This partnership project has explored how new sources of finance could help increase the delivery of natural flood management for the benefit of communities and wildlife across the Eddleston Water catchment
The “Financing Natural Flood Management for Communities and Wildlife of the Eddleston Water” project has taken an innovative approach to reducing flood risk by exploring how providing the “benefit” of reduced flood risk to downstream communities could attract investment by private finance. Building on the work of the long-running Eddleston Water Project, the project has investigated the possiblity of accessing new funds to pay for a significant increase in the number and diversity of natural flood management (NFM) measures within the Eddleston Water catchment. Any additional NFM measures should, in addition to reducing flood risk, also improve river habitat for key species such as Atlantic salmon and otter; enhance other wildlife habitats across the wider catchment; and provide climate change resilience through reforestation and restoration of ponds and wetlands. All of which should also deliver benefits, directly and indirectly, to local communities.
Tweed Forum, working in partnership with Finance Earth, JBA Consulting, The Rivers Trust, local communities and, most importantly, local landowners, have now concluded this 18 month study. Key findings include the importance of detailed hydrological information in accurately assessing the impact of different potential combinations of NFM measures on downstream flood risk, as well as recognising that the scale of intervention required might be extremely challenging, i.e., in some catchments achieving land management changes at the required scale might be unrealistic. The study has also highlighted that the costs of the differing range of NFM interventions proposed could impact the ultimate viability of any chosen scheme, as land managers hosting NFM measures would need to be adequately paid for their involvement at a rate that was attractive to them.
A key step in developing an NFM market was seen to be the identification of revenue streams that can underpin the activities proposed. The project was able to assess damages from flooding that could be avoided through different combinations of NFM measures upstream, but financial modelling showed that grants or non-repayable capital will likely be required to cover some or all costs of implementation of NFM, i.e., that private finance alone would not be sufficient. Looking beyond flood risk reduction to the financial value of wider ecosystem services benefits, the study found that these may be at least four times more than the flood benefits identified.
The study also found that meaningful revenues from private sources are unlikely to be realised unless flooding is seen to be threatening the resilience of large businesses/highly populated areas located within flood-prone areas. It also showed that investors had limited interest in NFM projects, unless they were of sufficient scale and with assured long-term land ownership to underpin financial returns. In contrast, landowner engagement in the Eddleston water catchment revealed that many landholdings were relatively small and there was a mixed level of interest in participating in NFM. This “patchwork” of interest poses a challenge for the effectiveness of NFM and investor confidence. Farmers need details on payment rates that would be on offer for NFM and this, along with more general uncertainties surrounding agricultural support payments that may emerge from the new Agriculture Bill, both work against informed decision-making around NFM options at the moment.
In summary, the project has demonstrated the significant potential of NFM for flood risk reduction but highlighted substantial challenges in securing private finance for its widespread implementation in a rural context. Key barriers include the high costs, limited private sector revenue potential due to the nature of the beneficiaries, mixed attitudes from land managers, small-scale spatially distinct landholdings and the need for aggregated, investable projects. The findings suggest that a blended finance approach involving public and private investment, along with a well-defined governance structure, may be necessary to advance NFM at a meaningful scale, and this is something that we hope to explore further in due course.
If you’d like to read the final project report in full, please see links below; other project outputs are also available in this section.
Project Outputs
Financing Natural Flood Management for Communities and Wildlife of the Eddleston Water (Report, 2025)
Natural Flood Management for Communities on the Eddleston Financial Modelling Outputs (Presentation, 2024)
Economic Appraisal of NFM to inform Green Finance in Eddleston Water – FIRNS Final Report (Report, 2024)
This project is supported by The Facility for Investment Ready Nature in Scotland (FIRNS). Delivered by NatureScot in collaboration with The Scottish Government and in partnership with the National Lottery Heritage Fund.