20 October 2016
Agustín Silvani, Vice President of Conservation Finance at Conservation International, explains how this is more than a tagline – it's a call to action now codified in the Sustainable Development Goals and the Paris Climate Agreement.
Nature-based solutions – protecting forests, managing watersheds, restoring coastal ecosystems – are efficient and effective answers to our most critical development problems. To achieve our goals of tackling climate change for a sustainable future by 2030 we will have to lean on nature – our green infrastructure.
In fact, nature can provide at least 30% of the solution to limiting global warming to 2°C. These are near-term solutions that are available today – not dependent on new technology – yet they currently receive only 2% of estimated global climate finance flows; 30% of the solution, but only 2% of current investment? That represents a tremendous opportunity that savvy investors, both public and private, are now looking to capitalize on.
Investments in nature, "conservation finance," are rich in impact but typically poor in cash-flows, limiting private sector involvement. It is stated that conservation finance is probably at the same stage that renewable energy markets were 10-15 years ago: full of potential, but fragmented and immature. COP22 in Marrakesh promises to be a turning point as countries and companies begin to value the services that nature provides.
In the short term, public funding will continue to serve as the primary source of conservation finance, yet the wealth of experience that the environmental NGO community has generated over the last 25 years is now being tapped by major financial actors such as Credit Suisse, JPMorgan, European Investment Bank, and others, as private sector participation and ambition are on the rise. As they have done in the past with global challenges from underwriting the industrial revolution and rebuilding after WWII, the financial community has a central role to play in helping society shift to a more sustainable future – and conservation lies firmly within that mandate.
What does a conservation investment look like? They are investments in the long-term conservation or restoration of an ecosystem – a country's "natural capital" – vital for people and biodiversity. We have come to realize just how important nature – and investing in it – is to our economies. Latin America has around 1,170 hydropower facilities with an installed capacity of over 163,000 MW (twice that of the United States) and an economic output of $123 billion a year. These power plants depend on upstream forests that provide at least 50% of the water that reaches them, yet following construction, 61% of these forests have been lost: thus the power plants are working at sub-optimal levels, heavily compromising their operational life span. Private investment is now being used to restore the watersheds, earning a return from the increased energy output and revenue that the hydro facilities generate.
At Conservation International we have deployed over a billion dollars in the past decade with successes ranging from avoided deforestation projects to sustainable coffee production systems illustrating the potential of these investments for transformational change on climate and communities. The challenge now is to scale up these solutions in time.
Institutional investors need to watch this space. In the next months, we expect to see the first of many "green" bonds directly targeting sustainable land-use rather than just renewable energy projects. The Green Climate Fund is beginning to deploy much of its $10 billion war chest on avoided deforestation and restoration programs designed to crowd-in private sector investment.
And, we will see a paradigm shift on the treatment of indigenous peoples given their substantial role in conserving an estimated 25% of the above ground carbon stored in all the world's tropical forests. After all, although most of the climate talk has been about de-carbonizing the energy grid, to achieve a 2°C pathway, we will also need a re-carbonization of our world, sequestering as much CO2 as possible, a solution that only nature can provide.
Find out more at www.conservation.org