Investing in nature-based solutions State-of-play and way forward for public and private financial measures in Europe

1 Foreword 
Healthy ecosystems play a key role in regulating our climate. Yet, while nature is our greatest ally in the 
fight against climate change, it is being destroyed at an unprecedented rate. The nature and the climate 
crises are inextricably linked. We cannot tackle one without addressing the other. 
We know that nature’s significant potential to alleviate global challenges is undervalued, untapped and 
under-resourced. Nature-based solutions, whether traditional or innovative, provide us with almost a 
quarter of the most cost-effective climate actions and help biodiversity to thrive, yet they are still on the 
margins of global finance. The challenge of scaling up nature-based solutions is clear and cannot be 
accomplished without the active support of the private sector in partnership with the public sector.
This report, by the European Investment Bank’s Innovation and Digital Finance Advisory Division, is the 
culmination of a key strategic partnership with the European Commission, aimed at fostering nature-

based solutions to climate change and reversing biodiversity loss. It assesses the current state of 
deployment of nature-based solutions in Europe — in large part supported by the EU budget — and draws 
lessons from our joint implementation of the pioneering Natural Capital Financing Facility pilot 
programme, which ran from 2015 to 2022. In particular, the report makes recommendations to increase 
support for nature-based solutions at scale across our continent’s varied landscape, from forests and 
cities, to coastlines and cultivated fields. 
The path ahead of us, to protect and restore nature and improve our resilience to climate change, is 
complex but promising. It is also full of opportunities. As the European Union's climate bank, we are taking 
up the challenge, in close cooperation with the European Commission and in support of the European 
Green Deal. We invite you to be part of the solution, with nature.
 Ambroise Fayolle, Vice-President, European Investment Bank

2 Executive Summary
The European Commission defines nature-based solutions as “Solutions that are inspired and supported 
by nature, which are cost-effective, simultaneously provide environmental, social and economic benefits 
and help build resilience. Such solutions bring more, and more diverse, nature and natural features and 
processes into cities, landscapes and seascapes, through locally adapted, resource-efficient and systemic 
interventions.” Nature-based solutions must therefore benefit biodiversity and support the delivery of a 
range of ecosystem services.
In 2022 the United Nations General Assembly countries adopted a resolution on nature-based solutions
 
which includes the framing of the concept and a multilaterally agreed definition: Nature-based solutions 
are actions to protect, conserve, restore, sustainably use and manage natural or modified terrestrial, 
freshwater, 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.
Nature-based solutions are both a means of addressing socio-economic challenges through biodiversity 
conservation and restoration and building resilience to the consequences of climate change through 
mitigation and adaptation using natural processes. The defining premise of wishing to increase the uptake 
of nature-based solutions is that encouraging and adopting nature in solutions to society’s challenges is 
expected to be superior to the use of alternatives, due to the multiple benefits that they provide, and/or 
their lower cost over the long term.
Nature-based solutions is nevertheless a broad term with a number of different definitions and 
interpretations, some of which, for instance, require a net positive outcome for nature. For the purpose 
of mapping their use throughout Europe in this report, nature-based solutions are to be understood as 
on-the-ground interventions that benefit different ecosystems and landscapes under pressure and that 
generate a series of environmental (co)-benefits.
Objective of the Report
Humankind’s dependence on functioning natural processes cannot be overstated, although it is largely 
taken for granted. In economic terms, more than half of the world’s total gross domestic product (GDP) is 
estimated to be moderately or highly dependent on nature and biodiversity. Agriculture, food and 
beverages, and construction are the largest economic sectors dependent on nature, generating $8 trillion 
in gross value added per year. The World Economic Forum estimates that investment in nature-based 
solutions needs to at least triple in real terms by 2030 and increase fourfold by 2050 if the world is to 
meet its climate change, biodiversity and land degradation targets. This acceleration would equate to 
cumulative total investment of up to $8.1 trillion, and a future annual investment rate of $536 billion.
The main challenge of financing the increased uptake of nature-based solutions is that the majority of 
nature’s benefits currently have no financial market value, despite the fact that nature underpins our 
collective survival and prosperity. In the policy discourse on nature-based solutions, there is little 
discussion about the key structural challenge stemming from the “public good” dimension of such 
investments, which fundamentally reduces the incentive for the private sector to invest. This both 
explains the status quo and provides a road map for expanding the use of nature-based solutions from its 
current low base, where it is largely fostered and paid for by the public sector, by attracting greater private 
sector involvement and allowing for a greater range of funding and financing mechanisms. If the necessary 
conditions can be established, nature-based solutions could represent an opportunity for private sector 
investment in the pursuit of sources of revenue that would bring the benefits of increased resilience and 
lower costs.
The objective of this report is to take stock of the current use of nature-based solutions in the European 
Union by identifying the operational and financing challenges faced by projects in different landscapes 
and ecosystems (such as in urban, forestry, agricultural, wetland, river/lake and marine/coastal 

Investing in nature-based solutions State-of-play and way forward for public and private financial measures in Europe