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.
Governance-related actionfields to support NBS uptake
Embedding NBS in existing plans and strategies
The action-oriented approach of developing “solutions” differentiate NBS from the other concepts in that it can be employed at a means for actors to achieve existing objectives.
Experimental areas for pilot projects
Experimentation can allow for the development of locally attuned interventions whilst facilitating learning processes between municipal staff, citizens, developers and other possible stakeholders.
Utilising environmental and sustainability management systems
In order to ensure objectives in the municipality are being met it is important that the sustainability performance is tracked and assessed in a systematic way.
Development of a resilience strategy
In order to effectively respond to anticipated future changes, cities need to undertake strategic action today to enhance their resilience in the future.
Awareness campaigns
Raising the awareness of local stakeholders and citizens is vital to implement successful NBS programs.
Use of Blue-Green Factos
This instrument, the Blue Green Factor, allows developers and designers the freedom to decide how green or blue elements should be incorporated in the respective plans and, at the same time, can be used as evaluation criteria in public procurement or in the distribution of land.
Training of administrative staff in cross-cutting issues
Personnel development and training in cross-sectoral issues is an essential part of a learning organisation. Training fosters knowledge transfer, enhances innovation among the employees and improves efficiency.
Review of existing policy framework
As a rather new concept, NBS as such are often not explicitly targeted through local regulations and incentives. Still, as an integral and highly cross-sectoral part in the urban system, they are both supported and inhibited by various policies from different areas, including land and zoning, building and construction, water, air, nature conservation, social issues, etc.
Introducing NBS-supportive building regulations
Buildings and new construction have a large impact on the natural water cycle as it involves the sealing of (new) surfaces, compaction of soils, and/or removal of natural vegetation. Also, other climate-related challenges in a city, such as urban heat islands, biodiversity and habitat loss, pollution, etc. are affected and may be worsened by such undertakings.
Introducing incentives to enhance private sector engagement
Feedback from UNaLab partner cities suggests a strong impression of insufficient regulations and/or incentives in place that encourage local businesses to develop, implement or invest in NBS. Furthermore, whereas public green is mostly being financed and maintained through the city administration, there is a need to also encourage private land owners to develop and invest more in NBS.
Use of compensation schemes
Compensation schemes are mechanisms which ensure that the overall function (e.g. ecosystem services) of a specific site is being preserved. Such schemes are often coupled to compensation funds, which can be used to realise NBS projects throughout the city (if direct compensation at the same plot is not possible).
Use of certification schemes and sustainability programs
Several certification schemes and sustainability programs exist with direct or indirect links to urban green and NBS. The main value of such certifications is that if incorporated well, they stand for objectivity, transparency and trustworthiness and are perceived as beneficial by most parties (private, public and citizens).
Data as an instrument for governing external agencies and contractors
As public space data can be understood as public property, several public authorities have defined data access as a precondition to public contracts. This practice helps municipalities to gain access to data and to guarantee data quality, as well as citizens to use apps that contain data from public facilities via third party apps.
TEV Framework in CBA
The application of a holistic cost-benefit scheme (analysis) could be applied to understand the value for money of NBS. Cost-benefit analysis (CBA) supports the economic case and generates data regarding cash savings, risk and financial impacts that feed into the financial case, and which inform the commercial case where procurement is required.
Targeted fees and other charges
Taxes and fees charged to the residents of the cities for delivering the public services have long been an important source of revenue for municipalities. By collecting additional internal revenues, the local governments could enhance their ability to introduce and scale up NBS implementation.
Apply the "polluter-pays" principle
The principle implies that whoever bears the responsibility for the negative (environmental) effects should incur costs associated with the damaging activity. If polluters are taxed on their harmful activities, society is compensated.
Issuing green bonds
As NBS can support biodiversity conservation, climate change adaptation and other environmental efforts in cities, green municipal bonds could serve as a means for cities to secure funding for NBS implementation.
Engaging in public-private partnerships
For widespread uptake of NBS throughout the city, the inclusion of private actors is essential. Public-private partnerships (PPPs) are a viable option to achieve this goal.
Introducing MEAT award criterion in public procurment
For effective adoption of the NBS concept and its integration throughout municipal structures, the often prevailing “lowest price offered” mentality in public procuring needs to be overcome within the existing legal framework.
Financing across multiple departments
In addition to enhancing internal revenue base and exploring additional external funding opportunities, local governments might expand the pool of available funding for NBS by coordinating funding across the budgets of multiple municipal departments. This coordination has potential to enable cost sharing across the budgets of different municipal departments.
Integration of social inclusion into green space planning
Planners have to strike a balance between targeting NBS to the areas where the challenges (air pollution, urban heat island, flooding etc.) they are supposed to address are most pressing, on one hand, and ensuring that this does not worsen social disparities, on the other.
Quantitative and qualitative assessment tools and standards
Quantitative and qualitative assessment tools and standards can be useful instruments to foster social inclusion of NBS.