Cities are increasingly dealing with higher temperatures, extreme weather events, and social inequality. In this context, nature offers practical ways to strengthen urban resilience. Nature-based solutions (NbS) – such as urban forests, green corridors, wetland restoration, sponge parks – can help cities promote biodiversity, manage climate risks, support public health, and improve essential services. When integrated into urban planning, these interventions contribute to more stable, resilient and effective city systems.
While NbS are gaining recognition in urban strategies, turning ideas into action remains a major challenge, with financing consistently cited as the biggest barrier. In fact, many city officials and urban practitioners are grappling with a common question: How can nature-based solutions be financed in ways that are sustainable, scalable, and socially fair? Addressing this challenge requires a fundamental shift in how NbS are planned, valued, and integrated into urban investment frameworks.
1. Creating an enabling environment
Cities face tight budgets, and NbS often compete with more traditional infrastructure projects – like roads, drainage systems, and buildings – for financing. These projects typically have clear financial models, while the benefits of NbS tend to spread across different sectors and may take years to materialize.
Even financing mechanisms are usually built around single-sector, short-term projects, while nature offers cross-cutting, long-term benefits. And since these interventions do not always generate direct revenue, it is harder for cities to justify them using conventional cost-benefit analysis.
Public procurement systems can add further complexity. These rules and procedures are often not designed to handle multi-benefit projects or nature-based approaches, which can in turn hinder or delay implementation.
Unlocking more funding for nature-based solutions requires addressing the issue on multiple fronts. Financial institutions and governments must adapt existing frameworks to account for the full suite of NbS co-benefits. At the same time, municipalities must break down institutional siloes so departments responsible for environment, health, infrastructure, and finance can jointly plan and deliver nature-based projects.
2. Embedding nature-based solutions in urban planning and public budgets
When cities plan green infrastructure from the outset, it becomes easier to align financial strategies and policy support. Indeed, embedding NbS into climate action and adaptation plans, infrastructure development, and land use policies helps ensure they are part of high-level decision making. This also improves coordination across departments and levels of government, which is essential to unlock public financial resources and attract external ones.
In particular, many funding mechanisms are still channelled through national governments and may not prioritize or reflect local needs. If cities are able to align their local plans with national frameworks such as Nationally Determined Contributions (NDCs) and National Adaptation Plans (NAPs), they will be in a better position to access such funding. That said, they should still be empowered to directly access funds and have stronger roles in national climate and biodiversity planning.
3. Building investment-ready projects
To attract both public and private investment, cities must develop bankable NbS projects that are well-designed and aligned with investor expectations. This goes beyond technical planning: It involves engaging stakeholders, assessing risks, and valuing or monetizing a range of co-benefits.
Smaller and medium-sized municipalities, especially in countries with constrained institutional capacity, often face greater hurdles in preparing these proposals. Limited staff, technical resources, and political leverage make application processes, which are often complex and resource-intensive; particularly difficult. Without streamlined procedures and targeted support, these cities risk being left behind. Project preparation facilities can help bridge this gap by supporting feasibility studies, financial structuring, and robust monitoring frameworks.
One practical resource to navigate in this complex subject and find solutions, is ICLEI’s Guide to Biodiversity Financing for Cities and Regions, developed under the INTERACT-Bio project. It outlines the key steps for project development, introduces the most commonly used financing instruments, and presents a structured collection of resources, definitions, and case studies. From project identification to implementation and monitoring, the guide provides seven key stages of the project development cycle and explains the necessary activities at each stage.
4. Exploring blended finance and partnerships
Blended finance, which brings together public, private, and philanthropic capital, is increasingly being used to support sustainable urban projects. In the case of NbS, public financing can help de-risk investments for private actors or support projects elements that do not generate direct revenue, such as community engagement or ecological restoration.
Additional financial mechanisms cities can explore are green bonds, impact investment funds, and public-private partnerships (PPPs). For example, a city might issue a green bond to restore a degraded watershed that also supplies drinking water and flood protection, delivering both environmental and social returns.
In other cities instead, civil society organizations and community groups have successfully co-designed nature-based interventions and secured external funding by demonstrating measurable improvements in wellbeing and climate resilience.
What are cities already doing
While finance is a shared challenge, solutions must be tailored to local contexts. This was one of the main outcomes from two global climate events held in June 2025 in Bonn, Germany: The Daring Cities 2025 Bonn Dialogues, where ICLEI and the NetworkNature co-hosted a session on urban nature finance, and the UN Bonn Climate Talks SB62, which included the side-event “From National to Local: Assessing the Opportunities for NbS in the Urban Context of NDCs and NAPs.” While core principles like early integration, multi-stakeholder collaboration, and innovative financing mechanisms have broad relevance, a financial model that works in a major European city may not be suitable for a small municipality in Asia or Africa.
Some cities are already showing what is possible. In Pakistan, cross-subsidization and community partnerships are supporting municipal NbS. In Brazil, a dedicated urban nature fund is helping cities move from planning to implementation. Across South Africa, NbS are being used not only for climate adaptation but also to promote social equity. These examples demonstrate that scaling NbS is achievable when financing systems are designed to support them.
NbS are more than environmental initiatives. They function as infrastructure, enhance public health, enable climate adaptation, and represent long-term investments in sustainable urban development. Cities are already leveraging them through innovation and collaboration, yet financial systems have not evolved at the same pace. Urban practitioners need more support to develop, finance, and implement NbS. Bridging this gap requires that governments and donors fully acknowledge the broad benefits of NbS, including their contributions to public health, social equity, and economic resilience.
This blog was written by Natalia Salazar (ICLEI World Secretariat) and and Daniela Rizzi (ICLEI Europe | NetworkNature coordinator), and edited by Matteo Bizzotto and Barbara Riedemann (ICLEI World Secretariat), and was originally published on the ICLEI World Secretariat website.