Challenge 3: Bankable business case
Benefits of BwN solutions are spread out over multiple disciplines (e.g. flood risk reduction, health, environment), but the funding often still comes from one discipline. Moving out of this ‘financial silo’ is crucial to make BwN bankable. We have managed and investigated this challenge through several methods, which you will read more about here.
Bankable business case
The effective adoption of BwN calls for business case tools that can appraise the full range of co-benefits (such as ecosystem services and flexibility) while taking into account the negative environmental damage frequently observed in grey infrastructures. National and local governments, financiers, engineers and other stakeholders should therefore adopt an integrated and more multi-disciplinary approach to evaluating infrastructure. The multiple functions and benefits could then be included in a quantitative appraisal framework that can value co-benefits such as flexibility and ecosystem services across the whole flood protection system in the long-term. Traditional financing mechanisms should be optimised to make use of these wide benefits, as the beneficiaries can often be a source of funding. So besides funds suitable for financing BwN (e.g. the Green Climate Fund, the European Fund for Strategic Investments, the Global Environment Facility), funding can be sought from direct and indirect beneficiaries. Creating a compelling business case means taking these multiple funders and beneficiaries into account.
Showing the added value of BwN
Throughout the past years, many pilots and projects have demonstrated the potential of Building with Nature (BwN) and the evidence base is growing. However, BwN solutions are not common in all project development, even though they are intuitively known to be lower in cost and/or deliver additional benefits for the environment, economy and people. Information on their performance in dynamic natural systems is not easily accessible, making it hard to justify BwN solutions alongside or instead of more engineered/hard solutions and preventing them from being included in strategies, models and policy.
In order to demonstrate the added value of BwN solutions to proponents and developers, further insights are needed. Ecoshape merged her own experience, gained during pre-competitive knowledge development programs, with that of other BwN partners. This resulted in a guidance document, 10 high-over and 3 indepth cases and information about developing BwN business cases.
Justification for BwN solutions
The goal was to assist the project in making the justification for BwN solutions, providing focus in and input for its business case.
The assessment of lessons learned of various applications showed that, in most cases, not a business case, but the preference for innovation and knowledge development was an important driver in opting for a BwN solution. It also became clear that the success of a BwN business case lies in a combination of physical and societal factors and is not merely a matter of cost effectiveness and/or physical environment. This makes the development of succesful business cases more complex and increases the need for guidance in this process.
Business Case Guidance Document
By combining the results of the initial assessment and literature research, the BwN Business Case Guidance Document was made. Five steps within BwN business case development were identified (Figure 1). This is an iterative process, in which successive stages build upon new insights. The five steps therefore form a circle and are mutually dependent (Figure 2).
The other works were aimed at providing feedback, lessons learned and additional input for the Business Case Guidance Document at the various project development stages.
Figure 1 Overview of steps in business case development
Figure 2 Iterative process in business case development
All partners were guided through the processes (Figure 2) by the EcoShape- team during an extensive CGM. The partners then applied it to their own labatories/ projects, resulting in business cases. Three projects were identified for further elaboration together with Ecoshape, resulting in three indepth business cases: Twin Dike, Eddlestone and North Jutland- Hörring. Finally, an opportunity mapping workshop was held about business case potential for new BwN applications.
We observed a difference in approach, readiness level and interpretation of the BwN business case over the NSR region and that the governance setting for flood-related issues is dominant in determining the need for a business case, details and function of the business case in the development (and financing) process. We also observed that there are common barriers for application of BwN solutions: insufficient system understanding, dealing with natural dynamics and inherent uncertainties, appreciation for ‘soft’ added values of BwN solutions, different roles of stakeholders and legislative limitations. The programme collected methods aimed at overcoming these barriers and enabling BwN solutions. Even though these methods will never be uniformly applicable to every BwN solution within the NSR-region, this collection can be a valuable connector between policy and practice.