In 2021, when the United Nations Environment Program (UNEP) issued its first State of Finance for Nature: Tripling Investments in Nature-Based Solutions by 2030 (SFN) it brought attention to a glaring gap in funding for nature-based solutions (NbS), a tool that enhances adaptation, in the fight against climate change. 1 This year’s upcoming report, based on new national data, outlines current spending at $152 billion annually and revises the gap upward, citing a total needed investment of more than $10 trillion by 2050 to meet global goals. The reports did not count spending on urban NbS despite UN Secretary General António Guterres’ assertion, “Cities are where the climate battle will be won or lost.”2 In fact, urban NbS differs dramatically from non-urban investment, a phenomenon inspiring the title of this piece and leading to the questions below.
What are Urban NbS?
A few months ago, the United Nations Environment Program (UNEP) asked researchers at Penn IUR to track the financing of urban NbS, with preliminary findings reported here. To begin such an exercise requires an operational definition of urban NbS, one that aligns with the recently adopted UN agreed upon wording for NbS as: “Actions to protect, conserve, restore, sustainably use and manage natural or modified terrestrial, coastal, and marine ecosystems, which address social, economic, and environmental challenges effectively and adaptively, while simultaneously providing human well-being, ecosystem services and resilience and biodiversity benefits.” 3 Urban NbS focuses on the unique features of such city systems as open space and parks, water supply, sanitation and management, mobility, urban agriculture, forests, and coastal and riverine protection. It often deals simultaneously with multiple systems. Further, it supports projects that contribute to both adaptation and mitigation.
Why Urban NbS?
NbS funding attributed to and needed by urban areas, especially in the Global South, is a topic of extreme importance for public and private decision-makers as well as for the more than 4 billion people living in cities today and the 7 billion urbanites expected by 2050. Crafting NbS in cities presents a time-sensitive opportunity for intervention because 60 percent of the land anticipated to become urban by 2030 has yet to be developed.4 Further, urban NbS often incorporate mitigation and adaptation. Cities contribute 70 percent of global greenhouse gasses (GHGs), and are responsible for 80 percent of the world’s GDP, making them critical players in the fight to address global warming through both mitigation and adaptation.5 Further, some 90 percent of urban areas are flood prone because of their location on vulnerable coastlines or in riverine basins. With urban real estate around the world comprising a current asset value of more than $300 trillion, anticipated losses by 2050 of more than $700 billion annually from flooding will occur if cities are not made more resilient.6
Where is the Data for Urban NbS?
Globally, urban NbS investments are severely undercounted. Current NbS models rely on data drawn from rural areas, national coastlines and riverine valleys, forests, and agriculture based on land use as the unit of analysis. Cities that cover some 2 to 3 percent of global land are non-existent in these data. The databases relied on for the SFN cannot be disaggregated to reveal urban numbers. In addition, except for ecosystem services for urban watersheds, funders, donors, and city budget officials generally do not track urban NbS investment data as a separate category but nest them in larger projects encompassing one or more city systems. A major development bank spokesman recently reflected: “70 percent of our cities have nature in their projects, but our program has quite an integrated approach, we don’t have segregated activities … a project might have four components, one on planning, one on nature, one on transport and one on capacity-building so it is hard to say how much is for nature….” 7 Data on private sector funds on urban NbS is also extremely limited, reported for viable business projects, impact or ESG investments, or philanthropy.
How Can Analysts Improve the Measurement and Valuing of Urban NbS?
The absence of global, national, and local urban NbS databases and metrics is clear. Needed is a combination of basic counts integrated or supplemented with such other methods as cost-benefit analysis and natural capital accounting to assist funders, donors, and public and private decision-makers to develop policies and programs that meaningfully engage well-coordinated urban NbS in addressing global warming.
One method of assessing funding for urban NbS would be to calculate it using a system-based taxonomy (e.g., the amount of money spent on parks and green spaces, urban agriculture, streets, buildings, stormwater management, water supply, and flood control via riverine or coastal efforts). However, in the Global South where urban NbS are often nested in larger projects, this approach may be difficult. Using other methods may offer a clearer picture of the situation. For example, a second approach that categorizes interventions by the relative costs and benefits of investments could assess benefits according to well-being (e.g., health, air pollution, exercise) or the valuation of ecosystem services, such as provisioning (e.g., water, food, timber); regulating (e.g., flood protection and temperature control); cultural services (e.g., aesthetics, recreation), supporting (e.g., habitat renewal); resilience (e.g., flooding, extreme heat); and biodiversity (e.g., variety and abundance of plant and animal species).
Within these two approaches, efforts to inventory and evaluate urban NbS are emerging, especially in the biodiversity community. For example, Singapore developed the Singapore Index on Cities’ Biodiversity (SI) in 2008 and updated it in 2021 to assist public and private sector decision-makers in formulating, financing, and monitoring programs that not only promote biodiversity (e.g., native bird species) but also provide quantifiable sustainable development benefits (e.g., recreational services).
A third approach, natural capital accounting (NCA), is also emerging. According to the UN, natural capital accounting (NCA) is an accounting framework that allows to measure and report on flows and stocks of natural capital in a systematic manner. This concept assumes that the environment should be recognized as an asset that must be managed and preserved and that its services should be integrated into national accounts frameworks.8 NCA, recently adopted by the UN Statistical Commission, is an area of growing interest for cities, but is not yet widely employed. Researchers originally conceived NCA to incorporate the value of natural assets in national accounts. They have now crafted urban natural capital accounts for several cities, including London, Belfast, Birmingham, Greater Manchester, Toronto, Vancouver, Philadelphia, and New York.9 This approach attaches a monetary value to the ecosystem services offered by parks, mangrove growth, and permeable drainage systems.
How Do Urban NbS Fit with Program and Policy Approaches?
Recently, multilateral development banks, donors, and specialized NGOs have begun to promote urban NbS for resilience, but admit to reliance on this basic principle to inform their approaches: “green, when possible, gray when needed.”10 Other cities‘ approaches to adaptation reveal the deep intertwining of urban NbS within one or more systems. They may encompass the integration of tree planting and green storm water management in transit corridors, include green roofs in mostly gray infrastructure systems or bundle tree planting and green infrastructure with institutional capacity-development in integrated urban management and enhancing disaster response preparedness. For example, the World Bank through its Cities and Climate Change Project (3CP)11 provided financial support to the Municipality of Beira for a project implemented by Mozambique’s Administration for Water and Sanitation Infrastructure for gray infrastructure, such as upgrades and extensions of drainage systems, as well as green nature-based solutions (NBS), for restoring the Chiveve River’s capacity to mitigate floods in Beira. Cities in developing countries need to invest in projects that combine green and gray infrastructure, as the gap in both is much larger than in developed countries.
Conclusion: A New Paradigm for Urban NbS
To date, understanding the extent and value of NbS as a tool to address climate change matters relies on the aggregation of national data to global levels as indicated in UNEP’s pioneering study, State of Finance for Nature (SNF). The SNF calculations do not address NbS applications in urban areas, despite the demographic and economic might of cities today and tomorrow, especially in rapidly urbanizing places in the Global South where an enormous amount of infrastructure and building investment will occur in the coming decades. A possible reason for this gap lies in the SNF’s valuation methods that measures land – forest, agriculture – as the unit of analysis. Since cities occupy only 2 to 3 percent of global land, they do not show up in the SNF report. Regardless, no reliable database exists for urban NbS. Yet, the value of cities based on their contributions to their nation’s GDP and their real estate assets calls for increased attention to evaluating urban NbS as a tool to combat global warming.
The answers to the questions posed above provide directions for developing ways to pursue a deeper understanding urban NbS. These assessments of urban NbS reveal features that differentiate it from the SNF assessments. For example, urban NbS projects are either nested in larger projects that bundle many activities of which NbS is one or are components of a single system that combines green and non-green features. Water management projects that combine green and gray infrastructure are examples. In addition, the character of urban NbS projects lends promise to considering the use of natural capital accounting (NCA) for measuring urban NbS. Lastly, employing cost-benefit analyses to urban NbS would also help inform public and private decision-makers about the worth of urban NbS.
Footnotes:
1 https://www.unep.org/resources/state-finance-nature
2 https://unfccc.int/news/guterres-cities-are-where-the-climate-battle-wi…;
3 United Nations Environment Assembly, 2022.
4 The Global Commission on the Economy and Climate, 2018, p.68.
5 World Bank, April, 2020.
6 Pinko, N., et.a., June 2020, p.1; World Resources Institute, April 23, 2020; Paul Tostevin, 8 Things to know about global real estate value, Savills, July 2018 https://www.savills.com/impacts/market-trends/8-things-you-need-to-know…;
7 Interview with the author, July 2022.
8 System of Environmental Economic Accounting. Natural Accounting and Ecosystem Services. https://seea.un.org/content/natural-capital-and-ecosystem-services-faq#…;
9 World Bank, 2019.
10 World Bank, 2021, p.15.
11 World Bank, Building Resilience Through Green-Gray Infrastructure: Lessons from Beira. January 2022. https://www.worldbank.org/en/news/feature/2022/01/31/building-resilienc…;
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