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Milestone 7: Market Potential of NBS and structuring the impact of Nature-Based Enterprises


Assessing the market potential of NBS

Since 2018, a dedicated Work Package (team) within URBiNAT has focused on assessing the market potential of NBS. This has involved identifying and collecting data from enterprises, including start-ups, cooperatives and non-profit organisations, that are involved in the development and commercial exploitation of NBS (Nature-Based Enterprises).

URBiNAT researchers have used different indicators and matrices to assess the market potential for different NBS solutions some of which can be seen below. This work had directly fed into high-level policy recommendations focused on how to replicate and scale best practice NBS business cases.

In due course, URBiNAT partners and interested third parties will be given access to a report on the market potential of the URBiNAT NBS catalogue.

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Valuing Nature-Based Solutions

What is a Nature Based Solution?

The European Commission defines Nature-Based Solutions (NBS) 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. As such Nature-based Solutions must therefore benefit biodiversity and support the delivery of a range of ecosystem services. Read more HERE 

Since 2018 the URBiNAT project has used an expanded definition of NBS. This consists, notably, of a four-part categorisation of NBS as Technical, Territorial, Participatory and Social & Solidarity Economy Nature-Based Solutions. More about the URBiNAT NBS Catalogue HERE

Capturing the social, economic and environmental value of NBS

The capacity to benefit from value generated by NBS through market transactions or policy instruments is defined as “value capture”. Based on economic theory on the classification of goods (Ostrom, 1990) four categories of goods can be individuated: private goods, public goods, toll goods and common pool resources.

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Flow of Natural Capital via NBS. Adapted from Capitals Coalition and We Value Nature

What is a Nature-Based Enterprise (NBE)?

NBEs are enterprises that use nature either directly, or indirectly as a source of value-creation, while also independent entities that innovate around, synthesise and process benefits of NBS so that these become visible and translate into value that can be internalised and captured by market actors.

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From Nature-Based Solutions to a Nature-Based Economy

The Market for Nature-Based Solutions

Since 2018, URBiNAT researchers have conducted research market for NBS including key challenges and enablers to market development. They have considered the market forces of supply and demand. The concept of nature-based enterprises (NBEs) has been identified as a key enabler of market supply to meet increasing market demand and provide additional vehicles for private sector investment.

Draft White Paper (2021)

NBS present many challenges for traditional policy-making in relation to demand. The extent to which there is demand for, e.g., the public space, amenities, climate mitigation & adaptation, support of wellness, or other kinds of functionality generated by NBS, is a complex and insufficiently explored subject.

Understanding the demand for Nature-Based Solutions

The recommendations of this White Paper provide a basis for dialogue with policy makers, at all levels of government and across all fields of policy implementation, and with wider stakeholders in business, society and the innovation ecosystem on the changes needed to shift towards a Nature-based Economy. It particularly aims at stimulating valuable cross-sectoral policy discussions between policy makers responsible for climate change and biodiversity policy and those responsible for sustainable economic growth policies within the context of rapidly depleting stocks of natural capital.

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Yet, the outcome is bound to have a strong bearing on the willingness of policy makers, market actors and civil society to invest in and develop NBS. It is also interwoven with the degree to which NBS are put to use and accompanied by innovation and the rise of commercial enterprises capable of sustainable business operations, or able to sustain social innovations and not-for-profit activities in support of wider social goods.

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Related URBiNAT Resources

High-level presentations

[VIDEO] UN Habitat Roundable. "Nature Based Solutions to a Nature-Based Economy" (Oct. 2022)

There is no future for “business as usual”. Systemic transformation is needed to shift towards an economy where economic growth is decoupled from resource usage, industry is decarbonised and climate neutral and all members of society are engaged in this transition in a fair and equitable way. To achieve this systematic transformation, disruptive change is required. The role of nature-based solutions (NBS) in societal transformation have been increasingly recognised in European and international frameworks. While much focus has been on the environmental or social benefits of NBS, less attention has been paid to their economic potential and their role in a just transition to a sustainable economy.

During this session, four distinguished economists, including URBiNAT’s Pr. Thomas Andersson (IKED, Sweden) discussed the relevance of the concept of a nature-based economy and identified conceptual and practical challenges and priority areas for further research and innovation.

Watch video HERE

[VIDEO] COP27 - A nature positive economy for climate and biodiversity benefits (Nov. 2022)

[PRESENTATION] In this session, businesses, researchers, and policy makers consider the evidence, best practices, tools, and strategies in support of a nature-positive economy. The benefits for biodiversity, ecosystems, and climate are highlighted.

Although many are committed to adopting nature-positive practices, hindrances prevail and clarity on the way forward is often lacking.

We examine the driving forces for a nature-based economy, showcase success stories and draw lessons what can be achieved going forward.

View video HERE

Nature Based Enterprises

In this section we present four categories of Nature-Based Enterprise corresponding to the four cateogories of NBS in as defined by the URBiNAT project.

For each category of Nature-Based Enterprise we have selected three representative enterprises from URBiNAT Frontrunner Cities. Click on each NBE Card for more details.

Technological NBE

A technological NBE is an enterprise or organisation that makes use of technical solutions and means as a core part of its value proposition relating to Nature, including by synthesising and processing benefits of NBS.

Featured Technological NBE

Territorial NBE

A territorial NBE is as an enterprise or organisation that draws on spatial solutions as a core part of its value proposition relating to Nature, including by synthesising and processing benefits of NBS.

Featured Territorial NBE

Participatory NBE

A participatory NBE is an enterprise or organisation that engages people using participatory methods as a core part of its value proposition relating to Nature, including by synthesising and processing benefits of NBS.

Featured Participatory NBE

Social & Solidarity Economy NBE

A social and solidarity NBE is an enterprise or organisation that propels voluntary and sharing economy methods as a core part of its value proposition relating to Nature, including by synthesising and processing benefits of NBS.

Featured Social & Solidarity Economy NBE

Matrix: Structuring the impact of NBEs

Typologies of NBEs

In this table ➡️ we present examples of NBEs in each Frontrunner city corresponding to the four categories of NBS used by the URBiNAT project.

In each Frontrunner city we have identified examples of economically viable NBEs delivering high value social and environmental services.

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Matrix mapping NBEs against NBS, URBiNAT frontrunner cities (Source: IKED & ITEMS, 2022)

Clusters of NBEs

In practice, NBEs may not relate to specific categories of NBS, but their orientation and mechanisms for value-creation may relate to a combination of several NBS, or NBS categories.

The figure ⬇️ maps the estimated position of each of the selected NBEs in a scatter diagram that allows for combinations of NBS types.

This results in indications of  “clusters”. What we observe is one cluster combining Participatory and Social and Solidarity Economy” NBS, and a second combining Technology and Territorial, with some variation which of these dimensions weigh most heavily.

All three URBiNAT frontrunner cities present NBEs that populate all these categories. The leading NBEs from Sofia are somewhat stronger linked to technological NBS  however, with Nantes and Porto lean more towards participation and the social dimension.

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Scatter diagram, NBEs scattered against NBS (Source: IKED & ITEMS, 2022)

Enabling Environment

The figure ➡️ presents a stylised illustration of the framework conditions for NBEs that appear in each of URBiNAT’s frontrunner cities, indicating their relative performances across selected key dimensions.  The further out from the centre, the stronger a particular city scores in any particular aspect. Generally, Nantes can be seen to offer the most favourable conditions for NBEs, although Porto is doing well in regard to conditions for start-ups and also public investment. Sofia is generally in a less favourable situation, except for digital services and partly R&D (including technical skills).

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External factors framing conditions for NBEs (Source: IKED & ITEMS, 2022)

URBiNAT Partners

[Section Heading 10] NBS Catalogue