Paying for green: A scoping review of alternative financing models for nature-based solutions
| Journal of Environmental Management | 2023 | Peer Reviewed | Review | https://www.sciencedirect.com/science/article/abs/pii/S030147972300542XAbstract
Nature-based solutions (NBS) are widely regarded as cost-effective responses to climate change and environmental degradation that also provide numerous co-benefits. However, despite significant policy attention, NBS plans often fail to materialize due to public budget shortfalls. Alongside traditional public finance, the international debate increasingly urges the mobilization of private capital for NBS through alternative financing (AF) techniques. In this scoping review, we examine the literature on a) the AF models connected to NBS and b) the drivers and barriers associated with these AF models in terms of their financial technicity and their embeddedness in the political, economic, social, technological, legal/institutional, and environmental/spatial (“PESTLE”) context. Although many models are discussed, the results indicate that none can be considered full substitutes for traditional public finance. Barriers and drivers converge around seven overarching tensions: new revenue and risk distribution vs. uncertainty, budgetary and legal pressure vs. political willingness and risk aversion, market demand vs. market failures, private sector engagement vs. social acceptance and risks, legal and institutional conduciveness vs. inertia, and upscaling potential vs. environmental risks and land use. Future research should focus on a) how to further integrate NBS monitoring, quantification, valuation, and monetization into AF models, b) systemic and empirical approaches to improve the understanding of the applicability and transferability of AF models, and c) an exploration of the potential qualities and social risks of AF models in NBS governance arrangements.