Abstract

Natural climate solutions (NCS) have the potential to achieve up to one-third of emission reductions, but uncertainties surrounding their effectiveness hinder their full realization. Here we employ modern portfolio theory to build NCS portfolios (NCSPs) including a variety of pathways listed in Griscom et al. 1. The different pathways are treated as risky assets within a 'carbon mitigation market' with their returns and risks defined by global estimates of mitigation potential. Our aim is to maximize carbon sequestration while minimizing the risk of carbon loss, thus effectively navigating the 'efficient frontier', where the best trade-off between maximum carbon sequestration and risk occurs. Diversifying pathways leads to decreased risk and enhanced resilience, particularly when risks of carbon loss due to environmental stressors are spatially or temporally uncorrelated. The optimal NCSPs provide valuable insights into distributing investments and land within pathway categories (forests, agriculture and wetlands), intervention types (e.g., manage, protect, restore), cost-effectiveness, and geographical contexts. We hope these results help inform policymakers to reduce risk while pursuing ambitious carbon mitigation targets.