Mandatory requirements and tax initiatives

Mandatory requirements and tax initiatives

Municipal administrations could enforce regulatory frameworks of a mandatory character requiring private actors to bear the costs of implementing NBS according to pre-established policy objectives. As a component of such a framework, cities could also introduce a set of taxes and fees, which would bring additional internal own-source revenues for the cities to finance NBS. Mandatory frameworks should aim at being environmentally effective, cost-effective, and bringing additional positive impacts to the society.

The mandatory schemes should be inducing private companies to change their behaviours and reduce the environmental externalities generated by their economic activities. The revenues obtained from the fiscal instruments can finance public measures such as converting roads into green corridors, redesigning the urban drainage system or replacing the pavement of public roads with permeable alternatives, if the municipal revenues are ring-fenced for NBS implementation.


• Mandatory requirements and taxes provide a direct way to push for the implementation of the desired technologies and outcomes.

• It allows policymakers to distribute the financial burden among a number of actors, sparing the municipal budget from excessive expenses.

• If new regulations are introduced without proper caution, it can create distortions of the market by taking a too intrusive role or overburdening of the targeted sectors.


• The political and economic context is one of the most important aspects to be considered when assessing the viability of enforcing a mandatory framework.
• Lack of political will to ring-fence the revenues for NBS implementation
• Political opposition and lack of appropriate dialogue between the city and potential participants can have a highly detrimental effect and should be carefully considered.
• The risk of being too strict, thus preventing economic actors to search for more cost-efficient alternatives.

Related financing options