How can we foster private sector provision of urban NbS?

Why this matters

Small and medium-sized cities in Europe and Latin America face unique challenges in implementing NbS, as most urban land is privately owned. Unlike large metropolitan areas, smaller cities are often not early adopters of NbS and may lack the necessary market size to sustain private-sector NbS providers.

Public and private-sector actors often have different perspectives on how to create an enabling policy environment for NbS. While financial and economic incentives may be assumed to be the preferred approach for businesses, and regulatory measures for municipalities, the reality is that both sectors support a broader mix of policy instruments. These include legislative and regulatory tools, financial mechanisms, knowledge-sharing initiatives, and cooperative agreements. However, without a shared analytical framework, private and public actors may struggle to align their approaches and communicate effectively about policy needs.

Common barriers

A significant barrier to private-sector NbS provision is the lack of enabling policies that create demand from private landowners and a supply of NbS services from businesses. Many small and medium-sized cities have relatively few private enterprises offering NbS, making it difficult to scale up ecosystem restoration and green infrastructure projects.

In some cases, policy barriers discourage NbS adoption, including outdated regulations that favor grey infrastructure, misaligned land-use incentives, and the absence of financial instruments tailored to NbS investments. Without public support for market development, including pilot projects, procurement policies, and certification systems, private companies face difficulty entering or expanding within the NbS sector.

Additionally, good governance is often overlooked as a precondition for NbS markets. Transparent public procurement processes, enforcement of labor and environmental standards, and third-party auditing mechanisms are crucial to ensuring fair competition and long-term market sustainability.

Key challenges and solutions

To foster a thriving NbS market, municipalities need to co-design policy instruments with the private sector, including businesses, non-profits, and local communities. Rather than replicating successful policy models from other cities, NbS strategies must be tailored to each city’s unique economic and environmental conditions.

A key step is to remove existing policy barriers before introducing new instruments. Identifying and addressing market disincentives—such as regulatory restrictions that prevent NbS investments—should be a priority. Cities can also experiment with different policy instruments, testing which approaches are most effective at incentivizing private-sector engagement.

A diverse policy mix is needed to account for different profitability contexts. Some areas may require direct financial incentives, such as tax benefits or grants, while others benefit more from knowledge-sharing initiatives, standardization frameworks, or strategic land-use planning. Public-private partnerships can help scale NbS initiatives by leveraging municipal funding to stimulate private investment.

Ensuring good governance structures is essential to creating stable and attractive conditions for private NbS providers. Municipalities should focus on transparent procurement systems, third-party certification schemes, and policies that support long-term business development rather than one-off pilot projects.