NbS are financially feasible and economically justified
To be sustainable and scalable, NbS should be both financially feasible and economically justified. Financial feasibility refers to the ability of an intervention to attract the necessary investment and generate sufficient revenues to cover all costs over time, including capital, operations and maintenance. Economic justification takes a broader perspective: it is not limited to financial flows but seeks to capture the full societal value created or lost, including whether the monetary and non-monetary benefits outweigh the overall costs. This includes positive or negative externalities that may affect people beyond those directly involved in the project. Addressing the financial and economic dimensions of NbS helps prevent short-term dependencies, supports a just distribution of costs and benefits among affected stakeholders, through adequate safeguards and associated corrective actions (Criterion 6), informs the establishment of enabling financial and economic policies (Criterion 8) and reinforces the long-term viability of NbS.
4.1 The distribution of financial and societal costs and benefits is understood and documented to ensure distributional equity
Identification and documentation of the main financial and social costs and benefits, including monetary and non-monetary elements, derived from the intervention are key components for assessing the financial feasibility and viability and economic justification of an NbS. Upfront and recurring costs are to be assessed against the anticipated longer-term benefits of the proposed intervention, while making explicit, testing and verifying all assumptions, ideally within a cost-benefit analysis (CBA) framework. Finally, it is important to understand who receives the benefits and who bears the costs of the intervention to allow for a fair and just allocation of benefits and costs across stakeholder groups (distributional justice) and the development of safeguards and associated corrective actions against any possible financial inequalities (Criterion 6).
4.2 NbS are economically and financially justifiable against alternative solutions
A key attribute of NbS is the ability to address societal challenges in a manner that is both economically viable and efficient. This means that, when possible, the cost-effectiveness of a candidate NbS should be tested against viable alternatives to help justify its selection. Firstly, it is important to understand whether alternative solutions to the candidate NbS exist. Alternative solutions may include a different NbS (for example, watershed catchment management rather than floodplain management), a different combination of conventional and NbS, or substitution of the NbS entirely with a more conventional approach such as engineered infrastructure. When comparing the candidate NbS to alternative solutions, the analysis should consider the range of costs and benefits associated with each option, including financial, environmental, and social dimensions. The assessment of the costs of alternative interventions in reaching the same outcome(s), ideally within a cost-effectiveness analysis (CEA) framework, should be based on the long-term and not only on short-term financial returns. If the candidate NbS proves less cost-effective than an alternative in purely financial terms, this should be weighed against the broader range of co-benefits it can provide, with a clear understanding that prevention of biodiversity loss at the source is preferred overcompensating its effects elsewhere (offsetting).
4.3 Financial mechanisms are identified and secured to ensure NbS long-term viability
To unlock their potential in delivering multiple benefits to people and nature, NbS need to be financially feasible and viable over their lifetime. Investing heavily in upfront costs without considering the longer-term financial viability (including maintenance of infrastructure and the development of an exit strategy) can negatively impact the intervention’s sustainability over time. Resourcing packages need to be developed and negotiated, integrating a range of financial mechanisms such as public-sector grants, incentives and low interest loans, private-sector loans and equity, blended public-private partnerships as well as philanthropic and voluntary contributions or combinations of the above, reflecting an equitable distribution of both the risks and returns. While securing its financial viability over time, NbS should inform and encourage the establishment of enabling conditions for their financial viability and upscaling (Criterion 8).
Table of Contents