Cities are under pressure to address climate change challenges. Nature-Based Solutions (NBS) have been identified as a cost-effective way of addressing climate change resulting in economic, social as well as environmental benefits. In Connecting Nature, we have developed tools for NBS financing, and implemented these in 10 European cities.
Who pays for NBS?
At present the business model and route to return-on-investment for nature-based solution is not always clear. This limits interest from traditional financial institutions. Even for ‘patient’ impact investors the return-on-investment is often not clear enough to secure investment.
As a result the Naturvation Urban Nature Atlas shows that almost 75% of nature-based solutions are funded from public sources (public budget / direct funding or subsidies). Pressure on public finances is intense so what is the business case for investing in nature-based solutions over other competing public sector priorities? To attract alternative sources of investment what return on investment can nature-based solutions deliver? How should return-on-investment be measured - in monetary terms or also taking into account the environmental and social benefits accrued?
Pressure on public finances is not the only reason innovation in financing and business models for nature-based solutions is required. Open innovation approaches to dealing with societal challenges recognise the benefits of engaging citizens and societal actors in creating solutions that respond to the specific challenges of their local environment and in designing solutions to meet these needs and environment. While the benefits of co-governance are recognised, implementing co-governance in practice can be challenging.
The 3 phases of NBS financing
Connecting Nature research has identified three major phases of financing nature-based solutions:
Financing the planning of nature-based solutions,
Financing capital investment in nature-based solutions,
Financing ongoing operational costs.
Research has shown that too often there is a focus on financing the capital investment costs of nature-based solutions and not enough consideration goes into planning long-term sustainable business models to secure a return on investment.
In response to these challenges, Connecting Nature has developed a number of guidebooks and tools to help cities better understand and tackle the challenges of developing new financing and business models for nature-based solutions.
CONNECTING NATURE RESOURCES
Below you can find an overview of relevant resources from the Connecting Nature project related to financing and business models.
- NBS Financing in Fast Follower Cities
- NBS Financing and Entrepreneurship in UrbanByNature Hubs
- NBS Framework Reports for Front Runner Cities
Papers / Policy Briefs