Nature Positive Financing the Tranisition in Cities

As global powerhouses, cities are strategic actors in the quest for a nature-positive world. Working at the local level allows officials to see policies’ impacts on nature up close. Cities can also assess their dependencies and impacts on key ecosystems inside and outside their boundaries with more accuracy. The more cities understand how they are interconnected with nature, the better they are able to control their pace of urbanization, protect themselves from disaster and provide essential services to citizens. For cities to be able to incorporate nature into their urban development, a multistakeholder approach is required that integrates public and private sectors, including municipal and national governments, philanthropy, private sector companies, and institutional and private investors. There are many compelling reasons to incorporate nature into the development objectives of a city, including health, environmental and economic benefits. It is crucial for cities to align their development and nature priorities, both internally and externally, with key financing institutions; this alignment will help channel financial resources towards promoting nature-first urban development. To better position nature finance within urban development, it is essential that city planners and local decision-makers recognize the role of nature in the quality of urban life and consistently integrate nature and green infrastructure as a key component of development projects. Limitations within existing frameworks and the absence of clear financing sources and mechanisms do, however, pose a challenge.19 Cities are struggling to manage budget deficits and keep up with the increasing costs of providing basic citizen services such as health, social services and emergency management. Growing populations have an increased demand for essential services, putting major cities under fiscal stress. Cities are looking to balance their budgets while priorities are being reordered across sectors, making it challenging to invest in nature outright and leading to mismanagement of infrastructure development, resulting in environmental damage, economic stagnation and social decline.20 Using external sources of nature funding can help address cities’ budgeting limitations while managing numerous priorities through rapid growth and development. One key mechanism that cities use to recoup costs for nature investments is through levies and surcharges on asset owners that stand to benefit from these investments. Residential or commercial real estate stand to benefit from government funding on green spaces or public transport, for example.2.1 Making space for nature in urban development finance Nature Positive: Financing the Transition in Cities 11