Defining the potential for private investment in sustainable land use

Mau Forest and tea plantations, Rift Valley, Kenya. CIFOR/Patrick Shepherd
Monica Evans
5 June 2018

WASHINGTON (Landscape News) – Conservation, restoration and improved land management could provide over 30 percent of the emissions reductions needed by 2030 to keep global temperature rise under 2 degrees Celsius above pre-industrial levels, according to new research led by The Nature Conservancy.

But such nature-based solutions currently receive only 2 percent of global climate funding, said Agustín Silvani, vice president of Conservation Finance at Conservation International, speaking on a digital summit panel focused on the role of private capital in conservation at the recent Global Landscape Forum’s Investment Case Symposium in Washington.

Private capital, combined with strategic efforts, could help bridge the gap.

“It’s not only about the finance,” Silvani said. “We need innovation and efficiency; we need everything that the private sector brings, and I think we need to shift in the way we’ve traditionally done conservation,” he said.

Beyond driving investment into sustainable land use, it’s also necessary to address the trillions of dollars that are currently invested annually in unsustainable resource use, said Christian del Valle, founder and manager of impact investment outfit Althelia Climate Fund.

“Conservation needs to be an outcome of mainstream agriculture,” he said.

“I think we’re doing ourselves a disservice if we put these kinds of investments in a different category than everything else,” Silvani added. “We need to start pushing the boundaries and have this considered as a regular investment.”

Conservation and sustainable production can certainly go hand in hand, said Marco Cerezo, Executive Director of FUNDAECO, a Guatemalan conservation non-governmental organization that partnered with the Althelia fund on a REDD+ (reducing emissions caused by deforestation and forest degradation) project for Caribbean Guatemala.

“Science is demonstrating that we can have both things at the same time: biodiversity conservation and landscapes that are generating revenue and generating employment for local populations,” he said. “The trick is designing projects that can value conservation, for instance through carbon, but also sustainable land uses that are producing commodities that are good for biodiversity, too.”

Getting that valuing right is a key challenge, said Kate Dillon Levin, vice-president of North American sales and marketing at Ecosphere Plus, a new venture of Althelia’s that aims to build global market demand for undervalued environmental assets and their services.

“Companies that are invested heavily in natural resources do realize that climate presents a very real risk, and they need solutions, but currently our natural capital is worth more destroyed than it is living,” she explained.

So, mainstreaming the practice of paying for environmental services is crucial in order to send the right price and demand signals and create returns on investment, which can then bring conservation finance to scale, she said.

Governments and multi-laterals also have an important role to play in creating an environment where investing in conservation, restoration and better land management practices makes economic sense, said Silvani.

“There needs to be a big push to change regulations, to have the incentives in the right place,” he said. “These are investments that can produce multiple positive outcomes that governments want to see. So we need to get that message out there to really change the narrative.”

De Valle issued a challenge to policymakers to step up the pace.

“For 10 years now I’ve heard policymakers talk about engaging the private sector, but so far it’s been a lot of heat and not much light,” he stated. “Now is the time to start seriously creating the set of incentives that’s going to really lead to behavioral transformation in private sector financing.”

The panelists were unanimous that better alignment between different actors is crucial for enacting the changes required at the landscape scale. Cerezo wryly described the “neurotic situation” that FUNDAECO faces in trying to meet the design and reporting needs of the various stakeholders, funders and investors involved in its projects.

He’d love to see a system where grants and multilateral financing are deployed initially to develop a project’s proof of concept; then investment funds such as Althelia enter the game “at the early stages, when it’s high risk, high yield”, and then local banks can continue to fund processes when risks are low and returns more secure. “Then, we can really think about replicating and going up in scale,” he said.

Dillon Levin added that consumers, academics and policymakers would do well to “go easier” in some respects on businesses trying to do the right thing.

“We are complicit in all of this,” she reminded us. “And we’ll be lucky if we get below 3 degrees [global temperature rise] at this rate. So rather than tearing companies down for trying to do all they can do, we need to start saying “OK, all hands on deck!”