**Table A1.** Socio indicator data from survey and Census.


**Figure A1.** Zip codes in the study area. **Figure A1.** Zip codes in the study area.

#### **References: References**


**Raghu Dharmapuri Tirumala \* and Piyush Tiwari**

Faculty of Architecture, Building and Planning, Melbourne School of Design, The University of Melbourne, Melbourne 3010, Australia; Piyush.tiwari@unimelb.edu.au

**\*** Correspondence: dtvraghu@unimelb.edu.au

**Abstract:** A rapid increase in land and property values has been one of the driving forces of urban ecosystem development in many countries. This phenomenon has presented project proponents/policymakers with multiple options and associated challenges, nudging them to configure or incorporate elements of land-based financing in their policies and legislations. Specifically, the Government of India and various state governments have sought to monetize land through diverse instruments, for augmenting the financial viability of infrastructure and area development projects. This paper compares Indian central and state infrastructure policies/acts with regard to land monetization strategies. The analysis indicates that policies and legislations are taking a turn towards promoting land monetization mechanisms as a financing tool for cities and project implementation agencies. However, the approach is cautiously used and implementation is often seen to fall behind actual project timelines. Based on the findings, key determinants of a successful policy that captures an increase in land values, are identified. The learnings provide useful inputs for states to strengthen their policy documents and legislative/institutional frameworks, for ensuring the effectiveness of land-based financing tools.

**Keywords:** land-based financing; land monetisation; policy; infrastructure; Sustainable Development Goals

#### **1. Introduction**

The infrastructure and urban development landscape across the world witnessed a substantial transformation in the last two decades, attributable to economic growth, internationalization, and greater expectations of citizens [1]. The developing world has struggled with wide-ranging systemic constraints that include technical, institutional, and financial aspects in managing this burgeoning change. The growing fiscal stress of cities ("urban local bodies" (ULBs)) is forcing nations and subnational entities across the world to explore newer sources of finance—broadening the tax base and introducing different charges for utilities [2]. Land-based financing is increasingly seen as a tool for developing infrastructure and providing ecosystem services, across the world. The success of Singapore and Hong Kong in using these tools has spurred the interests of various governments the world over, to explore various tools and instruments that capture the increased value of land, and to finance infrastructure or area-based developments. Driven by speculation, these approaches have led to increased land prices and created more inequality in the developing world. In developed markets such as Hong Kong, London, Paris, and Tokyo, it is estimated that a person earning a national average income would need to work for more than 60 years to buy a residential property. Similar assessment for India ranges between 100 years for property across Indian metros, and nearly 580 years for a property at the highest rate in Mumbai [3].

Land is an important backbone for infrastructure development, which led to numerous statutory interventions by governments, to ensure its availability for economic purposes. Land is conventionally seen as one of the factors of production, and the emphasis is on

**Citation:** Tirumala, R.D.; Tiwari, P. Land-Based Financing Elements in Infrastructure Policy Formulation: A Case of India. *Land* **2021**, *10*, 133. https://doi.org/10.3390/land10020133

Academic Editor: Alessio Russo Received: 31 December 2020 Accepted: 27 January 2021 Published: 29 January 2021

**Publisher's Note:** MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

making this increasingly scarce resource available for economic growth. The traditional land acquisition acts in many countries were all premised on procuring land, in some instances under the ambit of eminent domain, to propel economic and ecosystem growth. Further, to prevent runaway misuse of increasing land and property values, some countries put in place, urban land ceiling acts, to cap the rentals that could be charged [4].

The prominence attached to land is very explicit in the Sustainable Development Goals when compared to the Millennium Development Goals (MDGs). In the MDGs, land (and property) is viewed as a resource under Goal 7 (Ensuring Environmental Sustainability) for improving the lives of slum dwellers. In contrast, the importance of land as a contributing parameter has been featured in many SDGs. In SDG 1 ("Removing Poverty in all its forms everywhere"), land features as a factor in Target 1.4 that describes rights to economic resources for all (particularly the poor and vulnerable) including control over land and other forms of property. Access to land in a secure and equal manner is considered an important determinant for improving the productivity and incomes of small-scale food producers in Target 2.3 of SDG 2 ("End hunger, achieve food security and improved nutrition, and promote sustainable agriculture"). Having rights to ownership and control of land is also seen as an important feature for achieving SDG 5 ("Achieve gender equality and empower all women and girls"—Target 5a). Access to land is also an important factor for achieving SDG 11 ("Make cities inclusive, safe, resilient and sustainable"), which addresses access to the infrastructure [5]. Land has always been considered as a fundamental factor that influences poverty, hunger, and sustainability [6]. The development path of the urban ecosystem will be influenced in some sense, by how land develops [7].

This innate relationship between land and development, coupled with the poor resources of the governments to raise finances for providing urban infrastructure facilities to an increasing urban population, gave rise to the concept of land-based financing tools. Land-based financing is modeled on the premise that land as a resource adjacent to an infrastructure facility/service has a substantial increase in value, a part of which could be used for financing development projects in that area. Many countries including India and global forums such as Global Land Tool Network, Royal Institution of Chartered Surveyors have adopted tools for this value capture in the form of area linked development charges, impact fees, transfer of development rights, urban land value tax, surcharges on stamp duty, etc. [8–10].

The idea of levying a tax on increased land value due to the efforts of the government or the community was first stated by Henry George in his seminal book "Progress and Poverty" [11]. Since then the concept of land-based financing or variants of land value capture has been propagated through the years [2,12]. The instruments span across a transfer of development rights, impact fees, land leases and sale proceeds, property, and land tax variants, betterment charges, etc. [13]. The very steep increase in land values, particularly in the developing world, has presented project proponents and policymakers with a range of opportunities to fund projects using land as one of the resources. [14].

While the benefits from land value capture are evident, land-based financing does have its share of criticisms. Leveraging the increased value of land distorts the land rights regime and equity across various sections of the society. In India, for instance, many informal and slum settlements are situated on government-owned lands. The dwellers in these settlements do not own a legal title to the land but have perceived rights to reside. Attempts to gain from monetizing such land parcels might negatively impact these human settlements [15]. The equitable benefits of land-based financing across all sections of the society are not conclusive, as there have been instances of the system bypassing the poor [13] where the expected revenues do not subsidize the needy.

One of the major criticisms of land-based financing models is the intrinsic nature to front end the investment that is recouped over a period, during which time the affordability of the land to the general public is constrained. Thus, lawmakers and policy actors need to assess policies against an equity framework that addresses aspects relating to where the economic value is being created and recovered from, to who is going to benefit from

the initiative. The linkage between the taxation and budgeting process and distributing the financial risks equitably needs to be established. Projects such as Hudson Yards and Atlanta Beltline have been assessed under such criteria [16–18]. The evaluation of the effectiveness of the policy or the project being implemented is based on (i) whether there is value creation (ii) how do policies enable this value creation, (iii) how is the value shared between various stakeholders, and (iv) whether the re-deployment of value generated further increases value at other places in the region [16].

Cities, traditionally, have better control and flexibility in managing their non-tax revenues or own assets, due to the relatively limited need for approvals and adherence to the fiscal frameworks [19]. The discourse on land-based financing is largely limited to land value capture instruments and how cities can utilize them to fund their operations. There is limited research on how the potential increase in land values can be used for financing direct infrastructure projects, and how the policies at national or sub-national levels have incorporated the elements that promote land-based financing aspects. This paper discusses the extent of land-based financing being formally incorporated in policy documents, using the policies and legislations in India as a case example.

The rest of the article is organized as follows. The approach adopted for identifying the various policies that have elements related to land-based financing and the comparison framework of these policies is described in Section 2. A few Indian project experiences that used land-based financing are presented in Section 3 to provide an overview of the diversity of regions and project structures that are being developed across the country. Various national and subnational policies, schemes, and acts that incorporate or relate to land monetization are set out in Section 4. Contours of a framework that could be used for incorporating land-based financing aspects in policy are outlined in Section 5. The findings of this analysis and lessons for its wider adoption in land value capture policies are summarized in Section 6.

#### **2. Method**

The intent of the governments to encourage land-based financing tools and instruments is typically communicated through various policy documents (and in some cases specific programmes and schemes). The land-based financing mechanisms that are in practice internationally and captured in many forums such as the Global Land Tool Network [8] emphasize the need for such mechanisms to be contextually tailored. The effectiveness of land-based mechanisms and the equity principles promoted by the policies could be gauged by five questions [16] as set out in Table 1 below.


**Table 1.** Framework for Comparative Analysis.

To identify the programs/policies for a comparative study, the initiatives by the Government of India, and by three frontrunner states to undertake PPP projects over the last two decades, were screened for the following criteria (i) policies/programs that specifically address urban area development (ii) programs/policies that mention landbased financing and (iii) the programs/policies that allow for private sector participation to achieve the respective objectives. For this research, land-based financing included all the forms of land value capture, land monetization instruments generally adopted in global networks like Global Land Tool Network [8] and mentioned by the Government of India in its land value capture policy. The sections of the policies that refer to the land-based financing mechanisms were listed out. The land-based financing elements of these policies have been compared with the five parameters (as set out in Table 1) to understand if these elements address the fundamental questions of effectiveness and equity.

#### **3. Indian Project Experiences of Land-Based Financing**

Historically, urban land has been used to develop cities in India. Mumbai (known earlier as Bombay) was developed as a port city by selling the leasehold rights by the then English administration. A similar model was adopted to develop Kolkata (earlier known as Calcutta). Many surrounding areas of the capital city, Delhi, were also developed using the sale of urban land (through Development Authorities) [20]. When the Indian economy started to blossom in early 2000, many sectors attracted international investments which subsequently led to a sharp increase in land and real estate prices. For example, allowing foreign direct investments in privately built townships and special economic zones. The domestic investments followed suit, rapidly changing the sector into an attractive investment class [21]. The Government of India and various state governments took advantage of this increase and used the land as a means to fund infrastructure projects. A recent example is the greenfield development of Amaravati as the capital city of Andhra Pradesh (explained in Table 2).

Over the last two decades, India attracted a variety of domestic and international investors, developers, and other stakeholders to participate in its growth story, who have sought progressively to move up the risk curve by exploring newer sectors and implementation arrangements [22]. The launch of major infrastructure programmes such as the Golden Quadrilateral, East West North South corridors, redevelopment of airports, ports, telecom, and energy sector improvements gave a fillip to public and private investment in infrastructure. The subnational entities, state-owned organizations, city administrations, and parastatals followed suit with a range of projects spread across infrastructure subsectors [23]. The buoyancy and aggressiveness of the investment programme coupled with the increasing risk appetite of the private sector resulted in many projects being deemed financially unsustainable solely based on user fees and charges [23]. The project proponents then began structuring projects, primarily those implemented under public–private partnership arrangements, with land-based revenue as an additional source of financing. The trend continued across all the subsectors including transport, urban, tourism, and agriculture marketing projects. The project sponsors were also spread across the national, state, and city levels. While a few of the projects were large and had attracted substantial national and regional media attention, there were also a plethora of smaller projects spread across different states that benefitted. An indicative list of projects that used land-based financing mechanisms and have attracted substantial research attention are listed in Table 2.

The greenfield development project of Amaravati city that was based on land pooling, was designed to provide the development authority with considerable land to use for development and also to raise finances for infrastructure creation, through capturing the increase in land value. The challenge, however, will be from competing developments in fringe areas that could affect the land value appreciation in the development areas of the city. The development authority would need to identify measures to counter the impact of competing developments, for instance, by permitting higher built-up areas and capturing the value from this increase. Another challenge for the authority to balance is the mismatch in the timing of initial infrastructure investments required and the value capture that would be realized over a longer time horizon [15].


**Table 2.** Illustrative projects that incorporated land-based financing elements.

Source: Authors compilation based on a review of the literature.

The Bangalore Mysore Infrastructure Corridor, a road project that linked two major cities Bangalore and Mysore in the southern state of Karnataka, had attracted significant public attention as a large quantum of land was promised to the project developer. The business case of the project hinged on making land available to the developer along the corridor, for developing and maintaining townships for a defined period, which would offset the costs for developing the road and associated infrastructure. While there was opposition to the excessive land sought to be acquired for the project, the contours of this model served as a template for infrastructure projects in the country to use land-based financing approaches. Therefore, whenever the business case of a project resulted in suboptimal revenues (from the user charges and associated cash flow streams), the project sponsors, typically the public sector entities offered additional land or rights to use the land for shoring up the sources. For instance, in the case of Delhi International Airport (and other airports at Hyderabad, Bangalore, and Mumbai), the project sponsor offered land surrounding the main airport for commercial development. The income arising from such additional land development was expected to offset the capital and operations and maintenance (O&M) expenditure being incurred on the project.

Similar models have also been adopted in port projects (Dhamra port) and metro train projects (Hyderabad metro). The viability of revenue streams was a risk that was sought to be addressed using land and real estate as a sweetener in many instances. The approach, though, has not been a runaway success due to the limitations in monetizing the land value, especially after the global financial crisis and its aftermath [23]. Political controversies have also stalled the progress of land acquisition and the implementation of projects in many cases as there were attempts to convert agricultural land to industrial and infrastructure purposes [14]. However, the belief in such a model had nevertheless been seeded in many project sponsors.

#### **4. Elements of Land Monetization in Key Legislation and Policies in India**

There have been initiatives (though on a limited scale and fragmented) to reform the institutional, governance, and financial systems for encouraging private sector participation and coexisting with the social contexts surrounding land [14,29]. The policy and legislative framework that enables land-based financing in India include Municipal Corporations Acts, Municipality Acts, Development Authority Acts, Town Planning Acts, Stamp Duty, and Registration Acts, various schemes of the central and state government, national policies, and state policies. The powers to legislate different types of instruments varies by the type of agency.

The proponents of infrastructure projects are mostly city administrations and the state level parastatals, whose access to different sources of finances are limited by the powers to influence the prevailing legislations. In most cases, they have very limited say in introducing a new element or changing the base or the rate of a tax system, though they have better control over the administration of any tool once the same has been enacted. Moreover, the revisions to policies and legislations are not carried out regularly by central and state governments, leading to a potential delay in accessing the upside in the land value increases. In the meantime, the expenditure for the infrastructure service provision keeps escalating. Another area of criticism is the lack of transparency that exists in the distribution of land and the direction of transfer (typically from public ownership to private control). Therefore, an effective institutional and governance framework is vital for conducting transparent and equitable land-based financing transactions.

Various government constituted expert committees and interest groups have suggested mechanisms and instruments for utilizing unused land to finance infrastructure in India. One of the earlier initiatives was the report of the Committee on Roadmap for Fiscal Consolidation that recommended the monetization of land resources for financing civic infrastructure [30]. Instruments such as land pooling, monetization of underutilized/unutilized urban lands, land readjustment, land value capture were suggested as part of land-based financing systems [31,32]. The levy of area-based development charges

was in vogue till 2010 in Mumbai, where the revenues were collected and retained by the city municipal corporation. Ahmedabad city has been adopting the premium floor space index tool on a stand-alone basis, and to supplement the transit-oriented development initiatives in the city.

The design of recent government of India's schemes and programmes reflect this intent with sustainability as the centerpiece. Various urban development schemes were launched by the Government of India in mid-2000 to facilitate better infrastructure facilities and ecosystem services for citizens. The schemes were customized for different categories of towns and cities (based on population, characteristics, etc.). The prominent amongst them being the Jawaharlal Nehru National Urban Renewal Mission (JnNURM) Scheme, Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and the Smart Cities Mission. These schemes (and similar ones for different cities) aim to accelerate investments in city infrastructure while proposing to reform the governance, institutional, and financing systems. These schemes seek to improve land registration and cadastral systems and make the real estate available more freely for development projects through repealing land ceiling regulations.

Though direct methods of land monetization are not suggested in the JnNURM guidelines, it provided for legal and policy changes to be made by the States and simplify rules related to the conversion of land from agriculture to non-agriculture purposes. This implied that more land needs to be made available for the creation of assets meant for ecosystem services. As a consequence of this mission, the State needed to earmark land also for commercial use to serve the economically weaker sections (EWS) and low-income groups (LIG) allottees. This would include public markets, parks, schools, etc., that may generate continued revenues to the urban local bodies (ULB). As a result of the development of EWS and LIG housing projects, the land value in adjacent areas may increase due to additional habitation. The Smart City Mission guidelines place the onus on State level public agencies to create frameworks and policies for monetizing land and land-based assets in a Smart City. Land is also recognized as a key resource for implementing the AMRUT scheme, even though the scheme stops short of suggesting that excess land can be monetized for improving the sustainability of projects.

The primary legislation that enables the acquisition of land for infrastructure and development projects is the Land Acquisition Act, 2013 (which was promulgated replacing the archaic act of 1894). The Act sets out compensations that are much more aligned to market values than its predecessor. Section 26(3)(c) of this Act envisages that a Company can acquire land as equity and make landowners as its shareholders. It is possible, therefore, for a Government company to monetize land this way by acquiring it, developing necessary public infrastructure, and benefitting from the revenues that accrue.

The intention of various tiers of governments to provide direction for funding infrastructure developments is set out in the respective infrastructure policies and acts. The three states that are at the forefront are Gujarat, Andhra Pradesh, and Karnataka. While land monetization is not specified in the Andhra Pradesh law, it may be construed that in the process of development of a project for carrying out the objects of the Act, the Infrastructure Authority can suggest ways and means monetize land acquired for a project. Though the powers to acquire land is not vested in the Infrastructure

Authority directly, however, in Schedule V of the law [under Section 2(rr)], it is envisaged that the State Government will extend support to acquire land necessary for a project. It also provides for asset-based support by the Government, whereby the project proponent provides land at a subsidized lease for a predefined period (not exceeding 33 years).

The Gujarat Infrastructure Development Act does not empower the project authority to acquire land. However, in Chapter II—Infrastructure Projects (Section 6), the law envisages assistance by Government agencies for conferment of the right to develop any land. It also provides for Government agencies to participate in the equity of a project (not exceeding 49% of total equity), extends senior or subordinated loans, and similar such

conditions to provide assistance to any person developing an infrastructure project. Thus, the authority has a role of a facilitator in the development of infrastructure in the State. The Infrastructure Policy of the Government of Karnataka does not explicitly mention that land-based financing can be used, or land can be monetized, though there were numerous examples of land being used as a financing source across the state in the last two decades.

Traditionally, states and cities have been raising funds by the sale of lands which is a less efficient form of resource mobilization. Typically, land value has been captured by a levy of the impact fee, betterment charges, etc. For example, infrastructure project agencies in Maharashtra, (Mumbai Metropolitan Region Development Authority (MMRDA) and City and Industrial Development Corporation (CIDCO)) have used value capture methods to finance infrastructure development. Haryana and Gujarat have used land pooling schemes, but there is no systematic approach outlined for land value capture. The government of India's latest policy on land value capture (LVC) seeks to capture value from increases in private land valuation from public investments and public policy actions. However, it does not address direct monetization (sale/leasing) of public land. The policy document also lists out various value capture methods used in India. These include land value tax, fees for change in land use, betterment levy, TDRs, relations of rules or additional FSI, vacant land tax, etc. The guidance note recognizes that presently there is no tool to assess the increased value of the land as a result of development. However, the impact fee tool is discussed at length in the note. The other types of LVC are not dealt with in detail. While success stories of LVC implementation in India and abroad have been dealt with in Section III (page 20 onwards) examples of tried, tested and failed initiatives by Government on value capture are not provided in the guidance note. Annexure 1 contains details of the type of value capture fund sources (Land Tax, Conversion tax, Betterment Levy, Impact Fee, etc.) as has been practiced in different states in the country.

The list of policies, schemes, and legislations that have included land-based financing sources are summarized in Table 3.


**Table 3.** Legislations/policies with land monetization elements.

**Table 3.** *Cont.*



**Table 3.** *Cont.*

Source: Authors compilation based on a review of the policies/legislations.

The primary objective of these policies and legislation is to promote infrastructure development, and land monetization is suggested as a tool to achieve this goal.

#### **5. Comparison of Policies**

Over the years, project proponents have attempted to leverage the potential upside from increased land value due to infrastructure developments and have structured these increases as a source of revenue for the project. The project structures have attempted to balance concerns of the community and the political class pertaining to displacement and inequity. The history of policies, schemes, and laws also indicates an implicit real estate turn in the development landscape, as was witnessed in other Asian countries [14]. The following Figure 1 presents a timeline of the key projects and the policies, legislations discussed in the preceding sections.

**Figure 1.** Key projects and legislations/policies. **Figure 1.** Key projects and legislations/policies.

Most of the projects were structured and implemented before the respective policies for land-based financing were in place. The public sector project proponents have attempted to use land-based financing techniques in the projects, though with mixed results. The capture of the potential upside of land value is sought to alleviate the relatively higher capital and O&M expenditure, in relation to the revenues that are likely to accrue. The use of such implementation arrangements has become mainstream options, though they differ in the mechanics of the application. Only the Smart Cities Mission and the Land Value capture Policy set out more elaborate provisions for monetizing land. However, the inclusion of land monetization elements in various policies and legislations have begun to appear only in the later schemes (post-2015). The permissibility of land-based financing tools under the earlier schemes was implicit, as the same were not directly prohibited. This points to a substantial lag between the inclination to use land monetization instruments for promoting investment activity (or to develop infrastructure projects), and the hesitancy in formalizing the options through well-defined policies and legislations. The approach was noticeably cautious given the challenges and controversies involved with Most of the projects were structured and implemented before the respective policies for land-based financing were in place. The public sector project proponents have attempted to use land-based financing techniques in the projects, though with mixed results. The capture of the potential upside of land value is sought to alleviate the relatively higher capital and O&M expenditure, in relation to the revenues that are likely to accrue. The use of such implementation arrangements has become mainstream options, though they differ in the mechanics of the application. Only the Smart Cities Mission and the Land Value capture Policy set out more elaborate provisions for monetizing land. However, the inclusion of land monetization elements in various policies and legislations have begun to appear only in the later schemes (post-2015). The permissibility of land-based financing tools under the earlier schemes was implicit, as the same were not directly prohibited. This points to a substantial lag between the inclination to use land monetization instruments for promoting investment activity (or to develop infrastructure projects), and the hesitancy in formalizing the options through well-defined policies and legislations. The approach was noticeably cautious given the challenges and controversies involved with the acquisition, distribution of the land, and its ever-changing value to the stakeholders concerned.

the acquisition, distribution of the land, and its ever-changing value to the stakeholders concerned. Table 4 sets out the comparison of the various policies, programmes, and schemes on the five parameters—from whom the increased value is being recovered, who benefits from the distribution of the land monetization benefits, how is the process linked to the overall budgets of the project proponents, the stakeholders bearing the financial risks (of Table 4 sets out the comparison of the various policies, programmes, and schemes on the five parameters—from whom the increased value is being recovered, who benefits from the distribution of the land monetization benefits, how is the process linked to the overall budgets of the project proponents, the stakeholders bearing the financial risks (of future revenues and investments) and the stakeholders involved in governing the process.

future revenues and investments) and the stakeholders involved in governing the process.


All the land-based financing aspects of the policies at the national and state level appear to be similar in content and process. The land value creation is proposed to be captured primarily from the landowners and the private developers who are in the region. There is no explicit mention/provision for widening the base to include other financial investors, who could create additional value (for example through the issuance of bonds as is the international practice [18], or to attract philanthropic investors [17]).

The economic value that is recovered is proposed to accrue to the city administrations, development authorities, and other public sector parastatal agencies. There are no formal statements on how the additional value will be distributed, and how the general public is benefited from most policies, except in relation to the land pooling system. The benefit to the contributors of the land value is made possible under the "land pooling" scheme wherein the contributors have access to additional value for the portion of the land they continue to own post-implementation of the scheme [15]. There is no specific mechanism that has been stated in any of the policies for tax abatement to any of the contributors.

The linkage of the value that is captured through land-based financing mechanism to the general budget or the taxation regimes is not touched upon in any of the policies. While there is an assumption that all the additional cash flows due to these activities will go to the consolidated fund of the various governments, there are no stated commitments to ensure that these additional sources are not spent on unrelated activities. The process

appears to be at a preliminary stage of evolution. The policymakers are yet to set out the mechanism for investigating the relative advantages of land monetization options and to assess the impact of these choices on the wider society. Accordingly, the financial risks remain with the project proponents.

The governance of land-based financing structures has been retained by the government across all the policies. While there is no specific mention of region-specific urban development authorities to be created, such institutions exist across the country and have been used in the case of Amaravati city development [15]. Such institutional structures have added flexibility in raising capital, managing the project more efficiently, and insulating financial expenditure from the influence of political exigencies.

There have been substantial gaps in policy and planning with respect to incorporating land as a revenue source in the policy and legislative frameworks. Since urban development is a state subject, much of the federal schemes and guidelines highlight the need for adopting innovative land monetization principles but do not set out the finer implementation details. It is left to the states, to incorporate these principles based on their local context, relevance, and suitability. Many states have appropriately modified the relevant tax codes and other legislations to enable land value capture, though some are yet to initiate action. Therefore, at the state level, there is a wide disparity among states in their readiness to adopt or integrate land monetization approaches in their planning and project designs. While the value capture policy guidelines mention that land monetization principles should be an integral part of an assessment for all projects of the central government, the individual schemes under which projects are submitted (by individual states/departments) to the central government, do not insist on the same being an integral part. Therefore, there is some dissonance in the translation of a policy of the central government with policies/schemes of other departments. The dissonance only increases at the state level, where each state has different enabling mechanisms for promoting land-based revenue instruments.

In summary, the policies in India have lagged behind the projects in terms of incorporating land-based financing aspects. Driven by fiscal constraints, most states are now exploring various elements of land value capture to be included in their policies, though the Government of India policy on land value capture is dedicated to this aspect. The policy landscape appears to be in the initial stages of evolution and is yet to reach a higher-order process supported by appropriate legislations for mainstreaming land-based financing mechanisms in the design and planning processes. [8,16–18].

#### **6. Policy Implications**

For governments to use land-based financing tools effectively, it needs to be supported with appropriate laws/legislations or executive orders permitting value capture methods (through tax and non-tax revenues) and earmarking/distributing funds for specific projects/developments. Further, policies need to be formulated to provide a clear roadmap for (a) capturing the value (b) collecting the fees or charges (deposited to the consolidated funds of the state), (c) earmarking funds for specific projects/developments, and (d) ensuring timely disbursement of funds to project implementing agencies (through budgetary allocations or establishing project-specific funds/accounts) [8,16–18]. To enact the policies requires a strong institutional framework and collaboration between different stakeholders [2].

A reflection into the project structures and the elements of the national and subnational policies in India, and in international markets brings to the fore the conflicts between incorporating the private sector motivation of profit maximization against the public sector responsibilities for equitable access to ecosystem services and weaving these into state planning and policy statements [13]. In the Atlanta Beltline project, the project proponent has not made any provisions for reducing the negative effect of increases in taxes of low-income households or capping of any rents along the project influence area [17]. The extent of the control that the project proponent has over the land markets and the

autonomy of these proponents in making appropriate changes is limited in most countries given the distribution of powers across various tiers of governance. [14] This aspect of control can provide a layout of how the policies can span out in addressing issues relating to the core principles of SDGs (equity, access, efficiency, sustainability, and delivering public value) [31]. These aspects need better articulation in most instances. All of these guiding principles have a continuum with low to high ends of spectrums, providing a framework for understanding when and to what extent the public sector planning and policy framework can embed the land-based financing elements. An indicative framework to analyze the incorporation of land monetization elements in policy is set out in Figure 2. tries given the distribution of powers across various tiers of governance. [14] This aspect of control can provide a layout of how the policies can span out in addressing issues relating to the core principles of SDGs (equity, access, efficiency, sustainability, and delivering public value) [31]. These aspects need better articulation in most instances. All of these guiding principles have a continuum with low to high ends of spectrums, providing a framework for understanding when and to what extent the public sector planning and policy framework can embed the land-based financing elements. An indicative framework to analyze the incorporation of land monetization elements in policy is set out in Figure 2.

proponent has not made any provisions for reducing the negative effect of increases in taxes of low-income households or capping of any rents along the project influence area [17]. The extent of the control that the project proponent has over the land markets and the autonomy of these proponents in making appropriate changes is limited in most coun-

*Land* **2021**, *10*, 133 15 of 18

**Figure 2.** Framework for analyzing land-based financing elements in policies. **Figure 2.** Framework for analyzing land-based financing elements in policies.

At the core lie the principles that define the expectations of and responsibilities towards various stakeholders concerned. These principles are derived from the philosophy of SDGs [5] and also reflect the intents of many governments. The land-based financing aspects would need to provide equal access to all, be sustainable and follow an effective process that continuously delivers public value. At the core lie the principles that define the expectations of and responsibilities towards various stakeholders concerned. These principles are derived from the philosophy of SDGs [5] and also reflect the intents of many governments. The land-based financing aspects would need to provide equal access to all, be sustainable and follow an effective process that continuously delivers public value.

The operational elements of the framework relate to the evaluation of enabling land governance structures, addressing potential risks and challenges, defining value recovery and allocation process, supporting the implementation of various national and regional level urban development programmes, and promoting collaboration between different stakeholders. The land governance structures define the extent of control or ownership of the land and real estate resources, and the flexibility of the policymakers in adapting the resources for use of non-state stakeholders. The ownership patterns of land (widely diffused through a diverse cross-section of public, private, and community owners, with substantial informal claimants in India [9]) renders the policy development more constrained. The fragmented nature of the ownership and more often than not, the unequal impact of land acquisition and land value increase is visible across most developing nations [14] An evaluation of the potential risks and challenges through the lens of guiding principles would keep the frame of evaluation grounded to the desired outcomes. In the instances where the public sector does not have substantial direct control of land, the policy initiatives have been focused on the greater role of private lands, as witnessed in the The operational elements of the framework relate to the evaluation of enabling land governance structures, addressing potential risks and challenges, defining value recovery and allocation process, supporting the implementation of various national and regional level urban development programmes, and promoting collaboration between different stakeholders. The land governance structures define the extent of control or ownership of the land and real estate resources, and the flexibility of the policymakers in adapting the resources for use of non-state stakeholders. The ownership patterns of land (widely diffused through a diverse cross-section of public, private, and community owners, with substantial informal claimants in India [9]) renders the policy development more constrained. The fragmented nature of the ownership and more often than not, the unequal impact of land acquisition and land value increase is visible across most developing nations [14] An evaluation of the potential risks and challenges through the lens of guiding principles would keep the frame of evaluation grounded to the desired outcomes. In the instances where the public sector does not have substantial direct control of land, the policy initiatives have been focused on the greater role of private lands, as witnessed in the contents of the land value capture policy of the Government of India. The ability of the non-government stakeholders to influence the policy dialogue has been very minimal, even though the practice of contesting the implementation has been substantial [13]. A quantitative evaluation of the value recovery and the mechanics of the allocation across

various stakeholders is essential to understand and configure the project structures and to promote sustainability of the land-based financing mechanisms. A broader perspective of how these elements support collaboration with prevailing or anticipated government rejuvenation programmes indicates the inclusiveness of the policy. A proactive approach to governing the land monetization process, with supporting institutional and regulatory aspects would provide a feedback overlay for the assessment.

#### **7. Summary and Conclusions**

The purpose of this research article is to sketch out the broad direction of how the various policies and legislations incorporate the land-based financing elements, given the projects being implemented are actively adopting such mechanisms. The increase in attention to land-based financing models and the adoption of land monetization instruments generally coincided with the development of infrastructure projects under the public–private partnership arrangements. The stress on finances of the project proponents coupled with the anticipation of upside in the land values post-implementation of infrastructure projects has given way to consider land as a revenue source, rather than just a factor of production [9,13]. The viability assessment of the projects, particularly those in the transport sector, improved substantially with the addition of a real estate component.

The institutional, governance, and policy formulation practices present in India are reflective of similar structures prevalent in Asia and other developing regions. Development agendas of many countries are moving in a similar direction, so are the challenges that they encounter in accelerating political and administrative actions. The use of land-based financing elements without appropriate structuring could lead to sub-optimal distributive justice to all the stakeholders concerned. The policies need to strike a balance between increasing the burden on the adversely affected landowners and users, while not exaggerating the benefits derived by those who are advantageously placed to the intervention. A framework that encompasses the generally accepted guiding principles for analyzing the extent to which the land-based financing elements could be incorporated in their respective policies and legislations could provide the policymakers and public sector project proponents a tool to comprehensively assess their needs, opportunities, and constraints. The project proponents also need to be conscious of how the financial risks are identified and borne, which ecosystem services are receiving lower funding due to the land value increase interventions [16]. A holistic assessment needs to be undertaken before incorporating land-based financing elements in policy to balance the realities of the contributors to the land value increments, and broad basing the beneficiaries pool (to include wider society where appropriate through lower taxes or better ecosystem services).

A reasoned discussion with stakeholders while framing the policies, supported by political advocacy, will lead to a more efficient public investment process. With the increasing attractiveness of land monetization options for funding economic growth, many developing societies will need to balance value capture with the expectations of affected stakeholders. This research contributes to the ongoing discourse of systematically understanding the elements for formulating public policies on land management.

**Author Contributions:** Conceptualization, methodology, formal analysis, resources, writing–original draft preparataion and writing–review and editing–equally contributed by R.D.T. and P.T. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research received no external funding.

**Institutional Review Board Statement:** Not Applicable.

**Informed Consent Statement:** Not Applicable.

**Data Availability Statement:** The data presented in this study is contained within this article.

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **References**


**Harald Zepp 1,\* and Luis Inostroza 1,2**


**Abstract:** While Ecosystem Services (ES) are crucial for sustaining human wellbeing, urban development can threaten their sustainable supply. Following recent EU directives, many countries in Europe are implementing laws and regulations to protect and improve ES at local and regional levels. However, urban planning regulations already consider mandatory compensation for the loss of nature, and this compensation is often restricted to replacing green with green in other locations. This situation might lead to the loss of ES in areas subject to urban development, a loss that would eventually be replaced elsewhere. Therefore, ES assessments should be included in urban planning to improve the environmental conditions of urban landscapes where development takes place. Using an actual planning and development example that involves a proposed road to a restructured former industrial area in Bochum, Germany, we developed an ad-hoc assessment to compare a standard environmental compensation approach applying ES. We evaluated the impact of the planned construction alternatives with both approaches. In a second step, we selected the alternative with a lower impact and estimated the ES losses from the compensation measures. Our findings show that an ES assessment provides a solid basis for the selection of development alternatives, the identification of compensation areas, and the estimation of compensation amounts, with the benefit of improving the environmental quality of the affected areas. Our method was effective in strengthening urban planning, using ES science in the assessment and evaluation of urban development alternatives.

**Keywords:** compensation measures; urban resilience; urban development; impact assessment

#### **1. Ecosystem Services for Cities**

Ecosystem Services (ES) science has provided a framework and empirical evidence for analysing, discussing and communicating environmental trade-offs arising from alternative development options in several planning contexts [1–3]. Resilience, sustainability and quality of life can be greatly improved in urban areas by including ES assessments [4,5]. Urban planning can benefit from the adequate use of the ES framework. Urban areas need to improve the application of laws and regulations following EU-directives to protect and improve the natural environment at local and regional levels [6,7].

This paper uses the ES concept in a practical way to illustrate its potential to support decision-making. The aim is to present a clear way to apply the ES framework in an actual urban development case to show the benefits of such an approach. We apply the ES concept in a real planning case study using a procedure that is ready to implement and easy to understand, avoiding unnecessary conceptual and operational complexity. Our approach can be used by a broader community of scholars and decision-makers who might not necessarily be familiar with the ES concept. We present the ES concept, focusing on how it can be implemented in practice for urban planning and the necessary steps to follow.

**Citation:** Zepp, H.; Inostroza, L. Who Pays the Bill? Assessing Ecosystem Services Losses in an Urban Planning Context. *Land* **2021**, *10*, 369. https://doi.org/10.3390/ land10040369

Academic Editor: Alessio Russo

Received: 8 March 2021 Accepted: 31 March 2021 Published: 2 April 2021

**Publisher's Note:** MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations.

**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

#### *1.1. Ecosystem Services Assessments*

ES are the benefits that society obtains due to the functioning of healthy ecosystems [8]. ES can be classified to assist in assessing them. The Economics of Ecosystems and Biodiversity (TEEB) and the Common International Classification of Ecosystem Services (CICES) [9] are two broadly accepted classification systems. We used the CICES, which classifies ES into three groups: provisioning Ecosystem Services (P-ES), regulating Ecosystem Services (R-ES), and cultural Ecosystem Services (C-ES) [10,11]. CICES version v5.1 offers a detailed and extensive list of ES that can be applied to identify relevant services in several geographical settings.

In the context of urban planning, the assessment of ES should always start with screening, identifiing and selecting relevant ES. This is a fundamental starting point, because ES are always context-specific. This means that the presence, intensity, distribution, and relevance of ES change from location to location [12]. ES also change due to land management practices or urbanisation intensity [12,13]. A good practice for sound identification is to refer to an established classification system, such as TEEB or CICES. Using a validated classification of ES can help ensure a systematic screening process that does not leave out any important service, and that help avoid the inclusion of benefits that are not ES. Having a consolidated list of relevant ES a follow-up good practice is to perform an exploratory assessment to provide a sound evaluation of ES intensities that can help in further prioritizing and mapping ES. Many studies have applied these two steps using expert assessments and the matrix approach [3,14,15]. A pool of experts can select relevant ES in a study area and score the intensity of the ES. The matrix approach can link such scores to specific land use/land cover (LULC) to map the spatial distribution of ES. Preliminary scoring and mapping of ES using the matrix approach have been shown to have high concordance with biophysical estimations [16]. These steps can be a robust guide in further evaluations and biophysical quantifications of ES in a more detailed analysis.

#### *1.2. Ecosystem Services for Spatial Planning*

The capacity of the ES framework to assist in decision-making in several fundamental aspects of urban development, such as green infrastructure, climate change adaptation and sustainable urban development, has been largely confirmed [4,17–20]. ES can greatly help planners understand the dynamics of decision-making in complex eco-sociotechnical systems [21]. In concrete terms, in the context of planning, ES knowledge can have both conceptual and instrumental uses. The conceptual use of ES is aimed at broadening understanding to shape decision-makers' and stakeholders' thinking. The instrumental use of ES is focused on supporting the decisions between policy options regarding gains and losses, and involving concrete decision options [22]. To have practical instrumental value, ES information must be presented in a meaningful manner [23] and be ready to be applied in real-world situations. However, there is a need for feasible methods, models and applications that can assist planners in the practical implementation of ES science [21]. Empirical evidence shows that there are several problems, such as data availability, uncertainties, and, most importantly, difficulties in translating abstract scientific knowledge into practical applications and linking assessments to the characteristics of a specific local context, that planners face when attempting to use ES knowledge [24]. Furthermore, the ES concept cannot easily be translated into a legal framework and technical guidelines established as routine workflows in cities and regions [18].

The ES framework can link environmental aspects under an urban development perspective to better understand their effects on human wellbeing [25]. Integrating ES into urban planning can provide important benefits, such as (1) supporting the implementation and design of adequate measures to address current urban challenges, such as climate adaptation; (2) enhancing the transparency of trade-offs and cobenefits arising from urban development, while increasing awareness about the hidden or underrepresented values of nature that could eventually be lost; and (3) directly addressing issues of environmental justice in land-use change decisions through the identification of ES demand and supply [19].

The need to incorporate ES into urban planning is not only related to the desire to improve practice with new knowledge. The inclusion of ES in policymaking has already resulted in important policy recommendations in the EU. The EU Biodiversity Strategy for 2030 explicitly addresses the need to incorporate ES mapping, monitoring and assessing into policy making; action 7 aims to ensure no net loss of biodiversity and ES [26]. The Territorial Agenda, a strategic policy document for guiding the spatial planning in regions and communities in Europe, explicitly highlights the relevance of ES to ensure their provision and public awareness of them [27]. Finally, the EU guidance on integrating ecosystems and their services into decision-making outlines concrete actions for the integration of ES into a range of decisions at different levels and areas, including spatial planning. This report emphasizes the inclusion of ES within existing planning frameworks to avoid the generation of parallel processes and assessments [28]. There is a set of criteria for addressing the potential negative impacts on ES. This mitigation hierarchy includes: "*(1) Avoidance: measures to identify and completely avoid detrimental impacts from the outset, such as careful spatial placement of infrastructure; (2) minimisation: measures to reduce the duration, intensity and/or extent of detrimental impacts (including direct, indirect and cumulative impacts) that cannot be completely avoided; (3) rehabilitation/restoration: measures to rehabilitate degraded ecosystems or restore cleared ecosystems following impacts that could not be completely avoided and/or minimised; (4) offsetting: measures to compensate for residual, significant, adverse impacts that could not be avoided, minimised or restored. Measures to overcompensate for losses can also lead to net societal gains by their contribution to well-being and prosperity*" [29]:13. This mitigation strategy is aimed at ensuring an increased delivery of multiple ES. On the other hand, according to this report, only a "*few cities have prioritised access to nature as a central objective of urban planning*." [28].

This paper addresses three research questions: (1) how can the ES framework be methodologically and operationally incorporated into urban planning? (2) How can the results of ES assessments be translated into urban planning tools for the public, stakeholders, and decision-makers? (3) Can ES help avoid the environmental deterioration occurring due to urban development?

#### **2. Materials and Methods**

The methods were designed for the instrumental use of ES, which supports decisions between policy options regarding gains and losses, and involves concrete decision options [22]. Our approach aimed to provide a sound assessment of environmental compensation accounting for the eventual loss of ES due to urban development. The approach was based on the analysis and selection of the best planning alternative by weighing the impacts of each development option in a comparative approach. The positive and negative environmental effects of the project to be implemented were investigated and compared to choose, modify, or reject the planning ideas. We used a double method to assess the impacts of the planning ideas. In the first assessment, we used a standard approach to calculate the environmental compensations; in the second assessment, we used the ES framework. We illustrated our method by using an example from Germany's Ruhr region. Our method is unique in that it articulates ES knowledge with a practical application based on a real planning situation, showing how the ES framework can support decision-making.

#### *2.1. Case Study*

The city of Bochum has 371,000 inhabitants, and it is part of Germany's Ruhr metropolis, which is one of the largest metropolitan areas in Europe with 5.1 million inhabitants. During the 19th and 20th-centuries, coal mining and steel production were fundamental economic activities. For the last 50 years, structural economic change has driven the closure of all coal mines and resulted in a decrease in steel production. This situation has transformed the economic base of the city to electronic devices manufacturing and

car production, with a more diversified sectoral mix, including service industries and universities, as a part of the knowledge-based economy. industries and universities, as a part of the knowledge-based economy. The study area is located in the eastern part of Bochum. It can be considered a typical

The city of Bochum has 371,000 inhabitants, and it is part of Germany's Ruhr metropolis, which is one of the largest metropolitan areas in Europe with 5.1 million inhabitants. During the 19th and 20th-centuries, coal mining and steel production were fundamental economic activities. For the last 50 years, structural economic change has driven the closure of all coal mines and resulted in a decrease in steel production. This situation has transformed the economic base of the city to electronic devices manufacturing and car production, with a more diversified sectoral mix, including service

The study area is located in the eastern part of Bochum. It can be considered a typical example of "glocalisation" [30], depicting the local effects of economic globalisation. The multinational GM/Opel car factory is located at two sites within the city of Bochum, covering an area of approximately 100 hectares. After the company decided to end car production at the end of 2015, one site was given up, and the other site was developed to serve as the European logistics centre for the distribution of spare car parts and a new industrial area. The existing access road connecting the site by the freeway crosses a residential area, and will become overloaded by increasing traffic. To ameliorate the environmental impacts, four alternative corridors have been discussed. The four planning alternatives for the access roads to the former factories are generally presented in Figure 1. example of "glocalisation" [30], depicting the local effects of economic globalisation. The multinational GM/Opel car factory is located at two sites within the city of Bochum, covering an area of approximately 100 hectares. After the company decided to end car production at the end of 2015, one site was given up, and the other site was developed to serve as the European logistics centre for the distribution of spare car parts and a new industrial area. The existing access road connecting the site by the freeway crosses a residential area, and will become overloaded by increasing traffic. To ameliorate the environmental impacts, four alternative corridors have been discussed. The four planning alternatives for the access roads to the former factories are generally presented in Figure 1.

*Land* **2021**, *10*, x FOR PEER REVIEW 4 of 18

*2.1. Case Study*

**Figure 1.** Location of the study area in Germany and the Ruhr area, and main features. Four alternative access roads to the GM/Opel European logistics centre are under discussion (A1, A2, A3 and A4). Satellite imagery: ESRI, DigitalGlobe, Geo-Eye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS, AeroGRID, IGN, and the GIS User Community. **Figure 1.** Location of the study area in Germany and the Ruhr area, and main features. Four alternative access roads to the GM/Opel European logistics centre are under discussion (A1, A2, A3 and A4). Satellite imagery: ESRI, DigitalGlobe, GeoEye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS, AeroGRID, IGN, and the GIS User Community.

#### *2.2. Mapping Urban Structural Types 2.2. Mapping Urban Structural Types*

We delineated the area named Lagendreer-Werne with a total surface area of 1632 hectares. We mapped the entire area in several field campaigns. This detailed mapping We delineated the area named Lagendreer-Werne with a total surface area of 1632 hectares. We mapped the entire area in several field campaigns. This detailed mapping effort yielded several LULC classes. We grouped the LULC according to 22 urban structural subtypes (USSs), representing urban morphological units that embody the characteristics of the urban structure. The characteristics of urban structural types were related to factors such as the surface materials, the internal configuration of diverse open and sealed patches, the height of vegetation, and height [31]. We further differentiated the USSs listed in Table 1. A visual field survey was conducted after preparatory mapping based on aerial photos. Among the USSs, we identified open space, which normally contains the highest environmental values (Table 1).



#### *2.3. Impact Assessment Using a Standard Approach*

We analyzed the potential impacts of each of the four access roads using a parallel assessment. First, the impact assessment focused on three fundamental environmental aspects to estimate the necessary compensation, based on the protected environmental goods in German legislation: soil, biotope and recreation. We defined a buffer area of 50 m for each of the proposed access roads. We measured the high-quality soil, biotope and recreation values that would eventually be lost within each of these buffer areas.

#### 2.3.1. Biotope

A biotope is evaluated based on vegetation cover from the perspective of nature conservation (biotope value). The value of biotopes refers to the scheme to manage compensation used in landscape planning [32]. Biotope value depends on the degree of naturalness, rareness, recoverability, and integrity. Biotope value is expressed on an ordinal scale from 0 (the lowest) to 10 (the highest). Our assessment focused only on the highest occurring biotope values (6–7 high and 8–9 very high), for which we calculated the respective hectares. We used the detailed biotope map provided by the cities of Bochum and Dortmund. The maps were prepared at a scale of 1:5000 and are regularly updated. We manually determined the values of empty areas by identifying equivalent biotopes.

#### 2.3.2. Soil Values

Soil map units include soil quality based on a long-established assessment scheme [33], which assigns numbers according to a soil's relative capacity to bear and sustain crop production. Soil quality is assessed on the basis of the soil texture, which reflects a soil's

capacity to store plant available water and nutrients; soil parent material and soil development also reflect natural nutrient provisioning. Climate was also considered. All aspects were combined in a dimensionless, ordinally scaled indicator to express the relative differences in net agricultural yield from 1 to 100. Generally, a soil map assigns one of five land value classes to each soil unit (very low, low, medium, high, and very high). The class, very low, did not occur in our area. The analysis concentrated on measuring the hectares lost in areas with medium and high soil values in open spaces, as there were no very high values areas in the impacted areas. We evaluated soil only in open spaces because these areas have not been sealed, and, in the case of constructing the road, such soil would eventually be lost.

#### 2.3.3. Recreation Values

To estimate the recreational value of a particular USS, we used the assessment of cultural ES, as recreation is a cultural ES. We used the values obtained in an expert workshop with 11 scientists and professionals, as described in Section 2.4.1. We selected the five C-ES directly connected to recreation (column R in Table 2); therefore, this recreational value was slightly smaller than the estimated cultural ES. To estimate the recreational value, the analysis calculated the area loss only in terms of the USSs considered open space (column p in Table 1).

#### *2.4. Impact Assessment Using ES*

In the second step, we applied the ES land cover matrix and expert assessment approach [14,34,35] to evaluate the impacts of alternatives and to identify potential areas for compensation measures. The spatial scope of the compensation measures was restricted to the analyzed area for which the identification and assessment of ES were performed.

#### 2.4.1. Mapping ES

For the identification of relevant ES, we relied on a workshop with 11 experts in planning and science working in the Ruhr area. Using CICES v5.1 [11], the experts identified the 25 most relevant ES for the study area (Table 2). Then, the expert panel assessed the potential ES supply of each USS (Table 1) using a scale from 0 to 5 (null to very high). As the evaluations of the experts slightly differed, we averaged the experts' scores. To calculate the respective bundle, we average the single ES values of the ten provisioning (P-ES), nine regulating (R-ES), and six cultural ES. Using these bundle values, we mapped the bundles of ES following the matrix approach [3,14,15,36]. The full list of identified ES, with their respective CICES codes, is presented in Table 2.

We calculated the total ES supply within the 50 m buffer area for the four analyzed access roads using Equation (1):

$$E\_k = \sum\_{i=1}^{n} (a\_i e\_i) \tag{1}$$

where:

*E<sup>k</sup>* = total ES supply in buffer *k* (P-ES, R-ES, or C-ES) *a<sup>i</sup>* = Surface of USS *i* present in the buffer area *k e<sup>i</sup>* = Supply of ES of USS *i* (according to Table 1).

#### 2.4.2. Identifying Hot and Cold Spots of Supply

To identify the areas with the highest and lowest supplies of ES, we mapped the hot and cold spots for P-ES, R-ES and C-ES at 90%, 95% and 99% confidence levels using the Getis-Ord Gi\* tool in ArcGIS 10.1 ©. Using this method, we ensured a spatially explicit and meaningful identification of areas containing clusters of high and low ES supplies. These areas were also used in the design of compensation. The analysis of hot–cold spots was performed over a hexagonal grid of 1 ha.


**Table 2.** Selected ES used in the assessment. Column R indicates the ES used to estimate the recreation value.

#### *2.5. Evaluation of Compensation*

We used the direct loss per buffer calculated with Equation (1) (*E<sup>k</sup>* ) as a value for ES compensation. To evaluate the possible compensation for ES loss, our criteria were twofold: (1) to maintain the same amount of ES supply existing in the selected buffer and that redistributed in a sector located near the buffer area, and (2) to maintain the same amount of open space that will eventually be lost; this surface will be relocated in the nearby impacted area. To identify the area for compensation, we used the analysis of hot–cold spots to select the cold spot close to the selected access road. We performed the calculations for compensation using a hexagonal grid of 1 ha. Using a grid approach helped to understand the analyzed impacts that were more in line with aspects of urban form, as, normally, LULC units are hierarchically arranged in space and time following six fundamental aspects [37,38]. The hexagonal grid is a powerful tool to depict the spatial structure of urban environments [39], because it can summarise the high heterogeneity the land uses that occur over short distances in a comparable manner.

For the estimation of ES supply for each hexagonal cell, we used the same Equation (1) used for the calculation within buffers. The total amount of ES to be compensated in the new area corresponded to the total amount of ES in the respective buffer (*E<sup>k</sup>* ), an assumption that only maintains the current situation—no quantitative ES improvement. This ES total amount was the sum product of the ES (P-ES, R-ES and C-ES) and the respective surface in hectares covered by each of the USSs within the buffer. To estimate the amount of ES to be compensated per cell, we used Equation (2):

$$E\_c = \frac{E\_k - \left(\sum\_{i=1}^p (e\_i - e\_h)\right)}{(m + |p|)}\tag{2}$$

where:

*E<sup>c</sup>* = ES to be compensated in cell *h* (P-ES, R-ES, or C-ES) *e<sup>h</sup>* = existing ES supply in cell h (calculated with Equation (1)) *E<sup>k</sup>* = total supply of ES in buffer *k* (P-ES, R-ES and C-ES respectively *e<sup>i</sup>* = ES supply of open space USS (Table 2, P-ES, R-ES, C-ES where *p* = 1) *m* = number of cells in the cluster to be compensated *p* = number of cells to be replaced with open space, as shown in the following:

$$p = |p\_k|\tag{3}$$

*p<sup>k</sup>* = number of open space USS (Table 1), and *k* ∈ Z: 1 ≤ *i* ≤ 5.

Then, the new ES value per cell to be mapped was:

$$E\_t = E\_\mathcal{c} + e\_\mathcal{h} \tag{4}$$

#### **3. Results**

#### *3.1. Land-Use Change Impact*

The study area contained a core of residential and industrial uses surrounded by open spaces. Massive railroad infrastructure running from East to West separates the area into two parts. The three predominant USSs were "housing complexes with green areas", e.g., row houses and single multi-story houses, "arable fields", and "urban forest", covering 17.8%, 13.8% and 12% of the total area, respectively. Open space covered 36% of the total area at approximately 591 ha (see Figure 2).

Due to the particular spatial distribution of the USS and the differences in the surfaces covered by each of the proposed access roads, the potential impacts in terms of land-use change varied. Access A1 will affect 25.2 ha, of which 3.8 ha (15%) corresponds to open space. In the case of A2, the area impacted will be 25.3 ha, containing 7.7 ha (30%) of open space. Access A3 will affect 16.6 ha and 8.9 ha (53%) of open space. Access A4 will affect 15.8 ha, and the open space within that area is 6.4 ha (40%). In terms of absolute open space impact, alternative A1 has the lowest impact, followed by alternatives A4 and A2, while alternative A3 has the highest impact (see Figure 3).

**3. Results**

*3.1. Land-Use Change Impact*

total area at approximately 591 ha (see Figure 2).

The study area contained a core of residential and industrial uses surrounded by open spaces. Massive railroad infrastructure running from East to West separates the area into two parts. The three predominant USSs were "housing complexes with green areas", e.g., row houses and single multi-story houses, "arable fields", and "urban forest", covering 17.8%, 13.8% and 12% of the total area, respectively. Open space covered 36% of the

**Figure 2.** Urban structural subtypes in the study area (**upper left**). The areas of the European logistics centre for the distribution of spare car parts and the new industrial area are indicated with a black segmented line. The 50 m buffers of the four access roads are designated by the abbreviations A1, A2, A3 and A4. These buffers were used to calculate losses in the specific impacted areas. Soil values in open space (**upper right**). Biotopes values in open space (**down left**). Recreational values in open space (**down right**). Source: own elaboration and the assessment is based on information provided by the city of Bochum 2017 and Geological Survey NRW; satellite image as in Figure 1. **Figure 2.** Urban structural subtypes in the study area (**upper left**). The areas of the European logistics centre for the distribution of spare car parts and the new industrial area are indicated with a black segmented line. The 50 m buffers of the four access roads are designated by the abbreviations A1, A2, A3 and A4. These buffers were used to calculate losses in the specific impacted areas. Soil values in open space (**upper right**). Biotopes values in open space (**down left**). Recreational values in open space (**down right**). Source: own elaboration and the assessment is based on information provided by the city of Bochum 2017 and Geological Survey NRW; satellite image as in Figure 1.

Due to the particular spatial distribution of the USS and the differences in the surfaces covered by each of the proposed access roads, the potential impacts in terms of land-use change varied. Access A1 will affect 25.2 ha, of which 3.8 ha (15%) corresponds to open space. In the case of A2, the area impacted will be 25.3 ha, containing 7.7 ha (30%) of open space. Access A3 will affect 16.6 ha and 8.9 ha (53%) of open space. Access A4 will affect 15.8 ha, and the open space within that area is 6.4 ha (40%). In terms of absolute open space impact, alternative A1 has the lowest impact, followed by alternatives A4 and A2, while alternative A3 has the highest impact (see Figure 3). The USS most impacted by A1 was "commercial and industrial use", accounting for 5.6 ha and 22.4% of the total impacted area. In the case of A2, the USS most impacted was "urban forest", with 7.2 ha (28.3%) affected. A3 impacted 4.2 ha (25.5%) of "arable fields", while A4 also impacted "commercial and industrial uses" at a similar amount as that of A1 at 5.6 ha (33.6%). In terms of the impact on the USSs classified as open space, A2 had the highest impact due to the 7.2 ha of urban forest affected. The second-highest impact occurred with A3, due to the impact on "allotment gardens" and "arable fields". A4 impacted 3.6 ha of pastures and meadows, and, finally, A1 had less of an impact, with 1.7 ha of "urban forest" and 0.5 ha of "allotment gardens" affected.

native were plotted.

**Figure 3.** The USSs area lost from the development each of the access roads. Only the first three larger USSs in each alter-**Figure 3.** The USSs area lost from the development each of the access roads. Only the first three larger USSs in each alternative were plotted.

#### Impacts on Soil, Biotope and Recreation

The USS most impacted by A1 was "commercial and industrial use", accounting for 5.6 ha and 22.4% of the total impacted area. In the case of A2, the USS most impacted was "urban forest", with 7.2 ha (28.3%) affected. A3 impacted 4.2 ha (25.5%) of "arable fields", while A4 also impacted "commercial and industrial uses" at a similar amount as that of A1 at 5.6 ha (33.6%). In terms of the impact on the USSs classified as open space, A2 had the highest impact due to the 7.2 ha of urban forest affected. The second-highest impact occurred with A3, due to the impact on "allotment gardens" and "arable fields". A4 im-When the assessment included the quality of the impacted areas in terms of soil, biotope and recreation, the situation was similar to that described above. Figure 4 shows the highest and the lowest impacts of the access roads, according to the respective losses in terms of hectares, of high-quality soil, biotope and recreation. The most severe losses of good quality soil, biotope, and recreation were connected to A2, which had substantial impacts. The lowest impact for the three analyzed variables was found again in A1. High-quality soil will be impacted most by A3.

#### pacted 3.6 ha of pastures and meadows, and, finally, A1 had less of an impact, with 1.7 ha *3.2. Impacts on ES*

of "urban forest" and 0.5 ha of "allotment gardens" affected. 3.1.1. Impacts on Soil, Biotope and Recreation When the assessment included the quality of the impacted areas in terms of soil, biotope and recreation, the situation was similar to that described above. Figure 4 shows the highest and the lowest impacts of the access roads, according to the respective losses in In this section, we assess the impacts on ES, quantifying the impact of each of the access options in terms of P-ES, R-ES and C-ES (Figure 5). Similar to the previous analysis, A2 had the highest impact. However, the situation regarding the lowest impact changed, with A4 having the lowest impact. Considering the impacts in terms of ES bundles, A4 showed the lowest impact for P-ES and the second-lowest impact for R-ES and C-ES.

#### terms of hectares, of high-quality soil, biotope and recreation. The most severe losses of *3.3. Analysis of Compensation Areas using ES*

good quality soil, biotope, and recreation were connected to A2, which had substantial impacts. The lowest impact for the three analyzed variables was found again in A1. Highquality soil will be impacted most by A3. The spatially explicit assessment of ES using the hexagonal grid in the whole study area is presented in Figure 6, in addition to the analysis of hot and cold spots for provisioning (P-ES), regulating (R-ES), and cultural (C-ES) services. The results show a strong contrast between densely settled and industrial areas that produce cold spots, with the lowest ES values in the core, and the open space at the outskirts that concentrate the hot spots with the highest ES values.

8.0

10.0

12.0

values were considered.

tion 1 (Ek).

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High Very high

**Figure 4.** Area losses (hectares) of soil, biotope, and recreation for the four access road variants. The analysis considered only the areas providing high and very high values for each of the selected variables. In the case of soil, medium and high **Figure 4.** Area losses (hectares) of soil, biotope, and recreation for the four access road variants. The analysis considered only the areas providing high and very high values for each of the selected variables. In the case of soil, medium and high values were considered. A2 had the highest impact. However, the situation regarding the lowest impact changed, with A4 having the lowest impact. Considering the impacts in terms of ES bundles, A4 showed the lowest impact for P-ES and the second-lowest impact for R-ES and C-ES.

40 60 **Figure 5.** Impact of access roads in terms of ES. The impacts in terms of R-ES and C-ES for A4 are slightly higher than those for A3. Values for the P-ES, R-ES and C-ES were calculated using Equa-**Figure 5.** Impact of access roads in terms of ES. The impacts in terms of R-ES and C-ES for A4 are slightly higher than those for A3. Values for the P-ES, R-ES and C-ES were calculated using Equation (1) (*E<sup>k</sup>* ).

**Figure 5.** Impact of access roads in terms of ES. The impacts in terms of R-ES and C-ES for A4 are slightly higher than those for A3. Values for the P-ES, R-ES and C-ES were calculated using Equation 1 (Ek). 0 20 A1 A2 A3 A4 To illustrate our scheme of on-site compensation measures, we used A4, the alternative with less impact in terms of ES, according to our previous analysis. As a compensation area, we selected the hexagons present in a C-ES cold-spot cluster directly impacted by A4 (Figure 6). This cluster contained 63 hexagonal cells. We evenly distributed the amount of ES losses within these 63 cells. The amount to be compensated corresponded to the total sum product of the ES values per the USSs, P-ES, R-ES and C-ES, which are presented in the table in Figure 5. To fulfil the requirement of no net loss of important open space, we considered the replacement of the existing 3.6 ha of "pastures and meadows" and the 2.8 ha of "urban forest" that corresponded to the 6.4 ha of lost open space contained in

the A4 buffer (Figures 3 and 5). Each hexagonal cell was 1 ha, which corresponded to four complete cells of a new urban forest, and three new cells of pastures and meadows. We discounted the supply of the new urban forest and pasture and meadow cells from the total ES amount to be compensated. The remainder was evenly distributed within the 56 target cells. area is presented in Figure 6, in addition to the analysis of hot and cold spots for provisioning (P-ES), regulating (R-ES), and cultural (C-ES) services. The results show a strong contrast between densely settled and industrial areas that produce cold spots, with the lowest ES values in the core, and the open space at the outskirts that concentrate the hot spots with the highest ES values.

The spatially explicit assessment of ES using the hexagonal grid in the whole study

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*3.3. Analysis of Compensation Areas using ES*

**Figure 6.** Compensation example for A4. Spatial distribution of ES. Upper row: total supply of provisioning ES (left), regulating ES (center), and cultural ES (right); center and lower rows: respective analyses of cold–hot spot for the current situation (center) and improvements after compensation (lower). The selected compensation area is indicated in black. **Figure 6.** Compensation example for A4. Spatial distribution of ES. Upper row: total supply of provisioning ES (**left**), regulating ES (**center**), and cultural ES (**right**); center and lower rows: respective analyses of cold–hot spot for the current situation (**center**) and improvements after compensation (**lower**). The selected compensation area is indicated in black.

To illustrate our scheme of on-site compensation measures, we used A4, the alternative with less impact in terms of ES, according to our previous analysis. As a compensation area, we selected the hexagons present in a C-ES cold-spot cluster directly impacted by A4 (Figure 6). This cluster contained 63 hexagonal cells. We evenly distributed the amount of ES losses within these 63 cells. The amount to be compensated corresponded to the total sum product of the ES values per the USSs, P-ES, R-ES and C-ES, which are presented in the table in Figure 5. To fulfil the requirement of no net loss of important open space, we considered the replacement of the existing 3.6 ha of "pastures and meadows" and the 2.8 The central row in Figure 5 shows the analysis of cold–hot spot without compensation. The spatial structure of the ES describes a doughnut effect, with the outer areas forming a ring of hot spots and the inner areas containing cold spots. In the previous step, we selected alternative A4, which provided the amount of ES to be compensated. Once this compensation of ES was added to the selected cells, the existing cold spot was severely reduced. In the case of R-ES and C-ES, a new, small hotspot was generated in the area. This new small hot spot means that the improvement in the ES supply in the impacted area was, therefore, substantial.

#### ha of "urban forest" that corresponded to the 6.4 ha of lost open space contained in the A4 buffer (Figures 3 and 5). Each hexagonal cell was 1 ha, which corresponded to four com-**4. Discussion**

plete cells of a new urban forest, and three new cells of pastures and meadows. We discounted the supply of the new urban forest and pasture and meadow cells from the total ES amount to be compensated. The remainder was evenly distributed within the 56 target cells. The central row in Figure 5 shows the analysis of cold–hot spot without compensation. The spatial structure of the ES describes a doughnut effect, with the outer areas forming a ring of hot spots and the inner areas containing cold spots. In the previous step, we selected alternative A4, which provided the amount of ES to be compensated. Once this To be meaningful for society and decision-making, ES assessments should avoid the impulse to "distil the value of nature into a number (monetary or otherwise), and then communicate that number broadly" [40]. Alternative approaches to a single monetary value are better for considering what people care about in terms of specific decisions at stake, thus linking ES with social considerations. While ES science has evolved in meaningful ways to fulfil the promise of supporting decision-making, it is necessary to advance better characterizations of ES change, coupled with multimetric and qualitative context-specific valuations [40].

compensation of ES was added to the selected cells, the existing cold spot was severely ES mapping has been increasingly used to assess and predict the expected impacts of urban development as a way to increase the quality of planning decisions [25,41]. The paradox of urban development is that attempts to increase the quality of urban environments can, at the same time, harm ES by sealing soil, fragmenting habitats, losing open

space, and diminishing important vegetation structures, and, therefore, threaten human well-being [25,42].

Our empirical, methodological approach can counteract urban development shortcomings in a sound environmental compensation manner that accounts for the losses of ES. The proposed consideration of the spatial distribution of ES in a wider area surrounding a site that is affected by land-use change broadens the perspective. Our assessment gives an overall picture of an area's environmental situation, allowing multiple possible analyses of environmental performances, risks and strengths. We illustrated only three environmental aspects: soil, biotope and recreation. Similar studies have proven ES mapping a powerful input for scenario evaluation [3]. Here, we demonstrated that ES mapping using expert assessment can assist in evaluating possible impacts arising from urban development and in analyzing compensation. We presented two ways to analyze the impacts of urban development, with contrasting results. One way was based on the area-weighted loss of protected environmental goods, and the other way highlighted the impacts on ES. The merit of an ES assessment, as analyzed in the introduction (Section 1.2), is that it integrates into the decision-making process the hidden or underrepresented values of nature that could eventually be lost. Our analysis also included the full spectrum of USSs and the respective benefits that society receives from ecosystems in such areas. An analysis based on expert assessments of ES and the LULC matrix is highly correlated with biophysical measurements [16]. Therefore, our assessment is suitable for rapid preliminary evaluations and can be complemented or improved with biophysical measurements of key ES for a more complex analysis.

#### *4.1. Limitations*

There are two general limitations to consider when using our approach. The first limitation is that we used a general delineation of the planned roads. A more detailed assessment should use the exact delineation as detailed in engineering plans. The second limitation is that we did not assess in detail the area compensated in terms of USSs. In general, it is always possible to increase the supply of ES by including NbS in existing urban areas. However, a detailed estimation is necessary according to specific urban morphology.

#### *4.2. The Role of Participatory Processes*

Public participation can be greatly supported by using ES as a basis for guiding discussions and focusing on synergies and trade-offs between development options and stakeholder groups [1]. Our method allows the integration of civil society, a key aspect of participatory planning [1]. In the participatory process held in urban planning, argumentative lock-in-situations can block sustainable urban development. Environmentalists and environmental authorities remain in fierce opposition to municipal development agencies and developers. The former focuses on protection; the latter favours using open space for urban development while offering new economic possibilities and jobs. As a consequence, and due to powerful lobbies, city councils often overrule environmental concerns. Consequently, there is progress for one group of stakeholders only, at the expense of the other groups. We illustrated the procedure with an actual case study, with results that can feed a participatory process. Our method allows the use of participatory planning, where stakeholders and experts can identify development alternatives that could be judged by citizens assisting in a structured decision-making process that is value-focused, i.e., able to express what matters to people, and analytic, i.e., ascertains trade-offs between alternatives, as suggested by Chan [40]. Such an approach, where ES "values drive alternative scenarios and spatial analysis of benefits and costs" [40] holds the potential for reducing the social impacts brought on by urban development [1]. The theoretical basis of the ES framework is robust, but to put it into practice requires the involvement of key agents of development [43].

#### *4.3. Environmental Encroachment Paradox*

The assessment of environmental impacts induced by land-use change, such as the construction of road infrastructure, requires the inclusion of neighbouring areas that are spatially and functionally related to the directly affected site, and the taking into account of the urban context of urban transformations at larger scales. When ES are not assessed in areas where urban development takes place, the supply of ES might be reduced, affecting the well-being of residents. This local loss of ES can occur even if the overall ES supply remains equal or has been improved at larger scales.

The traditional approach of environmental impact assessments is to assess and judge possible encroachment on the environment expected at specific development sites. Mandatory compensation for the loss of nature (e.g., according to Directive 2011/92/EU) [44] is often restricted to replacing urban green spaces by improving rural or peri-urban green spaces, as in the case of German legislation [45]. According to the current legislation in Germany, compensation is restricted to the encroachment of legally protected goods (people and especially human health, animals, plants, biodiversity, soil, water, air, climate and landscape, cultural heritage and other properties, as well as interactions between protected goods) and must be carried out by balancing the loss of biotopes by increasing the quality of biotopes in other places. Typical compensation measures are planting trees, creating artificial wetlands, and transforming arable fields into species-rich meadows, or simply compensating by setting aside money for nature conservation purposes without any direct localised effect. These sites do not necessarily need to be close to the area of environmental encroachment. At the moment, even eco-accounting between distant locations and monetary compensation is legally possible. The highly valued vegetation will be placed far from the location of encroachment, making the compensation measures from such assessments lead to an upgrade in the quality of already existing open and green spaces elsewhere. Consequently, the environmental quality of the directly affected people, those living in the affected area, would not profit from such compensation. Thus, benefits may not be noticeable on or near the site impacted by the land-use change. Eventually, shifting compensation in distant areas means a deterioration of the supply of ES in the affected area.

Such legally binding, mandatory compensation for the loss of nature has several shortcomings: (i) compensation is carried out by replacing vegetation with vegetation; (ii) the loss of ES in areas to be developed is neglected; and (iii) the current environmental status is not improved. Vegetation and protection of species serve as the main indicators of the value of green elements. The degree of compensation is usually calculated by multiplying the biotope value with the area of the lost urban green space, neglecting other ES; and (iv) in practice, compensation is allowed to occur in distant areas, far from the affected site. In contrast, we suggest that compensation should include measures that maintain or eventually improve the environmental and living conditions in the affected area. Such measures could include countermeasures against urban heat islands, the realisation of nature-based solutions (NbS) against urban flash floods, reclamation of brownfields, river restoration, and other NbS. Using an ES assessment, it is possible to improve existing environmental quality in the affected areas. Our method goes beyond the calculation of impacts for each variant. We show how urban development can contribute to improving the overall environmental situation of areas subject to development, using the ES framework.

The consideration of the broad spectrum of NbS, along with ES supply, can open a vast range of possibilities for compensation. Admittedly, regulations that define compensation measures might have to be diversified, and practice in municipal administrations and consultancies needs to be adapted, for the ES concept to unfold its full advantage.

#### *4.4. Estimating Urban Development Compensations with ES*

To apply the ES framework in urban settings, it is necessary to include all types of urban areas belonging to the urban ecosystem, to consider the full spectrum of land-uses and not restrict the analysis only to the urban green space, as normally occurs [37]. Dif-

ferent degrees of urbanisation will deliver ES at different intensities, which can be higher for some bundles, such as cultural services, or lower for others, such as provisioning services [12,31,36]. Restricting the analyses only to green areas is a conceptual and methodological shortcoming which constrains the chances to ameliorate development alternatives in the places where it is needed. Furthermore, combining compensation measure determination with an ES assessment can improve preexisting situations, as we have indicated with our analysis.

Our approach ensures that the supply of ES will be maintained in the impacted areas, considering the broad spectrum of USSs. This means that the benefits of nature can be found everywhere. The relevance lies in the amount of ES—to maintain or increase when the amount is too low. Nature is not restricted to open space.

In our approach we considered no net loss of ES, i.e., maintaining the existing supply. It is also possible to apply this procedure to improve an existing situation. This could be realized by introducing a coefficient defining a target for ES improvement in the specific compensation area, or by targeting specific cold spots to transform them into hot spots.

#### *4.5. ES and Urban Form: Spatial Distribution Matters*

Enhancing the supply of ES in urban environments involves aspects of spatial distribution. In our approach, we maintained the same amount of preexisting ES that had been relocated to a nearby area previously identified as a cold spot for cultural ES. The analysis of cold and hot spots after the calculation of the compensation showed that the former cold spot was diminished in size, and partially transformed into a hot spot. This outcome indicated a substantial change in the spatial structure of the ES supply. It also showed that the supply of ES can be enhanced, even when no explicit quantitative improvements are considered, because a spatial structural assessment was involved in the supply of ES. Our results are in line with those in a similar study by Thomas [46], which showed that only by changing the spatial distribution of ES supply areas can the overall supply be altered, enhanced or diminished.

#### **5. Conclusions**

Our findings are relevant to research on the spatial structure of urban ES and the changes introduced by urban development. The peculiarities of the spatial structures found in urban areas, high heterogeneity, and complexity over relatively short distances, make the urban form a fundamental aspect to consider within ES assessments. Using USSs and a matrix-based approach for the assessment of ES allows the incorporation of the urban spatial structure that underpins the supply of ES. In our assessment, we illustrated how the selection of road alternatives can be improved by using an ES framework.

Our method illustrates how to improve planning procedures using an ES based approach. The suggested methodology is meant to counteract some of the shortcomings of traditional, legally binding regulations for environmental compensation due to urban development. Our method aims to strengthen urban resilience with a holistic understanding, using ES. The advantages of our method are the following: (i) not restricting compensation to merely accounting biotopes, but considering a wide range of ES; (ii) taking into account the overall spatial distribution of ES in the affected area in the search of legally mandatory compensation; (iii) highlighting synergies and trade-offs and allowing for NbS and strategic implementation of green infrastructure measures to leverage co-benefits [47]; and (iv) providing compensation near the affected locations.

**Author Contributions:** Conceptualization, H.Z. and L.I.; data curation, H.Z. and L.I.; formal analysis, L.I.; funding acquisition, H.Z. and L.I.; investigation, H.Z. and L.I.; methodology, H.Z. and L.I.; visualization, H.Z. and L.I.; writing—original draft, H.Z. and L.I.; writing—review and editing, H.Z. and L.I. All authors have read and agreed to the published version of the manuscript.

**Funding:** The finalization of this paper was supported by the research project, "Implementation of the Concept of Ecosystem Services in the Planning of Green Infrastructure to Strengthen the Resilience of the Metropolis Ruhr and Shanghai—research grant 01LE1805A", funded by the Bundesministerium für Bildung und Forschung (BMBF).

**Data Availability Statement:** Data available on request. The data presented in this study are available on request from the corresponding author.

**Acknowledgments:** Mapping was partly carried out in a transformation lab within the framework of the Double Degree Master Program, "Transformation of Urban Landscapes", jointly offered by Ruhr-Universität Bochum and Tongji-University, Shanghai.

**Conflicts of Interest:** The authors declare no conflict of interest.

#### **References**

