Where are the Gaps in Conservation Finance?

The rate of magnificent biodiversity loss and rampant destruction of our natural forests that accelerate climate change are now too severe to ignore. If we have any chance of saving ourselves from the most devastating effects of climate change, financing the protection of our natural places needs to scale up quickly.

Wildlife Works’ founder Mike Korchinsky spoke on a panel to discuss the gaps and opportunities in conservation finance at Stanford’s Natural Capital Symposium.

This panel reviewed the evolution of conservation finance, explored what’s not working and more importantly, what is working and what other innovative models have potential to reverse the negative trend.

The panelists:

Marilyn Waite Program Officer, Climate and Clean Energy Finance Company at William and Flora Hewlett Foundation
– Greg Watson Lead Specialist, Natural Capital Lab, Climate Change & Sustainable Development Sector at IDB
– Jennifer Morris President of Conservation International
– Douglas R. Eger ­CEO and Founder of The Intrinsic Value Exchange
– Mike Korchinsky Founder and President Wildlife Works

These were the key insights from the conversation.

Firstly, Marilyn defined Conservation Finance: the flow of money or other financial instruments that financially support global, regional or local conservation of natural ecosystems and biodiversity.

Consensus on what would fuel conservation finance include:

  • Government policy and political will that activates private sector investment
  • Science and natural capital accounting to be effectively integrated and communicated cross sector
  • Better financial tools to measure ecosystem services and higher risk tolerance within the financial sector
  • A common “language” (financial and cultural) across all sectors
  • Scale pay-for-performance mechanisms to create accountability and financial return on results for conservation programs

The panelists shared details of their work that offered movement towards these interdependent goals.

Jennifer Morris from Conservation International

Conservation International has been at the forefront of financing conservation projects for over 30 years. Jennifer gave a history of conservation finance through the decades. Watch her synopsis here.

Mike Korchinsky from Wildlife Works on REDD+

REDD+ is a pay for performance mechanism that has proven successful at attracting private sector funds and implementing to scale with the size of the threat. The REDD+ voluntary market operates well outside of policy but the latest example of government policy unlocking hundreds of millions of dollars in private sector investment is Colombia’s carbon tax program which allows REDD+ offsets to be used on a tonne for tonne basis to reduce tax liability. This is bringing huge investment to support Colombia’s domestic NDC commitments. Wildlife Works, a partner in REDD+ program implementation in Colombia, is working with other developing countries to adopt this tax model.

Mike sees movement towards national governments taking back control of REDD+ investment at a National level, to better manage the breadth of financing opportunities available and emerging. Public sector funds have led the way but are still a small portion of the financing potential compared to the funds that private sector can mobilize. Pay for performance mechanisms like REDD+ are the way to release private sector funds.

Currently, the UN works as a giant consensus group, and as a result it is very slow to act and Mike sees opportunity for the marketplace to move quicker not waiting for the perfect policy.

Greg Watson at IDB Lab

IDB recognized that their own conservation investments lacked intersection of language, data and financial modeling tools across all sectors. In response, IDB Lab was founded to bridge the gap between traditional environmental and financial actors from public and private sectors to incubate, accelerate and scale new solutions. The IDB Lab is allowed to take on high-risk investments that other sectors can’t, to test what can work and scale. For example, IDB Lab is an early funder of the Intrinsic Value Exchange (see below).

Greg emphasized the importance for conservationists (public and private) to appeal not to the minister of environment, but to the minsters of finance and planning. The value of conservation investments must be presented as job creation, risk mitigation and development budget savings. The IDB Lab funds innovative programs designed to work cross sector with a “common language” to activate funding at scale.

Douglas Eger from Intrinsic Value Exchange

The Intrinsic Value Exchange (The IVE) is an online stock exchange designed to value, price and monetize natural human and social assets. The monetary value of these natural assets would be based on measurable ecosystem services as well as intrinsic value, with the goal of out-pricing the value of extraction products made through ecological destruction.

In Douglas’ view, The IVE solves a fundamental problem that nature has been classified as an externality so it has no value in the marketplace or on balance sheets. If nature is given real monetary value as an asset class, it can be invested in and join the rest of the capital market’s natural mechanism.

Marilyn Waite from William and Flora Hewlett Foundation

As a moderator coming from the clean tech sector, which has seen large investments at scale, Marilyn asked what legislation or policy is needed to move the needle.

Jennifer Morris called out carbon price as one example, but most importantly, she echoed Greg’s point that conservation needs to be presented to governments as economic value.

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