Facilitate private funding of nature-based solutions
Exploring innovative funding mechanisms and facilitating private funding of NBS through economic incentives can prove successful for mainstreaming and upscaling NBS.
Specific Advice
Public funds can play a key role in de-risking private investment in NBS, particularly in contexts where there is scepticism about the effectiveness of nature-based approaches. Risk-sharing mechanisms, like guarantees or performance-based payments, can encourage more private sector participation. Engaging the private sector can also, for example, be achieved by emphasizing clear economic returns, promoting green financial instruments, and linking NBS to corporate sustainability or ESG goals. Experiences with innovative models elsewhere, such as green bonds or environmental impact bonds can also offer valuable insights and could be tailored for use in the Nordics.
Public-private partnerships (PPPs) are also effective in aligning shared interests, such as co-financing green infrastructure between urban developers and local governments. Furthermore, cross-sectoral business models, like payments for ecosystem services (PES), can pool resources from various beneficiaries (e.g., farmers, utilities) to support ecosystem restoration. Carbon or biodiversity credits are also tools that can be adopted to finance nature restoration efforts, such as kelp restoration, to secure carbon sequestration or enhance biodiversity in an area.
Good to Know
Ensuring that funding streams are linked to measurable outcomes further strengthens the case for NBS as a viable and impactful approach to addressing climate change, biodiversity loss, and social challenges.
Regular monitoring of the effectiveness of economic incentives for NBS are important, ensuring that the funds lead to the intended results. For example, in implementing carbon or biodiversity credits as a tool to finance nature restoration efforts, mechanisms should be included to ensure that the credits cause an increased restoration effort, not offsetting the degradation of nature elsewhere.
Context
To mainstream and upscale NBS, it is important to look for opportunities beyond public funding. Currently, most financing for NBS comes from public sources, such as governmental agencies and EU funding programmes. As funding remains one of the main barriers for NBS implementation it is important to diversify funding sources, facilitate private funding of NBS and create innovative financing structures that engage both public and private sectors.By diversifying funding sources in these ways, NBS can become more financially sustainable and scalable.
There is a need for more funding from all sources and shifting the perspective on nature investments. A recent study by the European Investment Bank explored and highlighted the investment opportunities in NBS. It encourages the creation of enabling policies and regulatory frameworks to incentivize investment in NBS. This includes providing incentives, such as tax credits and subsidies for projects related to NBS.
Examples and Cases
Examples of facilitating private funding for NBS:
#UK – Wyre Natural Flood Management Investment Readiness Project
The Wyre Natural Flood Management Investment Readiness Project, led by The Rivers Trust and Wyre Rivers Trust, is an example of a project which investigates innovative funding opportunities for implementing Natural Flood Management (NFM) measures to help reduce the risk of flooding in Churchtown, UK. The project explores the potential for securing green finance from investors, which can be paid back over several years by a range of organisations which will benefit from reduced flood risk and other benefits from the project. The project seeks to demonstrate the financial viability of NFM, encouraging private sector involvement and promoting the long-term resilience of local communities to flooding.
Further information:
https://ecology.wa.gov/water-shorelines/water-quality/water-quality-grants-and-loans/community-based-public-private-partnership-program#USA - Stormwater Community-Based Public-Private Partnership Program
The department of Ecology at the State of Washington, USA, are developing a Community-Based Public-Private Partnership Program. The program is in development but aims to support collaborative projects to improve water quality by encouraging partnerships between local governments, private entities, and community groups to co-fund and implement stormwater management and water quality projects. The program aims to leverage private investments alongside public funding, providing financial and technical assistance to reduce pollution and enhance stormwater infrastructure. By focusing on innovative solutions, the program helps communities achieve sustainable water management goals while fostering broader stakeholder engagement.
Further information:
https://ecology.wa.gov/water-shorelines/water-quality/water-quality-grants-and-loans/community-based-public-private-partnership-program#DENMARK – Tripartite agreement to transform land use
In 2024, the Government of Denmark, industry organisations and The Danish Society for Nature Conservation entered into a political agreement to transform land use. Over the next 10 years. The government will allocate more than DKK 45 billion to the Green Tripartite agreement. The Novo Nordisk Foundation wishes to support this work, and has therefore decided to allocate 10 billion DKK over the next ten years which aims to create more space for nature and biodiversity while promoting modern agricultural practices. This initiative will focus on restoring natural habitats, improving the aquatic environment, and developing sustainable agricultural technologies.
Further information:
Learn more
Approaches to financing nature-based solutions in cities
, published by the Grow Green project: https://growgreenproject.eu/approaches-financing-nature-based-solutions-cities/Nature-based Solutions Sustainable Financing Inventory
(with fact sheets for each financing mechanism), published by the Ponderful project: https://www.ecologic.eu/19473European Investment Bank Practical Guide
on boosting investment and financing conservation and nature-based solutions: https://www.eib.org/attachments/pj/ncff-invest-nature-report-en.pdfInternational Obligations
SDG 9
Industry, Innovation, and InfrastructureSDG 11
Sustainable cities and communitiesKunming-Montreal Global Biodiversity Framework
Ensure the full integration of biodiversity and its multiple values into policies,regulations, planning and development processes, poverty eradication strategies,strategic environmental assessments, environmental impact assessments and, as appropriate, national accounting, within and across all levels of government and across all sectors, in particular those with significant impacts on biodiversity, progressively aligning all relevant public and private activities, fiscal and financial flows with the goals and targets of this framework.United Nations Convention to Combat Desertification (UNCCD)
To mobilize substantial and additional financial and nonfinancial resources to support the implementation of the Convention by building effective partnerships at global and national level.