Posted on: Mar 14th, 2023

State of Finance for Nature in Cities: Time to Assess

Nature-based solutions can help cities become more resilient, healthy and equitable. But for urban nature to reach its full potential, investments need to be substantially scaled up. In 2020, NbS received just 0.3% of overall spending on urban infrastructure, and investments are unequally distributed across and within cities. With this publication, UNEP and the Penn Institute for Urban Research outline gaps and opportunities for NbS financing in cities, best practices from around the world, and actions that local governments, financial stakeholders, private sector and knowledge partners can take to scale up investments for nature in cities.

Key Findings 

  • The State of Finance for Nature 2022 (SFN 2022) finds that a rapid doubling of finance flows to nature-based solution (NbS) can halt biodiversity loss, reduce emissions by 5 GtCO2 per year by 2025, and help restore nearly 1 billion hectares of degraded land. Policymakers are increasingly recognizing the role of cities in reaching these global environmental targets and are eager to expand funding at local level. Target 12i of the Global Biodiversity Framework (GBF) adopted in December 2022 acknowledges the importance of the local level in mainstreaming the conservation and sustainable use of biodiversity for inclusive and sustainable urbanisation. Experts agree that while exemplary programs exist to support Target 12, overall funding of urban NbS is insufficient.
  • The SFN 2022 report estimates the annual finance gap as USD 230 billion in 2025, increasing to USD 520 million by 2050. Urban NbS should form a significant component of this given that the Green Climate Fund asserts that “Seventy percent of known climate solutions are located within the boundaries of subnational authorities.” Data at city level is, however, difficult to track over time because NbS investments at the urban scale are nested in larger infrastructure projects and/or integrated into national or subnational budgets. Since these investments are not disaggregated in global databases, thus presenting the need to develop dedicated global urban NbS databases and metrics to fill the information gap.
  • National governments have become more willing to funnel sovereign funds and international loans to local governments for NbS because
    of their growing awareness of how NbS is a cost-effective measure to achieve global and national climate and biodiversity goals. To take full advantage of increases in urban NbS financing, cities need technical and financial support to (1) restructure local governance to coordinate cross-departmental NbS efforts; (2) upscale existing programs; (3) improve alignment of national and sub-national priorities for NbS investment; and (4) develop project criteria that incorporate NbS from inception to implementation. With additional capacity support, financial tools, and public advocacy, local governments can identify investment-ready projects, restructure administrative structures, reform regulations, and re-align budgets to better incorporate NbS in city planning and management.