The Economic Case for Nature-Based Infrastructure

Nature-based infrastructure (NBI), such as wetlands, forests, coastal systems, and urban green spaces, is increasingly recognized as a viable alternative to conventional “grey” infrastructure. NBI delivers essential services such as flood protection, water regulation, and climate resilience, while also restoring ecosystems and supporting local livelihoods.

Despite this potential, NBI remains difficult to finance. Its value often shows up as avoided costs and co-benefits rather than direct revenue, making it hard to fit into conventional infrastructure appraisal and budgeting.

IISD’s Nature-Based Infrastructure Global Resource Centre has spent five years building the evidence base to address this gap. This report draws on 45 project assessments across 29 countries, using the Centre’s Sustainable Asset Valuation (SAVi) methodology, which monetizes the ecosystem services and social co-benefits that conventional infrastructure appraisals typically leave out.

The findings show that for every USD invested, NBI delivers USD 3.21 in benefits, and a median internal rate of return of 38%. This performance holds consistently across forest, wetland, urban, and coastal project types. A single wetland or forest also delivers multiple services at once, for example, flood mitigation, water purification, and temperature regulation, a form of multifunctionality conventional infrastructure cannot replicate.

The report sets out recommendations for governments, development finance institutions, philanthropic and bilateral funders, and project developers, covering appraisal and procurement reform, integrating natural assets into public asset management, and developing outcome-based and blended financing structures.