NbS Triple Win Toolkit: Economics and Finance 84 The Financial case for NbS Introduction Out of the $133 (USD) billion annually that was invested in NbS in 2020, only $18 billion (USD) was invested by the private sector, equalling just 14%125. Compared to the share of private finance in climate investments, which equalled 56% in 2019, this share of 14% for NbS forms a striking contrast125. To overcome the global investment gap in NbS and reach the international targets, mainstreaming of private sector investments in NbS is a crucial and urgent challenge to address. The following section explores the type of barriers that currently prevent more private sector investments in NbS, and which solutions could help overcome them. For this purpose, an evidence base of 50 recent papers and reports on the topic of NbS have been studied. The various barriers and solutions identified are categorised under three categories: Financial and administrative, political and legal, and environmentaland socio-economic. Types of financial flows in ODA NbS projects In the ODA NbS case study review, most of the case studies were funded by public sector grants or heavily concessional capital (i.e. loans with low interest rates). This matches a recent study whichfound that, for the three years analysed, up to 85 percent of alltracked funding for NbS was categorized as ODA grants126. It is not clear from all of the case studies why public sector grant is the most popular type of funding support, but where this information was provided, there appear to be three key reasons why grant, or heavily concessional, funding is most prevalent in NbS currently. It is probable that these reasons arise because of the focus on ODA countries, which inherently attracts public finance both domestically and overseas. Underlying population – many projects target the improvement of livelihoods of highly vulnerable population which suffer from food or natural resource shortages or are at extreme risk to the impacts of climate change. In many cases, poverty is pervasive and a large number of the population are living in poverty or below the poverty line. There is a high dependence on activities such as subsistence agriculture, which is already suffering, and will suffer more severely over time, from the impacts of climate change, namely unpredictable rainfall, rising temperatures or extreme flooding risk. The majority of such projects include technical assistance to help local, cash-constrained small-holder farmers adjust and strengthen capacity resilience to a changing environment and reduce poverty and vulnerability in local areas. As such, there is limited attractionfor private investment. Project activities – the types of activities which are targeted byNbS projects are wide-ranging in their nature and characteristics. Many are public goods, for example the conservation of biodiversity. For such activities, the incentive to invest in such goods which, in the absence of alternative market arrangements, do not generate cash flow, does not exist. Many of the activities do not generate cash but are critical in the context of adapting to the impacts of climate change, for example technical expertise and upskilling. Where activities do generate cash, for example improving agricultural yields or cost-saving measures, such cash flows are not typically amenable to private investment since these financial flows are required to reduce local poverty. Returning such financial improvements from local populations to private investors would not improve the localpoverty position. Similarly, many other activities require highup-front costs which generate benefits over longer periods