Unlocking Finance for Nature-based Solutions (NbS) in Indian Cities

The report analyzes the challenges and opportunities for financing nature-based solutions (NbS) in Indian cities, noting a heavy reliance on public funds and a lack of bankable project pipelines. It maps a wide array of financial and business mechanisms—ranging from green bonds and CSR funds to land value capture—and provides early recommendations to improve the enabling environment, project bankability, and the diversification of funding sources to enhance urban climate resilience.

• Global finance for nature-based solutions (NbS) is significantly underfunded, totaling USD 220 billion annually in 2023, and must reach at least USD 571 billion by 2030 to meet climate, biodiversity, and land degradation targets.
• NbS finance is dominated by public funding, which accounted for 90% (USD 197 billion) of total flows in 2023, while private finance contributed only 10% (USD 23 billion).
• Indian cities face high climate risks, with projected flood-related losses of USD 5 billion by 2030 and USD 30 billion by 2070, yet the adoption of urban NbS is hindered by weak creditworthiness of Urban Local Bodies (ULBs), limited technical capacity, and a lack of bankable project pipelines.
• India has established several national and state-level frameworks to support NbS, including the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), the Smart Cities Mission, the MISHTI mangrove initiative, and proactive urban planning frameworks in Tamil Nadu and Maharashtra.
• The report identifies a diverse catalogue of financial mechanisms (such as green/blue bonds, CSR, and ODA) and business mechanisms (such as Payment for Ecosystem Services, land value capture, and carbon credits) to recover costs and capture value from urban NbS.
• Analysis of best practices suggests that rigorous performance reporting, aggregating projects to a minimum of 2,000 hectares for feasibility, and linking risk transfer mechanisms like parametric insurance with natural infrastructure can de-risk investments.
• To scale urban NbS, the report recommends improving the enabling environment through long-term MoUs for land and carbon rights, utilizing ring-fencing to protect assets, and diversifying funding sources to include catalytic public finance for early-stage projects.

APA

Puri, P., Pal, U., Maliwar, S., Kumar, A., John, N., Wadhawan, S., Mishra, R., & Bajpai, A. (2026). Unlocking Finance for Nature-based Solutions (NbS) in Indian Cities. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2026/02/Unlocking-Finance-for-Nature-based-Solutions-NbS-in-Indian-Cities_Overview_Web-Ver.pdf

Chicago

Puri, Parag, Uma Pal, Shruti Maliwar, Aarathi Kumar, Nikhil John, Shreya Wadhawan, Ritwika Mishra, and Aryan Bajpai. Unlocking Finance for Nature-based Solutions (NbS) in Indian Cities. Climate Policy Initiative, 2026. https://www.climatepolicyinitiative.org/wp-content/uploads/2026/02/Unlocking-Finance-for-Nature-based-Solutions-NbS-in-Indian-Cities_Overview_Web-Ver.pdf.

Wikipedia

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BibTeX

@techreport{puri2026unlocking, author = {Puri, Parag and Pal, Uma and Maliwar, Shruti and Kumar, Aarathi and John, Nikhil and Wadhawan, Shreya and Mishra, Ritwika and Bajpai, Aryan}, title = {{Unlocking Finance for Nature-based Solutions (NbS) in Indian Cities}}, institution = {Climate Policy Initiative}, year = {2026}, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2026/02/Unlocking-Finance-for-Nature-based-Solutions-NbS-in-Indian-Cities_Overview_Web-Ver.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }