Infrastructure development and operations drive over 25% of human-generated biodiversity loss—fragmenting habitats, depleting resources, and polluting terrestrial, freshwater, and marine ecosystems. Their widespread reach amplifies ecological impacts caused by other sources such as climate change, land- and sea-use change, and the spread of invasive species—and compounds the challenges to addressing the problem.
Yet the broad scope of this sector—which includes the work of governments, infrastructure owners, engineering and construction firms, and real estate developers—also presents unique opportunities to create tailored restoration responses to specific environmental challenges. In fact, the infrastructure sector can play a vital role in addressing ecosystem degradation by contributing to nature restoration via nature-based and hybrid solutions, such as the use of wetlands for flood management or the use of mangrove reforestation for coastal protection. These solutions are particularly important to integrating infrastructure successfully with natural ecosystems.
Taking action to mitigate and reverse ecosystem impacts not only helps the environment, it also offers tremendous economic benefits. In our case experience, some businesses achieved an ROI more than double that of conventional “gray” or “built” solutions such as conventional wastewater treatment plants or drainage networks.
To understand the sector’s progress in this area, we surveyed more than 45 infrastructure companies around the globe to evaluate their awareness of the industry’s nature-related impact and their maturity in terms of mitigating harm, restoring ecosystems, and generating positive environmental outcomes. We found varying levels of awareness and maturity, with about 80% of respondents saying they focus on reducing the negative impacts of their projects through operational improvements and process changes.
While this focus on harm reduction is important, it is only part of the solution. Restoring the systems of nature is a transformational act that can greatly enhance our environmental resources. Infrastructure players looking for meaningful environmental impact should take a strategic approach that aims to:
- Reverse ecological harm.
- Reduce reliance on resource-intensive practices.
- Avoid emissions through ecosystem-based carbon sinks.
- Build resilience against climate change.
In the process, they will unlock business opportunities, foster innovation, and enhance their competitive advantage.
The Far-Reaching Effects of Nature Degradation
Nature is essential to human well-being and survival. It provides a wide array of vital ecosystem services—including food provisioning, carbon storage, and water and air filtration—that are collectively valued at over $150 trillion annually, or about twice the world’s GDP.
Yet, nature faces significant degradation, and its tangible impacts and the related biodiversity loss are increasingly evident. In fact, the Swiss Re Institute estimates that one-fifth of the world’s countries face the risk of ecosystem collapse, potentially affecting the planet’s ability to support human life. In recognition of this risk, the World Economic Forum in 2024 ranked biodiversity loss as the third most severe threat that humanity faces over the next ten years.
In addition, it is becoming clear that the decline in ecosystem functionality is also an economic concern. Nature is at the foundation of the global economy, and its significant degradation puts a substantial portion of worldwide commerce at risk. Since the late 1990s, in fact, our research finds that the global economy has lost ecosystem services worth about $5 trillion annually, or 6% of global GDP.
Four Factors Beyond Climate Change Are Damaging the Environment
The effects of
climate change
have been widely discussed in society; however, it is not the only cause of natural ecosystems’ deterioration. According to the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), four other factors also play a key role. Today’s environmental crisis requires that society address all these sources of environmental decline:
- Land-use and sea-use change
- Overexploitation of natural resources
- Pollution of air, water, and soil
- Spread of invasive species
Infrastructure projects have substantial and diverse impacts on these four factors. To more fully understand this dynamic, BCG combined the expertise of its sustainability consultancy, Quantis, with insights from the Exploring Natural Capital Opportunities, Risks, and Exposure (ENCORE) tool, The Taskforce on Nature-related Financial Disclosures (TNFD), Science Based Targets Network (SBTN) materiality screenings, and resources published by the World Business Council for Sustainable Development and IPBES.
Our analysis found that the segments of the infrastructure sector generating the most environmental impact are transport, energy, cities and urban development, and waste and water treatment. In comparison, the telecommunications segment, for example, has a relatively low impact, primarily due to its less-intensive land and resource use and pollutants release.
In addition, land- and sea-use changes, water overexploitation, and soil and water pollution represent the three factors most affected by infrastructure projects. Our discussion therefore focuses only on these factors. (See “Primary Environmental Impacts of Infrastructure.”) Importantly, we also find that these issues can be effectively mitigated through targeted nature restoration projects, that is, efforts to rehabilitate and preserve ecosystems degraded or destroyed by human activity and to restore ecological functions to their original states.
Primary Environmental Impacts of Infrastructure
Infrastructure development causes land- and sea-use change in three key ways:
- Destruction and fragmentation of habitats. Infrastructure projects such as roads, railways, energy networks, and urban development require extensive land clearing, which removes vegetation and weakens ecosystems. These projects also isolate wildlife populations, reduce genetic diversity, and impair species’ ability to migrate, forage, and reproduce. And the impact is spread across terrestrial, freshwater, and marine ecosystems.
- Soil degradation. Infrastructure activities requiring deforestation, construction, soil compaction, and/or surface permeabilization degrade soil structure and fertility. These activities reduce the soil’s ability to absorb water and organic content, increasing its vulnerability to flooding, erosion, and landslides. Poorly managed drainage systems and wetland destruction further aggravate these challenges, with significant repercussions for both natural ecosystems and urban settlements.
- Coastal erosion. Coastal infrastructure—including ports, roads, and rail and urban developments—removes vegetation, alters sediment dynamics, and intensifies wave impacts. These activities accelerate shoreline degradation, leaving ecosystems exposed to flooding and storm surges.
Water overexploitation arises when infrastructure projects withdraw water at unsustainable rates, depleting natural reserves and harming ecosystems. Water treatment and distribution networks and urban development further exacerbate this issue by increasing demand for water resources, particularly in arid or drought-prone regions
Pollution of Soil, Water, and Air
Infrastructure development contributes significantly to soil and water pollution, which degrades ecosystems and harms biodiversity.
- Soil pollution. Pollutants such as hydrocarbons, heavy metals, and chemical substances can seep into the soil from poorly managed infrastructure activities. Improper waste disposal and management can exacerbate the contamination.
- Water pollution. Runoff from roads, untreated or poorly treated wastewater, and pollutants from industrial and energy production facilities often introduce harmful substances into water bodies.
The infrastructure players we surveyed revealed varying levels of awareness regarding the role they play in these nature-related impacts and their ability to address them. They tended to be highly aware of issues such as climate change, pollution, and water overexploitation, which are among the most regulated, measurable, and widely recognized environmental challenges. However, we found significantly lower awareness of other key issues, such as land-use and sea-use change and the spread of invasive species. (See Exhibit 1.)
Opportunities for Infrastructure Players in Nature Restoration
Because the infrastructure sector currently plays a major role in land- and sea-use changes, water overexploitation, and soil and water pollution, it has immense potential to lead the mitigation of nature degradation. With its vast resources and expertise, the sector can develop scalable solutions that not only minimize harm but also actively restore and regenerate natural ecosystems. These efforts can create value not only for the environment but also for businesses and local communities.
Encouragingly, all respondents indicated they have a plan to address their company’s impacts on nature, and 60% have adopted a broader, strategic approach that includes avoidance, restoration, and regeneration to achieve net-positive outcomes. In the following analysis, we focus on actions that drive nature restoration.
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Leveraging Nature-Based Solutions for Restoration
The infrastructure sector has access to a wide array of nature restoration strategies, ranging from fully engineered initiatives to nature-based solutions (NbS). Some of these strategies can restore ecosystems “like for like,” recreating a degraded ecosystem to match its pre-disturbance condition. They also can go beyond this baseline to create enhanced ecosystems that offer greater resilience and biodiversity value. There are three potential approaches across the spectrum.
- Conventional “gray,” or “built,” solutions rely entirely on engineered systems, such as artificial wetlands, green infrastructure, or river restoration projects. They are considered NbS when designed to accelerate natural processes and support ecological functions rather than replace them. However, gray solutions are often resource-intensive and limited in addressing broader ecological functions.
- Nature-based solutions prioritize ecosystem-based adaptation and restoration, leveraging natural processes to manage resources and build resilience. These projects offer adaptive, cost-effective, and multifunctional benefits. For instance, creating pollinator-friendly habitats can restore native plants that support bees, butterflies, and other pollinators crucial for food production, while developing urban green spaces and “pocket” forests can support biodiversity, sequester carbon, and improve water quality—while being more sustainable and resilient to climate change impacts over time.
- Hybrid solutions combine elements of gray and nature-based approaches. A hybrid flood management system, for example, might integrate concrete levees with adjacent wetlands to balance hard infrastructure with ecological benefits. This mixture enables tailored strategies that blend infrastructure needs with ecosystem restoration.
To execute nature restoration strategies today, 70% of our respondents said they employ a combination of gray, hybrid, and nature-based solutions, with the majority relying on gray and hybrid approaches. Only 30% have implemented NbS to address their impact on nature. Examples shared by respondents include one company that allocates a quarter of the land in real estate developments to green spaces. Another company chose to site a bridge in a forested area to minimize risk of damage from avalanches, rather than building more traditional protective structures that would damage the environment.
While there is clearly room for improvement, more than 80% of respondents say they are at least partially aware of the competitive advantages offered by adopting nature-based strategies—highlighting growing recognition of their potential benefits. (See Exhibit 2.)
Moving from Impacts to Solutions
Infrastructure companies can follow a three-step approach to assess the diverse environmental impacts to which they may be contributing and identify corresponding restoration solutions suited to their specific industry subsector and its specific environmental footprint.
- Assess materiality. Players should first assess the environmental impacts created by their infrastructure segment, along with the level of significance. The goal is to create a comprehensive understanding of how infrastructure development and operations affect nature and its ecosystem services. (See Exhibit 3.)
- Break down material impacts. In this step, players should first identify how their infrastructure segment broadly contributes to the effects of land- and sea-use change, overexploitation of resources, and pollution. Next, they should classify more specific direct repercussions for biodiversity and ecosystem loss, such as habitat destruction or coastal erosion.
- Identify restoration objectives and pinpoint solutions. For each repercussion outlined in the previous step, players should identify a nature restoration objective aimed at rehabilitating and preserving natural ecosystems. Examples might include supporting biodiversity, improving environmental health, and restoring ecological functions. Players should then identify practical hybrid or nature-based solutions for achieving restoration objectives within their sector segments, then drive improvements in environmental stewardship across infrastructure projects.
To support step three, we offer a range of solutions across restoration objectives and infrastructure subsectors. (See Exhibits 4 and 5.) By implementing these restoration strategies, infrastructure players can not only address environmental challenges but also position themselves as leaders in the transition to nature-positive development.
The versatility of these solutions not only ensures their applicability but offers industry players a clear pathway to reducing their environmental footprint and achieving more optimal outcomes. For example, to reduce habitat destruction and fragmentation, land transport infrastructure projects can create ecological corridors to ensure habitat continuity, or they can recreate nearby ecosystems through grassland or wetland restoration or reforestation.
Similarly, companies that consume large amounts of water can improve water availability and efficiency by implementing solutions such as river restoration, catchment management, and riparian buffers, or strips of vegetation next to a body of water. These measures improve the natural water cycle, increasing groundwater recharge, reducing water loss, and acting as natural storage systems by filtering and slowing the water flow to ensure a more sustainable supply for both ecosystems and human use.
Quantifying the Benefits
These nature restoration solutions generate multidimensional benefits by offering integrated approaches that simultaneously address ecosystem degradation, unlock economic opportunities, and foster societal well-being. (See Exhibit 6.) These benefits include the following.
Environmental Value
Nature restoration solutions provide environmental benefits by acting as natural carbon sinks; improving resilience to climate hazards; reducing erosion; improving water, soil, and air quality; fostering biodiversity; and limiting the spread of invasive species. They also promote ecosystems that are more resilient to shifting climate patterns, playing a critical role in both adaptation and mitigation.
For example, restoring forests and wetlands supports local biodiversity and at the same time sequesters carbon, filters pollutants, and improves soil permeability, mitigating the risk of landslides and floods. Coastal restoration, such as rebuilding dunes or replanting mangroves, protects shorelines from erosion, fosters marine biodiversity, and safeguards critical carbon stores. Nature restoration projects also inherently promote native biodiversity and, as a result, contribute to reducing the spread of nonnative species.
Economic Value for Companies
Nature-based solutions can also present a compelling economic case for businesses, combining cost savings, revenue generation, and improved access to financing.
- Cost savings. Restoration can reduce both capex and opex. By mitigating physical risks and enhancing infrastructure’s adaptive capacity, it minimizes costly maintenance and extends asset lifespans. Nature-based solutions can also present a more affordable alternative to traditional gray infrastructure. An integrated constructed wetland (ICW) in the UK, for example, recently reduced development costs by 35% and operational costs by 40%.
- Revenue generation. Restoration solutions enhance infrastructure resilience, reducing shutdown risks and improving operational continuity and reliability. The growing interest in nature restoration has created a market that will require $1.2 trillion annually in private capital for specialized companies to offer consulting, technical support, and project development services for third-party initiatives. Additionally, these solutions unlock revenue streams such as trading credits (including carbon, biodiversity, and wetland credits) and establish green business opportunities, including ecotourism in restored areas and the sustainable production of timber, agricultural goods, and fisheries.
- Enhanced financing access. Companies investing in restoration are well-positioned to attract sustainability-linked investments, green bonds, and impact-focused funding. Demonstrating leadership in ecological restoration can open doors to government subsidies, grants, and tax incentives designed to support conservation and climate mitigation and adaptation.
Societal Value
These same solutions create meaningful benefits for society, particularly for local communities directly affected by infrastructure development. Projects can generate jobs, stimulate local economies, and foster cultural heritage preservation and community cohesion. In addition, access to healthier ecosystems and green spaces benefits public health and reduces the burden on the health care system by improving people’s physical and mental well-being.
In addition, nature restoration plays a crucial role in strengthening community resilience to environmental risks. Healthy ecosystems act as natural buffers against extreme weather events, such as floods, droughts, and storms—protecting lives, reducing property damage, and lowering disaster recovery costs.
Note that engaging local and indigenous communities in restoration projects is essential for success in this benefit domain. Their traditional ecological knowledge ensures contextually appropriate solutions tailored to local needs. Collaboration also fosters ownership, shared stewardship, and long-term commitment, enhancing the sustainability and impact of initiatives. This inclusive approach ensures that restoration efforts are both effective and aligned with the specific needs of the communities involved.
A case study of a project in the UK offers analysis across the environmental, economic, and social axes of a real-life nature-based solution. (See “Case Study: Construction of a Wetland for Wastewater Treatment.”)
Case Study: Construction of a Wetland for Wastewater Treatment
Environmental Value
The ICW is improving the quality of treated wastewater through natural filtration, sedimentation, and biological absorption, eliminating the need for chemical dosing, while maintaining ecological balance. It is also generating a net positive impact on biodiversity by attracting pollinators, birds, amphibians, and reptiles and enriching adjacent ecosystems with flower-rich grasslands created from reclaimed topsoil.
In addition, by leveraging the land’s natural slope, the ICW requires less mechanical pumping, which has reduced operational carbon emissions by 79%. And by minimizing the use of heavy materials such as concrete and relying on locally sourced clay, the project is cutting embodied carbon by 50%. It is also enhancing climate resilience by creating wetland buffers that adapt to changing water levels and mitigate flood risks.
Economic Value
The ICW project will deliver substantial economic value over its estimated lifespan, achieving an ROI of approximately 320%—more than double that of a conventional gray wastewater treatment solution (estimated at 150%)—and underscoring the strong business case for nature-based approaches. It is generating value through two primary streams: cost savings and additional revenue.
- Cost savings are significant, with development costs reduced by 35% from those of more traditional projects due to the elimination of heavy infrastructure construction in favor of natural materials. Operational costs have also been reduced by 40% due to the passive, gravity-fed design, which eliminates the need for mechanical pumping and chemical inputs, ensuring low maintenance and energy efficiency.
- In addition to standard wastewater treatment revenues comparable to those of gray solutions, the ICW can generate additional income by trading carbon and biodiversity credits. In addition, our ROI estimate does not include the expanded business opportunities from scaling this model. The operating company, which helped deliver the project, could certainly leverage its expertise to develop restoration initiatives for third parties—offering consulting, technical support, and project development services. In fact, the project’s design has already inspired plans for up to 1,000 hectares of integrated constructed wetlands across the UK, demonstrating the scalability and adaptability of such solutions while paving the way for broader industry adoption.
The project actively involves local residents through educational visits, planting activities, and open tours, enhancing public awareness and generating long-term support and stewardship. It strengthens community resilience by mitigating flood risks and buffering against extreme climate hazards through wetland buffers and improved soil stabilization, offering natural defenses against environmental disruptions. Additionally, improved water, air, and soil quality enhance the community’s living environment. By replacing a traditional wastewater system with a low-emission, low-disruption solution, the ICW fosters cleaner, healthier conditions that promote overall well-being.
Engaging a Variety of Stakeholders
Collaboration among stakeholders is essential in nature restoration efforts. Almost 90% of the respondents in our survey agreed that nature restoration is inherently a multistakeholder activity requiring coordinated efforts from diverse actors to ensure success. They primarily engage with specialized third parties on nature and biodiversity, and with the scientific community to accurately assess environmental impact and determine the most suitable technical solutions.
Local public entities and communities also play pivotal roles, providing regulatory oversight and localized insights to ensure that solutions address relevant issues and deliver societal benefits. In addition, NGOs act as a bridge between scientific expertise and societal needs, supporting project setup, advocating for underrepresented communities, and fostering alignment among stakeholders. By enabling collaboration across these groups, restoration efforts are significantly enhanced, delivering more inclusive, effective, and sustainable outcomes for ecosystems and communities alike.
Financial institutions are also pivotal players in enabling nature-based solutions, given the annual private sector investment required to implement these efforts. They can support the shift to nature-positive infrastructure by mobilizing private capital and supporting companies in achieving these goals. In addition, they can leverage innovative financial instruments and strategic partnerships to unlock economic opportunities and drive the restoration of critical natural systems.
Fortunately, financial institutions are increasingly recognizing the value in this area. Their growing interest is fueled by the emergence of projects delivering positive returns, coupled with additional benefits such as the mitigation of portfolio risks linked to biodiversity loss and ecosystem degradation, as well as alignment with net-zero commitments. For early movers, nature-related financing represents a key opportunity, with potential annual
revenues of $250 million
per institution.
Key Takeaways for Infrastructure Players
Nature-based approaches to infrastructure offer a clear range of environmental, economic, and societal benefits. To fully capture their value, companies need to set nature-based solutions as a strategic priority for business opportunity growth and adopt a comprehensive perspective that covers the spectrum of potential benefits. To succeed, we recommend they take the following steps.
Elevate nature to a strategic priority.
Nature should no longer be treated solely as a compliance or engineering requirement. Infrastructure players should transform it into a strategic focus, leveraging hybrid and nature-based solutions to unlock business opportunities, foster innovation, and enhance competitive advantage.
Adopt a localized and inclusive approach.
Engaging local communities and understanding specific regional needs are essential steps in successful restoration initiatives. Tailored solutions, developed collaboratively with local stakeholders, ensure societal benefits and long-term sustainability.
Take a holistic perspective on benefits.
Players should evaluate restoration activities comprehensively by considering economic and societal benefits as well as environmental ones. This approach can help in assessing the true value of hybrid and nature-based solutions versus gray solutions and support better-informed decision-making.
Foster resilience across the ecosystem.
Collaborative efforts amplify the benefits of nature restoration projects. Infrastructure players should therefore support interconnected actors such as local communities, governments, and industrial players, acting as enablers of resilience against climate change.
Leverage financing opportunities.
Infrastructure players can access dedicated financial instruments, such as green bonds and sustainability-linked loans, as banks increasingly recognize the business case for financing nature-positive projects, although it will take time and collaboration to reach full scalability.
Infrastructure companies have both the opportunity and the responsibility to lead the way in nature-based restoration, which not only addresses environmental degradation but bolsters economic sustainability and societal well-being. By understanding its multidimensional benefits and enhancing its adoption, infrastructure companies can mitigate risks, create new value, and contribute to a more sustainable future.
This article was developed in collaboration with Quantis.
