Introduction

Nature-based solutions (NbS) are increasingly recognised as critical pathways for addressing the combined challenges of climate change, biodiversity loss, and urban resilience. While India possesses supportive national and state-level policies to enhance finance for urban NbS, many promising financing and business mechanisms remain underutilised and fragmented. This report builds on previous research by shifting focus to the practical elements of developing investable NbS. Through nine case studies across India, it examines how financial instruments have been operationalised, the institutional arrangements enabling implementation, and the lessons learned to inform future investments.

Case study analysis

The report identifies several thematic insights across the examined projects. To reduce technical risk, feasibility studies and baseline investigations are essential. For instance, the project team for the artificial aquifer recharge under Amazon conducted baseline studies for approximately nine months to understand hydrogeological conditions and recharge potential. Furthermore, Monitoring, Reporting, and Verification (MRV) systems, particularly those combining digital sensors with community stewardship, have played a key role in ensuring long-term sustainability and performance accountability. Projects such as the MegCare agroforestry initiative in Meghalaya utilised locally trained community monitoring associates to validate performance.

Gaining institutional access requires alignment with existing policy frameworks. For example, the Narmada Landscape Restoration Project aligned the distribution of soil health cards with the central Rashtriya Krishi Vikas Yojana scheme to secure institutional buy-in. Additionally, bundling NbS with conventional grey infrastructure projects helped overcome a lack of institutional acceptance. The Kadapakkam lake project in Chennai was enabled by integrating it into a larger debt-financed stormwater investment of USD 470 million supported by the Asian Development Bank (ADB), with the lake restoration package valued separately at USD 9.49 million.

Securing demand early in the project lifecycle determines the success of financing mechanisms. While user-pay models struggle with the skewed economics created by water subsidies in India, projects like Rainbow Drive and Sikkim’s Dhara Vikas demonstrate that NbS can capture markets where public provision is inadequate. Financing sequencing and phased capital deployment also helped convergence; the Nagaland parametric insurance solution used the InsuResilience Solutions Fund to support subsidised premiums, allowing the state government to assume a progressively greater cost share over a three-year period.

Crosscutting findings

A pattern emerged across the case studies indicating that the primary challenge for NbS is less about the availability of capital and more about the project design that allows capital to be effectively deployed. Feasibility work remains under-resourced relative to its ability to reduce performance uncertainty. Additionally, even technically sound solutions may fail to attract paying beneficiaries without deliberate demand articulation built into the project design from the outset.

Recommendations- scalability and replicability

The report suggests that India does not necessarily require new standalone financing instruments for NbS. Instead, stakeholders should focus on addressing market failures that prevent existing capital from reaching high-quality projects. Key recommendations include the establishment of NbS project preparation facilities that account for adequate time and financial support for feasibility assessments. Central and state governments are encouraged to develop standardised but adaptable project-preparation templates for different NbS typologies to reduce transaction costs.

Stakeholders should create a taxonomy to match capital to interventions, identifying the sequencing of appropriate sources for different project stages. For example, philanthropic or CSR funding could support initial demonstration, while commercial debt or equity could be mobilised once a viable revenue or risk-reduction proposition exists. Finally, there should be a shift from input-based indicators to outcome indicators, such as measurable flood-risk reduction, water recharge volumes, or biodiversity recovery, to capture the long-term impacts and benefits of NbS investments.