- Item type
- Study and report
- Dissertation
- Language
- English
- Publication year
- 2024
- Contributors
- Subjects
- FINANCES
This master thesis explores the efficiency of innovative financial instruments in mobilizing private capital to scale up Nature-based Solutions (NBS) finance. The study tackles all NBS and does not focus on a specific geographic area. NBS have garnered increasing interest from political, economic, and scientific standpoints as they provide significant climate, biodiversity, and social benefits. Existing literature emphasizes the financing gap, barriers, and available financial tools, highlighting the small-scale and local nature of NBS. It also underscores the necessity to deploy innovative finance that de-risk investments and boost private sector mobilization. Knowledge gaps identified include a lack of comprehensive understanding of NBS, insufficient financial flow tracking, and a dearth of systematic analysis of financial instrument efficiency. The research develops a methodology to select innovative tools that enhance the risk/return profile and evaluate their efficiency in attracting private capital and delivering high-impact outcomes. The applied research focuses on carbon credits (in a deeper case study), biodiversity credits, blended finance, and result-based debt, which present the highest potential and interest. The research methodology employs qualitative semi-structured interviews, confronting hypotheses with the insights of professionals in asset management, project development, and consulting. Results indicate that environmental assets monetizing ecosystem services are the most efficient, there is a need for more creativity to design effective financial strategies and embark on the private sector, and NBS could become a separate asset class.
Key words: nature-based solutions, nature finance, innovative finance, private capital, carbon credits, blended finance.
