Adaptation through Water 2025

Sources: Rebalance Earth, West Yorkshire Pension Fund.20Project brief: In 2025, Rebalance Earth, a UK fund manager, will launch its flagship fund to position nature restoration as critical infrastructure. This innovative financial vehicle will mobilize institutional capital from pension funds to finance large- scale land and river restoration projects across the UK. The projects are designed to mitigate flood risk, drought and water quality degradation through nature-based solutions (NbS) and natural flood management (NFM). Businesses will invest in environmental resilience to protect their assets, revenues and supply chains, with payments for ecosystem services structured through nature-as-a- service (NaaS) contracts. The fund aims to raise £150 million (~$190 million) in the summer of 2025. Its primary focus will be identifying companies and infrastructure assets vulnerable to water-related risks. The fund plans to invest in restoring wetlands, riparian buffer zones and floodplains to help absorb excess floodwater. Additionally, it will support peatland conservation and reforestation as part of a broader climate adaptation and mitigation strategy. The fund will adopt a source-to-sea approach to invest in sustainable urban drainage systems for managing runoff in cities and towns. In addition to focusing on river catchments, the fund will target underwater ecosystems such as oyster reefs, kelp forests and seagrass meadows. These efforts will aim to improve water quality, enhance biodiversity and reduce coastal erosion. The investments will provide multiple benefits, including ecosystem restoration, increased biodiversity, carbon sequestration and improved resilience to climate impacts. As flood risks increase sharply due to climate change and land-use pressures, and/uni00A0as/uni00A0public budgets become/uni00A0more constrained, the Rebalance Earth fund presents a scalable model for private finance to address the adaptation gap. Incorporating NaaS contracts allows businesses to protect the infrastructure, assets and revenues that are most at risk.Why is this case innovative? –Linking resilience to business performance: through nature- based solutions (NbS), companies are integrating flood resilience into their risk management strategies and overall financial performance. –Reframing flood resilience: the fund moves beyond traditional flood defences by restoring entire river basins, wetlands and forests upstream to help reduce flood impacts downstream. –Shifting the investment model: instead of relying on government funding, this approach mobilizes long- term, patient capital to create scalable, nature-based infrastructure solutions. How is this example relevant to Southeast Asia’s water adaptation challenges? –Corporate- or institution-backed wetland restoration can focus on natural flood barriers to reduce downstream flooding in the Mekong and Chao Phraya river basins, both of which face severe flooding risks. –Government and business can develop NaaS contracts to fund urban green infrastructure (such as floodplain reconnection and riverbank afforestation) in industrial and urban areas. –Companies reliant on agricultural supply chains can finance upstream watershed restoration to protect crops and supply chains from extreme flood events. What opportunities does this illustrate for the private sector? –Banks and impact investors can issue nature-based flood resilience bonds or green bonds that fund river restoration, wetland conservation and green infrastructure for flood mitigation. –Industrial parks, manufacturers and real estate developers can enter into NaaS contracts to fund floodplain reconnection and watershed conservation, thus reducing their exposure to flood risk. CASE STUDY 2 Rebalance Earth: funding nature-based solutions for riverine flood resilience Adaptation through Water: Mobilizing the Private Sector for Climate Adaptation in Southeast Asia 20