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Shaping the Business case on Nature Based Solutions
Learning by p(l)aying
Introducing Nature^Squared
Project office specialised in:(paying) for ecosystem services
biodiversity
natural capital
and sustainable business models
Very often together with
entrepreneurs
and companies.
http://www.nature-squared.org/
Green cities
Sustainable agriculture
International Landscape restorationSustainable finance
Introducing Deltares
• Independent institute for applied research in the field of water, subsurface and infrastructure
• 800 + highly motivated employees from 36 different countries
• Some projects
Why a multi-stakeholder approach to the business case on Nature Based Solutions (NBS)?
• NBS: everything from gardens to large parks
• High ambitions, low funding
• Stakeholder engagement leads tosupport and ownership
• Multiplier effect when combiningprogrammes (biodiversity, urbanresilience, liveability, climateadaptation, healthy cities)
Incentives for financing:
▪ Improving climate resilience and liveability
▪ Improving urban biodiversity
▪ Enhancing social cohesion & improving health
What kind of actions can they take?
▪ Direct funding
▪ ‘Pool funding’ (internally)
▪ Bringing stakeholders together
▪ (Re)shaping incentives (e.g. building permits)
Introducing some stakeholders: The City Council/administration
Example: pool funding, channelling funding from different departments
Incentives for financing:
▪ Increasing quality of living, e.g. more social cohesion
▪ Increasing value of property sales & private sector rent (on average: 5-15% higher)
What kind of actions can they take?
▪ Make initial investments
▪ Invest (cash or in kind) in operations & maintenance and manage accordingly
▪ Providing financial warranty
▪ Use their network to activate and engage tenants
Introducing some stakeholders: Property owner: Housing Corporation (social or private) or private owner (collective)
Example: Vrijburcht, a privately funded climate-proof collective garden in Amsterdam
Incentives for financing:
▪ Enhancing flood and climate resilience (water safety, flood protection, river management, drought resilience: cost saving in the long term)
▪ Incentives depend on mandate of water authority.
▪ Habitat for wildlife
▪ Improving quality of living environment
What kind of actions can they take?
▪ Financial support
▪ Contributing with knowledge about water storage
Introducing some stakeholders: Water Authority
Example: Urban Adapt project in Rotterdam (collaboration between City of Rotterdam, WWF & National Water Authority)
Incentives for financing:
▪ Improving quality of the living environment, e.g. social cohesion and recreation & exercise
▪ Increasing property values (if house owner)
▪ Ideology
What kind of actions can they take?
▪ Set up a crowdfunding project or give donations
▪ Start a bottom-up initiative which does not require external funding
▪ Voluntary maintenance
Introducing some stakeholders: Engaged Citizen
Example: Ghent crowdfunding platform for climate adaptation. Option to co-fund with municipal subsidy
Incentives for financing:
▪ Improving quality of the air and the living environment in general
▪ Sound scientific evidence about the effect of green on human health via i.e. cleaner air, less obesity, less anxiety, less loneliness etc.
What kind of actions can they take?
▪ Invest in NBS that encourages
outdoor recreation/relaxation
▪ Incentivize their clients to use
NBS/green more often
Introducing some stakeholders: Health (Insurance) Provider
Example: Green exercise Partnership, Scotland
Role-playing Game: Urban Green Finance Game - 1
• The City administration wants to realise a new park in a relatively deprived neighbourhoodand is looking for stakeholders to (financially) contribute/invest.
• You are one of the lucky stakeholders that is being invited to talk.
• Who is willing to contribute/invest? And whatquestions do you have and guarantees do youexpect?
(extra) Questions - 2
1. How could you (financially) contribute to/ invest in the park?
2. In what other ways could youcontribute?
3. Which barriers do you see for yourrole when it comes tocontributing/investing?
4. Which requirements/guaranteesdoes your role expect?
5. Via which mechanisms could theCity Council/municipality incentiviseother stakeholders to contribute?
4 take-aways on setting up co-funding for NBS
DISCREPANCY BETWEEN COSTS-BENEFITSStakeholders benefiting from NBS are not primarily the ones paying for it. For example, a park is paid and managed by the green department but also leads to higher property values and lowers costs of nearby drainage infrastructure.
DISCREPANCY BETWEEN ECONOMIC VALUE AND FINANCIAL INCENTIVEDifference between (theoretical) economic value and a sound financial incentive to contribute/invest in a business case.
UNDERSTAND YOUR COUNTERPARTIt takes time to trust one another when it is unclear or ill-understood what people’s agenda, responsibility, triggers and limitations are.
LONG TERM VS. SHORT-TERMMost of the costs of NBS need to be made upfront, whereas the benefits might be paid back over a long time horizon.
4 ways to get forward to finance NBS
CONSIDER NEW FINANCIAL ARRANGEMENTS❑ Blended finance: private vs. public, debt vs. equity, first-loss positions etc.❑ Impact investment: institutions pay once the impact has been realised, not
upfront.
FOCUS ON FINANCIAL INCENTIVEFocus first on the stakeholders that benefit financially from NBS and can contribute significantly, later on the ones that may benefit from the economic value of NBS.
INDEPENDENT COORDINATORAn independent coordinator can overcome the different agendas of stakeholders.
USE NCA/ COST-BENEFIT ANALYSIS AS INPUTDemonstrating benefits and co-benefits for stakeholders in a natural capital account aligned with their financial reporting is a good starting point for internal and external communication and discussion on contributions by key stakeholders.
Contact Information
Please contact us if you have any questions or if you want to collaborate with us!
www.nature-squared.org 0031 20 261 9419 (NL) nature-squared.org
