Accounting for the Environmental Costs of Nature-Based Solutions Through Indirect Monetization of Ecosystem Services: Evidence from European Practices and Implementations

In response to recent policies on sustainable finance, nature restoration, soil protection, and biodiversity conservation, it is increasingly important for projects to assess their impacts on natural capital to safeguard Ecosystem Services (ES). Nature-Based Solutions (NBSs) are recognized as strategic tools for fostering cost-effective, nature- and people-centered development. Yet, standard economic and financial assessment methods often fall short, as many ES lack market prices. Indirect, ecosystem-based approaches—such as ES monetization and environmental cost accounting—are therefore critical. This study evaluates the feasibility of investing in NBSs by estimating their economic and financial value through indirect ES valuation. An empirical methodology is applied to quantify environmental costs relative to ES delivery, using Willingness to Pay (WTP) as a proxy for the economic relevance of NBSs. The proposed ES-Cost Accounting (ES-CA) framework was implemented across major NBS categories in Europe. Results reveal that the scale of NBS implementation significantly influences both unit environmental costs and ES provision: larger interventions tend to be more cost-efficient and generate broader benefits, whereas smaller solutions are more expensive per unit but provide more localized or specialized services. The findings offer practical guidance for robust cost–benefit analyses and support investment planning in sustainable climate adaptation and mitigation from an ES perspective.