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Breaking down the barriers for accelerating action across sectors on Nature-based solutions

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  • Climate mitigation and adaptation

Ecosystems are our first natural line of defence against floods, storm surges, soil erosion, droughts and other hazards. Nature-based Solutions are ways to actively protect, sustainably manage, and restore natural or modified ecosystems to address these societal challenges. But despite their role in building climate resilience, the multiple co-benefits they deliver including to halt the rapid decline of biodiversity, and increasing global attention, the use of Nature-based Solutions (NbS) remains far short of their potential. During this year’s Adaptation Futures conference, Wetlands International, UNEP-WCMC [1], EcoShape and the Environmental Ministry of Colombia reflected on how the collaboration across sectors can be enhanced to accelerate NbS.

What makes NbS inherently different to business-as-usual solutions?

NbS require a different way of working than with business-as-usual solutions, such as ‘’grey’’ or concrete engineering solutions. While the latter are characterized by a static design and focus on controlling the (eco)system, NbS are inherently dynamic and designed to interact with the local ecosystem as they utilise natural processes. Project development for NbS therefore ideally includes adaptive management with targeted and ongoing monitoring, supporting future adjustment and expansion. Indeed adaptive management is increasingly necessary for all type of solutions due to future climate uncertainties, and NbS is more flexible in adapting to uncertainties than grey solutions. Adaptive management is also essential in relation to closing knowledge gaps, for example in relation to performance and lack of standards or guidelines: it facilitates learning by doing.

The potential of nature to deliver multiple functions or benefits, like support for local livelihoods and industries, biodiversity conservation and improved health, also brings opportunities to build support and develop bankable projects. At the same time, cooperation between different sectors is required, which brings further complexity. NbS can only really be successfully developed and implemented when using multi-stakeholder and participatory approaches, maximising their sustainability and their potential to contribute to multiple objectives.

Interlinked barriers

The above features make NbS innovative and different; thus increased awareness, knowledge and evidence are needed to underpin and motivate an enabling policy and investment environment for NbS, which in turn can create incentives and political will to prioritise NbS. The ultimate aim is for NbS options to become routinely assessed as a matter of course whenever a need for adaptation is identified. This increase in demand will in turn contribute to an enhanced knowledge base, improved awareness and capacity and a lower perception of risk. More effort is therefore still needed to demonstrate the effectiveness and efficiency of NbS, and to provide tools to reduce or manage uncertainty.

Increasing evidence and knowledge

Fortunately the number of successful and effective NbS cases are growing, as shown in the session and the wider Adaptation Futures conference. For example, Itaipu Binacional integrates NbS in their designs for generating electrical energy from hydropower in Brazil and Paraguay. They have demonstrated that the protected and restored forest buffer provides a range of benefits for the functioning of the dam, as well as for local communities and wildlife. The Latin American Water Funds Partnership supports Water Funds, organizations that design and promote financial and governance mechanisms, engaging public, private, and civil society stakeholders to contribute to water security through solutions grounded on nature-based infrastructure and sustainable management of watersheds. They proactively and positively contribute to public policies on water and strengthen corporate water management practices.

And we heard about the Building with Nature approach developed by EcoShape that has implemented 20 large-scale projects in the past 12 years that integrate NbS in water and marine infrastructure design, and how this experience is used for upscaling the approach in the new Building with Nature Asia initiative led by Wetlands International. Globally, NbS are increasingly recognised as an effective measure to promote adaptation to climate change, reduce disaster risks, and address other societal challenges, and are appearing with more frequency in national policies and strategies, including in Nationally Determined Contributions to the Paris Agreement [2].

Overcoming financial barriers

What can different finance and governance players do to overcome financial barriers to scaling up NbS? When public and private sectors have a shared ambition, much is possible. Understanding the full range of benefits associated with NbS can help build this ambition. Projects often disregard the positive externalities that are beyond the scope of the donor or national budget planning. Therefore all benefits should be considered in project design from the early stages: primary and secondary benefits, public and private sector benefits, and short-term and long-term benefits, including the enhancement of biodiversity and ecosystem services.

Estimates of avoided costs, and direct and indirect benefits, should bring in the perspectives of all possible beneficiaries of the project, including communities and potential private sector partners. Benefits should be assessed through standardised (even compulsory) cost-benefit analysis, using a life-cycle approach, for both grey and NbS solutions. This value-based approach should also be normalised in procurement and contracting processes, challenging the market to propose solutions that maximise co-benefits for nature and society. Models like the before mentioned Water Funds can serve as a place where all relevant beneficiaries pool their resources for a common cause, underpinned by a robust assessment of the risks and costs to inform decisions.

Enabling private sector engagement

The private sector – ranging from private sector companies to financial institutions to advisory services – are also increasing engaged in NbS. Companies are using NbS to support their own operations, as shown by Itaipu Binacional and numerous other examples in energy, infrastructure and agribusiness. Private sector parties, including pension funds and insurance companies, have a growing interest in funding natural capital delivered by NbS, but such projects are also new. Private sector finance can be enabled by de-risking projects with an innovative character to reduce the barriers to in the private sector stepping in.

This is where co-financing by donors, multilateral development banks, climate funds and governments can play a key role. For example, by supporting project preparation, financing possible extra capital costs, and by alleviating specific risks perceived by the private financer, these barriers can be reduced. Innovative funding mechanisms like blue bonds and integrated contracts [3] may also make projects more financially viable and can relieve the short-term budget constraints of the public sector. In addition, new revenue streams can be created from natural capital, such as carbon credits (i.e. from reducing greenhouse gas emissions or removing carbon from the atmosphere).

Wide and deep collaboration

Creating shared ambitions based on the multiple functions of NbS and enabling blended finance requires collaboration to jointly explore opportunities and to co-design programs and projects. Working on NbS should be seen as an opportunity for better collaboration between sectors, such as infrastructure planning together with environmental departments, experts from multiple disciplines, and beneficiaries. It also allows building a shared understanding of NbS performance and risks, to inform decisions about the optimal balance between green and grey solutions, particularly while more evidence on NbS is being developed. At the heart of NbS is the recognition of the value of nature, and the value of collaboration.

Sources for more information:

 

Footnotes

  1. United Nations Environment Programme World Conservation Monitoring Centre (UNEP-WCMC)
  2. UNFCC (2021) Nationally determined contributions under the Paris Agreement – Synthesis report by the secretariat. https://unfccc.int/sites/default/files/resource/cma2021_08_adv_1.pdf
  3. Whitepaper Paving the way for scaling up investment in nature-based solutions along coasts and rivers. How to finance and accelerate implementation of nature-based solutions, EcoShape, 2021