Projektengagemang – Ideation

Blue Green Compensation

Consultants from Projektengagemang AB have completed the first phase of a financial modelling project (in collaboration with Västra Götaland Region/Västarvet) to create funding for nature-based flood prevention. Their pre-study, Business Model for Blue Green compensation to reduce risks for urban flooding , looks at instruments to encourage downstream landowners to compensate or pay upstream landowners to maximise water retention on their land.

Flooding is already a problem in many cities and expected to increase. Typically, large water flows are handled by grey infrastructure. That comes at a cost. Grey infrastructure typically has a higher environmental impact than green, not least because cement is a CO2 intensive material. It’s often a costly and, sometimes, questionable investment. Some flooding could be prevented with more cost-efficient, nature-based solutions (like dams and wetlands) that retain water in the landscape while also creating other value such as recreation and biodiversity.

For those models to work, the economic benefits for partners (ie, return on investment) must be clear. There’s a lot of research on cost-benefit analyses but [says PE] these have, so far, been theoretically oriented.


In Sweden (where PE is based and the pre-study was researched), municipalities can apply for funds to build nature-based flood prevention solutions. However, it can be a complex and lengthy process. The report’s investigation into compensation and trade systems aims to cut through the red tape and create new partnerships between private, public and civil stakeholders.

The environmental impact will be great if the financial models are successful. In the meantime, the impact is one of awareness and willing from key stakeholders to take the results further. The pre-study has brought different people together and helped them consider economically viable and sustainable ways of reducing flood risk.