State of the Art and Latest Advances in Exploring Business Models for Nature-Based Solutions

Abstract

Nature-based solutions (NBS) offer multiple solutions to urban challenges simultaneously, but realising funding for NBS remains a challenge. When the concept of NBS for societal challenges was first defined by the EC in 2017, financing was recognised as one of the major challenges to its mainstreaming. The complexity of NBS finance has its origin in the multiple benefits/stakeholders involved, which obscures the argument for both public and private sector investment. Since 2017, subsequent waves of EU research- and innovation-funded projects have substantially contributed to the knowledge base of funding and business models for NBS, particularly in the urban context. Collaborating and sharing knowledge through an EU Task Force, this first set of EU projects laid important knowledge foundations, reviewing existing literature, and compiling empirical evidence of different financing approaches and the business models that underpinned them. The second set of EU innovation actions advanced this knowledge base, developing and testing new implementation models, business model tools, and approaches. This paper presents the findings of these projects from a business model perspective to improve our understanding of the value propositions of NBS to support their mainstreaming.

Stakeholder Perceptions of Nature-Based Solutions and Their Collaborative Co-Design and Implementation Processes in Rural Mountain Areas—A Case Study From PHUSICOS

“…Economic aspects and financing of NBS are identified as one of the major challenges to mainstream NBS. A number EU research-and innovation-funded projects currently strive to increase the knowledge on funding and business models for NBS (Mayor et al, 2021). A key challenge is that benefits provided or created by nature and NBS are largely public goods and services that either have no markets or market prices or have costs that are relevant only in the distant future (Schweppe-Kraft and Grunewald, 2015).…”

“…Lupp et al, 2014 andLupp et al, 2015 for the case of biomass production for energy purposes). Thus, private stakeholders are hesitant in engaging or investing financially in NBS, and most business models currently depend on direct or indirect interventions to mitigate the lack of market mechanisms through policy instruments and incentives valuing the benefits generated by NBS (Mayor et al, 2021).…”

Innovating with Nature: Factors Influencing the Success of Nature-Based Enterprises

“…Economic-Inadequate financing of NBS implementation is one of the most commonly cited barriers to large-scale uptake [8,12,13,38,[40][41][42][43][44][45]. Financing barriers identified include an over reliance on public sector funding [36,45,46] and competing priorities for land use, e.g., land needed for housing [12,38].…”

“…Co-production of NBS with the local community and entrepreneurs is seen as critical in NBS planning, delivery and maintenance [15,41,48]. A key enabling factor for NBS is partnerships among stakeholders which in turn contributes to a more equitable distribution of the benefits of NBS and minimises negative trade-offs [8,42,45]. Collaborative governance of NBS is identified as a key success factor but presents challenges for more traditional forms of public administration [48][49][50].…”

“…Increased collaboration on common approaches to measuring impact may help to address this significant barrier, e.g., EC Handbook on Evaluating the impact of nature-based solutions [9,52]. Natural capital accounting and other approaches to defining service flows and monetary costs related to NBS are also being developed across multiple H2020 projects enabling actors to better capture NBS costs and benefits as part of the development of sustainable business models [42]. Given the relative novelty of the NBS concept and uncertainty around performance, lessons learned through demonstration pilots and experiments through mechanisms such as Living Labs have been identified as an enabler for NBS [13,37].…”