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Conservation Finance Guide

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					Conservation Finance Guide




                                    INTRODUCTION

1    WHY IS SUSTAINABLE CONSERVATION FINANCE SO IMPORTANT?


The Earth’s plants, animals and natural ecosystems provide goods and services that form the very basis
of human prosperity and survival. In scientific terms, we call this biological diversity (“biodiversity”) – the
variety of life on Earth. In financial terms, this is the Earth’s “natural capital,” which we are over-spending.
Under business-as-usual scenarios, only a few short decades remain before mass species extinctions
and wide-scale ecological collapse could exceed critical thresholds, with profound impacts on human life.


The irony is that while we have learned to value biological diversity and have made enormous scientific
advances in exploring its potential, we continue to lose species at a faster rate than ever. The
international conventions have not yet changed the situation on the ground. The current rate of species
extinction is believed to exceed the one the earth experienced before the onset of the human era -- during
the extinction episode of 70 million years ago when dinosaurs disappeared. It is now estimated that more
than 20,000 species are lost every year, and that this loss is between 1,000 and 10,000 times greater
than it would naturally be.


Worldwide, 80% of the earth’s original forest cover has been cleared, fragmented or otherwise damaged.
Over the last 20 years, an area of mainly tropical forests as large as six times the size of France has been
converted to other land use. In addition, fire and ecosystem degradation have decimated the earth's
forests, from Russia, to China, to Southeast Asia and Latin America.


Some 80% of the world’s population will live in developing countries by 2025, 50% of them in urban areas
located mainly in coastal regions and near rivers. The likely decline of many freshwater and related
ecosystems, resulting from such population pressures, will have direct, large-scale social and economic
repercussions.


Many of us – individuals, organizations, corporations and governments – have been working tirelessly to
address this crisis. Unfortunately, progress in addressing this escalating loss of biodiversity has been
limited. This is due, in large part, to several critical economic and financial factors. Just to name a few:

     Total investments in biodiversity conservation are woefully inadequate. Total funding for
      protected areas and biodiversity conservation, particularly in developing countries, must be
      increased dramatically.
     Lack of long-term investments in conservation. Long-term, reliable sources of financing for
      biodiversity conservation must be established and strengthened.
     Adverse impacts of private financial flows. The adverse impacts of private financial flows (e.g.,
      through financing of unsustainable logging, agriculture, mining, tourism development, and other
      activities) must be addressed.
     New environmental business opportunities are being missed. Financial constraints hampering
      the ability to capitalize on new environmental business opportunities that contribute to biodiversity
      conservation (e.g., ecotourism, organic agriculture, shade coffee) must be overcome.
     The Earth’s natural capital is under-valued. In particular, markets that value and pay for the
      critical services provided by intact ecosystems, such as carbon sequestration and watershed
      protection, need to be developed.

However there is hope! In recent years, a range of sustainable conservation finance mechanisms are
starting to be harnessed to address these factors – and particularly to provide reliable, long-term sources

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of expanded funding for on-the-ground conservation programs. Such long-term funding sources
supplement the important, short-term grants provided by private foundations and wealthy individuals,
government aid agencies, NGOs and the Global Environment Facility (GEF). Some of these sustainable
finance mechanisms are now well proven, such as: tourism user fees, “bio-prospecting” payments, debt-
for-nature swaps conservation trust funds, and carbon investment projects. Others are in early stages of
development and testing, such as: “green bonds” and other securitized instruments, ecosystem service
payment schemes (e.g., water use fees), “green insurance” products, resource extraction fees (e.g., on
oil/gas exploration, logging, and mining) dedicated to conservation and environmental investment funds
that support conservation-friendly enterprises.



2    HOW CAN WE EXPAND THE USE OF SUSTAINABLE (LONG-TERM)
     CONSERVATION FINANCE MECHANISMS?


At the global level, and particularly across the developing world, the use of sustainable conservation
finance mechanisms is quite limited. All governments party to the Convention on Biological Diversity
(CBD) are required to develop national biodiversity strategies and action plans (NBSAPs) and to provide
financial support to implement such plans. Yet very few of these strategies and action plans contain
details for how to generate the critical long-term financing for conservation. This situation poses a major
threat to conservation success worldwide. Therefore, a major challenge for us, as a conservation
community, is how to “scale-up” ( i.e., rapidly and dramatically expand) the use of these long-term
conservation finance mechanisms.

To address this challenge, this Guide is being developed by the Conservation Finance Alliance (CFA) as
a centerpiece of a comprehensive Conservation Finance Capacity Building Program (CFCBP). The clear
need for such a Guide became apparent following a survey of the many existing documents and tools
covering innovative conservation finance. The survey identified many critical gaps in the available body
of existing tools (see Table 1). Most importantly, most existing materials are not written in ways that
support on-the-ground, practical application of conservation finance mechanisms by individuals with
limited knowledge of the field and with limited or no assistance from technical experts. Conservation
practitioners and planners require information packaged in much more user-friendly and action-oriented
formats that help them better understand various finance mechanisms and select/ implement appropriate
options for their particular situation by guiding them through systematic decision-making processes.




                  Table 1. Major gaps in existing materials that are addressed in the Guide
      Types of gaps                                            Specific gaps
 Accessible language         Inadequate descriptions and packaging of information for non-experts
 Clear methodologies         Lack of clear methodologies that describe -- in simple and accessible language -
                             - the sequence of steps for pursuing specific finance mechanisms and highlight
                             the key decision points for whether to proceed
 Systematic approach to      Lack of a systematic overall approach to the conservation finance process
 conservation finance
 Planning, assessment        Lack of practical tools to plan, assess and implement conservation finance
 and implementation          mechanisms (e.g., tools for business planning, coarse screening, feasibility
 tools                       assessments, revenue projections, etc.)
 “Cutting-edge”              Very limited treatment of cutting-edge finance mechanisms that are in
 mechanisms                  conceptual/ testing stages, but will likely become increasingly important in the
                             future


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 Technical resources         Lack of a comprehensive listing of technical resources for each mechanism
                             (e.g., technical experts, case studies, web sites, bibliographic references, etc.)



3    PURPOSE OF THE GUIDE


The overall goal is to provide practical tools to support the rapid expansion of sustainable finance
mechanisms that generate long-term funding for biodiversity conservation.


The specific objectives of the Guide are:

     To increase awareness and understanding of the range of conservation finance mechanisms
      available;
     To provide practical, user-friendly tools to methodically assess which conservation finance
      mechanisms are most viable in specific settings, and to efficiently and successfully implement
      these mechanisms; and,
     To expand significantly the pool of practitioners able to develop and implement sustainable
      conservation finance mechanisms.


In terms of scope, this Guide covers major conservation finance mechanisms available at three levels of
conservation action: site, national / regional and international. It addresses both well-proven mechanisms
and promising new finance mechanisms in early stages of development and testing.


This Guide has been designed primarily to assist five target audiences that are most critical to putting
innovative conservation finance mechanisms in place. These “change agents” are:

       government officials;
       protected area managers;
       conservation/environmental NGOs;
       technical consultants; and,
       donor agencies.




4    CONSERVATION FINANCE CAPACITY BUILDING PROGRAM (CFCBP)


As noted above, the Guide will be a central element of a much broader CFCPB, jointly supported by a
number of partner organizations in the CFA. Other potential elements of this program already in operation
or under consideration include:

     Interactive web site version of the Guide, that now serves as a “one-stop shopping” source of
      information and decision tools on the internet (www.guide.conservationfinance.org).

     Conservation finance series of workbooks that will provide more in-depth tools for specific
      finance mechanisms, starting with those generating the greatest demand (e.g., carbon investment
      projects, tourism user fees).




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     Conservation finance curriculum, taught through in-person training workshops and distance
      learning channels (e.g., Líderes Sociales involving The Nature Conservancy, The World Bank,
      Technical University of Monterrey and other partners).

     Training workshops. A series of training workshops will be organized in major regions of the
      developing world.


     Regional technical assistance units (RTAUs) to provide targeted technical assistance (e.g.,
      peer-based learning workshops organized around broad curriculum or specific mechanisms;
      targeted one-on-one assistance for specific finance initiatives through a telephone help desk and
      site visits, referrals to other experts, etc.).



5    ACKNOWLEDGEMENTS

This Guide is a collaborative effort by members of The Conservation Finance Alliance (CFA), established
in February 2002. Member organizations of the CFA include, at present: The Nature Conservancy (TNC),
The Convention on Wetlands (Ramsar, 1971), Wildlife Conservation Society (WCS), World Conservation
Union (IUCN), World Wildlife Fund (WWF), Conservation International (CI), The Latin American and the
Caribbean Network of Environmental Funds (RedLAC),The German Technical Cooperation Agency
(GTZ), United Nations Development Programme – The Equator Initiative (UNDP), Enterprise for the
Americas Initiative/Tropical Forest Conservation Act (USAID), and the National Parks and Conservation
Association (NPCA). Kreditanstalt Fur Wiederaufbau (KfW), The Royal Society for the Protection of Birds,
and Danida - Royal Danish Ministry of Foreign Affairs. Associate members include The World Bank.


The Guide was developed in part with the financial support and encouragement of The Nature
Conservancy (TNC), The Convention on Wetlands (Ramsar, 1971), The Sustainable Alternatives Network
(SANet) project (with GEF support), USAID and GTZ.


We anticipate the CFA will grow to include additional partners for future editions of the Guide, and look
forward to continuing to receive generous contributions from people and organizations who, while not
officially members of the Alliance, share in its mission statement, “to promote sufficient and sustainable
funding for biodiversity conservation worldwide”.


Although a collaborative effort in the true sense, we would like to acknowledge the important contributions
of a number of organizations and individuals (in no particular order):


Lead Authors:
Alain Lambert (Convention on Wetlands); Patrick Maguire, Sheldon Cohen, Silvia Charpentier, Mary
McClellan, Manrique Rojas, Maheen Qureshi and Marlou Tomkins-Church (TNC); Marianne Guerin-
McManus (CI); Frank Vorhies (IUCN); Melissa Moye (WWF); Dirk Kloss, Michael M. Murgatroyd, Helena
Olivas and Belinda Morris (Independent Consultants); and Valerie Hickey (formerly WCS).


Contributing Authors:
Andy Drumm, Juan Jose Dada, Bill Stanley, Konrad von Ritter, Michelle Pena, and Eric Firstenberg
(TNC); Sonia Pena Moreno and Sebastian Winkler (IUCN); Barry Spergel (formerly WWF); Phil
Voorhees and Scott Edwards (NPCA); Claudio Volonte (GEF); Jennifer Morris (CI); Lauren Burnhill,
Corinne Schmidt, Sylvia Tognetti, Martha Echevarria, and Suzanna Egolf (Independent Consultants); Rolf
Mack (GTZ); Kreg Lindberg (Griffith University); Oliver Hillel (UNEP); and Andrew Keck (IRG).


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Technical Support and other contributions
Hugo Ahlenius (GRID Arendal); Ard Kant (SANet); Alex Shenkin and Peter Hulm (Independent
Consultants); Ilana Locker and Ray Victurine (WCS); Lorenzo Rosenzweig and Deyra Kelly (RedLAC);
Laura Diaz, Meagan Honnold, Scott Smith, Erica Bailey and Randy Curtis (TNC); Gunars Platais and
Stefano Pagiola (The World Bank); Sonal Pandya and Chris Heltne (CI); Esteban Brenes (WWF); and
Yibin Xiang (CBD Secretariat).


Last, but by no means least, we would like to acknowledge the work of the CFA Steering Committee, and
in particular its Chair, Alain Lambert, and its lead proponents, Sheldon Cohen, Patrick Maguire and
Valerie Hickey without whom this Guide, and the collaborative effort upon which it is built, would never
have come to fruition.


The CFA Steering Committee:
CFA Chairman, Alain Lambert (Convention on Wetlands); Sheldon Cohen and Patrick Maguire (TNC);
Gunars Platais and Valerie Hickey (The World Bank); Scott Dresser (CI); Scott Edwards (NPCA); Carlos
E. Quintela (WCS); Sebastian Winkler (IUCN); and, Timothy Geer and Esteban Brenes (WWF).




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