Value Chain Analysis in Key Economic Sectors (09/2024)

Key messages:

1. Using Value Chain Analysis to Promote NbS:
   This report applies Value Chain Analysis (VCA) to key economic sectors within the MERLIN project, exploring how Nature-based Solutions (NbS) can be integrated into freshwater ecosystem restoration. The focus of VCA is to understand and illustrate the mechanisms through which value is created across sectors, including economic, social, and environmental dimensions. This extended approach goes beyond conventional analyses that prioritise commercial value, emphasising how NbS contribute to broader societal and ecological benefits.
   By examining examples from the Water Supply and Sanitation (WSS), Agriculture, Insurance, and Peat Extraction sectors in Europe, the report demonstrates that VCA is an effective tool for promoting NbS adoption. It highlights how NbS create value in ways that are both attractive to businesses and aligned with sustainability goals.

2. Synergising Economic and Ecological Gains with NbS within Value Chains:
   Nature-based Solutions (NbS) provide an opportunity to align economic and ecological goals within value chains. By identifying sector-specific value chain challenges, integrating NbS helps make environmental resilience and economic interests mutually beneficial. Enhancing freshwater ecosystem resilience with NbS is not just corporate responsibility or green marketing but a strategy for generating commercial benefits. While initial external support may be needed to kickstart NbS, long-term gains such as reduced costs, risk mitigation, and enhanced reputation make NbS attractive for businesses, ultimately driving internal investment.

3. LeveragingFinancialSupporttoImplementNbSacrossValueChains:
   Pro-environmental capital investments and financial incentives are crucial in driving the adoption of NbS across value chains. These supports enable key actors to gain economic advantages while implementing sustainable practices, creating win-win scenarios that make NbS integration commercially viable in the long term.
   However, the role of standards is equally important in ensuring consumer support for NbS. Certification schemes and labels, while helpful, often face challenges due to the proliferation of different standards, some of which lack proper accountability mechanisms. For example, schemes like the RPP (Responsibly Produced Peat) support freshwater NbS but remain largely invisible to consumers, limiting their impact. Streamlining standards and enhancing transparency can help ensure broader consumer awareness and support for NbS.

4. EnhancingStandardsforNbSIntegrationintoValueChains:
   Many sectoral standards need to be renewed or updated for the purpose of a more comprehensive integration of NbS, with possibilities to involve a certification scheme or consumer label issuing procedure. More up-to-date sectoral standards are considered as an institutional instrument to provide systematic solutions to include NbS into value chains, as they provide a structured framework for ensuring that NbS are implemented effectively, facilitating their adoption while offering long-term economic and environmental benefits. This is particularly important for aligning value chains with broader environmental goals.