5 4 Nature Restoration Law and Funding.pdf

Ref. Ares(2023)389474 - 18/01/2023
Ref. Ares(2023)782205 - 02/02/2023

HOW MUCH WILL THE
IMPLEMENTATION OF THE NATURE
RESTORATION LAW COST AND HOW
MUCH FUNDING IS AVAILABLE?
Publication date:
December 2022
Authors:
Gabrielle Aubert (IEEP), Hugh McDonald, Levin Scholl
(Ecologic Institute)

HOW MUCH WILL IT COST?
The annual costs of restoring 30% of habitats listed in Annex I of the Habitats
Directive by 2030 have been estimated at €8.2 billion (average annual costs over
the 2022-2030 period). This estimate covers the costs of restoration, re-creation,
maintenance and enabling measures [1]1.
This  amount  underestimates  overall  funding  needs  as  it  does  not  include  the  costs  for  marine,  urban
ecosystems, and habitat areas not covered by the Habitats Directive. It includes the cost of enabling measures,
also called administrative costs, which include costs for establishing methodologies and monitoring progress.
Some are one-off costs and will be borne when the restoration takes place, while some are annual costs for
maintenance of restored areas. In total, they amount to €538 million for the period 2022-2030 [1].

The Biodiversity Strategy to 2030 states that biodiversity
actions  will  require  at  least  €20  billion  per  year
stemming from private and public funding at national
and  EU  level  [2].  Mobilising  funding  for  restoration  is
therefore  part  of  a  wider  effort  to  fund  actions  for
biodiversity up to 2030.

Tulcea, Romania, Photo by Dedu Adrian

1  Figures  are  based  on  the  costs  of  the  Impact  Assessment  accompanying  the  proposal  for  a  Regulation  on  nature  restoration
(unpublished analysis by IEEP).

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how much will the implementation of the nature restoration law cost and how much funding is available?
HOW MUCH FUNDING IS AVAILABLE?
EU FUNDING
EU funds have the scope to cover a large propor-
tion  of  the  funding  needs.  Under  the  2021-2027
Multiannual  Financial  Framework  (MFF),  estimates
for allocations to biodiversity amount to nearly
EUR  114  billion2  (approximately  EUR  16  billion
annually) [1]. The €16 billion annual biodiversity
spending  available  under  the  MFF  could  there-
fore cover a large part of the annual restoration
costs of €8.2 billion (see Annex 1).

Brussels, Belgium, Photo by Guillaume Périgois
DOMESTIC FUNDING
Total  domestic  biodiversity  expenditure  by  Member  States  on  biodiversity  in  2019  is  esti-
mated at €10.4 billion (an average of approximately EUR 360 million per Member State)3, with an increas-
ing trend between 2014-2019 [3]. This may be an over-estimate, as the data reported may include some EU
funding. A significant proportion of domestic funding available for biodiversity should be channelled towards
restoration once the NRL sets a clear incentive for Member States to scale up restoration.

PRIVATE FUNDING
Private funding can contribute – though primarily where restoration generates private bene-
fits. A study based on 412 restoration projects found that private sources provided 8% of the funding, half
from foundations and half from the private sector [4]. Between 2010 and 2020, this amounted to an average
of €6.5 million per year of private funding to restoration projects in Europe. Although this amount
is low compared to the overall funding needs, this estimate shows that private funding already contributes
to restoration. Globally, private sources provide 14% of funding for nature-based solutions, primarily through
supply chain payments for sustainable suppliers (e.g. of wood and food) or through voluntary carbon markets
or biodiversity offsets [5]. This indicates that there may be scope to increase private contributions to restora-
tion, so long as restoration generates private as well as public benefits.

2 This estimate for total available MFF funds is larger than the figure quoted in the impact assessment, as it uses the latest budget
estimate for 2023 published by the EC on 3 June 2022 [7]. The difference is mainly due to the addition of funding estimates from the
Recovery and Resilience Facility, the EMFAF, and the full LIFE funding period.
3 Based on data reported by Member States to EUROSTAT and recorded in the ‘Classification of the functions of Government’ (COFOG)
dataset.

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link to page 6 how much will the implementation of the nature restoration law cost and how much funding is available?
HOW CAN MEMBER STATES MOBILISE
FUNDING FOR NATURE RESTORATION?
There is no  dedicated EU fund  for  nature  restoration,  and Member States face many competing  funding
priorities when channelling the appropriate funding streams to fund restoration measures. Therefore, the gap
between the necessary and available funding must be bridged.
EU FUNDING
The EU has set a biodiversity spending target of 7.5% as of 2024 and 10% as of 2026 under the 2021-
2027 MFF [6]. Estimates of biodiversity spending under the various relevant funds amount to €114 billion in
total, an average of €16 billion annually (see Annex 1).
➢  The two CAP funds (EAGF and EAFRD) account for more than half (€64.4 billion). They are available
as  sources  of  funding  for  agroecosystems,  and  to  some  extent,  forests, wetlands,  heathlands,  and
scrub habitats, that are grazed or associated with farming activities in other ways.
➢  The ERDF and Cohesion fund make the third largest contribution to biodiversity (€20 billion). They
are relevant for all ecosystem types but mainly cover capital costs of restoration rather than mainte-
nance.
This  level  of  EU  funding  is  dependent  on  Member  States’  ability  to  seize  the  opportunities
offered by each fund and to prioritise restoration among other competing priorities.
Restoration can benefit from climate funding under the MFF. Ecosystem restoration directly contributes
to climate mitigation and adaptation objectives, and the EU Biodiversity Strategy to 2030 encourages the
investment of a significant proportion of funds dedicated to climate action under the current MFF in biodi-
versity and nature-based solutions.
While EU funding has the scope to provide enough opportunities to cover restoration costs associated with
the NRL, some gaps may remain, especially funding maintenance costs and some ecosystem types which do
not fall within the scope of funding programmes. Moreover, as most EU funding programmes require co-
financing, it is essential that EU funding is complemented by both public and private sources.
DOMESTIC FUNDING
Public funding at national and sub-national levels should be channelled towards nature restoration not only
from environment budget lines, but also from those dedicated to other sectors, such as climate adaptation
and mitigation, water management, disaster risk reduction, sustainable food, and public health as restoration
brings many benefits to these sectors. Several Member States have already set up dedicated funding for
restoration:
➢  Spain is allocating funds from the EU Recovery and Resilience Facility (RRF) to restoration through a
dedicated ‘Fund for Ecological Restoration and Resilience’.
➢  Austria has created a Biodiversity Fund to support the preservation and restoration of biological di-
versity, which is also partially funded through the RRF (complemented by national funds).

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how much will the implementation of the nature restoration law cost and how much funding is available?
PRIVATE FUNDING
EU and national public funding should also be used to leverage further investments in resto-
ration from the private sector using blended finance approaches.
There is high potential to attract private sector funding in cases where restoration provides direct benefits to
businesses and private individuals. Several instruments already channel private sector funding into restora-
tion, e.g. private-sector grants, donations, voluntary carbon markets and other Payments for Ecosystem Ser-
vices schemes, user fees, and offsets, sometimes supported by dedicated financing instruments such as green
loans. Blended finance - a mixture of private and public funding and finance – may be a solution: public
funding can help attract private investors to revenue generating restoration by reducing the financial risks
commonly associated with restoration and nature-based solutions.

EXPLAINING THE ‘EVERY 1 EURO
INVESTED INTO NATURE RESTORATION
ADDS €8 TO €38 IN BENEFITS’
STATEMENT
The European Commission stated that “Investment into nature restoration adds €8 to €38 in economic
value for every €1 spent, thanks to the ecosystem services that support food security, ecosystem and
climate resilience and mitigation, and human health”.
WHERE DOES THAT STATEMENT COME FROM AND WHAT DOES IT
MEAN?
The EC conducted an impact assessment for each ecosystem type and have quantified in monetary terms the
costs and benefits of meeting the NRL targets (as far as possible).
•  Cost analysis: the area of each ecosystem requiring restoration, re-creation and maintenance were
estimated and then multiplied by a unit cost per hectare (based on a review of ecosystem manage-
ment costs).  The  estimates  include opportunity costs  relating to  land  management  practices  (e.g.,
reduced agricultural production due to restoration measures).
•  Benefits analysis: the benefits were calculated based on a review of evidence of the benefits of res-
toration for each ecosystem type. Two values were identified: the value of carbon storage and seques-
tration benefits and the increase in the value of other ecosystem services including flood management
and water purification. A best estimate of the median value of the benefits per hectare was then ap-
plied to the area of each ecosystem to be restored.

4

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how much will the implementation of the nature restoration law cost and how much funding is available?
Costs  and  benefits  estimated  were  then  compared  over  the  period  2022-2070,  recognising  that  costs  to
restore and re-create nature would be faced up to 2050 but that the benefits would continue to accrue after
2050.

Examples of benefits (ecosystem services) identified for specific ecosystem types
Ecosystem type
Associated benefits (ecosystem services)
Timber products and non-timber forest products, water and soil quality, flood prevention,
Forests
increased  resilience  against  natural  disturbances  (droughts,  fires,  pests,  and  diseases);
cultural services.
Food and fibre; water quality; flood management; pollination; soil quality; erosion control;
Agroecosystems  climate regulation; cultural services (recreation, landscape, aesthetic values).
Rivers,  lakes  and  Fresh water; fisheries; genetic resources; waste treatment; water quality; flood management;
alluvial habitats
soil quality; cultural services (landscape, aesthetic, inspirational and recreational).
Health  and  wellbeing;  cooling  and  insulation  (e.g.  against  urban  heat  island  effect);
Urban
recreation; food- and fibre; flood risk reduction; water quality; air quality, noise reduction,
ecosystems
property value.

There are some risks that the benefits will not be realised, such as failure to implement actions to achieve the
targets,  scientific  uncertainties,  adverse  effects  of  climate,  etc.  They  can  be  mitigated  by  careful
implementation  and  compliance  with  best  practices.  The  Impact  Assessment  estimates  that  the  high
benefit:cost ratios estimated for each ecosystem type (ranging from 4/1 to 38/1) leave a sufficient margin
to ensure that ecosystem restoration will be efficient. Finally, the analysis assumes that 90% of degraded
ecosystems could be restored by 2050.
Failing to restore 90% of degraded ecosystems by 2050 would reduce both the benefits and costs of
ecosystem restoration.

What is the present value of the quantified benefits?
If 90% of ecosystems are
If 80% of ecosystems are
If 70% of ecosystems are
restored
restored
restored
€ 1,418 billion
€ 1,260 billion
€ 1,102 billion
See Annex 2 for estimated costs and benefits of ecosystem restoration and maintenance by Member States
up to 2050.

Photo by Jon Flobrant
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how much will the implementation of the nature restoration law cost and how much funding is available?
ANNEX 1: MAIN EU FUNDING OPPORTUNITIES FOR RESTORATION IN
2021-20274
Estimated
EU financing
funds available
source
Type of actions that could
Most relevant
Financing type (grants/ loans) and
for biodiversity
be financed
ecosystem types
beneficiaries
in 2021-2027

(M€)[7]
European
37 885.2
Restoration of agroecosystems
Agro-ecosystems
Grants (annual payments fully financed
Agricultural
Suitable
for
financing  and grasslands
by the EU)
Guarantee
maintenance
and
simple

Beneficiaries: farmers
Fund (EAGF)  under
annual restoration actions.
the CAP

European
26 513.2
Restoration
of
agro/forest  Agroecosystems
Co-financing for EAFRD
Agricultural
Fund
ecosystems
and grasslands
Beneficiaries:  farmers,  foresters  and
for
Rural
Capacity/knowledge building
Forests;  peatlands,  other landowners
Development
Knowledge exchange
marshlands,
Cooperation
heathland,
scrub
(EAFRD)  under  the
Suitable  for  financing  both  and
coastal
CAP
capital costs and maintenance.
wetlands,  if  grazed
or  associated  with
farmland.
European  Regional  20 138.2
Restoration measures
All ecosystem types
ERDF: grants/ financial instruments
Development
Capacity/knowledge building
Beneficiaries:
MS,
private
sector
Fund (ERDF)
Cooperation (incl. cross-border,
organisations,
universities,
transnational)
associations,  NGOs,  civil  organisations,
and
Suitable  mainly  for  financing
etc.
capital costs.
Cohesion Fund (CF)
Recovery
and  11 067.1
Restoration projects
All ecosystem types
Combination of loans and grants
Resilience
Suitable  for  financing  both
Beneficiaries: MS
Facility (RRF)
capital costs and maintenance.
Programme  for  the  2 529.89
Restoration projects
All ecosystem types
Grants, blending, prizes.
Environment
and
Capacity/knowledge building.
Beneficiaries: Public and private  sector
Climate

Suitable  for  financing  both
bodies and civil society organisations
Action (LIFE)
capital  costs  and  maintenance
(but time-limited funding so not
entirely  suitable  for  ongoing
maintenance costs).
Horizon Europe
6 832
Suitable  mainly  for  financing  All ecosystem types
Grants and procurement financing
supporting measures (research,
Beneficiaries:
typically,
consortia
capacity-building,
knowledge
including
universities,
research
building), but can in some cases
institutes and businesses
finance capital costs
European  Maritime  790.43
Restoration  projects  (marine
Marine  and  coastal  Co-financing
Fisheries
and
and rivers);
ecosystems
Beneficiaries:  MS,  Public  and  private
Aquaculture
Capacity/knowledge building
river ecosystems
sector
bodies
and
civil
society
Fund (EMFAF)
Monitoring.
organisations
Suitable  for  financing  both
Grants and tenders
capital costs and maintenance.

4 Source: Updated figure based on the latest budget estimates published by the European Commission on 3 June 2022 (COM(2022)
400 - June 2022).

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how much will the implementation of the nature restoration law cost and how much funding is available?
Also not included in this table: European Social Fund (ESF)+, Just Transition Fund (JTF), InvestEU, European Solidarity Corps, Technical
Support  Instrument  (TSI),  Copernicus,  Neighbourhood,  Development  and  International  Cooperation  Instrument  -  Global  Europe
(NDICI - Global Europe), Interreg Pre-Accession Assistance (PA) III
ANNEX  2:  ESTIMATED  COSTS  AND  BENEFITS  OF  ECOSYSTEM
RESTORATION  AND  MAINTENANCE  BY  MEMBER  STATES,  2022-2050
(€MILLION) [1]5
MS
Estimated annual benefits
Estimated annual costs
Ratio
AT
774
64.5
8.33
BE
631
65.3
10.35
BG
630
69.4
11.02
CY
38
7.3
19.21
CZ
361
41.0
11.36
DE
2,595
189.6
7.31
DK
3,171
176.2
5.56
EE
449
38.0
8.46
ES
7,939
1 450.9
18.27
FI
9,694
931.2
9.61
FR
14,618
2 060.3
14.09
GR
541
34.0
6.28
HR
622
63.4
10.19
HU
1,392
133.4
9.58
IE
1,922
134.0
6.97
IT
2,424
261.1
10.77
LT
1,081
80.3
7.43
LU
32
4.5
14.06
LV
611
54.4
8.90
MT
2
0.4
20.00
NL
1,056
53.4
5.06
PL
5,981
545.3
9.12
PT
915
148.9
16.27
RO
-
-
-
SE
5,881
637.6
10.84
SI
415
63.6
15.33
SK
473
97.5
20.61
EU-27
64,249
7 405.0
11.52

How to read this table: the aggregated estimated benefits across 7 ecosystem types average €64 billion
per year for the EU. The aggregated estimated costs average €7.4 billion per year for the EU (without
the costs of enabling measures). The benefits:costs ratio is 11.52.

5 Ratios have been calculated based on the Impact Assessment figures.

7

References
1.  European Commission, IMPACT ASSESSMENT Accompanying the proposal for a Regulation of the European Parliament and
of the Council on nature restoration, in STAFF WORKING DOCUMENT. 2022, European Commission: Brussels.
2.  European Commission, EU Biodiversity Strategy for 2030. 2020, European Commission: Brussels.
3.  European Commission Directorate-General for Environment, et al., Biodiversity financing and tracking : final report. 2022.
4.  UNEP-WCMC, FFI, and ELP, Funding Ecosystem Restoration in Europe: A summary of trends and recommendations to inform
practitioners, policymakers and funders. 2020. p. 24pp.
5.  UNEP, et al., State of Finance for Nature: Tripling investments in nature-based solutions by 2030. 2021, UN Environment
Programme: Nairobi.
6.  REGULATION (EU, Euratom) 2020/2092 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 16 December 2020 on a
general regime of conditionality for the protection of the Union budget. LI 433/1.
7.  European Commission, Draft General Budget of the European Union: Working Document Part I, in Programme Statements
of Operational Expenditure. 2022, Publications Office of the European Union: Luxembourg.

Funded by the European Union. Views and opinions expressed are however
those  of  the  author(s)  only  and  do  not  necessarily  reflect  those  of  the
European Union or CINEA. Neither the European Union nor CINEA can be held
responsible for them.
These  policy  briefs  were  written  by  IEEP  and
Ecologic Institute in the Think Sustainable Europe
Network  in  response  to  the  proposed  EU  nature
restoration law.