Financing Nature-Based Solutions: Exploring Public, Private, and Blended Finance Models and Case Studies

Acknowledgements
Contents
List of Tables
1 Introduction
	1.1 Introduction
	References
2 Nature-Based Solutions
	2.1 Introduction
	2.2 Societal Challenges
		2.2.1 Climate Change
		2.2.2 Population Growth and Rapid Urbanisation
		2.2.3 Increased Food Demand
		2.2.4 Rising Demand for Water and Deteriorating Water Quality
		2.2.5 Economic Growth
		2.2.6 Biodiversity Loss
		2.2.7 Natural Disasters
	2.3 Nature-Based Solutions
		2.3.1 Ecosystem Services
		2.3.2 Multifunctionality
		2.3.3 Nature-Based Solutions Meeting Wider Development Goals
		2.3.4 Typology of Nature-Based Solutions
		2.3.5 Implementation of Nature-Based Solutions
	2.4 Multiple Co-Benefits of Applying Nature-Based Solutions
	References
3 Financing Nature-Based Solutions
	3.1 Introduction
	3.2 Current Financing Levels of Nature-Based Solutions
		3.2.1 Future Investment Needs in Nature-Based Solutions
	3.3 Financing Nature-Based Solutions
	3.4 Sources of Finance
		3.4.1 International Public Financial Sources
			3.4.1.1 Multilateral Development Banks
			3.4.1.2 Bilateral Development Finance Institutions
		3.4.2 Domestic Public Sources
		3.4.3 Private Finance Sources
			3.4.3.1 Institutional Investors
			3.4.3.2 Environmental Corporate Social Responsibility
		3.4.4 Blended Finance Sources
			3.4.4.1 Types of Additionalities
			3.4.4.2 Actors and Financial Instruments
			3.4.4.3 Intermediaries
			3.4.4.4 Principles for Blended Finance
	3.5 Financing Instruments
		3.5.1 Combination of Financing Instruments
	3.6 Barriers to Financing Nature-Based Solutions
	3.7 Role of Governments in Removing Barriers to Financing Nature-Based Solutions
	3.8 Benefits to the Private Sector in Participating in Nature-Based Solutions
	References
4 Debt-for-Nature Swaps Financing Nature-Based Solutions
	4.1 Introduction
	4.2 Debt Swap
	4.3 Debt-for-Nature Swaps
	4.4 Bilateral Swaps Versus Trilateral Swaps
		4.4.1 Bilateral Swaps
		4.4.2 Trilateral Swaps
	4.5 Key Actors and Motivations
		4.5.1 Benefits to Actors
	4.6 Debt-for-Nature Swap Agreements
	4.7 Establishing a Conservation Trust Fund
		4.7.1 Governance and Management of Conservation Trust Funds
		4.7.2 Conservation Trust Fund Disbursement Instruments
	4.8 Monitoring and Evaluation of Debt-for-Nature Swaps
	References
5 Market-Based Instruments Financing Nature-Based Solutions
	5.1 Introduction
	5.2 Market-Based Instruments
	5.3 Environmental Taxes and Charges
		5.3.1 Environmental Tax Credits
		5.3.2 Designing Environmental Taxes and Charges
	5.4 Subsidies
		5.4.1 Technical Assistance Grants
		5.4.2 Benefits of Subsidies
		5.4.3 Principles for Environmentally Friendly Subsidies
	5.5 Tradable Permits
		5.5.1 Water Quality Trading
			5.5.1.1 Types of Water Quality Trading
			5.5.1.2 Benefits of Water Quality Trading Programmes
		5.5.2 Stormwater Credit Trading
		5.5.3 Tradable Development Rights
			5.5.3.1 Market Activity of Tradable Development Rights Programmes
			5.5.3.2 Benefits of Tradable Development Rights
			5.5.3.3 Monitoring and Enforcement of Tradable Development Rights Programmes
			5.5.3.4 Conservation Easements
	5.6 Choice of Market-Based Instruments
	References
6 Green Bonds, Loans, Credit Lines, and Microfinance Financing Nature-Based Solutions
	6.1 Introduction
	6.2 Green Bonds
		6.2.1 Benefits to Issuers and Investors
		6.2.2 Green Bonds Financing Nature-Based Solutions
		6.2.3 Green Bond Principles
		6.2.4 Climate Bonds Standard and Certification Scheme
			6.2.4.1 Agriculture
			6.2.4.2 Forestry
			6.2.4.3 Water
	6.3 Green City Bonds
	6.4 Environmental Impact Bonds
	6.5 Green Loans
		6.5.1 Environmental Benefits of Green Loans
		6.5.2 Principles for Developing and Implementing Green Loans
	6.6 Green Credit Lines
	6.7 Green Microfinance
		6.7.1 Assessment Process for Green Microfinance
	References
7 Payments for Ecosystem Services Financing Nature-Based Solutions
	7.1 Introduction
	7.2 Payments for Ecosystem Services
		7.2.1 Opportunities for Payments for Ecosystem Services Schemes
	7.3 Payments for Ecosystem Services Actors
		7.3.1 Buyers
		7.3.2 Sellers
		7.3.3 Intermediaries
	7.4 Transaction Costs
	7.5 Payments
		7.5.1 Other Payment Types
		7.5.2 Auctions
	7.6 Contract Types
	7.7 Private Versus Public Schemes
	7.8 Considerations to Increase Effectiveness and Efficiency
	7.9 Designing and Implementing a Payments for Ecosystem Services Scheme
	7.10 Examples of Payments for Ecosystem Services Schemes
		7.10.1 Payments for Forest Ecosystem Services
		7.10.2 Payments for Watershed Services
		7.10.3 Payments for Bundled and Layered Services
	References
8 Biodiversity Offsets Financing Nature-Based Solutions
	8.1 Introduction
	8.2 Biodiversity Offsets
		8.2.1 Restoration and Preservation
		8.2.2 Biodiversity Offset Currency
		8.2.3 Mitigation Hierarchy
			8.2.3.1 Environmental Impact Assessment
			8.2.3.2 Environmental Impact Assessments Incorporating Ecosystem Services
	8.3 Biodiversity Offset Principles
	8.4 Voluntary or Regulatory Biodiversity Offsets
	8.5 Regulatory-Required Biodiversity Offsets
		8.5.1 Developer-Initiated Offset Implementation
		8.5.2 In-Lieu Fees
		8.5.3 Market Mechanisms
		8.5.4 Conservation Banks
		8.5.5 Biodiversity Offset Aggregation
	8.6 Biodiversity Offset Project Framework
	References
9 Public—Private Partnerships Financing Nature-Based Solutions
	9.1 Introduction
	9.2 Public–Private Partnerships
		9.2.1 Partners
		9.2.2 Public–Private Partnership Models
	9.3 Other Public–Private Partnership Approaches
		9.3.1 Local Regeneration Approach
		9.3.2 Policy Approach
		9.3.3 Development Approach
		9.3.4 Governance Approach
	9.4 Risks and Public–Private Partnerships
	9.5 Success Factors of Public–Private Partnerships
	9.6 Public–Private Partnerships and the Sustainable Development Goals
	9.7 Governing Public–Private Partnerships
	9.8 Public–Private Partnership Lifecycle
	9.9 Financing Public–Private Partnerships
	9.10 Long-Term Performance Monitoring
	9.11 Application of Public–Private Partnerships in Nature-Based Solutions
	References
10 Voluntary Carbon Offsets Financing Nature-Based Solutions
	10.1 Introduction
	10.2 Carbon Sequestration
		10.2.1 Ecosystem-Based Mitigation
	10.3 Voluntary Carbon Markets
		10.3.1 Carbon Offset Projects
		10.3.2 Buying and Selling Offset Credits
		10.3.3 Pricing of Carbon Offset Credits
		10.3.4 Framework for Designing and Developing a Carbon Offset Project
	10.4 Voluntary Carbon Offset Standards
		10.4.1 Verified Carbon Standard
		10.4.2 Gold Standard
		10.4.3 Plan Vivo
		10.4.4 American Carbon Registry
	10.5 Voluntary Carbon Offset Project Types
		10.5.1 Forestry
		10.5.2 Agricultural
		10.5.3 Blue Carbon
	10.6 Corporate Carbon Neutrality
	References
11 Extended Case Studies of Financing Nature-Based Solutions
	11.1 Introduction
	11.2 Case: Restoration: Wendling Beck Exemplar Project
	11.3 Case: Restoration: Mobilising Finance for Forests Programme
	11.4 Case: Issue-Specific: Building Resilience of Communities Through an Ecosystem-Based Approach in Namibia
	11.5 Case: Issue-Specific: Nature for Climate Peatland Grant Scheme
	11.6 Case: Infrastructure: New York City Department of Environmental Protection’s Green Infrastructure Grant Program
	11.7 Case: Infrastructure: State of Virginia's First Environmental Impact Bond
	11.8 Case: Management: Channel Payments for Ecosystem Services
	11.9 Case: Management: Thames Water's Smart Water Catchments Programme
	11.10 Case: Protection: Caribbean Challenge Initiative Conserving and Protecting the Marine and Coastal Environment
	11.11 Case: Protection: BirdLife's Fiscal Benefits Project Developed into a Tax Incentive in South Africa
	References
12 Best Practices and Conclusion
	12.1 Introduction
	12.2 Debt-for-Nature Swaps
	12.3 Market-Based Instruments
	12.4 Green Debt Financing
	12.5 Payments for Ecosystem Services
	12.6 Biodiversity Offsets
	12.7 Public–Private Partnerships
	12.8 Voluntary Carbon Markets
	12.9 Conclusion
Index