Financing Strategies for Integrated Landscape Investment
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Transcript of Financing Strategies for Integrated Landscape Investment
Financial Strategies for Integrated Landscape Investment
Seth Shames, EcoAgriculture PartnersMargot Hill Clarvis, Earth Security Initiative
Gabrielle Kissinger, Lexeme ConsultingLaunch – April 30, 2014 – Washington, D.C.
Financing Needs for ILM: Asset Investment
• Agriculture practices that contribute to multiple landscape objectives• Farm conservation or production• Restoration or protection of natural
assets• Environmentally and socially
responsible enterprises• Large-scale green infrastructure
Financing Needs for ILM: Enabling Investment
• Stakeholder engagement and cooperation• Appropriate legal and regulatory
framework• Knowledge and capacity to plan and
manage on a landscape scale• Incentive mechanisms
Landscape analysis: Research questions
1. What is the current state of practice for landscape initiatives in accessing finance and achieving outcomes?
2. How does the integrated management that is characteristic of landscape initiatives relate to how these initiatives are financed? How are integrated outcomes achieved with disparate sources of funds? How is this integration coordinated?
3. Landscape initiative themselves are not static practices, but rather are dynamic, continually responding to community, market, policy and risk factors. What does the future of landscape initiative portend for how finance institutions and mechanisms can best respond to those needs?
4. How can the experiences of these landscape initiatives help and guide other initiatives in their approach?
Global scoping assessment: 29 initiatives● Full range of entry points (biodiversity/conservation,
production, livelihoods), range of institutional and agroecological contexts, stakeholder engagement
● Institutional planning/coordination key● ILI leadership and governance critical, finance siloed
Three in-depth case studies● Criteria: meets ILI definition, maturity, range of entry
points (production, REDD+, livelihoods, etc.), adequate information to assess
Synthesis report summarizing results
Landscape analysis: Methodology
ILI leadership and governance strongly correlated with finance sources and patterns
Landscape analysis:Case studies
Atlantic Forest, Brazil
Biome scale: Atlantic Forest Restoration PACT• Restore 15 million hectares by
2050
• Sectors: forestry, agriculture, urban water
• 250 registered signatories (members) – stakeholder platform, civil society-led
• 170 restoration initiatives
• Federal, state, multi-lateral and private investment authorized through legislation and coordinated across actors
• Cadastre Ambiente Rural/Rural Environmental Registry (CAR)
• Link between access to rural credit and improved land management
State scale: Espírito Santo• Applying PACT principles at state
scale
• Government-led, Reflorestar programme
Landscape analysis:Case studies
Atlantic Forest, Brazil
Espírito Santo
Atlantic Forest biome
Atlantic forest: finance innovation
Succulent Karoo Ecosystem Programme, Namaqualand, South Africa
Landscape analysis:Case studies• NGO-led stakeholder
platform, now housed within a parastatal biome scale and in Namaqualand
• Sectors: Biodiversity, agricultural production (livestock), mining
• Critical Ecosystem Partnership Fund
• Global Environmental Facility (GEF)
• SKEPPIES small-grants facility
• Investment in building scientific basis of information on risks and management options
• Challenge of moving mining sector investment from CSR to operations (and legal compliance)
SKEP: Namaqualand: finance innovation
Imarisha Naivasha, Kenya
Landscape analysis:Case studies
• Government-led stakeholder platform and public-private partnership, with very strong private sector leadership
• Sectors: Floriculture, municipal water, small-holder agriculture, forestry, wildlife, pastoralism, fisheries, tourism, geothermal energy
• IFC performance standards triggered over landscape-level water risks
Imarisha Naivasha: finance innovation
Imarisha Naivasha: finance sources
• Though an ILM approach, most investment is water-focused
• This sector-based focus has limited the ability for integrated management solutions– need finance to enable that
• Investment favors response to risk– how to have continuity for long-term solutions? Investor motivations and ‘skin in the game’
• Payments for Ecosystem Services:• Industry views as a tax
• Fairness concerns
• How to scale from >1000 smallholders to 250,000?
• Strategic coordination of all sources of finance to serve integrated outcomes is needed—e.g. PES, REDD+, access to credit and low-interest loans, strategic infrastructure investments, improving value-addition of agricultural products, and improved market access
Imarisha Naivasha: Finance challenges
• Cross-cutting needs (climate change, livelihoods, etc) can be emphasized as priorities to attract finance that supports integrated solutions
• A per-stem charge on flowers passing through the Dutch wholesale flower market
• Motivation for actors in the landscape to focus their investments in compatible management practices (PES)
Imarisha Naivasha: finance opportunities
Integrated landscape investment pathway
Tracking innovation in ILM Finance
Tracking Innovation● Identify types of
mechanisms and institutions.● Enabling Investment● Asset Investment
● Map public and private innovation.● Case Studies ● Case Examples
Scaling Opportunities● Understand barriers to and
opportunities for financing ILM.● Why, how?
● Roadmap for public finance institutions to work with private investors.● Aggregation & Coordination● Risk Profile of ILM● ILM Business Case
Framing ILM Finance
Institutional investors
Impact investors
Development finance institutions
Governments Non-Profit Organisations, Charitable Foundations
Social / Environmental Return Financial Return
ScopingILM Finance
200 Institutions
> 250 Mechanisms
Range of interfaces with ILM components
Scoping ILM Finance
ILM Case Studies and Examples- Global Environment Facility - World Bank BioCarbon Fund- NICFI / NORAD- EcoEnterprises Fund- Moringa- Althelia - Bunge Environmental Markets- Agricultural Lending & Investment
- SAB Miller- Global Mechanism UNCCD- Verified Carbon Standard’s Jurisdictional and Nested REDD+ (JNR)- ForestRE- CGIAR Landscape Fund- Grasslands, LLC
Why is ILM being financed?
• Sustainable & certified commodities.• Investment value of arable & fertile land.• Potential new PES markets.
Market Opportunities
• Environmental & social risk awareness, monitoring, management.
• Strengthened business model, diversified revenue streams.
Holistic & Diversified Risk Management
• Shifting global & national legal and market conditions.
• Green growth, green credit lines.
Regulatory Conditions
How is ILM finance structured?
InvestmentsEnabling Environment / Landscape (Stakeholder
coordination; institutional alignment; technical & skills,
infrastructure).
Portfolio of Companies (SMEs in conservation areas
with ESG impact)
Portfolio of Projects with landscape effects
(purchase agreements, intermediaries)
ReturnsEmission reductions
PES payments
Reduction of costs & land regeneration
Capital value appreciation of companies at exit
Long term capital gain from resilient and replicable agro-
forestry projects
Short & medium term cash flows from projects
Diversified revenue streams (biomass, certified crops)
Conclusions
●Tendency for small scale funds; un-coordinated funds; large scale single entry point funds; limited mix of funding for coordination.
●What would more comprehensive and coordinated landscape finance look like?
●How to overcome challenges for constructing a potential ‘Landscape Fund’?
Asset Investment challenges
• Time horizon
• Investment size
• Risk/return ratio
Enabling Investment Challenges
• Public sector silos
• Underfunded ILI coordination
• Incentives for asset investment
Recommendations: Strengthening enabling investments
• Clarify, quantify and communicate• Mobilize public and civil society• Coordinate investments at the
landscape scale • Foster new partnerships
Recommendations: Attract asset investors
• Use public finance to reduce risk• Use REDD+ to catalyze asset
investments• Bridge asset investments across
landscapes• Employ investment standards and
guidelines
THANKS!Questions or comments?