Restoring Europe’s freshwater ecosystems at the scale required by EU policy will require a broader mix of funding sources. Insights from the MERLIN project show that relying solely on public budgets will not be sufficient. Instead, restoration initiatives need to combine public funding with private finance while ensuring that investments remain compatible with biodiversity objectives.

The MERLIN Deliverable “Diversifying Funding for Freshwater Restoration using Nature-Based Solutions” examines how restoration teams across Europe are exploring new funding models and partnerships.

Key insights

• Diversifying funding is essential to scale up restoration.
  Current public funding alone cannot meet the financial needs of large-scale freshwater restoration required to achieve EU environmental targets.
• Restoration teams remain cautious about private finance.
  Many practitioners recognise the potential of private investment but hesitate due to unfamiliar terminology, perceived reputational risks and uncertainty about how to structure viable business models.
• New skills are needed within restoration teams.
  Engaging with private investors requires expertise in economics, finance and business planning alongside ecological knowledge. Many teams are already investing in training, partnerships and interdisciplinary collaboration.
• Quantifying ecosystem services and benefits is crucial.
  Tools that measure and communicate ecosystem services help demonstrate the broader societal and economic value of restoration. Economic assessments such as cost-benefit analysis or cost-effectiveness analysis can support project design and strengthen investment cases.
• Early engagement with stakeholders improves project design.
  Collaboration with local communities, businesses and other stakeholders can generate innovative ideas and ensure restoration initiatives integrate regional needs and opportunities.
• Strong governance and policy enforcement remain essential.
  Effective regulation, enforcement of existing environmental policies and well-designed incentives are necessary to create the conditions for responsible private investment in restoration.

Overall, the report shows that closing the restoration funding gap requires more than new financial instruments. It depends on adequate training and advisory services to restoration managers, better quantification and communication of restoration benefits, and more consolidated and accountable governance frameworks that guide investments towards nature-positive outcomes.