Carry out cost-benefit analysis considering the Total Economic Value of NBS
Analysing the Total Economic Value of NBS highlights their long-term benefits, including ecosystem services and helps policymakers and investors recognize NBS as cost-effective and scalable.
Specific Advice
To effectively support and upscale the use of NBS, conducting a thorough cost-benefit analysis inspired by the Total Economic Value (TEV) approach is beneficial. This approach assesses not only the direct financial costs and benefits of NBS but also the broader ecosystem services they provide, such as flood protection, carbon sequestration, enhanced biodiversity and value of nature’s existence. By integrating these values into economic assessments, policymakers get a clearer picture of the long-term economic benefits of NBS.
Cost-benefit analysis can be used to develop policy incentives, such as subsidies or tax benefits, that reflect the full economic value of NBS. The results also provide a compelling case for investors, demonstrating that NBS are cost-effective in the long term compared to traditional solutions. Ultimately, this approach fosters stronger support, attracting both public and private funding for sustainable and scalable NBS projects.
If conducting a cost-benefit analysis considering most benefits is not feasible due to the lack of monetary values or similar data, a multicriteria analysis can be employed as an alternative or supplement. This approach is akin to a cost-benefit analysis and helps establish a framework for comparing grey infrastructure solutions with NBS. By evaluating various criteria, such as environmental, social, and economic factors, stakeholders can make informed decisions that account for multiple dimensions of value, facilitating a more holistic comparison between the two options.
One practical step is to engage interdisciplinary teams, economists, ecologists, and local stakeholders, to collaboratively identify and calculate the diverse values of NBS. Internationally, several tools and synthesis exist that can be helpful for the valuation. Moreover, national authorities may consider supporting the development of such tools for their country or in the Nordics.
Evaluating the benefits of trees in cities is one example where TEV can be applied (photo: Johan Östberg / Trädkontoret).
Good to Know
Ensure that the analysis captures the full range of ecosystem services NBS provide, such as flood control, carbon storage, and biodiversity enhancement, alongside traditional economic factors. This comprehensive approach strengthens the case for NBS investments.
Avoid double-counting when valuing both the use and non-use values of NBS. Conducting a full TEV analysis for these benefits can be quite challenging.
When performing value transfers, it is crucial to ensure that the values are relevant to your specific context. The best practice is to transfer values from contexts that are similar to yours economically, environmentally, and socially.
Cost-benefit analyses rely on metrics that effectively measure the impacts of NBS. Engage experts from diverse fields, to provide a balanced and accurate assessment. Involving stakeholders early can also ensure that local social and cultural values are considered.
NBS often provide benefits that grow over time. Incorporating a long-term economic perspective into the analysis, including future cost savings and environmental improvements, is crucial to demonstrate their full value.
Use the results of the TEV analysis to align NBS with policy incentives, such as financial subsidies or tax breaks, which encourage adoption. Tailoring policy frameworks to reflect these values can accelerate NBS implementation at scale.
Context
While NBS provide a range of ecological, social, and economic benefits, such as flood mitigation, carbon sequestration, and improved well-being, these are often undervalued in traditional economic assessments. This has been a barrier in many countries, where green infrastructure projects can struggle to secure funding due to a lack of clear economic justification. Without a comprehensive cost-benefit analysis, which includes both direct and indirect benefits, policymakers and investors may prioritize traditional engineering solutions over NBS. By highlighting the total value of NBS, including ecosystem services and long-term savings, stakeholders can make a stronger case for investment, ensuring that NBS are seen as viable and cost-effective solutions for addressing environmental challenges.
Over time, those involved in implementing and maintaining NBS will gain insight about the financial costs associated with NBS. However, the monetary value of ecosystem services provided by NBS may be less known. These benefits can be quantified using market values for provisioning services or through non-market valuation methods. The latter generally entails conducting primary studies focusing on revealed or stated preferences. Alternatively, value transfer can be applied from one location to another. To facilitate this process, several databases exist to assess the monetary values of NBS, such as I-Tree and inVEST.
There are many evaluation methods that can be used to highlight the benefits and effectiveness of NBS. However, such methods should always be used with care as it is impossible to set an economic value on nature. Humans and the economy are not separate from the planet’s ecosystems, and putting a price on certain benefits is just a small part of the total picture. The World Economic Forum warns that “viewing nature and other species as objects and resources for human ends will never ensure effective conservation”. It is therefore important to use such methods in the appropriate settings and when it can be useful to argue for prioritising NBS over other “grey” solutions, but the economic value is never the only argument for protection of nature and biodiversity.
Examples and Cases
#DENMARK – Online portal for Climate Adaptation (Klimatilpasning) - OS2 Skadesøkonomi
The online portal is anchored in the Danish Environmental Protection Agency and represents a comprehensive approach to climate adaptation in Denmark, focusing on municipalities and utilities. This strategy outlines methods for managing climate risks, including flooding and extreme weather events, and emphasizes the importance of collaboration among local authorities, stakeholders, and communities.
The portal contains information about the latest research and development within climate adaptation in and outside of Denmark, news about climate adaptation and a number of concrete examples of adaptation and technological solutions, but also interactive tools. One of them is the OS2 Skadesøkonomi tool, which helps municipalities and utilities assess the economic costs of climate-related damage.
The tool calculates damage costs for buildings, infrastructure, transport, etc., and presents the results in tables and graphs for further analysis. Municipalities receive a comprehensive risk map to prioritize preventive efforts and communicate with citizens. Additionally, the program maintains a complete, time-stamped log of all calculations, ensuring a history of inputs and outputs for transparency and future reference. It enables users to calculate the financial impact of floods, storms, and other climate events, allowing for better planning and resource allocation in climate adaptation strategies. The tool provides a framework for understanding the cost-benefit of different adaptation measures and supports informed decision-making.
More information about the OS2 Skadesøkonomi can be found here:
#NORWAY – Cost-benefit analysis for urban blue-green infrastructure (BGI) in Oslo
The costs and benefits of six strategies for storm water management were estimated for the Grefsen area in Oslo by Wilbers et al. (2022). The six strategies include (i) wadis; (ii) green roofs; (iii) raingardens, rain barrels and wadis; (iv) infiltration crates; (v) water squares, and (vi) a separate sewage system. Some of these can be considered NBS, some are BGIs and some are grey infrastructures. The strategies were dimensioned to prevent combined sewer overflows and urban flooding.
The assessment includes costs like capital expenditure and operating and maintenane expenses, while benefits like prevented flood damage, increased aesthetic values, increased house prices, prevented sewage water treatment and drinking water savings. The study estimated each strategy’s effectiveness on preventing flood damage, preventing sewage water treatment and drinking water savings (as water from rain barrels could be used for watering gardens). The monetary values were generally based on value transfers from previous studies and Statistics Norway.
The analysis calculated the benefit-cost ratios for all six strategies and found that, for this case, wadis (i) gave the most value for money, followed by separating the sewage systems (iv), and a combination of rain gardens, rain barrels and wadis (iii). This example shows how these assessments can be used to demonstrate the value of NBS (in this case wadis) and help decision-makers in choosing a strategy for this area.
More information about the cost-benefit analysis for urban BGI in Oslo can be found here:
Wilbers, G.-J.; de Bruin, K.; Seifert-Dähnn, I.; Lekkerkerk, W.; Li, H.; Budding-Polo Ballinas, M. Investing in Urban Blue–Green Infrastructure—Assessing the Costs and Benefits of Stormwater Management in a Peri-Urban Catchment in Oslo, Norway. Sustainability 2022, 14, 1934. https:// doi.org/10.3390/su14031934
#SWEDEN – i-Tree Sweden: For strategic work with the ecosystem services of trees
i-Tree Sverige is a three-year research project led by the Swedish University of Agricultural Sciences (SLU), focused on evaluating the benefits (including the economic benefits) of urban trees in nine Swedish cities. The project assessed ecosystem services provided by trees, such as air purification, carbon sequestration, and stormwater retention, calculating both the physical impact (weight and volume) and their broader societal benefits, including reduced healthcare costs and lower absenteeism due to improved air quality.
The study revealed that trees in these cities contribute to societal savings of over 1.3 billion SEK by reducing air pollution, thus lowering negative health effects. The report also quantified the impact of urban trees on emission reductions and their ability to delay and store stormwater. This research is connected to cost-benefit analysis as it provides a financial valuation of ecosystem services, helping policymakers understand the economic benefits of urban trees. By integrating these values, municipalities can make informed decisions about investing in green infrastructure, highlighting the long-term savings and societal gains.
The project was conducted in collaboration with arborist companies, cemetery administrations, housing companies, and municipalities from Luleå to Malmö. It offers strategic support in urban planning, emphasizing the role of trees in climate adaptation and sustainable urban development. The tool and report serve as key resources in demonstrating the economic and environmental importance of urban trees in cost-benefit analyses for climate resilience and city planning, which can inspire future NBS-projects that want to carry out cost-benefit analysis.
More information about the (name of the example) can be found here:
Sjöman, J. D., Östberg, J. (2020). i-Tree Sverige: För strategiskt arbete med träds ekosystemtjänster. https://pub.epsilon.slu.se/21754/1/deak_sj%C3%B6man_j_%C3%B6stberg_j_210126.pdf
Learn more
I-Tree,
developed in the US, is a database that enable users to quantify the benefits and values of trees and forests. https://www.itreetools.org/InVEST
is a software tool designed to evaluate ecosystem services provided by NBS. https://naturalcapitalproject.stanford.edu/software/investThe Economics of Nature-based Solutions Part II - Handbook for a socioeconomic and environmental assessment of Nature-based Solutions. A report published by the MAVA Foundation, Vertigo Lab, Birdlife International and the IUCN. https://www.birdlife.org/wp-content/uploads/2022/06/Economics-of-NbS-Guidelines-Part-II.pdf
The NATURVATION Financial and Economic Values Database:
A database provided by the EU Horizon 2020 project NATURVATION with 205 values assigned to nature-based solutions from 105 academic on the economic valuation of environmental services. https://naturvation.eu/result/financial-and-economic-values-database.htmlGuideNBS on cost-benefit of NBS:
https://nbsguide.org/Learn-more/Cost-benefit-of-NbSInternational Obligations
Sustainable development goals, target 15.9
“By 2020, integrate ecosystem and biodiversity values into national and local planning, development processes, poverty reduction strategies and accounts.”This advice quantifies the economic benefits of NBS, promoting the integration of biodiversity’s value into economic planning, fostering conservation, and sustainable use of ecosystems, which is essential to meet the biodiversity objectives set by SDG 15.