Task 3: Multiple Benefits and Blended Finance

Objectives

Task 3 focuses on building a common language and understanding of the concepts of Multiple Value Cases, Regeneration and Blended Finance in the city context. Underlying action research, empowerment of frontrunners and codification is needed to support ‘new’ investors, stakeholders, placemakers and cities on the topics of:

• Multiple benefits and values, and regeneration. We observe the emergence of business cases that integrate the positive externalities of products and services. Therefore they get the benefits of both delivering these products and services, and of the positive externalities. Some of these benefits are financial, or can be made financial, others create values as positive spill-overs for society. All can contribute to regeneration of the environment, physical and social.
• Positive externalities being used, instead of neglected, means that they change into products and services, that in their turn also generate positive externalities. A chain of events follows that might go a long way in both generating new products and services, and in regenerating the environment. This gives a new outlook on what opportunity costs are, and how to optimise value cases, for instance of energy communities in cities. The chain of events is a new way of dealing with the pains and gains of all stakeholders.
• A product or service has a sum of its intended effect and its positive externalities, but it doesn’t stop there. This effect and these positive externalities can mutually reinforce each other; think of a green roof with solar panels on it. Carrying both green and panels are positive externalities, but furthermore this green cools down the panels. This is the mutual reinforcement since cooler panels produce better. Mutual reinforcement is a hidden force in society and economy that can help to regenerate cities.
• Working with positive externalities increases income and also decreases costs, since resources are being shared for the intended effect and positive externalities. Think of one roof with a variety of functions. More income, less costs and also less transaction costs. Optimizing the intended effect and the positive externalities in such a way that they reinforce each other is an effort that results in transaction costs. However, these are not sunk costs, since they also result in a further chain of events: positive externalities that turn into products with their own positive externalities, etc. Transaction costs for a former step pay off in a next step also.
• In the eyes of for instance financiers multiple benefits can result in multiple risks. Do they really, or do they result in resilient business cases that mitigate risk? Think of the green roof with solar panels where both protect the other against too much heat. The shadow of the panels protects the green, and this green protects the production of the panels by way of cooling these. If risks go down than also the price of risk.
• Knowing that products and services create multiple benefits, that costs can be shared, transaction costs can pay of and risk can be mitigated, an investment platform can help the various beneficiaries to finance production together. An investment plan can help to structure finance coming from various sources into blended finance of both product or service, and of its positive externalities. These and other methodologies can be developed to work with multiple benefits and blended finance; think of true pricing as a condition for an investment platform to function better.
• The investment platform can be a place where various parties discover how their actions can be mutually reinforcing. Being active in the same city these parties can come up with solutions for problems that others struggle with. They can offer their solution in an unsolicited proposal, but it’s also interesting to turn this around: knowing that parties discover what they can mean for others, these other parties can open a challenge to come up with proposals. The habits of tendering are reversed from asking for specified products to spontaneous offers and to challenges.