CFA 2020 Incubator

Biodiversity Lending Instruments for Coastal Restoration and Protection

Natrx, Inc. (USA, Global)

Demand for natural capital investment opportunities has exploded in recent years, yet investors lack a sufficient supply of large high-quality bond and other debt offerings directly linked to conservation outcomes. On the other hand, planners and ecologists struggle to obtain financing to protect communities and natural assets in ways that assure long-term ecological resilience.  Natrx has been an effective provider of dual-purpose restoration and asset protection solutions for coastal resilience and will work with the CFA to increase the use of these holistic approaches for both public and private coastal management.  This will be achieved through a combination of two related solutions:

1) a data tool that assists land owners and managers to compare costs and benefits of alternative green / grey and hybrid solutions

2) developing a set of situational GAAP heuristics that can be employed by companies, investors, and governments to facilitate financing large scale nature-based coastal resilience solutions. 

The initial focus for these solutions will be waterfront ecosystems in southern North America and the global south with proven nature-based asset protection value and established methods for autonomous monitoring (oyster reefs, coral reefs, mangroves, etc.).  These solutions have very attractive 5-year cash flow streams when compared to traditional, often destructive, infrastructure alternatives.

Link: www.natrx.io

Kenyir For Life

Protecting the Kenyir Watershed through Sustainable Financing Mechanisms

Rimba (Malaysia)

The Terengganu State in peninsular Malaysia contains an essential watershed with a large reservoir, hydro-electric power that supplies Kuala Lumpur and other users, and a spectacular forest estate that contains rich biodiversity including diverse birdlife, tigers, and more.  Some of this forested landscape is adjacent to Taman Negara – Malaysia’s best known and largest national park.  In 2018, Terengganu State gazette 75,000 acres of the watershed as Kenyir State Park, demonstrating political will and commitment towards sustainability. There is, however, a need to secure an additional ~220,000 acres of biodiversity-rich and ecologically sensitive forests, currently classified as production forest reserves (designated for logging), within Kenyir watershed. Towards this objective, the State, in 2019, endorsed the formation of the Green Financing Task Force to explore alternative revenue streams to secure long-term financing through improved forest management strategies.  Identifying and establishing diverse revenue streams from standing forests can help reduce deforestation and forest degradation. The ‘Kenyir For Life’ project, led by the local NGO Rimba, aims to help Terengganu State generate revenue from standing forests in order to promote sustainable management of the Kenyir watershed and maintain essential biodiversity and ecosystem services.

Link: https://rimba.ngo/

Community Reef and Forest Bank

Community Reef and Forest Bank

GreenFi Systems Limited (East Africa)

Village Savings and Loans are local community owned “banks” that are shown to produce increased access to finance, enhance local investment, and can be tied to effective natural resource management.  Communities which depend on nature and the organizations which support these communities often lack effective and appropriately designed and affordable tools to support local ecosystem management. GreenFi has developed a smartphone and tables application (with supporting off-line system) that facilitates the establishment and management of Village Savings and Loans tied to sound environmental management – creating community reef and forest banks.  GreenFi is a team of experienced community-based natural resource practitioners, who provides highly effective and cost-efficient tools to NGOs and companies to help establish and manage community reef and forest banks. With these tools, communities supported by NGOs or companies, set up community-owned banks, from which loans to community members are issued. Loan terms include requirements for nature management, for example planting of mangroves or protection of reefs. When community members repay loans and protect the environment, they receive an eco-credit score, which qualifies borrowers for higher levels of credit and lower rates of interest. The GreenFi approach is founded on the recognition that credit systems can be blind to natural resource overuse, and only by incorporating environmental requirements into credit terms, can we create systemic incentives for environmental restoration, rather than degradation.

GreenFi Systems Limited is an East African operating financial technology (fintech) start-up company. They are building mobile money-integrated management information systems which power the scaling of the community eco-credit movement.

Link: http://greenfi.org/

Rubber Trust Fund

Rubber Trust Fund

Halcyon Agri Corp Ltd – WWF-US (Global)

The rubber supply chain is broken: Global demand for natural rubber is constantly rising to support the world’s increasing mobility and medical needs, yet most of the 6 million farmers who produce 85% of the world’s rubber live in poverty. Market fluctuations in price often result in negative impacts on farmers and the environment. At low prices, farmers struggle to break even. At high prices, valuable natural ecosystems are at risk of conversion as farmers switch to more lucrative crops. How do we drive sustainability in the rubber supply chain so that carbon stocks and biodiversity are protected while small farmers improve their livelihoods.

With support from Conservation Finance Alliance (CFA) experts, WWF and Halcyon Agri will design a Rubber Trust Fund (RTF) that seeks to offer transparent, trustworthy, and efficient financial solutions to: (1) farmers seeking to improve their productivity and livelihoods sustainably; and (2) rubber supply chain actors developing and implementing tools to make rubber more sustainable.

This project will develop a model for a first-of-its-kind financial mechanism for a global commodity. The project team will engage the multi-stakeholder Global Platform for Sustainable Natural Rubber (GPSNR) to leverage GPSNR’s technical and financial reach throughout rubber’s production, processing, and trade. The mechanism will be designed to engage the entire sector in addressing supply chain risks and impacts with investments that may include the matching of bi- and multi-lateral developmental aid with mandatory or voluntary sustainability premiums collected through an innovative, GPSNR-endorsed rubber e-trade platform.

Links:

WWF-US https://www.worldwildlife.org/projects/transforming-the-global-rubber-market

Halcyon Agri https://www.halcyonagri.com/

Investment in Coral Reefs for Coastal Protection

Investment in Coral Reefs for Coastal Protection

Barbados Reef Keepers - Coenostrum Inc. (Barbados)

The beaches of Barbados, like many small island developing states (SIDS) suffer from coastal erosion, caused in part by coral reef deterioration. This impacts the attractiveness of beaches which is a major pull for the tourism driven economy. Hoteliers have already proven that they are willing to pay for solutions to coastal erosion affecting their business. Solutions that improve coral reef health could not only assist with maintaining beach width but also with other tourism-based Ecosystem Services – such as snorkeling and diving.

This project seeks to develop a sensible  investment mechanism  for hoteliers to maintain and enhance these ecosystem services (ES). Based on state-of-the-art scientific knowledge to identify reefs where these ES are maximized, this mechanism will allow the hoteliers to contribute to the financing of reef conservation and restoration activities. The goal of the project is to test a sustainable finance mechanism that will be used to improve the health of coral reefs as well as the structural ability of the reef to protect shorelines (ES of coastal protection), scenic beauty and fish biomass.

Links http://blue-finance.org/

Photo: RAMONA OSCHE / CORAL REEF IMAGE BANK