One of the ways to address the many societal challenges facing our city, is by using the multiple benefits of nature. To do this, we have to integrate this strategically into our urban planning. The term nature-based solutions suggests that nature holds a diversity of benefits. One way to realize nature-based solutions is by building business models around these benefits. Many of the benefits of nature-based solutions are public, meaning that we all profit from this together. But sometimes some people benefit more than others. If we build a new park in the city, all the inhabitants of the city can benefit from the increase in biodiversity, but only the people live in close to the park benefits from an ice view. So nature-based solutions create different types of value to different people at the same time and they've can provide many benefits to a lot of people. But then a crucial question arises, who should pay for them and why? Well, traditionally, we look at the public sector to pay for public benefits. In this case, we could leave the delivery of nature-based solutions to municipalities,, water boards or governments. But there are at least three important challenges. The first challenge is that they're often not enough public funds. The funding needed to reach urban sustainability goals, can often not be met by governments alone, especially when countries are affected by a recession or by austerity. The second challenge is that the public sector is not always in the best position to deliver nature-based solutions. Sometimes the knowledge about what is needed is embedded in local citizen networks and often land is privately owned. So governments do not have the mandate to develop nature-based solutions in this space. The third challenge is that a single actor like a department within a government, often focuses only on one type of value when investing in nature-based solutions like water management, air quality or social cohesion. But nature-based solutions often have multiple benefits. If we take a narrow focus, we underestimate the value they deliver. So since governments cannot do it alone, one way to deliver urban nature-based solutions is to develop business models that take these multiple benefits into account. So what is a business model? Well, business model describes how firms create and capture value through their activities, and there are at least three important parts to business model; first, the value proposition. What value is being created and for whom? Second, how is this value being delivered? With what resources and which partners? Third, how is value being captured? So what are the costs and what are the revenue streams? That brings us back to the question, who will pay for the value that is provided? So if we take a business model approach to scale up nature-based solutions, we should remember that nature-based solutions create multiple types of value. So there may be multiple value propositions, perhaps to different people or customer groups. This means that there can be also multiple revenue streams and it may not be a single actor who delivers or pays for the nature-based solutions. But instead, several actors. This means that we need to take a broad perspective on business models when we try to use it for upscaling nature-based solutions. Well, let's look at an example of nature-based solutions together. Namely green roofs. So green roofs contain different value propositions for different people. For the owner of a building, a green roof improves the energy efficiency of the building by providing isolation, both for cooling and for heating. If a green roof is installed in combination with solar panels, it increases their efficiency. A green roof can also double the lifetime of the roof itself, which saves maintenance costs and roof replacement costs, and it can reduce noise and improve air quality. But green roofs also offer value to the city as a whole. They prevent flooding by holding rainwater, they help sustain biodiversity, and they reduce the urban heat effect by cooling the city. On top of that, neighboring residents and employees with a view of the green roof, profit from health benefits and a nice view. So we can see that different actors capture different types of value from green roofs, and each actor may have a certain willingness to pay for a green roof based on these benefits. This shows why successful business model for green roofs may actually require value propositions that are based on multiple benefits or even multiple value propositions for different actors. So a municipality may be willing to provide a subsidy for green roofs based on its water management, air quality, and biodiversity goals and neighbors may be willing to pay to improve their view and air quality. This funding could make the remaining costs of the green roof low enough for the building owner to pay them, based on the benefits that they get from the green roof. Each actor captures and pays for the value that they care about most. The gardening firm that then delivers the green roofs can deliver it profitably if these different value propositions and revenue streams are developed. So how does this approach work in practice? Well, let us look at Melbourne in Australia as an example, where the municipalities setup the urban forest fund, a pool of funds from different departments and real estate development firms to stimulate private greening in the city. So both citizens and businesses in Melbourne can develop plans to green their premises and they can propose these plants to the urban forest fund. This fund covers half of the project costs of eligible projects. So the municipality pays half of the costs and provides a public benefits like cool spaces for hot summers, biodiversity, and water management for the city. Citizens and businesses pay the other half because a greening projects increases their quality of life by providing outdoor relaxation, a nice view and social cohesion between neighbors. We can also look at Amsterdam in the Netherlands, where the organization rooftop revolutions helps individuals to set up a crowdfunding campaign to fund the greening of their roofs. In these campaigns, building owners request funding from the neighbors who have a view of their roof. Since the neighbors are likely to benefit directly, they may be willing to contribute. This is an example of an initiative that seeks to rethink business models for nature-based solutions. So using a business model perspective can help us to scale up nature-based solutions in cities and if we understand how nature-based solutions create value for different actors, we can build business models that let each actor pay for the value they obtain. In this way, public and private actors can deliver nature-based solutions together. At the same time, it is important that public actors like municipalities are still involved to pay for the public benefits of nature-based solutions and also to make sure that all citizens can profit from nature-based solutions in an equal way.
