NBS Business Model Methodology

With this practical methodology, we aim to help practitioners in various sectors and positions to develop business models for Nature-Based Solutions (NBS) projects that they want to promote to address challenges related to the Water-Energy-Food Nexus.

The business model's development helps identify various elements to make possible the implementation of the solution; ranging from defining the necessary resources, the critical partners to collaborate with, the governance arrangements to maintain the solution, and the solution's cost structure up to a point to identify possible financing sources.

The Business Model Canvas proposed to apply in the context of the LENSES project follows the original Business Model Canvas by Osterwalder and Pigneur, with novel adaptations specifically to fit the case of NBS options provided by the Connecting Nature and the NAIAD projects.

The development of NBS business models consists of 3 phases

Value Proposition Phase

Defining the project's value proposition.

Value Creation and Delivery Phase

Determining how the project creates and deliveries value.

Value Capture Phase

Establishing how the project captures value.

The Value Proposition Phase consists of defining how, according to the identified Nexus challenges, the proposed NBS is offering value from the environmental (e.g., addressing droughts), social (e.g., increased food security), and economic (e.g., job creation) dimensions. Moreover, this step helps consider and prioritise trade-offs between these dimensions. Here, the user (e.g., practitioner, decision-maker) must address the following questions:

Value Proposition Phase

What are the main challenges of the WEF Nexus present in the area at the scale the user can impact?

TIP: Filter from the 12 societal challenges.

What is the primary service of the selected NBS?

TIP: Prioritize one Ecosystem service.

What are the secondary services (co-benefits) of the selected NBS?

TIP: Add other Ecosystem services.

Which are your selected NBS for addressing these challenges and providing these services?

TIP: From the list of NBS, please select the three most important ones and provide a small description.

What value does the selected NBS offer to the different groups of beneficiaries? What is the Environmental, Social, and Economic value proposition?

TIP: An example with planting tree strips - the Environmental value proposition could be to intercept superficial run-off and create habitat for birds. Social value proposition could be an increase in people's health due to the trees' shade and the temperature regulation. Economic value proposition could be an increase in the property price due to aesthetic values.

What could be the potential trade-offs between the mentioned ecosystem services and the mentioned value propositions?

TIP: Think of examples in which the increase in the value of one dimension could reduce the value in another. This question helps to be aware of these situations and minimize such trade-offs. For example, by establishing ponds/wetlands to trap sediments and pollution, the increase in the environmental value could decrease the economic value by reducing the arable area.

Furthermore, the Value Creation and Delivery Phase helps establish the key activities, resources, and partners needed and identify the key beneficiaries to implement the NBS effectively. In this stage, the project developers must address the following questions:

Value Creation and Delivery Phase

What are the key activities required to deliver the Value Proposition?

TIP: Make a detailed list of the activities necessary to implement each NBS selected in the Value Proposition Phase. These activities range from obtaining permits from the corresponding authorities to the actions required to establish and maintain the NBS.

What are the key resources needed to deliver the Value Proposition?

TIP: Provide a list of the resources needed (physical, human, political, and natural) to implement each required activity. For example, technical knowledge, political support, tree seedlings, etc.

Who are the Key Partners required to perform the activities and achieve the resources, to deliver the Value Proposition?

TIP: Consider and list all the partners required to implement the activities and deliver the resources listed before. This list includes, e.g., financing partners, local communities, municipalities, public authorities, operators, etc.

Who are the Key Beneficiaries of the Value Proposition?

TIP: Consider and list all the potential direct end-user and indirect beneficiaries from the NBS project, i.e., all the actors who retrieve value from the project's implementation. In some cases, key beneficiaries are also key partners. For example, a local authority needed to approve an NBS project such as restoring a wetland could also benefit from potential future tourism revenues.

Finally, the Value Capture Phase is used to propose the cost structure and formulate the financial part of the NBS project, a stage useful among others to apply to potential funding mechanisms. The core questions for this phase are the following:

Value Capture Phase

Please provide an estimate of the costs required to implement the selected NBS to deliver the Value Proposition (at this point the estimate does not have to be particularly precise).

TIP: Map the most important cost categories associated with the implementation of the NBS. It might be useful to consider two different categories of costs: Lifecycle costs - The total cost of an asset throughout its life including planning, design, implementation, management, and maintenance costs. Opportunity costs - Include the benefit, profit, or value that would have been generated by implementing other alternatives.

What are the fixed costs associated with the NBS?

TIP: An example of fixed costs could be the personnel cost of a team of gardeners undertaking annual maintenance work.

What are the variable costs associated with the NBS?

TIP: An example of variable costs could be the number of trees which need to be replanted each year, which may vary.

How can we generate monetary revenue from the value proposition?

TIP: Think of the potential instruments and sources that could help fund and maintain the NBS project based on the identified key partners and beneficiaries. Examples of these instruments include private funding, money transfers from grants/institutional funds, taxes, tariffs, etc.

What indicators can be used to capture 'non-monetary' value? e.g., environmental indicators, social indicators (including health and wellbeing where relevant).

TIP: These two questions help us think about how the value of the NBS can be captured.

Including ecosystem services delivery in the NBS cashflow.

TIP: Please provide the data requested in the file “Data Request” for each kind of indicators (i.e., supply, demand, value).