Nature Positive Financing the Tranisition in Cities

For cities to effectively finance nature, it is imperative to address several external challenges. These challenges impact both the ability of cities to attract investment and the capacity of financial institutions to identify impactful and profitable opportunities. The nascent stage of the nature-positive movement has constrained institutions’ capacity to deliver significant impact, particularly in urban environments where investment outcomes are not well understood. This uncertainty obstructs cities from strictly integrating natural elements into their urban landscapes and embedding nature into all aspects of governance and operational processes.3.7 Increasing nature finance in citiesOther funding mechanisms and enablers Policies and regulatory instruments are also valuable means to embed nature into all investment decisions. Other instruments can generate investment flows into nature conservation by making biodiversity destruction expensive or untenable.46 Green budgeting and natural capital accounting methods help to assess the value of ecosystem services and account for them in project balance sheets or embed nature considerations into project development and assessments.47,48Payment for ecosystem services (PES) schemes are another way to mandate nature investment by incentivizing upstream resource holders to protect nature resources being used further downstream. Public private partnerships (PPPs) seek to improve the management of public resources and enable governments to retain ownership of assets and infrastructure. Blended finance incorporates concessional and non-concessional capital to develop an investment portfolio considering differing investor needs. Due to the limitations in total public spending and the challenges associated with private sector participation, blended finance is a reasonable solution to increase finance for nature. Nature Positive: Financing the Transition in Cities 25