Mitigating the risk of natural climate solutions failure through diversified portfolios

Natural climate solutions (NCSs) play a key role in achieving emission reductions in most mitigation scenarios, but uncertainties surrounding their effectiveness hinder their full realization. Existing frameworks struggle to include risk of carbon loss when evaluating trade-offs with carbon benefits, limiting optimal investment strategies. Here, we address the inherent risk associated with individual NCS pathways and advocate for diversified pathways to secure carbon sequestration benefits. We employ modern portfolio theory to build NCS portfolios, including major pathways identified in the literature. The pathways are treated as risky assets with returns and risks defined by global mitigation estimates. Our aim is to maximize carbon sequestration while minimizing risk of carbon loss, navigating the “efficient frontier” where optimal trade-offs occur. Diversifying pathways decreases risk, particularly through strategic geographical distancing or mutual reinforcement between assets. Optimal portfolios may help guide policymakers distributing investments across intervention types and geographical contexts to achieve robust carbon mitigation.