Investing in Nature for Europe Water Security

The report Investing in Nature for European Water Security (INEWS) identifies the roles that nature-based solutions can play to tackle Europe’s water security challenges, as part of hybrid (green-grey) water investment strategies. It extracts learning from on-the-ground experiences with investments in nature and identifies enabling conditions and barriers to scale. The INEWS report formulates recommendations for water sector professionals and investors seeking to understand what needs to be done differently to achieve scale and contribute to boost water security and resilience in the European Union. The report is a joint effort by The Nature Conservancy, Ecologic Institute and ICLEI.

Transcript

1. 1 Investments in Nature-based Solutions for Water Security in Europe: State of Play and Transformative Ways to scale EU Water Innovation Conference 2019, Zaragoza Sophie Trémolet, Water Security Director, Europe
2. Presentation outline • Key water security challenges in Europe • How can Nature Based Solutions help • Main challenges • Proposed pathways to scale • Key take-aways 2
3. Towards a strategic vision for scaling up Nature based solutions for Water Security in Europe • Increase awareness on the potential of NbS to address water security challenges – including with non-water experts and financiers • Bring together knowledge on existing experiences with NbS-WS in Europe • Identify barriers to scale and existing enabling solutions in European countries • Scope out opportunities for innovative approaches 3
4. 4 Nature Based Solutions for Water Security Links to water challenges
5. Surface water quality: challenges and role of NbS • Water quality issues in the EU: excessive nutrients and sediment loads • As of 2015, only around 40 % of EU surface waters were in good ecological status (or good ecological potential) and 38 % were in good chemical status • Approximately 11.4 % of the EU territory is estimated to be affected by a moderate to high level of soil erosion • High economic losses: For example, In England and Wales, the cumulative cost of water pollution is between £700 million and £1.3 billion a year NbS-Ws can improve surface water quality thus reducing costs of drinking water and wastewater treatment (and generate additional benefits), e.g.: ➢ Vegetated buffers within riparian zones ➢ Artificial wetlands Source: EEA, 2018
6. Groundwater quality: challenges and role of NbS • Groundwater in the EU is mainly affected by diffuse pollution stemming from agricultural sources including nitrates in fertilizer or manure and pesticides • 25 % of groundwater bodies in the region are in poor chemical status The highest percentage of groundwater bodies not in good chemical status are found in England and Wales, parts of Germany, France, Spain and Italy • Over 18 % of the area of groundwater bodies in Europe is affected by excessive nitrates • Pesticides are causing poor chemical status in 6.5% of groundwater bodies (by area) A wide array of NbS can be deployed to address groundwater quality, ranging from improved agricultural practices to land-use changes. 6 Source: EEA, 2018
7. Flooding: challenges and role of NbS • Flood events have had significant and rising impact in Europe in the last decades • 3,695 distinct flood phenomena were identified in Europe between 1980-2015, with the highest number reported in 2010 • Costliest natural hazards: economic losses up to EUR 52 billion (1998-2009) 7 Source: EEA NbS can contribute to alleviating flood risk and its impacts in floodplains, as well as in urban environments. Explicitly included in FRMP of virtually all MS and can include: ➢ Restoration of natural river characteristics ➢ Afforestation ➢ Wetlands conservation
8. Water Scarcity: challenges and role of NbS • Economic and population pressures + climate change: water scarcity risks risking from Mediterranean to Northern Europe • From 1976-2006, water scarcity affected > 100 million people and over 37 % of the continent’s landmass, with associated financial losses of EUR 100 billion • These events are expected to increase in frequency and severity across the region due to climate change. NbS-WS can play a significant role in increasing resilience to water scarcity and stress – but few examples to date: ➢ Aquifer recharge ➢ Wetland restoration 8 Source: Jacob et al., 2014
9. Example of challenges: financing is limited, too fragmented, not sufficiently outcome-based 9 • Between 2014 and 2020, an average of EUR 5.5 billion per year was committed to restoration and conservation of watersheds and to sustainable management activities • An estimated 99 % of all funding for watershed investment in Europe comes from public funding sources (CAP subsidy payments to landowners, regional funds, EU dedicated grant programmes) Public funds, although significant, can be challenging to mobilise and tend to be poorly coordinated, thereby limiting the potential to support large scale investments in NbS-WS across Europe • Private funding through user-driven investments in NbS-WS still small although steadily growing → Mobilizing repayable financing to invest earlier in NbS-WS could help address current funding limitations
10. Water companies and cities are engaging with upstream users to protect their water sources Types of interventions: • Buying and protecting land • Working with farmers and forest managers to support change in agricultural practices • Building artificial wetlands to reduce the costs of wastewater treatment • Restoring degraded peatland Learning from examples: • Bottled water companies in France • English water companies, thanks to supportive policy and regulatory environment 10 Examples of user driven investments in Europe
11. 11 What could be transformative ways to scale?
12. # 1 VALUE : Give natural capital the place it truly deserves in resource allocation 12 Source: Eftec, 2019 - Investability assessment of a pipeline of potential natural capital project types in Greater Manchester. Natural capital should be fully taken into account in investment decisions → Priority should be given to NbS- WS when they can increase natural capital values → Adoption of natural capital accounting methods would help
13. # 2 WORK TOGETHER – Harness the power of collective action • NbS-WS generates multiple benefits for multiple parties • Beneficiaries should work together at the local level to establish governance and financing structures for joint planning, investment, management and maintenance of NbS-WS • Examples exist in Europe: • England: regional planning structures • France: SAGE 13 TNC’s Water Fund model applied in 35 locations
14. # 3 MOBILISE – Generate investments through outcome-based blended finance packages Package water sector investment needs in a way that can attract repayable financing WHY? → Bring forward investments and prevent further deterioration of water resources and biodiversity →Provide access to substantial, liquid and deep financing markets Examples emerging mostly in the US: • Environmental Impact Bond (urban drainage in Washington DC, Atlanta) • Forest Resilience Bond (prevent catastrophic forest fire in California) • Delaware Revolving Water Fund 14
15. Outcome- based repayable finance: typical set-up
16. # 4 PRIORITISE – Identify where greatest results can be achieved Mobilising a mix of private and public funding and financing requires: ➢ Estimating investment needs ➢ Identifying where certain types of NbS-WS can work at landscape scale ➢ Building pipelines of investable NbS-WS projects Building shared pipelines of investable projects should be actively encouraged, including potentially through innovation prizes. A stronger focus is needed on measuring effectiveness and cost- effectiveness on a more reliable basis, to allow comparisons with grey infrastructure 16
17. # 5 KNOW YOUR ROLE : recommendations by type of actors 17 Actors Key recommendations for each type European Union institutions • Maintain high level of ambition in terms of water security outcomes: do not extend deadlines but rather bring forward investments in water security • Fund the development and application of strong monitoring frameworks for NbS-WS, with a focus on data on their effectiveness and cost-effectiveness • Clarify the legal framework for payments for environmental services National governments • Identify water security hotspots and potential for NbS-WS to address them • Help build project pipelines by organising national-level innovation prizes Local governments • Define water service contracts based on outcomes rather than specifying technologies or outputs • Review policies in multiple areas where local government’s role is strong that can incentivise (or not) NbS-WS adoption. Water service providers • Systematically consider NbS-WS as options in investment planning and programming, so as to minimise overall costs and generate co-benefits • Work with other actors in collaborative structures for regional water resource planning and implementation • Systematically monitor effectiveness and cost-effectiveness of NbS-WS they implement to contribute to building evidence base
18. # 5 KNOW YOUR ROLE : recommendations by type of actors 18 Actors Key recommendations for each type Water users (corporations) • Join multi-sectoral governance platforms for water management • Contribute funding for NbS and investments for water security • Consider NBS as a key way to deliver on multiple objectives, including in terms of water stewardship, biodiversity, carbon neutrality targets. Farmers • Adopt improved farming practices to reduce pressures on water resources • Embrace NbS-WS as a way to get a just retribution for land stewardship services they can provide, with benefits in terms of income and recognition • Seek facilitated access to credit to help with the transition Public financiers • Provide grants for innovative projects and seek to de-risk private financing • Move towards a loan-based model for NbS-WS with clear revenue streams Private financiers • Engage with water actors, public funders and intermediaries to better articulate what sustainable finance opportunities they are looking for • Seek returns on multiple fronts: financial, environmental and social Intermediaries (NGOs, consultancies, academic institutions) • Bridge information and knowledge gap between water sector actors / funders/ financiers • Perform a brokering role: help build project pipelines and match with funding and financing • Innovate and develop outcome-based blended finance vehicles
19. Key take-aways • European water security challenges are significant and will be exacerbated by climate change and urbanization: these challenges are closely inter-linked with freshwater biodiversity sharp declines and climate adaptation • Nature based solutions can generate multiple benefits: scale-up will call for “smarter funding and financing” • Mobilize repayable finance to bring benefits forward into the present • Blend funding and financing with different risk / return expectations • Focus on generating and measuring results ! 19
20. Thank you for your attention! Photo: © Kevin Arnold Contacts: Sophie Trémolet, Water Security Director - Europe (sophie.tremolet@tnc.org) Anna Favero, Europe Water Security Policy Officer (anna.favero@tnc.org)