Business Case


The term business case can have different meanings for different people. And even more important, the content and form of a business case differ across public and private sectors and throughout the project cycle. Confusion around what is meant by the term ‘business case’ can be a cause for miscommunication and can be a tread for the investability and so for the realization of a Building with Nature project.

What is a business case? Definitions and key concepts

Generally speaking, a business case is ‘A presentation of arguments that outline the rationale for doing a project from the perspective of the entity or entities doing an investment’. These arguments depend on whether this entity is a public actor or private investor. The business case for a public project addresses the public rationale and impact of the project (e.g. cost-benefit analysis, cost-effectiveness), as well as a practical overview of the cash flow for the public investor;  expenditure, revenues, risks and opportunities. Private investors are likely to focus on the cash flow; financial, commercial and manageability aspects. Other arguments like license to operate or corporate social responsibility may also play a role.

For further reading please have a look at the explanatory note in which we:

  • Explain and clarify definitions and key concepts related to business cases
  • Shortly discuss key tools commonly used to support or develop a business case
  • Highlight how a business case for Building with Nature concepts may differ from a regular – non Building with Nature- project

Institutional & financial context for Building with Nature projects

Mainstreaming Building with Nature in regular infrastructure planning begins with an understanding of the current institutional and financial architecture. Who are the actors involved and how do projects come into being in the markets relevant for Ecoshape’s Building with Nature concepts: aquatic ecosystem restoration, coastal protection and port development & maintenance?

Scaling up investment in BwN requires action at two levels: new approaches to develop a business case at the project development level and an enabling regulatory and institutional environment at the (public or private) investor level. To support these two sides of the coin, we have developed guidance material for these two target groups:

Business developers and project proponents

Ports are key economic drivers with clear revenue streams. Port development, and consequentially key decisions in port design and layout, may be initiated and funded by either public or private actors, or a combination. The application of Building with Nature concepts can help reduce costs, bring additional benefits for society or nature, and in doing so increase the ports’ license to operate, or even generate additional revenue streams. Depending on the port management model, key arguments to choose for a Building with Nature design instead of a traditional ‘grey’ solution might be CSR/ license to operate in order to ensure public support and compliance with social and environmental regulations, cost reduction or – effectiveness or the socio-economic rationale (including co-benefits/ ecosystem services).

Policy makers and actors at financial institutes and governments

Flood risk reduction is typically a public good and therefore funded predominantly by public budgets. However, as these projects typically have high up-front investment costs, in most cases some degree of finance – the provision of monetary resources to be reimbursed over time with interest – is needed to raise the high up-front investment costs. Organisations that provide this finance – for example development finance institutes and adaptation funds – often have some degree of influence in how their loan is spent. They can include the BwN approach as condition for their loans: e.g. the World Bank already states in the condition of certain loans that the framework for ‘Implementing Nature-Based Flood Protection’ should be applied in project development. For further reading please look at the following documents:

  • Explanatory note: the institutional and financial architecture of investment in coastal protection, ecosystem restoration and port development in aquatic systems.
  • A general guideline at the project level on how to develop the business case for a Building with Nature project (developed under the flag of the Interreg Building with Nature in the North Sea Region project) and a tailored advisory note for business developers.

White paper: paving the road to scaling up BwN in Delta environments

Over the past ten years there has been a growing recognition of the potential of nature-based solutions (NBS) to help cope with the challenges of sustainable development, climate change,  and the biodiversity crisis across the globe as evidenced by many ambitions and initiatives. Despite this, the number of projects actually implemented around the globe remains limited, with the majority of infrastructure investments still targeted towards conventional solutions. To achieve the required systemic change, the gap between the scientific / engineering communities, public authorities and the financial world needs to be bridged, and institutional structures better geared to facilitate investment in NBS.  In a white paper together with consultant and investor Rebel Group, we discuss advantages and disadvantages of NBS compared to “grey” engineering solutions from an economic perspective and discuss barriers to the widespread uptake of NBS in public and private investments and how these can be overcome. Read the whole paper.

White paper: scaling up Building with Nature in the Netherlands

The need for a different approach in infrastructure management is clear in the Netherlands across an array of challenges such as flood safety, drought management, biodiversity crisis and water quality goals. Yet, despite an array of pilots, BwN is still far from mainstream. A key barrier is that the multi-functional character of BwN is ill-reflected in the typical monofunctional asset management of public infrastructure in the Netherlands. Although from a socio-economic welfare perspective BwN is often more attractive, initial investment costs may be higher, and the value of co-benefits is not always recognized in the decision making process.  A shift from object-based to system-based asset management, including e.g. a move away from compartmentalized budgets, may be part of the solution. In this white paper we explore what institutional and financial boundary conditions need to be changed in the Netherlands to create a more enabling environment for BwN projects,

Under development, expected in February

Developing a BwN business case

Scaling up investment in BwN means moving away from BwN as innovation towards BwN as common practice in infrastructure planning. To achieve this aim, action is required at two levels:

  1. creating an enabling regulatory and institutional environment at the (public or private) investor level, and;
  2. develop new approaches for business cases at the project level.

For the latter, we illustrate these three key aspects:

Seek new cooperation: connect traditional engineering and nature conservation expertise with financial knowledge to define an optimum business model and financing: Think global and act local.

Think global: the world is facing all kind of troubles, such as climate change, degradation of biodiversity, decrease of important biotopes. Ecosystems are under pressure. To combat these negative developments the UN have launched the Sustainable Development Goals in 2015, and the UN has proclaimed 2020-2030 the decade of ecosystem restoration. Ecosystems all over the world are important contributors to achieving the SDG, e.g. in providing and supporting food, employment, resiliency, etc.
Act local
: To achieve the potential contribution of healthy ecosystems at the project level, working with local stakeholders and local expertise and analyzing the local ecosystem services is a first step. Construct a BwN solution which solves the problem at hand, whilst at the same time adding value for the local community and the local ecosystem, in the spirit of the SDG’s. This is the best way to find added value, to get acceptance and local support and to find additional funding sources for the project.

Better estimates of maintenance costs and the additional ecosystem services and benefits

Nature is dynamic and flexible and so Building with Nature may be more suitable than conventional solutions to deal with changing (e.g. climatic) circumstances in the long term: “be adaptive to become resilient”.  On the flip side, the dynamic character of BwN may also be associated with more uncertainties and less predictability. BwN solutions typically have lower investment costs but higher (and more uncertain) maintenance costs. To address this, extra effort in predicting lifecycle costs and developing action perspectives for dealing with uncertainties and risks increase the confidence in the viability of the project, for more information also read our enabler on adaptive management, maintenance and monitoring.

Co-investment, financing arrangements and pre-requisites

The multi-functional character of BwN creates opportunities for a wide array of investors to invest in BwN projects. BwN solutions provide additional values for society in the form of ecosystem services. These may for example lead to improved fish abundance, food production, recreation opportunities and availability of fresh water, leading to the well-being and even the prosperity of the regional economy. Quantifying these aspects and identifying key beneficiaries can help convince existing (public) investors and identify co-investors, leading to financial arrangements. If the contribution to the global challenges (SDG’s, Climate Adaptation, Ecosystem Restoration) is evident, a range of funds and IFI’s may be willing to support the financing of the project (i.e. provide a loan) under attractive conditions.  If private value streams can be connected the project, it may also be possible to attract private investors. By identifying potential public and private investors from the early stages of project development and engaging with them throughout, a strong and solid business case can be developed.

Because BwN considers several aspects that are important for society and nature, a business case for BwN is less straight-forward than for traditional projects. Developing a business case is a process, not a project: it consists of iterations. So, a clear procedure to come to a proper business case will help the realization of BwN solutions. We have developed various documents that aim to support business developers through the procedure to build a sound business case for a BwN project.

Within the INTERREG BwN in the North Sea region project we developed a guidance document on ‘Making a (business) case for  BwN’.

Building on this document, we developed a shorter, more targeted guidance note for business developers around the globe, following the slogan: think global act local and is thus applicable around the globe, which can be read here.

As illustration we enclose three in-depth business cases around northern Europe: Denmark, Scotland and the Netherlands, also developed under the INTERREG project.