As Europe moves towards implementing the Nature Restoration Regulation, a central question comes into focus: how can freshwater restoration be financed at scale? At the joint policy event in Brussels, Dr. Josselin Rouillard presented MERLIN’s approach to addressing this challenge, combining practical tools, policy insights and financial innovation to support restoration on the ground.

From fragmented funding to structured financing approaches

A key contribution of MERLIN is the development of a structured financing framework to support the upscaling of restoration. This includes four core building blocks:

• a workflow to guide the strategic planning of funding and financing solutions for freshwater restoration,
• a catalogue of revenue-generating opportunities, 
• a directory of financial mechanisms and instruments, and
• off-the-shelf financing instruments (OTSI) providing more in-depth guidance on specific funding and financial instruments.

Together, these elements help restoration practitioners navigate the complex landscape of funding sources and identify viable financing strategies.

Diversifying funding – opportunities and constraints

A central theme of the presentation was the need to diversify funding sources, particularly by mobilising private finance. However, this shift is not without challenges. Dr. Josselin Rouillard highlighted that high transaction costs remain a key barrier to private investment in restoration. Developing financially viable projects often requires significant upfront effort, coordination and risk management, factors that can limit scalability.

At the same time, Dr. Josselin Rouillard emphasised the importance of public funding to support current and future freshwater restoration due to the difficulty to monetise all benefits associated with restoring nature. Public funding is also critical to lower risks for private sector engagement and buy in their participation to restoration efforts. Public funding in nature restoration will be critical to ensure targets under the EU Water Framework Directive and Nature Restoration Regulations are met.

Making financing accessible: tools and capacity building

To address these challenges, MERLIN worked with 18 case studies to make support funding diversification, notably through:

• opportunity finding from sector engagement,
• targeted capacity building, including training and advisory services, and
• technical support to develop innovative business models associated with freshwater restoration 

These efforts aimed to support the gap between the restoration, business and financing community, and enable a broader range of actors to engage in restoration financing.

The role of agricultural policy

Public funding remains a cornerstone of freshwater restoration, particularly through the Common Agricultural Policy (CAP). The presentation highlighted several areas for improvement, including:

• strengthening support for wetland and floodplain restoration,
• improving the strategic targeting of funding, and
• reducing environmentally harmful subsidies.

Aligning agricultural policy with restoration objectives will be essential to achieve impact at scale.

Financing as a key enabler of restoration

The discussions in Brussels were complemented by contributions from Christoph Heinrich, who emphasised the need to increase overall investment in freshwater restoration, and from Gerardo Anzaldua, who highlighted approaches to building value chains and revenue streams as part of MERLIN’s upscaling work.

Together, these perspectives underline a shared conclusion: scaling up freshwater restoration in Europe requires not only political ambition but also robust, accessible and diversified financing models.