From sustainable agriculture to habitat conservation, there is a significant shortfall in funding to address the world’s conservation issues. Approximately US$300 billion is needed annually to meet global conservation needs, according to a Global Canopy Programme report. Yet current levels of investment, mainly from governments, multilateral agencies and philanthropic sources, totals about US$50 billion.
A new first-ever survey of conservation impact investing reveals a fast-growing market, with its value totalling US$23 billion over the last five years, and investments in this space expected to more than triple over the next five years to US$37.1 billion (2014-2018).
Conducted by The Nature Conservancy’s NatureVest and EKO Asset Management, Investing in Conservation: A landscape assessment of an emerging market, is the first data-driven study of the market for conservation-related investments based on direct feedback from investors. The report presents findings from a survey of 56 investors, including five for-profit and nonprofit development finance institutions and 51 private investment organizations.
Conservation investments, also referred to as conservation impact investments, are intended to return principal or generate profit while driving a positive impact on natural resources and ecosystems.
According to survey findings, the approximately US$23 billion committed to conservation impact investments from 2009-2013 was invested in three main categories:
- Water quantity and quality conservation, including investments in watershed protection, water conservation and storm water management, and trading in credits related to watershed management
- Sustainable food and fiber production, including investments in sustainable agriculture, timber production, aquaculture, and wild-caught fisheries
- Habitat conservation, including investments in the protection of shorelines to reduce coastal erosion, projects to Reduce Emissions from Deforestation and Degradation (REDD+), land easements, and mitigation banking
“As conservation and the value of nature become a stronger focus for impact investors, public and private dollars can be used together for greater impact in environmental projects. This research reveals what many have suspected—that impact investors are using substantial, fast-growing amounts of money to support sustainable food and fiber production, as well as water and land conservation, and will continue to do so for years to come, ” said Marc Diaz, Managing Director of NatureVest at The Nature Conservancy.
The report also finds that a substantial amount of potential private capital has not been deployed, highlighting the need for a significant increase in the number of investment opportunities. Investors reported a variety of challenges typically associated with a nascent market, such as a shortage of investment prospects with appropriate risk-return expectations and experienced management teams and a lack of standardized impact metrics. For-profit investors also stressed the need for policies that put a price on a broader range of ecosystem services.
“Our report puts real numbers to what we’ve long suspected: Private investors are deploying more capital than before toward investments that lead to both greater conservation and a definable financial return” said Ricardo Bayon, EKO Asset Management Partner.
“But more needs to be done. What the report tells us is that this is not a money problem. The money is out there. It is about courage, ingenuity, and creativity. It is about coming up with appropriate financeable deals. If we’re successful, it will mean that billions of new dollars will flow into efforts to improve sustainable food supplies, protect habitats, and achieve water conservation around the world.”