Policy evaluation of the budgetary instrument “Natural Capital and Greening the Financial Sector”

Background
Commissioned by the Dutch Ministry of Agriculture, Fisheries, Food Security and Nature (LVVN), SEO Amsterdam Economics, in collaboration with NewForesight, evaluated the budgetary instrument Natural Capital and Greening the Financial Sector (Natuurlijk kapitaal en vergroenen financiële sector, in Dutch). The ministry deploys this budgetary instrument to (a) make the social value of nature visible and (b) embed it in the considerations, decision-making and accountability of companies, governments and financial institutions, the three target groups of this instrument.  

This report combines a retrospective assessment of the effectiveness and efficiency of NKVFS since 2017 with a forward-looking analysis for the years 2030 and 2050. For the retrospective part, SEO analysed the effectiveness and efficiency of the instrument using the TransMission model developed by NewForesight. The forward-looking part of the report includes recommendations to improve the instrument, based on the retrospective analysis, existing literature, interviews and a strategy workshop with LVVN and the Netherlands Enterprise Agency (RVO). 

Results
The main findings of the report are as follows: 

• Effectiveness: The instrument increased awareness of natural capital and biodiversity-related risks; stimulated the use of measurement tools and methodologies; supported platforms and collaborations; and encouraged policy-relevant and strategic applications. Among financial institutions, this also had international spillover effects and contributed to target setting for phasing out harmful investments. A challenge across all target groups was the structural embedding of these insights in decision-making and operations beyond pilots and small-scale initiatives: the group of frontrunners remained small, and upscaling towards systemic change was still limited. 

• Efficiency: The efficiency analysis presents a mixed picture. In the period 2017–2023, EUR 1 million less was spent than budgeted, while productivity per full-time equivalent increased despite a reduction in staff. However, shortcomings in the monitoring system limit insight into performance and the allocation of resources. 

• Recommendations: The budgetary instrument is at a turning point. While a solid foundation has been laid, achieving real impact requires scaling up, sharper focus and the structural embedding of nature values in policy and decision-making. System change calls for an integrated approach with clear objectives and monitoring, an ecosystem-based approach, and wider uptake of instruments through ‘sandboxing’. Cooperation with other ministries, good governance, and convincing social business cases for nature restoration are crucial for enabling the instrument to grow into the driving force behind a nature-inclusive economy. 

Methods 

• Reconstruction of the Theory of Change.  

• Collection, reconstruction and in-depth analysis of instrument-specific documents, reports by implementing organisations, and other literature on nature inclusivity 

• Collection, reconstruction and analysis of financial data on budgeted and actual expenditures 

• More than 20 interviews with a diverse group of stakeholders 

• Strategic workshop with LVVN and RVO on the future of the budgetary instrument.