hesitant to fund nature
• How Biodiversity Net Gain and habitat banking work
• The risks of reducing biodiversity to a metric
• Goodhart’s Law and “gaming” environmental targets
• Why democratising nature finance requires local empowerment

Alice argues that the key issue isn’t how much money flows into nature but whether it goes to the right places, empowers the right people, and delivers meaningful ecological outcomes.

Find out more about Alice's work and view their outputs on mapping financial flows here:
https://naturerecovery.ox.ac.uk/people/alice-stuart/

The Leverhulme Centre for Nature Recovery is interested in promoting a wide variety of views and opinions on nature recovery from researchers and practitioners.

The views, opinions and positions expressed within this podcast are those of the speakers alone, they do not purport to reflect the opinions or views of the Leverhulme Centre for Nature Recovery, or its researchers.

The work of the Leverhulme Centre for Nature Recovery is made possible thanks to the support of the Leverhulme Trust.

Transcript

00:00:05 – Stephen Thomas
Welcome to the Nature Recovery Podcast.

00:00:10 – Stephen Thomas
We’re going to take a closer look at some of the solutions to counter biodiversity decline, and we’ll find out more about the people behind these ideas.

00:00:26 – David Goodman
Alice Stuart is a postdoctoral researcher at the School of Geography and the Environment at the University of Oxford, where they work on reimagining nature finance for a more equitable and effective future.

Their current research focuses on mapping and assessing nature finance flows, including tracking public, private, and philanthropic investments in ecosystem and species conservation across the UK.

Previously, their work explored how individuals and communities form social license judgments — in other words, under what circumstances they see external actors as legitimate.

Alice holds a PhD in Environmental Science from the University of East Anglia and an MPhil in Zoology from Cambridge. They’re also a talented illustrator, which we’ll get into later.

So Alice, your background is in zoology. What’s it like working with economists? Are there cultural differences you’ve had to navigate?

00:01:29 – Alice Stuart
It’s a funny one. Economists often avoid people like me working on the edges of nature finance, where we’re asking questions that aren’t directly about the money itself, but about how it moves and what impacts it has.

One of the biggest differences is a greater willingness among economists to parameterize complex systems. When zoologists and economists sit down to design biodiversity metrics, there’s tension between making a system simple enough to fit into an economic model and complex enough to reflect ecological reality.

Interestingly, now that I work more with social scientists — and perhaps count myself as one — I sometimes find I’m the one trying to parameterize things more. Social sciences are much more comfortable with the idea that there isn’t a single objective truth, and that findings are constructed. That’s something I’ve had to learn from.

00:03:06 – David Goodman
How is conservation and restoration usually funded, and what does nature finance aim to change?

00:03:33 – Alice Stuart
Historically, nature has been treated as a public good, so funding tends to come from public money — government grants and increasingly agri-environment schemes. In the UK, one of the largest flows of nature finance comes through agri-environment schemes supporting things like field margins and habitat measures.

Interestingly, that public funding ultimately comes from the sale of government debt — so private finance feeds into the public pot and is repaid through taxation.

Beyond public money, there’s philanthropy — from major donors to membership organisations like the RSPB.

Nature finance as a field examines these flows. Some see it as a way to bring in more private investment. But that depends on what kinds of nature can be made investable or profitable.

00:06:04 – David Goodman
So there are three main streams: public funding, philanthropy, and private investment. Is the challenge getting more private money into nature in a way that works?

00:06:34 – Alice Stuart
Yes, though the streams interact more than we think. For example, corporate philanthropy — like Aviva’s £70 million commitment — is private money flowing into conservation. Green bonds are private money flowing into public funds.

If we look specifically at private money going directly into nature, market-based approaches often get the most attention — biodiversity credits, for example. But demand is often limited.

00:08:33 – David Goodman
Your recent paper found private finance makes up only around 12.5% of total nature investment in the UK. Why is private money hesitant?

00:08:57 – Alice Stuart
Nature is uncertain and complex. It’s hard to generate predictable financial returns from it.

Nature-based investment funds often require returns that far exceed what projects can realistically provide.

Much current investment is speculative — betting that demand for biodiversity markets will grow. That may or may not materialise.

Take Biodiversity Net Gain (BNG) in the UK. Developers must deliver a 10% biodiversity increase, often by purchasing off-site units. Regulatory changes increased sales significantly — from around £7 million to perhaps £40 million — because regulation forces demand.

But another model is indirect financial benefit. For example, Yorkshire Water invests in peatland restoration to improve water quality and reduce treatment costs. Nature isn’t being sold — it’s improving operational efficiency.

00:12:11 – David Goodman
What is habitat banking? Could it become a mainstream asset class?

00:12:33 – Alice Stuart
First, transparency is a major issue. Even after years working on this, it’s often difficult to know exactly what nature investments are. Reporting can be vague, sometimes by design.

Habitat banking in the UK is closely linked to Biodiversity Net Gain. Landowners enhance land — often agricultural land — to increase its biodiversity value. That additional value is converted into units, which developers can purchase to offset damage elsewhere.

At the moment, supply exceeds demand. Many are creating biodiversity units, but fewer are buying them. It’s unclear whether this is due to the market being new — BNG only came in from 2021 — or structural limits.

For habitat banking to become mainstream, demand would need to grow significantly, either through stronger regulation or social pressure.

00:16:14 – David Goodman
You’ve spoken about democratizing nature finance. Is transparency central to that?

00:16:28 – Alice Stuart
Transparency is essential for researching and improving nature finance. But it’s not sufficient on its own.

Nature finance operates within a broader financial system that concentrates wealth and power. Without transparency, large headline numbers are meaningless. If money flows to poorly managed or ecologically irrelevant projects, it doesn’t advance biodiversity goals.

Democratising nature finance means empowering local communities and aligning projects with local visions of nature. Conservation works best when local people are involved and supported.

00:20:49 – David Goodman
How do we avoid Goodhart’s Law — when biodiversity metrics become targets and stop being good measures?

00:21:49 – Alice Stuart
That’s the million-dollar question.

Biodiversity has no single value. It means different things to different people. Reducing it to one commodifiable metric is inherently problematic.

In Biodiversity Net Gain, the metric can incentivize creation of “other neutral grassland” — because it’s relatively easy and produces units efficiently — even though it may not align with biodiversity priorities.

Possible solutions include stricter trading rules or incorporating more qualitative, localised assessment alongside metrics. But it’s difficult.

00:26:38 – David Goodman
If listeners remember one thing from this episode, what should it be?

00:27:09 – Alice Stuart
It’s not about how much money is flowing. It’s about whether it’s going to the right place, empowering the right people, and creating the kind of biodiversity we actually want — rather than just fitting into the current financial system.

00:27:38 – David Goodman
Finally, you’re also an illustrator. Is there a connection?

00:28:24 – Alice Stuart
The common thread is that I was an autistic child who asked for animal encyclopedias every birthday from age six to twelve.

I studied zoology because I loved ecology. Over time, I shifted toward societal questions because we already know much of what needs to be done to address biodiversity loss — the issue is implementation.

Finance isn’t a passion in itself, but a way of understanding how change actually happens.

Illustration keeps me connected to that original love of animals. When working in complex systems that feel difficult to shift, sometimes you just need to draw.

00:31:36 – David Goodman
Thank you, Dr. Alice Stuart. This has been the Leverhulme Centre for Nature Recovery Podcast. Please tune in next week.

00:31:58 – Stephen Thomas
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