Perceived Costs and Benefits and Financing of NBS

As many of the benefits delivered by NBS are considered public goods they cannot easily be internalised by investors. Often, the direct and indirect impacts and payoffs of NBS require time to become evident, and the estimates of NBS costs and benefits are frequently dependent on individual value judgment.

Attracting private capital investment in NBS can help to ensure the continuous implementation and mainstreaming of NBS in the context of the limited public budgets. However, private sector investments are also based on potential profits. The intangible and public nature of the benefits delivered by NBS makes the developing of feasible business cases for NBS implementation difficult. At the same time there is a lack of user-friendly tools and methods to account for the benefits delivered by NBS and express these benefits in monetary terms that would in turn help develop the business cases for investing in NBS.

This leads to NBS typically being financed by local governments. In the short-term, local governments might not need to set up additional revenue collection and appropriation systems to fund NBS.

However, long-term funding for NBS may not be stable if other obligations, especially those resulting in short-term benefits, are viewed as higher priorities. Budgetary constraints might imply prioritising other policy areas for funding that have more readily quantified and articulated effects.

Procurement practices may impose additional challenges to NBS implementation and mainstreaming in cities. Often, public procurement officers are subject to many pressures ranging from cutting costs to meeting the demands of internal users and the public. Since NBS lack straightforward business cases, demonstrating their cost effectiveness when compared to conventional solutions for urban development can prove challenging. For this reason, relying on the lowest cost indicator in the public procurement process implies an additional obstacle to NBS implementation.

Piggy bank and coins

Governance-related actionfields to support NBS uptake