return on investment (ROI) 101

During this step, the core project team will define the beneficiary(ies) of the NbS interventions and ecosystem services that affect the water security challenges the defined beneficiary(ies) care about improving. 

Team Members: Project Manager, Stakeholder Engagement Specialist, Ecologist, Hydrologist. 

Core Questions

• Who are your target beneficiaries? What are their views about nature-based solutions? Do they understand the potential benefits?
• Who are your stakeholders? 
• Does your team have a strong relationship with the stakeholders and beneficiaries you have outlined?
• What benefits do your beneficiaries and stakeholders care about? 
• Are your beneficiaries willing to provide you with details about their operations and associated costs?
• This will be very important in subsequent steps to calculate the beneficiary’s return on investment (ROI). 
• What ecosystem services provide the benefits your beneficiaries and stakeholders care about? 
• What metrics can you use to measure ecosystem services that represent their value to your beneficiaries and stakeholders?

Stakeholder Consultation

During the initial stakeholder consultation, your team should define:

• The benefits and co-benefits your beneficiaries and stakeholders care about.
• The ecosystem services that provide the benefits your beneficiaries and stakeholders care about;
• The metrics you can use to measure ecosystem services that represent their value to your beneficiaries and stakeholders.

You should also confirm whether your beneficiaries are willing to provide you with details about their operations and associated costs. Understanding the true costs of your beneficiaries’ operations (Step V), will help produce an accurate return on investment calculation in Step VII. 
If your beneficiary is the local utility, the Stakeholder Engagement Specialist can help your team understand the utility’s concerns and craft messaging to get the utility on board. Utilities may not be convinced that NbS can improve ecosystem services to help meet demand, can be more cost-effective than alternative grey infrastructure, or help improve its functionality. During this step, you should inform other local stakeholders and experts — identified during analysis preparation — of advancements in the process and any future requests for their time and input. 

During this step, the project team will begin to associate the ecosystem services defined in Step I with NBS interventions, like reforestation or protection, that can improve their outcomes. In this section of the economic and financial analysis, the project team will focus on the improvements they can make to ecosystem function that will, in turn, improve the ecosystem services about which their beneficiaries care. Refer to the Nature-based Solutions Deep Dive and the Green-Grey Deep Dive for helpful guidance on choosing potential NbS options.

NbS Deep Dive  Green-Grey Deep Dive

Note, that if you are producing an economic and financial analysis for a water fund, this step may have been partially completed during the feasibility stage. During the feasibility assessment, the team will have likely already identified challenges the watershed is facing — water availability, flooding, water quality, etc. — and possible interventions that could improve ecosystem function and, therefore, ecosystem services.

Team Members: Project Manager, Stakeholder Engagement Specialist, Ecologist, Modelling Specialists and Hydrologist 

Core Questions 

• What improvements in ecosystem function could, in turn, improve the identified ecosystem services?
• What conservation interventions can improve the identified ecosystem function?

Stakeholder Feedback

After having identified the interventions that could improve ecosystem function, some teams choose to run this list of interventions past their stakeholders to solicit their feedback, particularly regarding the estimated costs of these interventions. Further, teams have found that consulting their stakeholders — even briefly — during this step provides an opportunity for them to raise questions or concerns before the modeling process begins and serves as another engagement touchpoint to strengthen relationships.

In some cases, this step may have already been completed as preliminary work ahead of the economic and financial analysis, but many teams use this step to develop relationships and solidify commitments to collaborate.

Connecting Ecosystem Services and Interventions case study

Having laid the theoretical groundwork for looking into returns on investment from ecosystem services, the presentation video below runs through a case study of municipal water supply and ends with issues around developing a rigorous mathematical model exercise.

Watch Video

During this step, the project team will model a business-as-usual scenario. You will be modelling what the watershed would look like in the future without NbS intervention from your program, and how this is expected to impact the ecosystem service(s) you identified in Step I. You will need a specialist for this step who can model the projected land use and land cover change and how these will affect the hydrology of the watershed. Often, the team will contract with highly specialized, technical staff who will be able to build, calibrate and run a model for the study area — watershed / catchment, sub-basin, etc. — your team has identified.

Your contractor or modelling specialist(s) will perform this step. See a template Terms of Reference [LINK] resource for teams who will contract out the modelling portion of the analysis.

Team Members: Project Manager, Stakeholder Engagement Specialist, Ecologist, Modeling Specialists and Hydrologist

Core Questions

• What are the recent patterns of land-use-land-cover change?
• Do you have LULC data stretching back at least 10 years?
• What is the spatial resolution of these LULC changes? Are the expected LULC changes detectable at the spatial resolution satellite imagery is available? If not, are in-situ data available?
• Do you foresee a change in any major drivers of recent LULC change (e.g., expected policy or regulatory changes, major changes in markets, or future infrastructure development)?
• Is accurate, reliable data for the watershed available on the hydrologic parameters of concern (e.g., precipitation, streamflow, suspended solids, nitrogen)? What is the length and spatial and temporal resolution of these data?
• What time horizon is most appropriate for your beneficiaries? Do your key beneficiaries have peak and off-peak season demand patterns or temporally variable water quality concerns (e.g., after high-precipitation event; during low flow periods) you should be aware of?
• What are your beneficiaries’ current and projected water supply requirements and how do they plan to meet these needs? What are the projected costs of the planned interventions? It may also be useful to understand how they plan to fund the future options, e.g., water tariffs, repayable financing, etc.
• What is the current and projected water demand in the basin? (not just for your beneficiaries)
• What level of uncertainty in hydrologic outputs is acceptable to your beneficiaries?

Stakeholder Consultation

• During the stakeholder consultation, your team should define:
• The time horizon most appropriate for your stakeholders.
• Whether your beneficiaries have peak and off-peak season demand patterns or temporally variable water quality concerns.
• The level of uncertainty in hydrologic outputs that are acceptable to your beneficiaries.
• The most appropriate models to demonstrate land-use-land-cover change, hydrologic and hydraulic conditions in the basin of interest, as appropriate.

Your beneficiaries and stakeholders may also have preferences regarding the types of data — and their resolution and timescale — your team uses for the analysis. Most teams will have confirmed data availability during analysis preparation, but you may have recruited additional stakeholders into the process between the pre-work and model development. Using the same data your beneficiaries and stakeholders employ to make operation and management decisions could strengthen the results of the return-on-investment analysis; outputs are more likely to be comparable to other analyses your beneficiaries use to consider alternative infrastructure investments. During this step, your team should also consult with other well-regarded experts and stakeholders to ensure they agree with how the analysis is undertaken. After the BaU modeling, your team should reconvene with your beneficiaries and stakeholders to share preliminary results and solicit their feedback before moving onto the interventions.

In reality, this step is likely to require several touchpoints with your stakeholders depending on the complexity of the modeling, the data requirements, the level of uncertainty they’re comfortable with, etc. The Stakeholder Engagement Specialist must maintain consistent, strong communication with your stakeholders, including prior notice to schedule meetings, and ample time to review and provide feedback on products from your modeling specialist(s). Figure 5 below shows some of the models that can be used to model ecosystem function in a watershed. You can also visit the Tools Page.

During this stage of the economic and financial analysis, your project team will develop an intervention portfolio based on the costs and benefits of potential NbS. The intervention portfolio describes the type of activities that will be implemented, where they will be implemented within the watershed, and when they will be implemented. You’ll also model what the watershed will look like when the activities in your intervention portfolio are implemented. To move on to this next step, your BaU LULC and hydro-sedimentological and water quality (and, where flood mitigation is a key objective, your BaU hydrodynamic) modeling will need to be complete. Results from the intervention scenario will be compared to the BaU LULC and hydro-sedimentological and water quality and/or hydrodynamic models to quantify the difference in the performance of the ecosystem function. 

Your contractor or modeling specialist(s) will perform this step. See a template Terms of Reference  resource for teams who will contract out the modeling portion of the analysis.

Team Members: Project Manager, Ecologist, Modeling Specialists, Hydrologist, Economist. 

Core Questions

• What restoration activities are included on the list of potential interventions? How much do these interventions cost?
• What conservation activities are included on the list of potential interventions? How much do these interventions cost?
• Where in the watershed does the BaU LULC model indicate the greatest amount of land change?
• Of the LULC areas indicated, which will have the greatest impact on ecosystem function as indicated by the hydro-sedimentological and water quality models?
• What is your cost-effective intervention portfolio?
• What is the difference in ecosystem function — and ecosystem benefits — between your BaU and Intervention scenario?

Stakeholders Consultation

Using the list of potential interventions and their associated costs identified in Step II, your modeling specialists will choose the interventions that will produce the highest improvement in ecosystem services, as compared to the BaU scenario, for the least cost. After your modeling specialist(s) has modeled the intervention scenario for your NbS project, you should communicate the preliminary results to your stakeholders. However, be very clear that these are not the final results, but rather the projected improvement in ecosystem services.

In this section, your team will take the analysis a step further by monetizing the benefits of these ecosystem services, specifically as they relate to your beneficiary. At the end of this step you should have an estimate of the benefits to your beneficiaries.

Your contractor or Economist will perform most of this step. Sometimes teams prefer to conduct the stakeholder engagement process, themselves, while other times, they prefer to contract out. See a template Terms of Reference [LINK] resource for teams who will contract out the economic and financial valuation.

Team Members: Project Manager, Economist, Stakeholder Engagement Specialist, Ecologist, Water Supply Systems Specialist.

Core Questions

• Do you have a strong relationship with your beneficiaries?
• Do your beneficiaries have the capacity to collaborate with your team at this time?
• What are the operations of your beneficiaries’ businesses and what are their operations associated costs?
• Do your beneficiaries have peak and off-peak demand seasons you should be aware of?
• When will your NBS interventions be implemented?
• When will investors start to see benefits? By what time will full benefits accrue?

Stakeholder Consultation

For your Economist to perform the return-on-investment analysis, you will need a strong relationship with your beneficiaries to get the required information for an accurate calculation. If you were unable to get clarity in Steps I and III regarding,

• Your beneficiaries’ peak and off-peak season demand patterns. 
• Your beneficiaries’ projected water supply requirements, how they plan to meet the needs and projected cost of these planned interventions.
• Your beneficiaries’ temporally variable water quality concerns.
• Whether your stakeholders are willing to provide you with details about their operations and associated costs

It's important to re-approach your beneficiaries to get clarity, if possible, so you can determine the empirically based benefit functions most applicable to your stakeholders.

Empirically based benefit functions are those quantitative relationships that allow us to economically value ecosystem services in a way that is meaningful to the beneficiaries’ bottom lines. For example, a reduction in total suspended solids concentration could reduce the treatment plant’s application of a specific chemical “Y”, or proportionally reduce the amount of water lost in sludge treatment. Your stakeholders should approve the benefit functions.

In this phase of the analysis, you will identify the costs associated with your program in order to prepare for the economic and financial calculations in the next step; Step VII. At the end of this process, you should have a list of the costs associated with the overall program and the costs incurred by the beneficiaries. These costs will be combined with the outputs from Steps III — V to create a financial model that captures how costs and benefits will decrease or accrue over the lifetime of the NbS program.

Your contractor or Economist will perform most of this step. The project teams will need to provide some data to the contractor so this step can be performed, including, but not limited to, costs incurred by the program to-date and the capital structure of the NbS program. See a template Terms of Reference resource for teams who will contract out the economic and financial analysis.

Team Members: Project Manager, Economist, Ecologist.

Core Questions

• What are the full costs of the proposed NBS program activities to date?
• What are the projected future annual costs of the proposed NBS program based on the expected time profile of each activity?
• How much are your beneficiaries investing in the NBS program or NBS activities?

What is the capital structure? Are there other stakeholders investing? How much are they investing? Are they interested in funding certain NBS activities? Here, capital structure refers to the way the program will fund or finance its NBS through some combination of direct stakeholder investment, debt, equity, or hybrid.

Stakeholder Consultation

This step does not necessarily require consultation with your stakeholders, but some teams choose to touch base to validate program costs, including those assumed to be incurred by the beneficiary. For example, if your team intends to embed the results of this analysis as a permanent function in one of the beneficiaries’ (e.g., utility’s) operations it would be beneficial to get their input before calculating ROI.

Additionally, if the team has questions about developing unit costs for implementation, then it may be beneficial to reach out to stakeholders who have a strong history of implementation on the ground. 
 

During this step your team will calculate the indicators that are most appropriate for your analysis, whether that’s the ROI for a particular beneficiary or group of beneficiaries, the benefit-cost ratio, the cost-effectiveness of the program, overall, or the cost-effectiveness of the change in a particular ecosystem service. In most cases, more than one type of indicator will be calculated. You can also describe the co-benefits of the program which may not be among the ecosystem service(s) targeted, and the program’s positive externalities, e.g., the positive benefits to parties who do not contribute, whether financially or in-kind, to the NBS program. Both co-benefits and positive externalities could justify cost-sharing of the program with additional parties. Some co-benefits are often difficult to quantify or monetize but may be crucial in building support for your program now and in the future. 

Your contractor or Economist will perform this step. See a template Terms of Reference [LINK] resource for teams who will contract out the modeling portion of the analysis. 

Team Members: Project Manager, Economist, Stakeholder Engagement Specialist, Communicator 

Core Questions

• What are the full costs of program activities to date?
• What are the projected future annual costs based on the expected time profile of each activity?
• How much are the beneficiaries investing in the NBS program?
• What is the capital structure? Are there other stakeholders investing? How much are they investing? Are they only interested in funding certain NBS?
• What is (are) the most appropriate financial and/or economic analysis tools and indicators for your stakeholders and/or beneficiaries? What metrics, or indicators, do they use to make investment decisions?
• What is the appropriate discount rate?
• Did your team use an appropriate time horizon?
• What other co-benefits is the program producing?

Types of Financial and Economic Analyses

As mentioned in the introduction, an economic analysis will assess whether the investment is worthwhile for society, while a financial analysis will assess whether the project is viable from the investor’s point of view. It can also help determine whether an NBS program is justified in receiving external support because it provides broader benefits for society. It’s possible for a project to be viable from an economic perspective because it generates multiple co-benefits whose combined value exceeds the total costs of the program, but not from a financial perspective if the benefits for project investors are less than their costs. This can be the case for programs that generate substantial positive externalities or co-benefits for program investors that may not be monetizable or whose value is not fully recognized. 

First and foremost, the analysis your team chooses to undertake will depend on your beneficiaries’ and stakeholders’ preferences; many will prefer and require more than one type. However, some analyses are used more commonly for economic or financial valuation so it’s important your project team confirm with your beneficiaries and stakeholders. A cost-benefit analysis, for example, is typically used by public policy actors to evaluate the total net benefit of the NBS project and is, therefore, a common valuation method for economic analyses. In other cases, the analyses listed below can be used for either financial or economic analyses, depending on the scope of the impacts (benefits and costs) and beneficiaries or other stakeholders included in the analysis. This is why it’s particularly important to speak with your beneficiaries and stakeholders to understand their preferences. 

After projecting the estimated costs and benefits of an NBS project — or program — using one or more of the analyses below, your team will also need to decide which summary indicators, or metrics, they will calculate to assess the viability and profitability of the project or program. Again, the indicators chosen should be what your beneficiaries or stakeholders use to make their investment decisions. 

A cost-benefit analysis (CBA) helps assess whether a proposed NBS investment is worthwhile for society, as a whole. This tool can help define the optimal investment package for society and the environment by valuing a broader set of impacts. Monetizing a large number of benefits, however, can be challenging especially if attempt¬ing to do so rigorously and for many beneficiaries. Instead of attempting full monetization, most CBAs focus on valuing key economic costs and benefits while capturing others in qualitative terms.

A cost-effectiveness analysis (CEA) assesses how an NBS intervention or a combination of NBS interventions performs in terms of cost per unit change in a single targeted ecosystem function, or, inversely, the change in ecosystem service per unit cost (e.g., the concentration of TSS of water at the intake of the municipal water supply). You can use this value to compare the program’s ROI to that of other alternative interventions investors may be considering that produce the same ecosystem service. For example, the cost of removing invasive plant species versus the cost of constructing a new desalination plant to increase water supply. 

A CEA can assess how much a given investment in the program will change the target ecosystem service, for a specific intervention portfolio. This calculation can be performed per beneficiary or for the group of beneficiaries investing in the NBS program. Including a larger number of beneficiaries in the calculation will increase the ROI of the program because the quantity of beneficial impacts captured in the analysis, likewise, increases. Similarly, for any given program size, a larger number of financial contributors to the program will tend to increase the ROI for each beneficiary because of increased cost sharing. Your team can produce cost-effectiveness measures for each intervention and the whole portfolio of measures. 
If your analysis is assessing multiple ecosystem services, you’ll want to assess the cost-effectiveness of your NBS intervention scenario for each ecosystem service; with indicators such as cubic meter of additional water supply during times of scarcity; reduction in sediment flowing into reservoirs; reduction in sediment concentrations in water abstracted directly by households and by the public utility; reduced number of flooded structures, etc. This will result in one cost-effectiveness metric for each target outcome, with all conservation scenario costs assigned to that outcome. These are called single-objective cost-effectiveness metrics.

On the other hand, multi-objective cost-effectiveness metrics allow you to assess how cost-effective your full intervention scenario is in achieving the complete suite of target ecosystem services. With multi-objective metrics you can compare your intervention scenario with a bundle of alternative, conventional interventions that provide the same suite of ecosystem services. This is particularly useful when a beneficiary is considering several investment options. However, since the target outcomes have different units (cubic meter of additional water supply during times of scarcity; reduction in sediment concentrations in water abstracted directly by households and by the public utility; reduced number of flooded structures, etc.), no single cost-effectiveness metric can be calculated for a multi-objective intervention suite. 

If the NBS interventions generate multiple important benefits, then calculating cost-effectiveness separately for each benefit ignores the multi-benefit nature of the NBS program and distorts its comparison with common single-objective, grey alternatives. There are ways around this, by assigning costs to individual ecosystem services based on their relative importance, which is not always easy. One way of determining these shares is to base them on the relative costs of an alternative, conventional intervention portfolio that produces similar quantities of the suite of target ecosystem services you’re interested in. For example, you could look at the cost of water storage infrastructure that’s been combined with sediment removal and floodwater retention infrastructure. Your consultant can help your project team explore other rationales for deriving cost shares. 

Cost-benefit analysis, however, avoids this challenge by expressing all beneficial impacts using a common metric (monetary value), and thus is better suited to analyzing programs that generate several important benefits.

Financial and Economic Indicators

Your team should view summary indicators, or metrics, as tools to assess and communicate the financial or economic viability of your proposed NBS program. These are listed below. It’s recommended that your team calculate the same indicators your beneficiaries or stakeholders use to make investment decisions.

The net present value (NPV) is often used in investment planning to analyze the profitability of a future project. A positive NPV indicates that the earnings generated by a project are projected to exceed its anticipated costs. Therefore, a project with a positive NPV will be profitable and a project with a negative NPV will result in a net loss. To understand how NPV is calculated, it’s important to understand present values and discount rates. The present value (PV) (sometimes referred to as the present discounted value) is the current worth of a future value or future stream of values. To get this present value, future values are discounted using an appropriate discount rate.

The benefit-cost ratio (BCR) is used to express the size of a project’s benefits relative to its costs, both expressed in PV terms. If a BCR is greater than 1, benefits exceed costs and the project is considered a potentially justified investment, depending on the BCRs of competing projects.

The internal rate of return (IRR) is the rate at which the net present value of a project reaches zero; the discount rate (see next section). It uses financial rather than economic costs (Step VI) and refers to the rate of return — or annual rate of growth an investment is expected to generate — for the project implementer. The higher the rate is, the more attractive the project will be for the implementer. IRR is one way to compare different types of investments because it can be used to rank multiple prospective projects using relatively objective criteria.

The monetized ROI divides the monetary value of the ecosystem service improvements (caused by the NBS program) by the cost of the program. While the IRR indicates the annual rate of growth, ROI indicates the total expected growth of the investment over its lifetime. An ROI exceeding 1 indicates a positive return on investment; an ROI less than 1 indicates a negative return on investment. If your calculation does yield a negative ROI, it doesn’t necessarily mean that the program is not economically viable as it may produce co-benefits of value to your beneficiaries or other stakeholders that have not been included in your analysis.

Factors that Influence ROI

It’s worth noting that many factors can influence ROI – these are listed below.

Time horizon — Time horizon for your ROI calculation that made the most sense for your beneficiaries’ circumstances. This time horizon indicates the period over which your program should generate a positive return on investment in order to be competitive with grey infrastructure alternatives. This can be more difficult if your program has high upfront costs and realizes its benefits slowly.

If your program includes restoration interventions, for example, your financial model will likely show low annual benefits initially, followed by a gradual increase over time. It takes time for restoration interventions to reach their full potential. Your implementation costs will level out once your program is up and running, but because of the inverse time profile of costs and benefits — meaning, initially, high but declining costs and low but increasing benefits during the first few years — longer time horizons will, in general, increase the ROI. A longer time horizon is often advantageous because more years will be included during which the program is producing benefits that outweigh the costs.

Your time horizon will also affect which interventions are chosen for your program. Your BaU LULC model from Step III shows how your basin is predicted to change over your chosen time horizon. You then choose the interventions — which activities and where they’re implemented — that will most improve your ecosystem services based on the BaU scenario. If you extend your time horizon, your BaU LULC model may indicate different sites that, if protected or restored, could produce better outcomes for your ecosystem services. However, since these sites are predicted to change only at a later point in the future, they did not make it into the original intervention portfolio. Thus, changing the time horizon of the analysis may affect the “optimal” interventional portfolio.

Social discount rate — Discounting is the process of estimating the present value of a future value or future stream of values. When calculating the ROI, you should discount all costs and benefits of the program incurred during your time horizon (e.g., 30 years) to their present value using an appropriate discount rate. Choosing the right discount rate can be difficult, and teams should consult with their beneficiaries and stakeholders to gauge their preferences.

For private individuals and private companies, these rates are typically based on the private rate of pure time preference (individuals) and the private cost of capital or its rate of return from competing investments (companies), respectively. Conversely, public investments in long-lived conservation projects such as watershed natural infrastructure conservation and restoration are often discounted using a long-term social discount rate.

Social rates, rather than market discount rates, are usually used when evaluating long-term publicly financed projects like environmental protection (Arrow et al., 2013). Given the time profile of costs and benefits characteristic of many watershed nature-based solutions, higher discount rates will tend to lower the ROI while lower rates will tend to increase the ROI. A private entity’s discount rate will likely exceed the public discount rates. However, in a recent 2018 paper Discounting Disentangled, Drupp et al. conducted a survey of leading discounting experts and found that most agreed a two percent discount rate was appropriate, much lower than discount rates commonly used (Drupp et al., 2018).

The discount rate will have a large impact on the results of your ROI analysis, so it’s important to choose a commonly accepted rate for your beneficiaries.

Co-benefits — In addition to improving the targeted ecosystem service(s), the program’s interventions could produce several co-benefits that are important to the beneficiary, other program investors or the public. While it can be difficult to quantify these co-benefits, they can improve the program’s overall ROI and the ROI for a given beneficiary.

Scale of Intervention — Transaction and program management costs often account for a high share of total program costs. However, some components of these costs are not affected by — or increase less than proportionally with — the geographic scale of intervention. In other words, increasing the total intervention area to include additional high ROI sites may not incur a proportionate increase in transaction and overhead costs and thus could improve program ROI. For example, increasing conservation and restoration areas by ten percent might only increase transaction costs by six percent and might increase overhead costs by an even smaller percentage, thus raising total program costs by much less than ten percent (Fisher et al., 2017).

Addressing risk and uncertainty — Natural ecosystems including NBS can have an inherent level of unpredictability. It is, therefore, important to assess to what extent the results of your analysis reflect relevant risks and uncertainties. This is usually done using a risk and/or sensitivity analysis. The goal is to quantify how robust the estimated benefits and costs of your NBS project are to changes in assumptions, and therefore produce a range of potential values for your chosen indicators. For example, rather than calculating a single ROI value of 1, you’ll end up with a range of ROI values that better reflects likely outcomes, e.g., 0.80 – 1.20. A single ROI value essentially reflects the mean values of key assumptions and incorporating uncertainty will help your results better reflect the range of these assumptions.

Understanding the strengths and limitations of your economic and financial analysis is critical to managing stakeholder and beneficiary expectations. Even during project preparation, your team should be working with your beneficiary to determine what level of uncertainty they are comfortable with, and how you can potentially mitigate any factors.

Stakeholder Consultation

Before calculating indicators, it’s important the team consult with its beneficiaries to,

• Determine the appropriate discount rate.
• Determine the economic and financial tools and indicators most useful to their decision-making process.
• Confirm an appropriate time horizon was used.
• Brainstorm other co-benefits they might care about. 

It’s important to communicate the preliminary results to get your beneficiaries’ feedback and incorporate changes that will improve subsequent rounds of calculations. You should also use this time to review the assumptions made – and, ideally, approved by your beneficiaries – during the analysis, and note which portions of the analysis are important to them. This will help your team effectively communicate the final results and highlight those portions that weigh heavily when making decisions.

Your team should also review the risks and uncertainties of the analysis with your beneficiaries at this time. If they have been closely involved, this should not be a surprise for them.

At the end of the analysis, you’ll have a polished report, associated appendices, high-resolution native files, and geodatabase prepared by the contractors and/or team to disseminate the results and details of the analysis, but it’s important you further distill the results for your beneficiaries and stakeholders. The final report will note your portfolio of interventions and its associated costs; where, spatially, these NBS should be implemented; the timeline over which these NBS solutions should be implemented and in what sequence; which ecosystem benefits and co-benefits they will produce and over what timeline; etc. 

It’s highly unlikely, however, that your stakeholders will read an entire report, so you must consult them to determine what information they need to know and how they would like that information to be presented, e.g., abbreviated report, technical presentation, etc.

Monitoring & Evaluation

It is recommended that an M&E program be established (if one is not already in place) to verify and validate the model and to assess whether the predicted financial returns come to fruition. M&E can also help evaluate partner satisfaction which is important to ensure continued investment. Be clear about the factors that can cause increased risk or uncertainty in your analysis like the lack of site-specific data to feed into models or unforeseen impacts to LULC caused by natural disasters, changes in policy or demand for commodities, climate change, etc.

Fundraising

Your project team can also leverage the economic and financial analysis to garner support among current and potential investors. Having a clear idea of the viability of your project and its proposed NBS — and the timeline for implementation — will enable you to market and pitch its benefits for funding and/or investment.

Implementation & Operational Plan

the intervention scenario from your ROI analysis (Step IV) can be used to prioritize areas for implementation and define an initial operational plan. See Design for more information about developing these components.