Natural capital accounts for 4–5% of global GDP but draws less than 0.2% of institutional investor allocations, a new report from Climate Asset Management argues, framing the gap as a reallocation problem for asset owners weighing farmland, forestry and ecosystem assets against traditional real estate and infrastructure pools.

The asset manager's report, "Is Natural Capital the New Infrastructure?," puts the funding shortfall in dollar terms: $220 billion flowed to nature-based solutions in 2023, against $7.3 trillion directed to "nature-negative activities." Closing that gap requires annual nature-based investment of $571 billion by 2030.

How does agriculture sit at the center of the gap?

Agriculture alone generates about one-third of all global greenhouse gas emissions, and agriculture, forestry and other land-use changes (AFOLU) account for roughly 21%, per the report. The World Bank estimates nearly half of global GDP depends on biodiversity and natural assets now in decline from overfishing, pollution, deforestation and other extractive practices.

"Investing in Natural Capital solutions and AFOLU measures remains key to retaining the potential for alignment with the target of limiting warming to 1.5°C above pre-industrial levels," Climate Asset Management writes.

The firm defines natural capital as the stock of natural assets — soil, water, air and biodiversity systems — that underpins economic activity. "As the world's foundational infrastructure, these natural systems generate long-term environmental, social, and economic value while enhancing resilience to climate and nature-related risks," the report states.

What stops the capital from moving?

Institutional investors "still struggle to determine where natural capital sits within their investment pools, which inevitably limits investment capacity," the report argues. The asset class historically shared characteristics with real estate and infrastructure — long duration, stable cashflows, inflation linkage — so it was often slotted into those sleeves rather than tracked on its own.

Climate Asset Management presses for a standalone allocation, citing revenue streams traditional real-asset strategies cannot match:

• Carbon and biodiversity credits
• Conservation easements on working lands
• Flood mitigation through restored wetlands
• Soil-health gains tied to food security and farm yields

Natural capital strategies "deliver stronger potential environmental outcomes than many traditional real-asset strategies," the report claims.

How do investors plan to act?

Two in five institutional asset owners expect to make their first natural capital allocation within five years, according to a survey cited by the report. Those already deploying capital expect to scale further.

Substance matters more than the label. Some 68% of respondents said "well-defined, project-level KPIs matter most" when assessing strategies. Investors who find a strong evidence base "are more likely to support the long-term economic case and to consider larger allocations over time," the report notes.

What does this mean for farm-linked strategies?

The gap between agriculture's emissions footprint and the capital chasing natural-asset strategies puts row-crop and livestock operators at the center of the reallocation. AFOLU mitigation, regenerative-soil projects and working-lands conservation all qualify as natural-capital plays — but only if managers can translate agronomic outcomes into auditable KPIs that pass institutional due diligence.

Without those metrics, even the projected $571 billion annual flow by 2030 may not materialize, leaving farmland, forests and wetlands outside the institutional allocation debate that Climate Asset Management wants to force open before the next crop of fund mandates comes up for review.