3. Method

Categorisation of Ecosystem Services from Nature-Based Solutions

We use the Millenium Ecosystem Assessment (2005) (MA) framework to categorise positive externalities from nature-based solutions. This globally recognised framework provides a comprehensive approach to understanding the benefits that ecosystems offer to human well-being, which is crucial for designing and implementing effective NBS. By aligning our categorisation with the MA framework, we aim to emphasise the multifunctional role of regulating environmental processes and supporting sustainable development goal, in addition to providing protection.

The Millenium Ecosystem Assessment (MA)

MA was an initiative conducted between 2001 and 2005 to evaluate the impacts of ecosystem changes on human well-being. Initiated by the United Nations, MA involved over 1,360 experts globally. The MA identifies four main categories of ecosystem services, which we adopt in our categorisation of nature-based solutions seen in Table 1:

Regulating services: Benefits from regulating ecosystem processes, such as climate regulation, disease control and water purification.
Provisioning services: Products derived from ecosystem processes, including food, fresh water, timber, and fibre.
Cultural services: Non-material benefits that ecosystems provide, including recreation, aesthetic experiences, and spiritual enrichment.
Supporting services: Fundamental processes that support all other services, such as soil formation, photosynthesis, and nutrient cycling.

Table 1 ESS Categories, as defined by the Millenium Ecosystem Assessment

regulating	provisioning	cultural	supporting
purification	food	cultural	nutrient cycling
climate regulation (UHI)	raw materials	spiritual and historical	primary production
waste decomposition	genetic resources	recreational	soil formation
Predation	biogenic minerals	science and education	habitat provision
pest and disease control	medicinal resources	therapeutic
pollination	energy
disturbance regulation	ornamental resources

The Millenium Ecosystem Assessment provides a well-structured framework for understanding and categorising ecosystem services, making it highly suited for assessing nature-based solutions. Its systematic approach ensures that all key dimensions of ecosystem functionality – provisioning, regulating, cultural and supporting services – are considered. This holistic perspective enables a thorough evaluation of externalities from nature-based solutions.

Benefit transfer

We apply the framework for benefit transfer outlined in the work of Zanini et al. (2024), which simplifies the process of transferring monetised ecosystem service values from study sites (where the original valuation study was performed) to the policy sites (where the CBAs are performed). This framework reduces the risk that valuation studies are used out of their context, and thereby it increases the possibilities for decision-makers to effectively evaluate nature-based solutions (NBSs).

The benefit transfer methodology is divided into three main steps, each systematically designed to refine transferred values and ensure they align with the specific characteristics of the policy site.

1. PPP adjustment

The first step involves converting monetary values from the original study site to the currency of the policy site. This is done using purchasing power parity (PPP) to account for differences in economic conditions and price levels between regions.

2. Inflation adjustment

The values are then inflation-adjusted to a common year – in this case adjusted to EUR 2023. This ensures the comparability of values over time and avoids distortions caused by purchasing power. Note that this assumes that people’s valuation of environmental goods increases at the same rate as the basket of goods that is used to calculate the change in the consumer price index.

3. Correction factor

To address the contextual differences between study sites and policy sites, a correction factor is applied based on three attributes:

Suitability of the study site to the policy site, scored from 1 (low) to 5 (high), in terms of environmental, socio-economic and policy characteristics. Factors include ecosystem and climatic similarity, economic and cultural comparability, governance alignment, scale and scope and baseline conditions. A score of 5 indicates a near perfect alignment, while lower scores reflect increasing divergence and the need for adjustments.
Valuation methodology used in the original study, assigned a binary value. Cost-based or market pricing methods and value transfer or other indirect methods correspond to score one and score zero, respectively.
Reliability of indicators used to quantify benefits, assigned as a binary value with one for high reliability and zero for low reliability. Reliable indicators are scientifically validated, contextually relevant, and based on accurate, up-to-date data. Transparent documentation of data sources and assumptions ensures replicability and trustworthiness, making the indicators suitable for benefit transfer and robust decision-making.

The correction factor is derived from the sum of these scores, with adjustments made to the final transferred value as follows,

Score 7 = correction factor of 1 (no adjustment).
Score 6 = correction factor of 0.9.
Score 5 = correction factor of 0.8.
Score 4 = correction factor of 0.7.
Score < 4 = correction factor of 0.5.

The corrected monetised value is obtained by multiplying the PPP and inflation adjusted benefit by the correction factor, resulting in the final monetised value for the policy site. Since a low correction factor will reduce the monetised value being transferred to the policy sites cost benefit analysis, this method ensures a conservative approach during the benefit transfer.

The Zanini et al. (2024) framework is an accessible and flexible tool for benefit transfer, allowing decision-makers to apply it without extensive expertise in economic valuation. Its adaptability accommodates diverse NBS characteristics, economic conditions, and valuation methods, ensuring reliable results across varying contexts. Scalable from local to European applications, the framework is particularly suited for preliminary evaluations. In this report, it enables the efficient transfer of benefits from previous studies to our policy sites, supporting the monetisation of NBS for challenges like sea-level rise and storm surges while maintaining methodological rigor.