Communities continue to be challenged by major storm events that result in flooding and excess quantities of water, which are directly linked to water quality issues. To address these issues nature-based solutions (NBS) have been explored as potential methods of mitigating the impact of flooding. Nature-based solutions for rural landscapes include agricultural, wetland and stream restoration, and structural projects. These solutions are designed to mitigate the impact of flooding and excess quantities of water by collecting and storing water on farm and forest lands and attenuate rapid downstream flooding by releasing storm flow naturally or through soft engineered structures.

This publication provides a set of budget tools for the ten most promising NBS for flood reduction in Eastern North Carolina, which include common farm practices of no-till, cover crops, and tree planting to more complex NBS of wetland creation, water farming, and low-rise earthen berms and retention basins with flashboard risers (Table 1). These budget tools result from research termed “FloodWise” to describe the water quality, flood mitigation, farm benefits, and community engagement and governance connections. The budget tools were developed through discounted cash flow economic-engineering analyses on the costs of installing and maintaining the most important NBS practices identified. Researchers developed a general spreadsheet template for estimating these costs and used it to estimate costs for installing the 10 selected practices, and the FloodWise conservation incentive payments that might be required for such practices to break even at a given discount rate. This template was then adapted and applied to the 10 major NBS practices that could be used in Eastern North Carolina.

Table 1: Preferred flood mitigation practices for the Coastal Plain of North Carolina

Using these budget tools (Table 2, downloadable xlsx files), landowners, researchers, practitioners, and others can estimate the costs and returns for adopting different NBS to help reduce and store stormwater to mitigate flooding. Each template uses a discounted cash flow table to display the costs and revenues of each practice by year. In each budget tool, there is a table for Establishment Costs, Periodic Maintenance Costs, Annual Management Costs, and Income (which includes rows for cost-share payments). Users can insert their operation’s costs and returns in cells highlighted in yellow. Each budget tool includes an “Overview” tab, which explains in detail the use of the spreadsheet.

The capital budgeting formulas calculate the investment returns. The capital budgeting measures in these templates include the Net Present Value (NPV), Land Expectation Value (LEV), Annual Equivalent Income (AEI), Benefit-Cost Ratio (BCR), and Internal Rate of Return (IRR). A more in-depth description of these measures and how to interpret them is discussed in Hovis et al. (2022). A financially acceptable NBS practice at a given discount rate should have a positive NPV, LEV, or AEI, meaning that the discounted present value of the cash inflow (revenue) is greater than the discounted present value of the cash outflow (costs). Users can read the full publication, Determining the costs, revenues, and cost-share payments for the “floodwise” program: Nature-based solutions to mitigate flooding in eastern, rural North Carolina, which describes how the authors utilized these spreadsheets and financial criteria for estimating the returns for NBS in North Carolina in 2021.

Table 2: Budget tools for nature-based solutions. Click on the nature-based solution practice to download the associated budget tool.

As global climate changes and adverse weather events continue to occur, implementing NBS to reduce flooding will be an important mitigation tactic to decrease potential risks. Understanding the costs and benefits of specific NBS can help farm and forest owners decide about the financial merits of installing these practices on the ground and help mitigate flooding on rural, agricultural lands. Once entering the relevant inputs and revenues into the budget tool spreadsheet, users can estimate the present values of the costs for each practice. For any practice with a low or negative financial return at the given discount rate, landowners may need annual farm conservation payments to break even for their returns and costs. These budget tool spreadsheets can be adapted and used by landowners, technical specialists, researchers, and others to analyze and consider the establishment and maintenance of NBS for flood reduction, with and without possible farm conservation or NBS program payments.