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This Week in Biodiversity: Impact Investors Still Kicking the Tires for Mit Banks

Ecosystem Marketplace

Locating finance for conservation is a challenge inspiring some creative approaches. A recent report released hard figures on the emerging conservation impact investment market finding significant potential particularly from the private sector. And an ongoing initiative attempts to scale up biodiversity funding with market mechanisms.

This article was originally posted in the Mit Mail newsletter. Click here to read the original.

18 November 2014 | Greetings! A major new report this month from EKO Asset Management Partners and The Nature Conservancy’s NatureVest division attempts to put some hard figures on conservation impact investment. Investing in Conservation: A landscape assessment of an emerging market finds that more than $23B profit-seeking dollars flowed into ecosystem-friendly investments over the past five years, though less than $2 billion of that came from the private sector. But while the private sector component is small, it’s also incredibly dynamic, growing at an average annual rate of 26% from 2009 through 2013. The triple bottom line is real, folks: investors report a weighted average target IRR of 5%-9.9%.

Still, most conservation impact investment is going to the two F’s: food and fiber. Private investment in mitigation banking came in at a somewhat distant second. An estimated $100M was tracked flowing from the private sector between 2009-2013 – four times the value the report records from 2004-2008. At present, 80% of investment value consists of real asset purchases: project development finance took in 11% and early stage companies 10%. “What the report tells us is that this is not a money problem, says report co-author Ricardo Bayon, a partner with EKO Asset Management. “It is about coming up with appropriate financeable deals.” Get Ecosystem Marketplace coverage of the report and download a copy here.

Last month also saw the Convention on Biological Diversitymake real progress on financing biodiversity protection to the scale needed to meet the Aichi Targets, and one initiative aiming to scale up the use of market mechanisms in getting there.

In the United States, a decision by the US Fish & Wildlife Service this week to list the Gunnison sage-grouse as threatened is sure to ruffle some feathers, and we gain some perspective on the debate over voluntary efforts to protect imperiled (but not yet listed) species thanks to a new opinion piece from Timothy Male, the Director of Mission:Wildlife.

As always, we depend on our readers to help us keep covering the latest in conservation finance news. If you have a tip on a story or would like to make an end-of-year donation as a supporting subscriber, send us an email.

Very best,

The Ecosystem Marketplace Team

If you have comments or would like to submit news stories, write to us at mitmail@ecosystemmarketplace.com.

EM Exclusives

Filling In The Information Gap On Market Based Instruments For Biodiversity Conservation

Market based tools like economic incentives and offsets may be a key way to finance biodiversity conservation but the little clarity and certainty surrounding their success rates causes policymakers to overlook them. The INVALUABLE project says it can change that by providing the necessary data. The initiative’s overall objective is to clarify the potential of market-based instruments for financing conservation to policymakers, so biodiversity can be better integrated into economic systems and decision-making.

These ideas were recently presented during a side event at the 12th Conference of the Parties to the Convention on Biological Diversity (CBD). Project coordinator Renaud Lapeyre put together a detailed analysis of this event that included several presentations on conservation finance mechanisms from different parts of the world. The event looks closely at the role MBIs can play in achieving number three of the CBD’s Aichi Targets: developing and applying positive incentives for conservation.

Read more at Ecosystem Marketplace.

 

Study Sees Sustainable Ag Driving Surge In Ecosystem Investing

They call it “conservation impact investing,” and the authors of a new report entitled Investing in Conservation: A landscape assessment of an emerging market define it as “investments intended to return principal or generate profit while also driving a positive impact on natural resources and ecosystems.” Co-authored by EKO Asset Management Partners and The Nature Conservancy’s NatureVest division, the report says that $23 billion flowed into conservation impact investing over the past five years. The public sector, in the form of development finance institutions (DFIs) like the International Finance Corporation, accounted for $21.5 billion of that, with private investments accounting for just $1.9 billion.

While the private sector component is small, it’s also incredibly dynamic, growing at an average annual rate of 26% from 2009 through 2013. Two-thirds of that growth came in sustainable food and fiber production, including forestry, and the survey finds $1.5 billion or about 79% of the total invested over the past five years now on the books and ready to be deployed. The survey also says there are concrete plans to raise and invest another $4.1 billion through 2018.

Get coverage.
Download the report.

 

Opinion: US Feds Should Give Credit For Saving Unlisted Species, But Must Do It Right

The US Fish & Wildlife Service is contemplating a program that would recognize conservation credits generated in state programs for any rare species, even if it’s not yet endangered. In November, they will finish taking public comments on this proposed policy that would make it possible for the federal government to recognize credits generated by state-sanctioned conservation actions taken to benefit an unlisted species. Ideally, those actions will be enough to keep a species from declining further, but if the species ends up under federal protection, the credits can be used to offset impacts from development or other projects. Federal land-management agencies are likely to be some of the biggest investors in projects that generate advance credits.

Yet in order to encourage any investment, the policy needs to be better designed.

Read the full piece here.

 

Biodiversity And REDD: How They Fit Together

Never before have we known as much about the synergies between forest carbon and biodiversity as we do now, but that knowledge has been hidden beneath layers of impenetrable gobbledygook – and serious questions about how to implement an effective financing instrument on the ground. As the authors of A Sourcebook: Biodiversity Monitoring for REDD+ put it: “A key challenge [to monitoring biodiversity for REDD] is to avoid creating monitoring and reporting systems that will be too difficult and expensive for countries to implement.

Published jointly by the Zoological Society of London (ZSL) and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), the sourcebook scoops together research and analysis from scores of sources and then scrapes away the jargon to provide as clear and concise a summary of the current policies and programs as youll find anywhere.

Learn more at Ecosystem Marketplace.
Download the sourcebook here.

 

COP 12 Indicates More Funds, Capacity Building Needed For Biodiversity

On 17 October, the Convention on Biological Diversity’s (CBD) Twelfth Conference of Parties (COP 12) came to a close with some hard-won advances with respect to financing for biodiversity conservation, integrating biodiversity into the Sustainable Development Goals and recognizing the rights of indigenous peoples and local communities.

Resource mobilization was a key issue in talks: much more finance is needed to flow to biodiversity conservation to achieve the Aichi Targets. The High-Level Panel’s Report estimates that it will cost between US$150 billion and US$440 billion per year to achieve the Targets by 2020, several magnitudes higher than current expenditures.

Get the full story.

 

The Ecosystem That Is Disappearing Faster Than Any Other on Earth

Mangroves–the uniquely salt-adapted trees and shrubs that line our tropical and subtropical coasts, the critical membrane between land and sea–are disappearing at faster rates than virtually any other ecosystem on Earth.

The destruction and degradation of these natural systems–because of factors such as climate change, development, tourism, wood extraction, and non-sustainable farming–bring about tremendous ecological, social, and economic losses, the extent of which we are only now just realizing. But there is hope for mangroves. The world is starting to notice just how important they are and is beginning to take steps to prevent further loss.

Learn more.

Mitigation News

Endangered Species Act Revisions Spark Outcry from Businesses

The US Fish and Wildlife Service and the National Marine Fisheries Service have proposed definition revisions and procedural changes under the Endangered Species Act much to the dismay of several industry interests. The two agencies propose alterations regarding the range of activities covered under the ESA’s critical habitat designation process to enable listing of over 750 species within two years. The dozen business groups that submitted comments on the proposals say these revised rules will have a detrimental impact on economic development by devaluing land for productive purposes. The group also says the provision that allows for areas that a species has never inhabited to be nevertheless designated as critical habitat exceeds the federal agencies’ authority.

The Oil & Gas Journal has coverage.

 

Gunnison Sage-Grouse Joins the ESA Ranks

The US Fish and Wildlife Service (FWS) announced yesterday that it would list the Gunnison sage-grouse as threatened under the Endangered Species Act – a move that’s rankled environmentalists who wanted an ‘endangered’ listing, and a coalition of industrialists and conservationists who have worked to prevent listing at all. The FWS is expected to publish a rule setting out rules for mitigation early next year, which will probably resemble an earlier rule for the Lesser Prairie Chicken - though it’s not clear yet what the role of habitat exchanges will be in protecting the Gunnison sage-grouse.

Read a press release from US FWS.
Get analysis from the National Law Review.

 

TEEB Creates Special Wetlands Report for India

In 2013, The Economics of Ecosystems and Biodiversity (TEEB) published a report outlining ways to halt the degradation of wetlands. This year, TEEB has released another report – this time with a focus on India. The study is in partnership with the government of India, among others, and focuses on the value of nature and the impact the loss of ecosystem services has on human well-being. The Economics of Ecosystems and Biodiversity-India Initiative (or TII, as it’s called) provides an assessment framework and pilot sites prioritizing coastal and inland wetland ecosystems.

Learn more.

 

Offsets in Africa: Go Big or Go Home

Offset efforts that work on a project-by-project basis will likely fall short, finds a new study published in PLOS ONE. Researchers examining offsetting’s prospects in African countries conclude that a national strategy is needed to acheive effective conservation: ad hoc offsets simply can’t take into account cumulative impacts or broader population trends. They recommend mapping conservation priorities and creating ‘no-go’ zones for development.

Learn more at Science Daily.

 

Getting it Right: Biodiversity Offsets in Canada

Canadian think tank Sustainable Prosperity has laid out an agenda to move forward with biodiversity offsets in certain cases – though it cautions that more research is often needed. As biodiversity offset policy basically doesn’t exist in Canada, a key message of the proposed agenda is to build on real world knowledge. Establishing and implementing biodiversity goals into policy is also critical. Overall, the organization says offsets can maintain Canada’s wilderness and abundant biodiversity while still promoting sustainable development.

Get the agenda here.

 

$430B to Save the World is Peanuts!

The Convention on Biological Diversity estimates that in order to meet the Aichi Biodiversity Targets, US$ 150-430 billion annually needs to flow toward biodiversity conservation. The numbers seem impossibly high, but Carlos Manuel Rodriquez of Conservation International says mobilizing the resources is entirely doable especially when comparing it to how much is spent on other sectors. And because we are living in what many are calling the Anthropocene where human activities may be causing irreversible damage to the planet, the cost to conserve is only going to get higher making the decision to meet the current financial deadline all the more urgent.

Read Rodriquez’s piece here.

 

Mitigation Roundup

 

  • In Alabama, the Etowah County Commission will pay $24,225 for 0.3 acres’ worth of wetland credits.
  • The Wisconsin Department of Transportation will pay the town of Neenah, Wisconsin $522,450 for 4.83 acres of agricultural land to develop as a wetland mitigation site.
  • The U.S. Court of Federal Claims dismissed a suit against the Army Corps of Engineers by a wetland bank alleging a $1.4M breach of contract, on the grounds that the suit was filed eight years too late.
  • The South Dakota Farm Bureau received a $75,000 grantfrom the USDA Natural Resources Conservation Service to develop a statewide wetland mitigation banking system for wetlands lost to farmland. This development comes at a good time: banks will help farmers comply with the new Farm Bill’s conservation compliance rules.

 

WWF Defends its Mascot

Forest tenure reforms in China may have the effect of allowing the sale of land that makes up 15% of remaining panda habitat, according to WWF-China researchers. They’re suggesting that the government step in to fund conservation agreements with landholders or panda re-colonization projects elsewhere; China’s already spent over $100B on “eco-compensation” payments in the last decade.

The New Scientist has the story.

 

For Value, English Wetlands Beat Farms

Restored wetlands can reduce flood damage and carbon emitted into the atmosphere while increase recreational and tourism activities. In some cases, wetlands’ monetary value even exceeds development. Research done on a nature reserve in England found that each hectare of land was worth at least US$150 more as a wetland than as farmland yearly. The Wicken Fen Vision project researchers are hoping to inform the debate on publicly-funded incentives like carbon payments after finding the economic gains from tourism, flood protection and greenhouse gas emissions exceeded the estimated loss from the drop in agricultural lands.

“Under arable production, a small number of landowners and their employees gain the majority of the benefits,” says a research author. “Under restoration a much broader range of people benefit, including many more visitors as well as the global community through reduced greenhouse gas emissions.”

Keep reading.

 

Compliance Just Might Become Lucrative for CA Developer

Five years ago, real estate developer Spanos Cos. funded a habitat restoration site in northern California as part of its efforts to offset environmental harm from its housing projects. The restoration was a success and now the company is considering turning 80 acres not needed for wetland credits into a conservation bank for the endangered giant garter snake. A bank could be profitable for the real estate company and good for the snake, industry analysts say, although it must be absolutely certain the restoration site will serve as quality habitat for the snake.

Read more from the

 

Natural Capital Valuation Doesn’t Always Mean a Happy Ending

Putting a price on carbon doesn’t necessarily lead to biodiversity conservation. In fact, in some cases, it leads to species loss and ecosystem degradation. That’s according to a paper published in the Science journal. The paper cites several forces that negatively affect ecosystems when valuation takes place. An ecosystem that is managed to deliver economically valued services may not support other functions that aren’t considered valuable. Market-based incentives can be problematic also, since prices fluctuate and there aren’t markets for many vital ecosystem services. However, the paper does note the valuation approach can lead to biodiversity conservation, typically where overall ecosystem services provision depends on a high level of biodiversity.

Read it at Phys.org.

EVENTS

 

ACES 2014 Conference: Linking Science, Practice, and Decision Making

ACES: A Community on Ecosystem Services represents a dynamic and growing assembly of professionals, researchers, and policy makers involved with ecosystem services. The ACES 2014 Conference brings together this community in partnership with Ecosystem Markets and the Ecosystem Services Partnership (ESP), providing an open forum to share experiences, methods, and tools, for assessing and incorporating ecosystem services into public and private decisions. The focus of the conference is to link science, practice, and sustainable decision making by bringing together the ecosystem services community from around the United States and the globe. ACES 2014 will bring together leaders in government, NGOs, academia, Native American communities, and the private sector to advance the use of ecosystem services science and practice in conservation, restoration, resource management, and development decisions. We hope you will make plans to join more than 500 ecosystem service stakeholders in this collaborative discussion to advance use of an ecosystem services framework for natural resource management and policy. 8-11 December 2014. Washington DC, USA.

Learn more here.

 

2015 National Mitigation & Ecosystem Banking Conference

The 2015 National Mitigation & Ecosystem Banking Conference, scheduled for May 5-8, 2015, in Orlando, Florida is the only national conference that brings together key players in this industry, and offers quality hands-on sessions and training as well as important regulatory updates. Proven to be “the” place to gain insights, explore new markets and learn from sessions, the 2015 Conference will continue its focus on educational content both advanced and basic sessions as well as moderated exchanges and a variety of mini workshops that help to connect bankers, regulators, users and others involved in this industry. Pre and post- event workshops include Primer 101, Stream Banking, Long-Term Stewardship, Financing & Valuation and more. Hear perspectives from bankers, regulators and users, get updated on regulations, legislation and legal challenges, participate in field trips and benefit from the many opportunities to network! With a high attendance this past year, we anticipate a record attendance in Orlando and encourage you to make plans to submit to present, attend, even sponsor or exhibit!Orlando FL, USA. 5-8 May 2015.

Learn more here.

 

JOBS

 

Executive Director

National Mitigation Banking Association - Washington DC, USA

Established in 1998, the National Mitigation Banking Association is the nation’s leading voice for the rapidly growing private sector restoration industry. After 16 years of promoting federal legislation and regulatory policy that encourages mitigation banking as a means of compensating for adverse impacts to our nation’s environment, the Association is moving to increase its effectiveness and reach by hiring a full-time Executive Director.
The successful candidate for this position will manage day-to-day operations of the organization, coordinate and support the Board of Directors, and lead public policy and advocacy activities in Washington, D.C. As energy, infrastructure and other development projects continue to impact American land and water on which we all depend, having strong and consistent standards for compensatory mitigation that enable and encourage private investment in conservation and restoration is essential. The Association and its 87 corporate and non-profit members advocate for good public policy that works for both business and the environment, and we encourage candidates with a proven track record of engagement in these issues to apply.

Learn more here.

 

Director – Claims, Traceability and Trademarks

Rainforest Alliance - New York NY, USA

The Director will be responsible for overseeing strategy, operations, and general management of Rainforest Alliance’s Claims, Traceability & Trademarks team through direct management of the Traceability, Trademarks, Chain of Custody, claims based system, and related components. S/he will also be responsible for ensuring the integrity of the Rainforest Alliance Certified (RAC) seal by overseeing the implementation of policies and guidelines provided to registered companies using the seal for their certified products. In addition, s/he will ensure that all strategies and activities of the business unit are fully coordinated with SAN, pursuant to policies and agreements for mutual governance and oversight of the SAN-RA sustainable agriculture certification scheme. S/he will coordinate closely with the Sustainable Agriculture Network (SAN), and internal teams including Accounting, Information Technology, RA-Cert, Markets Transformation, Sustainable Agriculture, and Legal to provide oversight of systems and policies in place to trace Rainforest Alliance certified products throughout their supply chain. S/he will also interact externally with clients/stakeholders.

Learn more here.

 

Manager, Sustainability

KPMG - Houston TX, USA

KPMG’s Advisory Services Practice focuses on fundamental business issues managing risk, increasing revenues, controlling costs that organizations, across various industries, should address in order to help them flourish. We help companies to identify and manage risks inherent in business processes and technology systems that support business objectives, and provide them with the information needed to help them meet their strategic and financial goals. Services are specialized to help clients mitigate risks across an overall risk spectrum. We are currently seeking a Manager inInternal Audit & Regulatory Compliance Services (IARCS)-Sustainability for our KPMG Risk Consulting practice to join us in our Houston TX office.

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