Innovative financing strategies for involving the private sector in the mainstreaming of Nature-Based Solutions - A case study in Barcelona

Abstract

In the era of the Anthropocene, cities face escalating challenges due to climate change. Over the past decade, Urban Nature-Based Solutions (UNBS) have gained increasing interest as a holistic and sustainable way to tackle these challenges. These nature-inspired solutions are cost-effective and provide environmental, social, and economic benefits, helping to build resilience. Despite widespread advocacy for mainstreaming, financing remains a significant challenge. Experts suggest that the private sector should engage in UNBS financing, but this occurs infrequently. Research advocates studying the effectiveness of the innovative approaches that facilitate such engagement. This thesis investigates the extent to which innovative financing strategies involving the private sector contribute to mainstreaming UNBS, specifically in the context of Barcelona. It focuses on two programs implemented by the municipality: green roofs and green walls. Each program employs a unique innovative financing strategy that leverages a mix of public and private funds to support the installation and maintenance of these solutions. The way this research studies contribution to mainstreaming is by measuring to what extent they have overcome financing barriers. Both strategies have excelled in addressing barriers to mainstreaming, including information gaps, undervaluing natural capital, reliance on voluntary agreements, policy failures, and institutional inertia. However, other barriers still persist, such as perceived high risks and low economic returns. While the strategies address these issues, they still significantly influence the investor’s perspective on the uptake and investment in these solutions, especially when the investor is private. The study identifies that success depends not only on the financing mechanism used, but also on the solution it supports. For instance, green roofs have been more successful in reducing costs compared to green walls, leading to better long-term investment prospects for green roofs. This results in a positive long-term investment outlook for green roofs and a less favorable one for green walls. The research also explores how policy plans continue to incorporate the feedback and counteract these market dynamics. Through an in-depth analysis, the study scrutinizes these programs, revealing that their success is defined by continuous data collection and collaboration over decades. This positive feedback loop increases interest in UNBS for its benefits, triggering the incorporation of new finance mechanisms and further expanding the solutions. Finally, the study emphasizes the need for context-specific approaches, highlighting the importance of supportive legal frameworks, political support, comprehensive data, and collaborative networks. Despite existing challenges, the innovative financing strategies developed in Barcelona offer valuable insights for other cities in similar contexts aiming to implement UNBS as part of their urban strategies.