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

The document addresses the financing gap for urban Nature-based Solutions (NbS) in India, where investment remains heavily dependent on public funds. It proposes a three-step guidance framework: identifying the enabling policy environment, leveraging financial and business mechanisms, and applying a nine-factor project evaluation framework. The guide maps existing Indian national and sub-national policies—including forestry, water, and infrastructure schemes—that can be leveraged for NbS. It also catalogues various financial instruments (such as municipal bonds, green bonds, and blended finance) and business models (including carbon credits and user-pay systems) to improve project bankability. A repository of nine global and domestic case studies, such as Chennai's municipal bonds for stormwater drainage and Chicago's Tax Increment Financing for green roofs, illustrates replicable approaches for Indian urban contexts.

• Urban NbS in India are currently underfunded and overly reliant on public sources, with a significant disparity between government and private sector contributions due to factors like uncertain economic returns and a lack of standardized impact evaluation.
• The document establishes a three-step framework to make urban NbS more investable: (1) assessing the policy and regulatory enabling environment, (2) identifying appropriate financial and business mechanisms, and (3) evaluating projects using a nine-factor framework to ensure scalability and viability.
• India's existing policy landscape, while not always explicitly mentioning 'NbS', contains numerous 'nature' focused subsystems in forestry, land, water, biodiversity, and infrastructure that can be leveraged to support NbS projects.
• Specific Indian financial regulatory frameworks can be utilized to mobilize resources, including the Companies (Corporate Social Responsibility Policy) Rules 2025, the Green Credit Programme 2023, and SEBI's Green and ESG Debt Securities Framework.
• Financial mechanisms (which focus on capital allocation and feasibility) and business mechanisms (which focus on value capture and cost recovery) are complementary; a clear business model is essential to provide the rationale for financial instruments to attract investment.
• The guide identifies a diverse range of financial instruments for NbS, categorized into public finance (subsidies, fiscal transfers), private finance (green bonds, impact bonds, venture capital), and blended finance, which combines different capital types to mitigate risk for private investors.
• A nine-factor evaluation framework is proposed to assess NbS projects across four themes: Definitional Fit, Diversity (including local factors and governance), Performance (scaling and maladaptation), and Financing (bankability and innovation).
• Case studies demonstrate the viability of diverse mechanisms: Chennai used municipal bonds (INR 200 crores) for stormwater drainage, Surat used a blended model for the Tapi Riverfront, and Chicago utilized Tax Increment Financing (TIF) for a Green Roof Improvement Fund.
• Stakeholder insights reveal that the lack of technical capacity in local governments and the difficulty in monetizing co-benefits (such as health and biodiversity) are primary barriers to scaling urban NbS in India.

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_Guidebook_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_Guidebook_Web-Ver.pdf.

Wikipedia

{{cite report |last1=Puri |first1=Parag |last2=Pal |first2=Uma |last3=Maliwar |first3=Shruti |last4=Kumar |first4=Aarathi |last5=John |first5=Nikhil |last6=Wadhawan |first6=Shreya |last7=Mishra |first7=Ritwika |last8=Bajpai |first8=Aryan |title=Unlocking Finance for Nature-based Solutions (NbS) in Indian Cities |publisher=Climate Policy Initiative |date=2026 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2026/02/Unlocking-Finance-for-Nature-based-Solutions-NbS-in-Indian-Cities_Guidebook_Web-Ver.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

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_Guidebook_Web-Ver.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }