1. Harnessing nature’s strengths for addressing water-related climate risks: insights from country experiences

Global temperature changes are exacerbating water-related risks with increases in frequency and intensity of heavy precipitation and of drought periods in some regions. A growing body of evidence shows that climate change will intensify the risks of water-related hazards. By creating a warmer lower atmosphere, climate change is altering the water cycle through an increase in evapotranspiration and precipitation and changes to atmospheric and ocean circulation, which can lead to wet regions becoming wetter while dry regions become drier, although there may be regional variations (Masson-Delmotte et al., 2018[1]). Compounding these risks, a deteriorating natural environment worldwide is increasing vulnerability to water-related hazards. Interlinked pressures, such as the loss and degradation of natural areas like wetlands, soil sealing and the densification of built-up areas, are undermining ecosystem functionality (Kabisch et al., 2016[2]). These pressures challenge the provisioning of ecosystem services, such as water retention and water filtration, subsequently affecting human well-being (van der Geest et al., 2019[3]).

While “grey” engineering solutions such as dykes or levees have been the most widely used measures to adapt to and reduce climate risks in the past, nature has increasingly come to the fore as an effective alternative or complementary solution. Riverbed or wetland restoration, for example, are increasingly being considered to reduce flood risk. The multiple co-benefits of nature-based solutions (NbS) have contributed to their increasing attractiveness. Protecting coastal marshes can not only contribute to flood abatement, but it can also enhance carbon and nutrient sequestration and water quality and create a habitat for wildlife and flora (Narayan et al., 2016[4]). Similarily, restoring forests in upper catchments can help to protect communities downstream from flooding, while simultaneously increasing carbon sequestration and protecting biodiversity (Filoso et al., 2017[5]). Finally, NbS have been recognised for their own flexibility and adaptability to changing environmental conditions, including climate change (Chausson et al., 2020[6]).

More recently, evidence on NbS’ economic dividends has raised their attractiveness in comparison to grey solutions further. For example, in the north-eastern United States, protected coastal wetlands are estimated to have helped prevent over USD 600 million of direct property damages during Hurricane Sandy (The Nature Conservancy Business Council, 2019[7]). Globally, it is estimated that without mangroves, 15 million more people would suffer from flooding annually (Menéndez et al., 2020[8]). Investments in NbS can stimulate job creation. For example, the American Recovery and Reinvestment Act of 2009 financed coastal habitat restoration projects that yielded an estimated 17 jobs per USD million invested (Edwards, Sutton-Grier and Coyle, 2013[9]). In the European Union (EU), it was estimated that restoring 15% of degraded ecosystems, consistent with Target 2 of the EU 2020 Biodiversity Strategy, would result in between 20 000 and 70 000 full-time jobs (OECD, 2019[10]).

A number of international efforts are promoting the use of NbS to help address water-related climate risks. These include the Paris Agreement of the United Nations Framework Convention on Climate Change (UNFCCC), the United Nations Convention for Biological Diversity and the Sendai Framework for Disaster Risk Reduction. The Paris Agreement calls on all Parties to acknowledge “the importance of ensuring the integrity of all ecosystems, including oceans, and the protection of biodiversity, recognised by some cultures as Mother Earth”. Parties to the UNFCCC underlined “the essential contribution of nature to addressing climate change and its impacts and the need to address biodiversity loss and climate change in an integrated manner” (UNFCCC, 2020[15]). The Sendai Framework for Disaster Risk Reduction (2015-30) recognises the need to shift from primarily post-disaster planning and recovery to the proactive reduction of risks, and specifies that strategies should consider a range of ecosystem-based solutions. The United Nations Convention for Biological Diversity, at its 14th Conference of the Parties, formally decided to integrate climate change issues into national biodiversity strategies and vice versa, bringing important interdependencies to light (CBD, 2018[16]). NbS efforts for managing climate risks also contribute to meeting other international objectives, such as the Sustainable Development Goals (SDGs), in particular SDG 13 (climate action), SDG 15 (life on land), SDG 6 (clean water) and SDG 14 (life below water). They also contribute to initiatives such the Bonn Challenge on forest and landscape restoration, the New York Declaration on Forests, and to the agenda on land degradation neutrality of the United Nations Convention to Combat Desertification. Similarly, NbS were a priority of the discussions for the G20 Climate Stewardship Working Group under the G20 Saudi Presidency in 2020 and the United Kingdom is making them one of the priorities of the COP26 Presidency.

International efforts are increasingly mirrored in countries’ key national policies. For example, two-thirds of the Paris Agreement signatories refer to NbS as a way to achieve their climate change mitigation or adaptation goals within their nationally determined contributions (NDCs) or their adaptation communications (Seddon et al., 2019[17]). Similarly, 24 out of the 35 OECD countries that have national adaptation plans (NAPs) or strategies explicitly promote the use of NbS for climate adaptation. For example. Australia’s NAP highlights the suitability of NbS in the areas of coastal, river as well as urban flooding, while Hungary additionally mentions their effectiveness in mitigating drought risks. NbS are similarly promoted in sectoral policy documents (OECD, 2020[13]) (see Section 1.2). An OECD survey of 27 countries confirms that 23 include NbS in their national water management strategies, the majority of which to promote its use in flood risk management (OECD, 2021[18]).1

The initial desk review carried out by the OECD suggested that the growing international and national policy ambition to implement NbS has not translated into practice (OECD, 2020[13]). The majority of NbS initiatives have been implemented as one-off projects and in an ad hoc way, often on a pilot basis and on a small-scale. This was confirmed by an OECD survey among water management officials, where only 2 out of the 27 responding countries estimated their implementation of NbS to be in line with stated policy ambitions (OECD, 2021[18]).

The initial OECD review further found that the scaling up of NbS may be constrained by an institutional, regulatory and financial environment that constrains their mainstreaming into the set of solutions used across different sectors. Challenges, such as the lack of awareness and understanding about their performance in the longer run and gaps in technical capacity, hinder the design and implementation of NbS. It also encourages policy makers to turn to options they are used to relying on, especially when they have to take decisions within a short time span. The difficulty of quantifying benefits and the lack of robust performance data make it hard for NbS to be considered on an even playing field with grey solutions. This is further reinforced by a perception that the benefits of NbS are less certain than those of grey solutions (Han and Kuhlicke, 2019[19]; OECD, 2020[13]).

This report uses case studies of Mexico and the United Kingdom to provide insights on how countries are taking action to scale up the use of NbS. The remainder of this chapter summarises the key findings of the case studies to identify common challenges and good practices for scaling up NbS. The case studies provide illustrative examples that may inspire actors to increase leadership, investment and collective action for scaling up the use of NbS.

Future country-focused work by the OECD will enrich these initial findings by incorporating a broader range of experiences, including the use of NbS beyond water-related risks. This includes the use of NbS to address other climate risks (e.g. heatwaves and wildfires) as well as climate change mitigation and safeguarding biodiversity.

The objectives of the case studies are to understand more concretely and in specific country contexts:

  1. 1. the state of play of using NbS

  2. 2. the institutional framework

  3. 3. the policy context and regulatory framework conditions

  4. 4. awareness and technical capacity

  5. 5. the funding environment for NbS.

The case studies followed the same process, had the same scope and were guided by the same structure of research questions, as presented below.

A questionnaire (Annex 1.A.) was developed and shared with the main counterparts in each country (namely the Ministry of Environment in Mexico and the Department for Environment, Food & Rural Affairs in the United Kingdom). The country counterparts in turn shared the questionnaires with all of the main governmental stakeholders that are in charge of or contribute to the use of NbS. Questions covered a selection of topics related to each respective country’s existing practices, including governance, policies, regulations, technical capacity and finance. Following an analysis of the written responses, consultations of both public and private stakeholders were held in a virtual format in July 2020 for Mexico and in September 2020 for the United Kingdom. These consultations aimed at obtaining complementary information and insights into the more subjective views of policy makers and practitioners to better understand the current practices. A list of the stakeholders who were consulted in each country as well as the questionnaires are available in Annexes 1.A., 2.A. and 3.A.

NbS can be applied to many policy areas to address societal challenges such as climate change mitigation, biodiversity loss, air and water pollution, or climate change adaptation. In this report, the focus is on the application of NbS for addressing water-related climate risks, which includes measures in the following three areas:

  1. 1. River flooding and urban flooding: Flood plains, inland wetlands and upland forests can contribute to regulating the flow of water through percolation and topography. Certain natural habitats can also prevent landslides. Similarly, in urban areas, green spaces can reduce flood risks.

  2. 2. Coastal hazards and sea-level rise: Natural coastal habitats, such as coral reefs, saltmarshes, sea grass or mangroves, can provide effective defences against hazards such as storms and tsunamis as well as from chronic stressors such as sea-level rise and coastal erosion by significantly reducing wave heights and stabilising shorelines.

  3. 3. Water scarcity and droughts: Natural habitats can contribute to groundwater recharge and to retaining water in soils, while helping to abate soil erosion and drought with moisture absorption. For instance, trees’ roots enable them to store and tap into groundwater resources. The water transpires during dry periods, which can be essential for helping ecosystems, farmlands and human communities to cope with drought (FAO, 2019[20]).

The focus on water-related climate risks should render the analysis more comparable and the conclusions and recommendations more relevant to a specific policy community. As mentioned above, in future work, the scope should be expanded to broaden the understanding of the use of NbS in other domains and to strengthen policy support more broadly.

The case study work was guided by and builds on the policy evaluation framework developed in the initial OECD policy paper (OECD, 2020[13]). The policy evaluation framework built on an initial assessment of the extent and modality of integrating NbS into existing planning and investment decision-making processes. It supports the identification of bottlenecks and adjustments to existing processes so as to enhance NbS uptake more widely. Applying this framework in the case studies allows going beyond an understanding of barriers to NbS to providing guidance on how these barriers could be overcome to ensure coherent articulation of what NbS can achieve and how they can be deployed at scale.

The policy evaluation framework consists of five dimensions that characterise the enabling environment for NbS for adapting to water-related climate risks in order to overcome the key challenges and that facilitate their uptake: 1) governance arrangements; 2) policies; 3) regulatory requirements; 4) technical capacity; and 5) funding and finance mechanisms (Figure 1.1). These components are critical for facilitating the uptake of NbS by both national and subnational public agencies and private actors.

The remainder of this chapter provides a discussion of the findings from the country case studies, for each dimension of the policy evaluation framework. Chapters 2 and 3 present the detailed case study reports of Mexico and the United Kingdom respectively.

Across OECD countries, NbS are increasingly promoted in key national policies and strategies, notably climate change and biodiversity policies, confirming the initial findings of the OECD report (OECD, 2020[13]). For example, Mexico’s Sector Program for Environment and Natural Resources (Programa Sectorial de Medio Ambiente y Recursos Naturales, Promarnat) (2020-24) and its Climate Change Strategy for Protected Areas (Estrategia de Cambio Climático desde las Áreas Naturales Protegidas, ECCAP) (2014-20) heavily emphasise the potential of NbS for adaptation and include concrete actions regarding their implementation (Government of Mexico, 2020[21]; 2017[22]). Mexico and the United Kingdom provide support for NbS in their national biodiversity strategies and action plans. The United Kingdom’s strategy promotes the conservation of water ecosystems and encourages natural flood management approaches (Defra, 2011[23]).

In the realm of national policies for climate change, NbS can be found as recommended measures in both adaptation and mitigation plans and strategies. Among the 35 OECD member countries with NAPs, the majority mention the importance of NbS, including, but not exclusively, to address water-related climate risks. Few NAPs include concrete implementation measures, such as the creation of policies or monitoring systems, and no OECD country currently has a NAP that includes quantitative targets related to NbS (OECD, 2020[13]). Mexico and the United Kingdom specifically refer to the importance of NbS in their NAP for managing water-related climate risks, notably for coastal, river and urban flooding. Mexico underlines the potential of ecosystems, notably forests, to moderate the impacts of extreme weather events and the United Kingdom includes ecosystem restoration for adaptation as one of its strategic goals (Government of Mexico, 2016[24]; JNCC and Defra, 2012[25]). Other OECD countries also discuss the role of NbS in their NAPs. Australia underlines the role of NbS to address coastal, riverine and urban flooding and Hungary discusses how well-suited these approaches are for mitigating risk to urban and riverine flooding, as well as drought (OECD, 2020[13]). The EU Strategy on Adaptation to Climate Change also includes NbS as one of its three cross-cutting priorities, with the goal of increasing resilience and contributing to Green Deal objectives. It specifically references NbS measures for reducing flooding, such as wetland and peatland restoration, as well as the potential of NbS in the agriculture sector for adapting to drought (European Commission, 2021[26]).

Similarly, many countries worldwide have included NbS in their NDCs. Although the degree to which NbS are discussed in NDCs varies, the majority of them acknowledge the value of nature and raise the potential of NbS to address both mitigation and adaptation challenges (Seddon et al., 2019[17]). More recently, among those countries that have issued their second NDC, Chile, Colombia and Mexico specifically mention the importance of NbS for adaptation.2 Chile’s updated NDC includes commitments regarding coastal wetlands, peatlands and forests with regard to afforestation, restoration, sustainable management and recovery (Government of Chile, 2020[27]). Mexico emphasises the use of NbS for managing water-related risks, with actions listed including the protection, conservation and restoration of watersheds (Government of Mexico, 2020[28]).

The COVID-19 recovery packages are an opportunity to support NbS as part of a range of measures that will seek to enhance environmental quality. The United Kingdom plans to invest around EUR 30 million through the Green Recovery Challenge Fund that is designed to help environmental groups and public authorities create or safeguard up to 5 000 jobs related to nature conservation and restoration, with a focus on tree planting and the rehabilitation of peatlands. Other countries have employed similar measures, as highlighted in Box 1.2.

Although a comprehensive review has yet to be carried out, there are indications that NbS are increasingly embraced in local level policies. Nearly half of the 210 cities worldwide that had submitted their adaptation plans to the Carbon Disclosure Project in 2016 included measures related to NbS, such as the creation of green spaces for climate change adaptation (UNEP, 2021[29]). NbS investment programmes have accelerated support for NbS at the municipal level too. For example, Manchester’s (United Kingdom) Natural Capital Investment Plan specifically encourages investment in NbS projects such as wetland creation and peatland restoration for the purpose of adaptation, supported by the EU Urban Innovation Actions initiative (eftec, Environmental Finance and Countryscape, 2019[30]). More work is needed to decipher how national policy frameworks can inspire and incentivise (and not stifle) subnational initiatives to deploy NbS.

While the integration of NbS into overarching and cross-cutting national and subnational policies is essential, it is important that sectoral policies integrate these approaches as well help them gain traction and drive their implementation. With regard to water-related risks, NbS are recognised in many flood and drought management policies, as well as wider water management policies. Indeed, a majority of respondents to a recent OECD survey on water management confirmed that their national water management strategies included NbS (OECD, 2021[18]). In the United Kingdom, for example, natural flood management has been adopted by almost all high-level policies relating to flood risk management, such as the Department for Environment, Food & Rural Affairs’ (Defra) Policy Statement on Flood and Coastal Erosion Risk Management, the National Flood and Coastal Erosion Risk Management Strategy for England (2020), and the National Flood and Coastal Erosion Risk Management Strategy for Wales (2020). Mexico’s National Water Programme (Programa Nacional Hídrico, PNH) (2020-24) emphasises the potential of NbS for enhancing water security in the context of both floods and droughts (Government of Mexico, 2020[37]). Similarly, in its river basin management plan, Genova (Italy) recommends to opt for “natural techniques […] whenever possible” to prevent flood and landslides and ensure that soil permeability will not be negatively affected by possible interventions (Hawxwell et al., 2019[38]).

Other important sectors have also started to embrace NbS, for example:

  • Agriculture: Updates to the EU Common Agriculture Policy reference measures that fall under the umbrella of NbS, such as the required creation of Ecological Focus Areas by farmers (Underwoord and Tucker, 2016[39]). In addition, the United Kingdom’s Agriculture Act 2020 contains specific measures related to the protection and restoration of habitats for the purpose of improving air and water quality, as well as increasing biodiversity net gain (Coe and Finlay, 2020[40]). Mexico’s Sectoral Program for Agriculture and Rural Development 2019-24 aims to promote sustainable production, the restoration of ecosystems and adaptation to climate change (OECD, 2020[41]).

  • Infrastructure: The UK National Planning Policy Framework goes further by stipulating that new housing and non-residential “developments should only be allowed in areas at risk of flooding where it incorporates sustainable drainage systems, unless there is clear evidence that this would be inappropriate” (MHCLG, 2019[42]). Peru has made advances in mainstreaming NbS into national investment practices, with the public investment programme Invierte.pe explicitly supporting natural infrastructure as part of public infrastructure projects. This opened up financial resources to support the implementation of NbS with USD 300 million of public spending allocated to 209 NbS-related projects in Peru between 2015 and 2018 (OECD, 2020[43]).

Trade-offs are important to consider across policy objectives. For example, NbS for flood risk management, such as the expansion of flood retention areas (used for either temporary or permanent water retention from floods) can have important implications for the use of land for agriculture. They can also have implications for other risks (e.g. increase disease vectors) or for the necessity to convert built land into flood retention areas. Similarly, depending on the context, reforestation and afforestation efforts can affect both nearby and distant water supplies, thereby affecting biodiversity. If efforts focus on monoculture plantations, they risk being more susceptible to wildfires (FAO, 2019[20]). Further work is needed to understand trade-offs and synergies between different policy objectives in order to inform and develop appropriate safeguards to avoid unintended consequences of NbS. These could include, for example, unintentionally generating inequality between local communities or among vulnerable groups and landholders or the overlooking of broader environmental (OECD, 2021[44]).

NbS planning and implementation involve a wide range of actors from different agencies and non-governmental entities, across different jurisdictions at national and subnational levels. With regard to water-related risks, actors at the central government level are often responsible for driving NbS-related policies and projects. These include flood and drought management agencies, alongside other agencies within environmental ministries, such as those responsible for promoting biodiversity or forest management units.

In both Mexico and the United Kingdom, national agencies in charge of flood and drought management play a key role in shaping policies, providing financial support for NbS projects, and bringing a national strategic role on flood and drought risks to the local issues. The Ministry of Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales, SEMARNAT) in Mexico and Defra in the United Kingdom actively promote NbS for water-related climate risks through their policies on water resources, including flooding, coastal erosion and drought. These actors, who have taken increased ownership of NbS, are mainstreaming them into their decision-making processes and finance mechanisms (e.g. by making NbS eligible for funding through water and environmental management programmes).

At the subnational level, regional and municipal authorities are important drivers of NbS planning and implementation. They can incentivise NbS through regulations: in Mexico, regional and municipal authorities have an instrumental role in defining land use and regulations, including environmental permitting. They also drive implementation, like in the United Kingdom, where subnational authorities, such as local authorities or internal drainage boards, are tasked to carry out projects. Although no NbS-specific vertical co-ordination mechanisms exist across levels of administration in Mexico or the United Kingdom, subnational authorities co-ordinate through funding mechanisms. For instance, Defra provides national co-funding to flood and coastal erosion management projects, complemented by local sources of funding (e.g. through grant-in-aid, discussed in more detail below).

Other non-governmental stakeholders have important roles in the implementation of NbS. These include infrastructure operators, such as water utilities that might incorporate NbS into their operations. Private businesses may increasingly consider NbS as part of their operations as well. Non-governmental organisations may integrate NbS as part of their activities and promote them as part of their environmental objectives. Private landowners (such as farmers) and indigenous peoples with land rights can also play an active role if their land is to be dedicated to NbS. In practice, it has been shown that while it may take time to convince farmers, for example, of the value of NbS in the beginning, they have become strong supporters when once they have experienced the benefits yielded by NbS, such as with regard to soil quality or the water storage capacity of their land. The UK government worked with the Royal Society for the Protection of Birds and other partners, such as the company Crossrail, on the Wallasea Island (United Kingdom) to control water levels and create a variety of depths of water to suit different species by managing saline lagoons (RSPB, n.d.[45]).

Co-ordination among governmental agencies is important to foster coherence and synergies across policies and initiatives relevant for NbS and to address trade-offs between them, where necessary. Co-ordination is further needed, as NbS planning and implementation build on regulations and policies that go beyond a single agency’s responsibility or jurisdiction.

When central government agencies operate in silos, with their own visions and objectives, legal frameworks, planning documents, resources and procedures, it is more difficult to incentivise collaboration or facilitate the implementation of NbS. To overcome this, some good practices are emerging. Agencies, such as the UK Environment Agency, which steers flood risk management across England, play an important co-ordination role both with other government agencies as well as with non-state actors. They have played a key role in the dialogue with actors to raise awareness about NbS and to accompany them and address concerns in the process of implementing NbS, such as shown in the above example of working with farmers. As part of an EU Horizon 2020 project, a polycentric governance approach was established to restore a section of the Isar River (Munich, Germany) to increase flood protection, recreational potential and improve ecological quality. This collaboration was facilitated by a cross-sectoral work group, which cut across the silos of water and urban planning, involving multiple institutional scales and sectors (European Commission, 2020[46]). As part of its efforts to develop a long-term vision on cross-cutting issues for the Chilean Long Term Strategy, Chile is undertaking a participatory process focusing on the role of ecosystem functions and NbS.

Co-ordination can be operationalised through data and knowledge sharing between agencies. However, countries do not necessarily have specific mechanisms, such as an exchange platform, in place to facilitate this. Sometimes public bodies, such as in Mexico, have their own platforms for hosting information, making it difficult for practitioners to access the information necessary for a project. Co-ordination can occur through cross-agency financing of NbS (see below).

The co-ordination and engagement between governmental and non-governmental actors can occur at different stages of the process, from planning to financing and implementing NbS interventions. A number of examples of collaboration exist. For instance, the UK Environment Agency, in collaboration with the Royal Society for the Protection of Birds, engineers and the local community, created a coastal wetland at Medmerry (South England) to address coastal climate hazards and reduce flood risk for over 300 homes. Local communities were engaged in the design process to ensure that the wetland enhanced recreational opportunities (RSPB, 2015[47]). A study of close to 1 000 NbS initiatives in European cities shows that a majority of projects are jointly led by public and non-governmental actors (European Commission, 2020[46]). Collaboration between those actors enables them to learn from each other, exchange information about new designs, and account for various needs and perceptions from different perspectives. In the city of Antwerp (Belgium), a co-creation process engaged citizens, urban planners and designers to help set up a green corridor to connect different NbS for water retention and foster resilience, building on a diversity of approaches and social innovation (Frantzeskaki, 2019[48]).

The government is also encouraging private actors to contribute to funding projects, providing financial incentives that can mobilise various stakeholders in NbS implementation. Financial instruments such as the land stewardship scheme3 in the United Kingdom or payment for ecosystem services schemes in Mexico help to engage with private actors on NbS projects. As part of the Payment for Hydrological Services Programme (Programa de Pago por Servicios Ambientales Hidrológicos, PSAH), forest communities in Mexico can be paid for conserving land.

Long-term ownership of and accountability for NbS is important to ensure that they maintain their benefits over time. While it is increasingly clear who initiates and implements them, long-term responsibilities can be blurred. This has been raised as a challenge in the United Kingdom, especially when it comes to identifying who is liable for the long-term maintenance and sustained performance of NbS over time. Clear distribution of roles and responsibilities, backed by resources to support longer term efforts, is therefore important.

Ownership can also pose issues, where specific NbS interventions benefit more actors than the ones responsible for implementing and maintaining them. In the United Kingdom, much of the land is owned privately, which requires an engagement with landowners to best define possible compensation for using the land (OECD, 2021[49]). For example, the land used for riverbed or watershed restoration by an individual land owner may provide flood risk reduction benefits for other land owners nearby. These issues can arise, for example, at watershed scales or where NbS connect upstream and downstream, rural and urban areas. NbS benefits spill over beyond the jurisdiction that implements them. Equity issues may also arise over time, meaning that the governance settings might have to reflect changing needs of the people who manage and rely on these ecosystems.

Spatial plans (land-use or urban planning) shape the built environment and human activity. They define what is permissible in certain areas and in new developments (e.g. building, infrastructure) and can thereby play a critical role in fostering (or inhibiting) the use of NbS. The UK National Policy Planning Framework specifically encourages local authorities, who are in charge of developing local land-use plans and issuing land-use permits, to maintain and enhance green infrastructure. It requires all plans “to use opportunities provided by new development to reduce the causes and impacts of flooding (where appropriate through the use of natural flood management techniques)” (MHCLG, 2019[42]). Norway requires both counties and municipalities to consider the use of NbS in planning processes before the use of alternatives such as grey infrastructure. If an alternative approach is chosen, authorities must provide the government with justification for their decision (Lovdata, 2018[50]).

Building codes and regulations can also encourage the use of NbS. Some countries and municipalities are setting up NbS-specific regulations, such as requirements for new buildings to be equipped with a green roof or a green space minimum for certain areas (Hawxwell et al., 2019[38]). In 2009, Toronto (Canada) became the first North American city to adopt a Green Roof Bylaw that stipulates that new developments covering more than 2 000 m² require green roofs (City of Toronto, 2021[51]). Copenhagen (Denmark) also mandated in 2010 that green roofs be included for a majority of large buildings (City of Copenhagen, 2015[52]). In the United Kingdom, the 2016 London Plan requires that “major development proposals should be designed to include […] green roofs and walls where feasible” to deliver adaptation to climate change and sustainable urban drainage benefits (Government of London, 2021[53]). In the absence of prescriptions of NbS in building codes, the local government of Mexico City provides a 10% reduction in property tax for installing green roofs (Mexico Daily Post, 2019[54]). Certification schemes with NbS criteria, notably for vegetation use, such as BREEAM and LEED4 in the building sector, can also facilitate the use of NbS (UNaLab, 2021[55]).

However, despite emerging good practices, case study interviewees in both Mexico and the United Kingdom noted that regulatory frameworks are complex and result in high resource and transaction costs. It is difficult for practitioners to navigate the many and complex regulations from land-use zoning to permitting and safety and performance codes. This can lead to grey infrastructure solutions being favoured. Both countries are undertaking reviews to understand how such bottlenecks can be better addressed (e.g. forthcoming IMTA study in Mexico and Defra’s study The Enablers and Barriers to the Delivery of Natural Flood Management Projects in the United Kingdom (Defra, 2020[56])). Defra’s study highlights several regulatory bottlenecks, such as complex funding application processes as well as approvals and planning processes and excessive requirements on performance information for funding applications (e.g. modelling). To help address these bottlenecks, Defra suggests identifying ways to maximise the multiple benefits of NbS and creating guidance to help practitioners and local planning authorities navigate regulations that apply to NbS projects (Defra, 2020[56]).

In addition, there are also a number of legal complexities related to NbS in terms of land ownership and liability. Case study interviewees highlighted that landowners, and those leasing land, are often concerned over liability for potential maintenance, damage to land and a loss of control of their land. Those who own or manage the land (e.g. landowners or water companies) are not necessarily those who are in charge of the NbS project (e.g. public/private bodies) and may have technical or financial difficulties to maintain the optimal functioning of NbS. Therefore, it is important to clearly define long-term responsibilities.

Certain requirements can make it difficult for NbS to compete in traditional public procurement procedures. Project proposals need to demonstrate the socio-economic and environmental benefits, which are difficult to quantify for NbS. This information is highly site-specific and depends on the NbS’ project features, whereby the maintenance cost structure can vary depending on the development over time or climatic and ecosystem conditions. A lack of experience on NbS among procurement practitioners does not facilitate the use of public procurement for encouraging NbS (European Commission, 2020[57]). Germany created the Competence Centre for Innovative Procurement (KOINNO), an online platform that educates and provides consultation on public procurement with best practices for NbS to advise staff on design and implementation processes for these projects (European Commission, 2020[57]). The Global Commission on Adaptation is developing a training course on public-private partnerships for climate-resilient infrastructure, which includes capacity building for green infrastructure (GCA, 2021[58]). Adapting specific clauses in public tenders can encourage the use of NbS while supporting biodiversity, for example, by requiring the use of specific construction materials or native plant species that can bring environmental, flood or drought management benefits to the management of public buildings or spaces.

As a complement to regulatory requirements, standards and other guidelines are being developed to increase the quality of NbS interventions. For example, the International Union for the Conservation of Nature developed the first-global standard for NbS to help users design, implement and verify NbS actions. It is intended for governments, business and civil society to provide clear parameters for defining NbS and a common framework to help benchmark progress (IUCN, 2020[59]). In England, Natural England is helping to deliver on a commitment under the 25 Year Environment Plan to develop a practical national green infrastructure standard to help local authorities, developers, landowners and communities to deliver more good quality green infrastructure across England (Natural England, 2020[60]). The Mexican city of Hermosillo, for example, developed technical guidelines, including a Green Infrastructure Design Guidelines Manual for Mexican Municipalities and a technical standard for green infrastructure for industrial, commercial and housing developers (Villa, 2018[61]). By contributing to some form of standardisation, these efforts can help reduce transaction costs.

The EU is working towards the creation of a common classification system for sustainable economic activities to facilitate sustainable investment. As per the EU Taxonomy Regulation (EU 2020/852) and the technical screening criteria, an economic activity that favours NbS over grey measures to address adaptation qualifies as doing no significant harm to adaptation, which is one of the conditions for an economic activity to be environmentally sustainable (EU Technical Expert Group on Sustainable Finance, 2020[62]).

To successfully design and implement NbS, public and private actors must be aware of their strengths and limitations, as well as have the technical capacity to design and implement them. Having access to NbS project performance data, as well as robust technical and design guidance, helps strengthen technical capacity.

Policy makers and NbS practitioners rely on technical information related to ecosystems to determine and design the NbS measures that are most appropriate for addressing certain risks (IUCN French Commission, 2016[63]). Although estimating natural resource stock is difficult, creating an inventory of existing natural capital and assets provides a basis for estimating the value of services and benefits provided by nature and helps support arguments in favour of NbS (Dasgupta, 2021[64]). The United Kingdom has completed a National Ecosystem Assessment and published guidance on how to apply the natural capital approach5 in decision making (Defra, 2020[65]).

In addition to information related to ecosystems, there is a need to build on existing information regarding water-related risks in order to effectively identify when and justify why NbS are best suited in a specific area. An increasing number of studies assess the value of the ecosystem services in addressing flood and drought risks in specific areas. Mapping and valuing these can help inform the design of NbS interventions. For example, London’s “urban forest”, containing over 8.5 million trees, is estimated to provide annual flood mitigation benefits valued at approximately EUR 3 million (Treeconomics, 2015[66]). In addition, a study found that while restoring 100% of the United Kingdom’s peatlands would cost between EUR 9 billion and EUR 25 billion, having just 55% of the country’s peatland in good status would yield between EUR 51 billion and EUR 58 billion in benefits over a 100-year period (Government of the United Kingdom, 2019[67]). Information about human settlement scenarios and vulnerable groups can also help decision makers better target NbS projects (Hawxwell et al., 2019[38]).

In addition to information on climate risks and ecosystem services, there remains a need to fill information gaps related to the effectiveness of NbS projects to help make their business case and inform decision making. Understanding the longer term climatic changes and projected extremes at a regional scale will also be relevant for supporting decision making. Although monitoring at the project level is critical to gather information about NbS effectiveness, it is rarely integrated from a planning and finance perspective. Certain benefits of NbS can take years, even decades, to be fully realised (e.g. forest regeneration efforts can take a long time before stabilising slopes). To help bridge this gap, monitoring is a requirement for any projects completed through the Defra Natural Flood Management Programme for England. In addition, the EU Valorisation of NbS Projects Initiative found research is still needed on small-scale NbS projects at the urban level and large-scale projects at the catchment level, as well as on individual performance and hybrid solutions with grey infrastructure (European Commission, 2020[46]). The European Commission also notes that more performance information is available on small-scale NbS than on large-scale NbS, such as porous pavements and green roofs. It thereby recommends to develop an up-to-date platform with lessons learnt and implementation costs; it encourages efforts to develop tools that integrate flood risk models, weather prediction models, real-time monitoring systems and smart early-warning systems (European Commission, 2020[68]).

Technical competences of NbS practitioners and policy makers for NbS need to be strengthened. Interviewees in the United Kingdom raised the challenge that as NbS are often considered to be a relatively new approach, practitioners are uncertain about their performance and therefore chose solutions whose performance they are more familiar with, such as grey infrastructure. In Mexico, most water sector specialists have traditional engineering backgrounds, while engineering programmes are only slowly starting to incorporate innovative approaches, such as NbS. To help bridge this gap, Mexico has incorporated green infrastructure into an engineering programme hosted by the National Autonomous University of Mexico (Universidad Nacional Autónoma de México, UNAM), where, for example, sand dune conservation is part of the measures taught to prevent coastal erosion.

To help raise awareness and build capacity among policy makers and NbS practitioners, both Mexico and the United Kingdom have started compiling best practices and performance data on the implementation of NbS. The United Kingdom created an evidence directory compiling over 60 case studies highlighting best practices related to natural flood management (Environment Agency, 2017[69]). The EU supports several web platforms to display NbS information, such as Climate ADAPT, Natural Water Retention Measures and the Urban Nature Atlas (European Commission, 2020[46]).

A range of tools, handbooks and technical guidance documents help inform and guide NbS projects. For example, the United Kingdom currently has a range of toolboxes and guidance documents that are available to inform practitioners on the design, implementation and continued management of NbS. In addition, the UK Construction Industry Research and Information Association developed a guidance document for the construction of sustainable urban drainage systems and is preparing a Natural Flood Management Design Manual. It aims to support actors designing, specifying and constructing sustainable urban drainage systems to understand and avoid common pitfalls (CIRIA, 2015[70]).

Tools also exist to support decision making. For example, the EU-funded UNaLab developed an NbS technical handbook to guide stakeholders in the selection of NbS most adapted to specific contexts (Eisenberg and Polcher, 2019[71]). In addition, the suite of models known as InVEST (Integrated Valuation of Ecosystem Services and Trade-offs) from Stanford maps and values goods and services from nature and is designed to help decision makers quantify trade-offs and identify natural environments that can most benefit from investment in order to enhance natural capital and deliver ecosystem services for society (Standford University, 2020[72]).

Tools and methods are needed to evaluate many of the benefits of NbS, such as their climate change mitigation or adaptation impact or their contribution to habitat preservation. Benefits left unquantified are overlooked by traditional cost-benefit evaluations and thereby act as a constraint to scaling up their use. The existing methodologies for valuing these effects remain underdeveloped or challenging to apply. Examples of methods and studies that can support decision making include those that assess ecosystem service functions such as through hydraulic assessments; those that assess risk exposure and vulnerability to climate change (e.g. vulnerability assessments); or those that help to deal with risk and uncertainty, such as probability analysis or real option analysis (OECD, 2020[13]) (Dasgupta, 2021[64]) (GIZ, 2017[73]).

Public funding represents the majority of funding for NbS in both Mexico and the United Kingdom. It is supplemented by funding from non-governmental organisations, philanthropies, communities or private companies, such as property developers or water companies. Public funding for NbS emanates from funds for both climate adaptation and mitigation, environmental conservation, water, or those funding measures in disaster risk management. Some projects are also directly funded through urban planning budgets (UNEP, 2021[29]).

Environment and climate change funds are an important source of funding for supporting NbS design and implementation, most often in the form of grants. In Mexico, the National Climate Change Fund, linked to the Biodiversity Endowment Fund, supports NbS for adaptation. Similarly, the UK Nature for Climate Fund allocates over EUR 700 million to plant trees and restore peatland across England (UK 2020 Budget). Disaster risk management funds have increasingly included NbS as eligible measures for funding. The UK Flood and Coastal Resilience Innovation Programme6 targets resilience actions, including NbS or sustainable urban drainage systems, that increase resilience to flood, coastal or drought risks. The fund specifically excludes grey infrastructure such as walls (Government of the United Kingdom, 2021[74]). Large pools of funding available for grey infrastructure have also started to fund NbS projects, such as Canada’s EUR 1.3 billion Disaster Mitigation and Adaptation Fund.7 The eligibility of NbS is not yet a common practice. In Mexico, the disaster prevention fund (i.e. FOPREDEN), which is a significant pool of funding, excludes NbS, as it is currently not considered as a form of structural prevention. Another key obstacle is the valuation and quantification of some of the beneifts of NbS (such as ecosystem service enhancement). While de facto eligible for funding, in practice NbS are outperformed by other solutions.

Multilateral development banks, development finance institutions, dedicated funds (such as the Global Environment Facility, the Adaptation Fund or the Green Climate Fund) and bilateral donors also provide an important source of funding for NbS projects worldwide. In Mexico, these have funded projects to reduce climate-related risks in the Gulf of Mexico.

A challenge that practitioners face is accessing funding over the NbS’ project life cycle. Similar to grey infrastructure, NbS projects require funding over time for maintaining the project’s performance. For instance, resources might be needed to ensure slope restabilisation, pest monitoring or invasive species removal in some types of NbS. However, case study interviewees noted that these resource needs are often not factored into initial budgets for NbS projects. For example, in Mexico, most conservation-based programmes are subject to annual budgets. The lack of funding for continued maintenance can lead project implementers, such as landowners, to be reluctant so as to avoid liabilities for costly long-term maintenance or in the case of an NbS project’s failure.

For NbS that are characterised by strong public good features, public funding is important. For NbS that benefit specific private actors, or co-benefit them, private (co-)funding should be mobilised. For this it is important to make the business case for NbS. There are a growing number of successful examples of privately funded NbS projects. For instance, water companies (e.g. Scottish Water, Anglian Water and Severn Trent in the United Kingdom) finance the protection of catchments or the creation of wetlands to improve water quality.

Public sources can be important in mobilising additional private finance. Defra and partners8 joined forces to provide seed grants to four NbS pilot projects to be supplemented by private funding. The private funds are to be paid back by the potential NbS beneficiaries (e.g. water company, the Environment Agency, local authorities, the insurance industry, local stakeholders) (The Flood Hub, n.d.[75]). At the regional level, the Inter-American Development Bank leveraged an additional USD 55 million for projects with the private sector as part of its Natural Capital Lab for improving land use, agriculture and marine ecosystems (Dasgupta, 2021[64]).

Governments incentivise private actors, such as landowners, farmers and foresters, to implement NbS initiatives on private land through various schemes, such as land stewardships schemes, carbon or biodiversity offsets (e.g. planting woodlands, hedge planting or floodplain restoration). While they might not be implemented with water risk management objectives as such, they help mobilise private investment in schemes that deliver quantifiable and valued services, such as Mexico’s Payment for Hydrological Services Program for forest conservation.

Private actors also use proceeds from a range of instruments to fund NbS projects, including those from water tariffs. Some water companies in England and Wales are financing NbS out of tariff revenues. Ofwat, the national economic regulator for water services, agreed to include an outcome-based payment in its tariff-setting formula linked to utilities’ environmental performance and specifically authorised these companies to use their revenues for such purposes. Severn Trent, for instance, invested its own resources gathered from water tariffs and mobilised matching funding from other sources (Trémolet et al., 2019[76]).

The insurance industry can play a role in fostering NbS. It can incentivise NbS measures with reduced premiums (e.g. on flood insurance) to customers investing in NbS. For example, the insurance industry played a role in developing the Coastal Zone Management Trust of Quintana Roo (Mexico). Established in 2019, the trust collects hotel and tourism concessions to fund coral reef maintenance activities and to purchase a novel parametric insurance policy for hurricane-induced coral reef damage. If a hurricane exceeding a specific wind speed occurs, the insurance coverage will be used to repair the reef (Bechauf, 2020[77]).

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  1. 1. Who are the key government authorities with a mandate to undertake planning for the management of water-related risks? This includes assessing areas at risk of flooding (riverine, coastal, urban) and drought, and prioritising different interventions to manage these risks. Please fill in the table below with the authority’s name and role, and both national and subnational levels, if applicable. Please add rows if needed.

    1. a. Of the stakeholders listed in the table below, in the column on the right, please rank the level of awareness of NbS on a scale of 1-5 with 1 being low and 5 being high.

Table i: Planning

  1. 2. Who are the key government authorities who implement measures to manage water-related risks? This includes engaging stakeholders, securing financing, and overseeing construction and maintenance. Please fill in the table below with the authority’s name and role, and both national and subnational levels, if applicable. Please add rows if needed.

    1. a. Of the stakeholders listed in the table below, please rank the level of awareness of NbS on a scale of 1-5 with 1 being low and 5 being high.

Table ii: Implementing

  1. 3. Are any private actors involved in the implementation of NbS, and if so, what is their role? Please check those that apply:

  • Landowners (including farmers, forest managers)

  • Property developers

  • Insurers

  • Water utilities

  • Other (please specify)

  1. 4. Are any private actors involved in the financing of NbS, and if so, what types of actors? Please check those that apply:

  • Landowners (including farmers, forest managers)

  • Property developers

  • Insurers

  • Water utilities

  • Other (please specify)

  1. 5. Overall, would you say the use of NbS is promoted by the relevant national authorities?

  • Yes

  • No

  • It depends. Please provide more detail.

  1. 6. Are there any institutional or governance issues (for example, co-ordination or communication challenges between different departments, levels of government or communities) which have impeded the use of NbS? Please describe.

  2. 7. In your opinion, do existing institutional arrangements facilitate the use of NbS? Please explain.

  1. 8. Are NbS cited in key national plans/strategies? Please check all that apply, and fill in the name and year of the plan.

  • For Mexico: National Development Plan (Name and year)

  • National Adaptation Plan (Name and year)

  • National Biodiversity Plan

  • Disaster Risk Management Plan

  • National Infrastructure Delivery Plan (for Mexico: National Infrastructure Investment Plan)

  • Other (please list)

  1. 9. In those strategies, which sectors have been identified as the most relevant for the use of NbS for managing water-related risks?

  • Water management

  • Flood risk management

  • Agriculture

  • Urban development

  • Forestry

  • Transport

  • Other (please list)

  1. 10. In your opinion, what have priorities related to NbS been influenced and determined by? (This could include local demand, international policy frameworks, increasing flood risk with climate change, etc.).

  2. 11. Have trade-offs between policy objectives related to NbS emerged? (For example, conflict between different land uses or sectoral needs.) If yes, please explain.

  3. 12. For the United Kingdom: Have any policies been particularly instrumental in facilitating the use of NbS? If yes, please describe.

  1. 13. Do any of the following codes, laws or regulations make reference to NbS?

  • Local land-use plans

  • National building code guidelines

  • Local building codes

  • Flood safety standards

  • Other relevant codes/laws/regulation for the management of water-related risks (please list below)

  1. 14. In your opinion, do any of the codes, laws or regulations listed above make the use of NbS challenging? Please explain.

  2. 15. In your opinion, do any of the codes, laws or regulations listed above facilitate the use of NbS, and if so, how?

  1. 16. Have technical or information gaps related to NbS been identified? If yes, what are they?

    1. a. If yes, are there any measures in place to address these gaps?

    2. b. In your opinion, are these measures sufficient? If no, any suggestions for improvement?

  2. 17. Overall, how would you rank public sector technical capacity with regards to NbS? Please check below the option that best describes the current situation:

  • High capacity – strong technical knowledge among many related to NbS planning and implementation

  • Medium capacity – modest technical knowledge among some related to NbS planning and implementation

  • Low capacity – low knowledge among most related to NbS planning and implementation

  • Other – please describe

    1. a. Are there specific areas in government or professions where you think technical capacity is particularly high?

  1. 18. Has training to implementing agencies been provided on NbS? If yes, what has this entailed?

    1. a. Has this training been effective? Are there any gaps?

  1. 19. What are the main domestic public sources of funding available for protection against risks of floods and droughts? Please check those that apply.

  • Subnational funds

  • National disaster risk management funds

  • Other national funds (please list)

  • International public funding9

  • Other (please list)

  1. 20. Have any of the sources listed above been used to finance NbS? If yes, please elaborate.

    1. a. Do the rules on using any public sources of funding explicitly include NbS? If yes, please list which ones (e.g. special grants, earmarked funds, etc.).

    2. b. In your opinion, could any of the sources listed be used to finance NbS? If yes, please explain. If no, what do you see as the main bottlenecks?

  2. 21. Are there any other sources of funding that are used to manage water-related risks? Examples include philanthropies, foundations, corporates, other private sector funding.

  3. 22. Of the sources listed in Question 19, have any of them been used to fund NbS? If yes, could you provide an example?

    1. a. If no, what do you see as the main bottlenecks?

    2. b. Is there a rough estimate of the amount the public sector annually invests in NbS?

    3. c. Is there a rough estimate of the amount the private sector annually invests in NbS?

  4. 23. What methodology do you use for considering the costs and benefits of investments (either NbS or grey infrastructure) that reduce exposure to water-related risks? Please specify:

    1. a. Which categories of costs are included: CAPEX (cost of capital investments), OPEX (cost of operations) or TOTEX (total costs)?

    2. b. What would be the typical time horizon of financing decisions?

    3. c. How are co-benefits valued and factored in?

    4. d. Is flexibility and capacity to adapt to shifting conditions given value? If so, how?

  5. 24. In your opinion, do any of the methods listed above support or hinder consideration for NbS? Please develop your answer.

  6. 25. Have any ex ante assessments of the costs and benefits of NbS compared to grey infrastructure been performed? If so, what have been the results? (Please fill in the box, or link relevant document).

  7. 26. For Mexico: Who is accountable or liable in case of damage/asset failure? Please check all that apply.

  • Asset owner

  • Government authority

  • Other

  1. 27. Are there examples of what you would consider the successful application of NbS in your country? If yes, please describe both the application itself and how you define success.

    1. a. In your opinion, why was the above project(s) a success?

    2. b. How was the above project(s) funded?

  2. 28. What do you see as the most important opportunities and challenges for the use of NbS to manage water-related risks in your country?

Notes

← 1. For more information about the OECD Survey on the Implementation of the Recommendation of the Council on Water, carried out between October 2019 and February 2020, with responses from 26 OECD countries and Costa Rica, see OECD (2021[18]).

← 2. As of January 2021, six OECD member countries (including Mexico and the United Kingdom), as well as the European Union had published their second NDC.

← 3. The UK Countryside Stewardship is an agri-environment payment that provides financial incentives for farmers, woodland owners, foresters and land managers to look after and improve the environment.

← 4. https://www.breeam.com and http://leed.usgbc.org.

← 5. The natural capital approach is defined as being a form of policy and decision making that takes into consideration the value of the environment and its services in relation to society and the economy (Defra, 2020[78]).

← 6. This programme (GBP 200 million fund) aims to encourage local authorities, businesses and communities to demonstrate innovative practical resilience actions in their areas. Eligible resilience actions include NbS and sustainable drainage systems. Further information is available at: www.gov.uk/guidance/flood-and-coastal-resilience-innovation-programme.

← 7. Eligible projects under the Disaster Mitigation and Adaptation Fund include new construction of public infrastructure including natural infrastructure and modification and/or reinforcement, including rehabilitation and expansion of existing public infrastructure including natural infrastructure. Further information is available at: www.infrastructure.gc.ca/dmaf-faac.

← 8. Defra, the Environment Agency, Esmée Fairbairn Foundation and Triodos Bank UK.

← 9. EU Cohesion Funds, others.

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