Rivers are the unsung heroes of our planet, essential to both environmental health and economic resilience. They fuel economies, sustain communities and act as nature’s original infrastructure – yet they remain massively undervalued in climate finance discussions. They only make headlines when disaster strikes, like when the River Rhine’s water levels dropped so low in 2018 and 2022 that commercial shipping ground to a halt. Or when the River Thames repeatedly burst its banks over the last decade, causing millions in damages.
Unlike carbon credits – which can feel abstract – water-related ecosystem services are tangible, immediate and relevant. For example, both the 2022 UK drought and the recent severe floods in Valencia are stark reminders of the pressing need to invest in nature. Public sentiment backs this up: 60–70% of people see flood prevention as essential to national security.
As climate risks escalate, we must recognise rivers for what they are – essential ecosystem service providers and business-critical infrastructure. If we treat nature as an asset class and integrate rivers into investment strategies, we can generate financial returns while tackling urgent environmental challenges.
Rivers: The providers of ecosystem services
Rivers are fundamental to our economy. They deliver measurable ecosystem services such as clean water and flood and drought prevention, all of which are essential for building greater resilience against climate change and could save businesses billions. However, these services often go unvalued in decision-making processes, such as:
Flood mitigation: Rivers regulate water flow, reducing flood risks. The Leeds Flood Alleviation Scheme, for instance, prevented £28b in potential damages, safeguarded 33,000 jobs and generated £774m in economic growth. With UK flood damage costs set to rise from £2.4bn to £3.6bn by 2050, investing in river restoration is not just an ‘ESG’ or sustainability initiative, it is also a serious economic and commercial strategy.
Drought resilience: Rivers act as natural water reserves, buffering against drought. The 2022 UK drought showed just how vital this is. By 2050, some rivers could lose up to 80% of their summer flow due to over-abstraction and climate change, jeopardising water supplies for 40% of households in England.
Water purification: Rivers filter pollutants, ensuring clean drinking water and reducing industrial treatment costs. Yet only 16% of English surface waters met good ecological standards in 2020 – down largely to pollution from agriculture (40%), wastewater (36%) and urban runoff (18%). These numbers are worsening, with major implications for public health and productivity.
Biodiversity support: Rivers connect and sustain ecosystems, yet freshwater wetlands have declined by 90% over the past century due to urbanisation and intensive agriculture. Protecting rivers means protecting biodiversity.
Coastal protection: River deltas shield coastlines from erosion and storm surges – a role that will become increasingly vital as sea levels rise.
Restoring rivers: An investment opportunity hiding in plain sight
Beyond the environmental benefits of river restoration, it is emerging that river restoration presents an investment opportunity. By treating rivers as ‘green infrastructure’, investors can achieve returns through reduced risks, enhanced resilience and socio-economic benefits.
Economic benefits: Investing in river restoration yields significant savings. Research shows that every £1 spent on new flood defences saves £8 in damages, with £3 directly benefiting public infrastructure such as roads, schools and hospitals. Flood defence maintenance investments are equally cost-effective, with every £1 invested saving £7.
For example, water retention areas save £3.50 for every £1 spent, while lowering peak flood levels by 70%. Such measures are particularly impactful in protecting small and medium enterprises (SMEs), which face average losses of £50,000 per flood event. Retrofitted defences in Carlisle reduced SME damages by 45% after severe flooding in 2015–16.
Unlocking private investment: Public funding for river restoration and other climate adaptation measurers could unlock £10bn of private capital annually – every £1 spent on adaptation has the potential to attract £2 in private investment. This approach can not only generate returns from the ecosystem services that nature and adaptation provides but it will mitigate GDP losses projected at 6–12% by 2030 due to environmental degradation.
Ecosystem services framework: Unlocking this level of investment requires markets to value the ecosystem services provided by nature investment. For example, riparian forest restoration upstream of Barcelona’s Llobregat River reduced stream temperatures during summer months – a factor that lowered water treatment costs significantly at local purification plants. Modelling showed that nearly half of the investment could be recovered within two decades through reduced treatment costs alone.
This case study exemplifies how nature-based solutions often outperform hard grey-engineered infrastructure financially while delivering broader ecological benefits such as biodiversity support and carbon sequestration
The future: Paying for ecosystem services
Rebalance Earth is pioneering scalable mechanisms that enable payments for ecosystem services like water security and climate resilience. These mechanisms are designed to be transparent and equitable – rewarding communities that restore natural assets without commodifying nature. This model mirrors carbon credits but focuses on tangible local benefits tied to water systems.
The time has come for investors to reframe their understanding of nature – not as an externality to be protected but as an asset to be valued. Rivers provide a compelling case study for this paradigm shift, offering both financial returns and environmental outcomes. By investing in river restoration today, we can build a resilient future where nature thrives alongside economic growth.
