Financing of nature-based solutions for urban stormwater management – a systematic mapping and scoping review

Summary

More frequent episodes of extreme rainfall and increasing impervious surfaces are expected to intensify the need to finance nature-based solutions for stormwater management (stormwater NbS) in cities. This study conducted a systematic literature mapping and scoping review to examine i) how the literature on stormwater NbS financing mechanisms has evolved, ii) which types of stormwater NbS financing mechanisms are most commonly reported and whether new mechanisms are emerging, and iii) whether geographical differences exist in their application. We find that publications on stormwater NbS financing mechanisms increase from around 2010 onwards, peaked in 2019, and declined afterwards. Our assessment distinguishes two main types of mechanisms: financing mechanisms used by local governments (FMLG) and financing mechanisms used to encourage third parties (FMETP), which are reported to approximately equal proportions in the literature. For FMLG, “instruments generating revenue” are most frequently reported (N = 69), followed by grant funding and donations (N = 35). Examples of "green finance or debt-based instruments" were identified 19 times, while the use of public budgets was reported 12 times. For FMETP, “market-based instruments” clearly dominate (N = 121), with subsidies (n = 59) and tax or fee rebates (n = 43) being the most prominent mechanisms. Geographically, the use of stormwater NbS financing mechanisms is unevenly distributed around the globe, with a clear dominance of cases reported from North America (FMLG = 120, FMETP = 129), particularly the United States (FMLG = 114, FMETP = 123), followed by Europe (FMLG = 27, FMETP = 32) and Asia (FMLG = 16, FMETP = 15). Stormwater NbS financing mechanisms are nearly absent in South America and Africa. Most mechanisms focus on financing the implementation of new stormwater NbS, while only a minority address operation and maintenance costs. Our review also reveals promising complementary management approaches used in combination with financing mechanisms, as well as more advanced instruments such as performance-based contracts, which may have broader application in the future. Future research could focus on mechanisms for financing operation and maintenance, the transferability of financing approaches across contexts, and the effectiveness and limitations of different FMLGs and FMETPs, including their combination with complementary management measures.