Plotting a new course: Towards external financing for nature-based in Cities

By Ingrid Coetzee & Kobie Brand

The challenge of rapid urbanization:

According to a senior manager of Biodiversity and Nature-based Solutions, the United Nations World Cities Report 2016, predicts that by 2030, 67% of the world’s population will be now living in an urban area. It further forecasts that the urban developing countries will be doubled its population and the area covered by cities could be triple. It also report that megacities, the highest growth of economy, will take place in the developing regions. Addition to that, the fastest growing urban centers are the medium and small cities (with less than one million inhabitants).

In an instant modernization, land, water and other natural resources that we all depend on, are on under pressure to encounter the increased demand for every organization. In addition, climate change impacts will increase through the resource consumption patterns and greenhouse gas emission, which causes by the rapid urbanization.

Financial resources of the cities will be at risk by solving these increasing demands. At the local level, budgets and policies for addressing development and infrastructure challenges, as well as climate adaption and disaster reduction strategies, are determined by a complex mix of growth and development priorities, fiscal systems, legal mandates, institutional factors and political will.

Why do external investments remain low at city level?

Most of the city’s climate resilient projects, are lacking and even out of reach. The reason behind it, is due to the poor credit ratings, in certain parts of the world, the minimum government fund is often delayed by lack of external funding. Other reason is the absence of “bankable” projects. Desire for venturing outside the normal revenue streams of cities and fiscal allocations, remain really low. The support coming from government officials are not encouraged to create attractive, innovative, profitable, and sustainable business proposals, it can draw new public and private investors to the table. Day-to-day basic service delivery and maintenance is the goal, the innovative projects will transform and disrupt our cityscapes and systems.

Making room for nature:

Economy has a very important relationship when making an environmental sustainability, and nature-based answers in particular, as essential lecture to the numerous challenges related to rapid urbanization. Asia and Africa which is classified as a fast-growing urban cities, need to think a way that can be place in a planning and prioritizing budgets. Administrations must focus on planning and building with nature, rather than against it. For us to move with the nature and adopting nature-based solutions, the values that prior to planning, budgeting and fiscal policy at locals, must study or, in many examples, must turned around.

Decoupling natural resource, environmental impacts from economic growth, recognizing the interdependence of people, nature and the economy, these are the principles that must embrace by the city governments. These principles are advocated in the Quintana Roo Communique on Mainstreaming Local and Subnational Biodiversity Action, adopted at the 5th Global Biodiversity Summit of Cities and Subnational Governments held in parallel with the United Nations Biodiversity Conference in Cancun, Mexico, in December 2016. Nature fiscal policy opens an opportunity for advanced monetary improvements that can present new income streams for nature-based solutions. For instance, the solution for the worsen global warming, which is urban heat island effect and poor air quality, Stuttgart present a tax incentives and tailored financial programs to endorse the environment quality expansion. And Seattle has made a self-governing Seattle Parks District with taxing authority to charge taxes to decrease the strain of future city funds for parks preservation and establishment.

The City government must prepare a full long-term cost of “free” ecosystem facilities that are healthy and well-maintained with a charge of conventional engineering solutions. In other words, managements must propose a model modification from the dependency on conventional rapid-solution options to green and blue organization, “tinkering” and biophilic design options, as well as other nature-based movement. Cities must think another way about the solution for investment. They should analyze the direct and indirect donations of nature-based solutions, such as the economic value of ecosystem services, and mainstream this into policy and decision-making on infrastructure investment and development. In instance, air pollution is the Beijing’s greatest environmental problem. The air purification and temperature regulating services of forest ecosystems surrounding Beijing have been valued at around 1.03 billion euro annually (based primarily on avoided air pollution charges and electricity savings). Faced with the challenge of deteriorating air quality, the local Beijing government initiated a program in 2012 to invest around US$4.7 billion in planting 67 000 hectares of trees around Beijing over the next few years.

Cities can also expand the available funding envelope by sharing the financial burden through collaboration and adopting nature-based solutions. One such example is uMngeni Ecological Infrastructure Partnership, consisting of the eThekwini Metropolitan Municipality (Durban), neighbouring local authorities, including the city of Pietermartizburg and uMgungundhlovu District Municipality, as well as South African provincial- and national authorities, civil society organisations, academia, and major industry and business sector associations. The Partnership was born out of a realization that engineering solutions were too costly and not able to solve the problem of providing clean potable water and furthermore, that the solution required collaboration between multiple actors to secure green infrastructure investments and improve water security in the greater uMgeni catchment.

While the financing of nature-based solutions by cities remains a challenge, the multiple challenges associated with rapid urbanization have led to a growing realization that innovative finance options, which support nature-based solutions, are imperative to improving sustainability and resilience. Changing the course of local fiscal policies and budgets in support of nature-based solutions requires courage and foresight. These are qualities that characterize many cities and will ensure a sustainable future for urban communities.

This think piece is the third in a series entitled “Investing in nature for resilient cities” created in partnership between ICLEI – Local Governments for Sustainability’s Cities Biodiversity Center and The Nature Conservancy. It highlights some of the challenges faced by cities in securing external funds to address rapid urbanization challenges, and for nature-based solutions in particular, and points to the need for “bringing nature into local fiscal policy”.