What if we didn’t have to choose between green and growth?

GLF 2017 Blog Competition
Andrea Cristina Ruiz, Diego de Leon Segovia and Sarah Cruz

Every year there is a global gap of $300 billion for natural capital programs for conservation and sustainable environmental management. While this might seem extremely high amount, this barely represents 0.1% of world wealth – or a fifth of countries total annual expenditures on arms and weapons. Nature conservation projects can generate rates of return of up to 30%, not accounting for the social benefits generally associated to this type of projects. Yet, they are still a greatly unexplored and often overlooked area by the for-profit sector. But let’s not deceive ourselves. Nature conservation is not an unattainable dream, but rather a tangible concept that needs to be harnessed in order to reach its true value.

The business case for financing conservation

Without doubt economic growth needs to feed on natural resources in order to maintain the global production and consumption cycle. But where resource exploitation can be done in sustainable ways – such as sustainable forestry – it is imperative that we, humans, conserve a percentage of these resources within planetary boundaries. This will in turn help us sustain indispensable resources such as clean air and fresh water. Here, it is important to make a business case not only for restoration and sustainable resource management, but also to give value of, and more importantly, capitalize over preserving nature. To many, this will sound utopic, yet, the Sustainable Development Agenda and global support for the Paris Agreement are evidence that nations are committed to organized efforts to sustainability. It is no longer possible to think about growth, without being “green”.

In reality conservation remains greatly underfunded. Today, the majority of conservation efforts depend on public and philanthropic funding. These mechanisms are contingent on the availability of resources. Often, when the money runs out projects are left unattended, compromising conservation. Government financing is susceptible to political changes and budgetary constraints. Fluctuation is less frequent in the philanthropic conservation but is limited in time and quantity. Lack of awareness, technical knowledge, and/or management capacity by conservation areas constrain access to these funds.

It isn’t all bad news.
For two to three decades, multiple international organizations have continued developing a series of financing tools that seek to provide a sustainable source of income to conservation organization. One of the most common talked mechanism are carbon credits, but there are also important examples of conservation bonds linked to resilience and ecosystem services, ecotourism, insurance, and trust funds.

Payment of ecosystem services is one of the most common mechanisms, and will most likely remain an important source of financing. These schemes are also evolving to engage the private sector.

Carbon credits are considered prominent and promising funding sources; however, they require high up-front investment and technical expertise to build a baseline, continuous capacity building to comply with creditor and broker´s standards, whether they be REDD other source. Managing areas and resources with accountability also requires significant investment in monitoring and evaluation systems to remain transparent.

Trust funds have demonstrated to be a sustainable mechanism for conservation finance as dividends from investments and are accessible to small, private conservation areas. They also require less time to be developed and implemented once the initial investment is made.

Ecotourism is also a sustainable alternative for areas with attractions like endemic species or unique landscapes and have basic infrastructure including roads, bathrooms. Initiatives to finance conservation by creating ecotourism destinations can benefit from international organizations support. The Rainforest Alliance and WWF help communities build conservation-based concessions that alleviate the cost of project development and management, and provide certification to back the projects.

Though ecotourism is promising, it is not a secure source of funding for all reserves. The presence of a charismatic endemic species can attract funds but also poachers. Proximity to roads can increase ecotourism potential while multiplying threats to conservation. Land rights, governance, and poverty present unique challenges. Stakeholder engagement can vary as well, with discrete impacts on conservation outcomes.

It goes without saying: obtaining sustainable financing conservation remains a challenge. Steps towards achieving sustainable environmental development involve increasing awareness of existing opportunities and actively working on innovative mechanisms. To build momentum, finance tools funding restoration must be stimulated and private sector investment unlocked. After all, without forest and oceans, there is neither Paris Agreement nor sustainable development.

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