June 23, 2015

Finance Leaders Pioneer Investment Coordination for Sustainable Landscapes

Seth ShamesEcoAgriculture Partners

How can private investors help dairy farmers, mushroom growers, and AIDS orphans lift themselves out of poverty and protect their environment?

In a sense, this question was at the center of two LPFN-organized events at the Global Landscapes Forum: the Investment Case event in London last week. Each of these groups, small-scale dairy farmers, mushroom growers, and AIDS orphans, received grants of just a few thousand dollars from a multi-stakeholder committee in the Lari Landscape of Kenya made up of civil society organizations, government officials, private businesses, producer groups, and conservation organizations. They were selected from among dozens of proposals for funding because their activities met jointly developed criteria for the sustainable development of the landscape: they would raise incomes, reduce pressure on forests, and increase food security, without tradeoffs for other land users. But how do these kinds of activities access larger amounts of financing, and how can investors locate them?

This post originally appeared on the Landscapes for People, Food and Nature Blog.

Without integration, landscape investing misses the mark

The Global Landscape Forum: The Investment Case focused largely on how to finance sustainable agriculture, forestry and other land use projects. But these well-intentioned projects can have sub-optimal or even far-reaching negative impacts when they are not planned at the landscape level, using the best scientific and local knowledge, and with the involvement of all the affected stakeholders. There is little difference between traditional agriculture and forestry investing and “investing in landscapes” if investing in landscapes simply means substituting the word ‘landscape’ for ‘sourcing area’ or ‘region’.

Investment vehicles, mechanisms and outputs for landscape investments

A figure from the GLF session white paper describes the typical classes of investments along the enabling to asset investment continuum. Click to enlarge.

With that in mind, the finance working group of the Landscapes for People Food and Nature Initiative organized two working sessions on integrated landscape investment at the Investment Case event. These sessions highlighted the ways that cutting edge private and public investors and landscape stakeholder platforms are working to design and coordinate (integrate) investments to create lasting positive impacts at a landscape scale.

Seven innovative funds demonstrate successes

Seven funds were highlighted in these sessions, five that are designed as impact investment vehicles that receive financial returns and two whose returns are solely environmental, social and institutional. Among the impact investors, the Ecoenterprises II Fund has the deepest experience, based on the history of Ecoenterprises first fund, while Althelia Climate Fund and Moringa Fund have begun operating within the past few years. Commonland and the Land Degradation Neutrality Fund are still in their design phases. Of the public investors, the Dutch Sustainable Trade Initiative (IDH) through its Initiative for Sustainable Landscapes (ISLA), is now investing in landscape stakeholder coalitions in six commodity landscapes around the world, and  the Global Environmental Facility’s (GEF) Integrated Approach Pilot (IAP) program on Fostering Sustainability and Resilience for Food Security in Sub-Saharan Africa is working with 12 countries at both the landscape and national levels to build the enabling conditions for landscape-scale action.

LPFN_DecisionSupportDiagram_061815a-01

Global threats have impacts at various scales. Investments in interventions need to be planned at the appropriate scale and with all the affected stakeholders. Figure by EcoAgriculture Partners and TerrAfrica. Click to enlarge.

 

The first session highlighted the experience of impact investors and development finance institutions who are designing new instruments for investing in integrated landscapes. For example, the Moringa Partnership is an example of a PPP that manages a private equity fund in coordination with a publically funded grant facility which helps lay the groundwork for its private investment. Moringa uses a stakeholder engagement protocol when designing its agroforestry investments, and one of the key roles of the grants facility is to strengthen local landscape management efforts. The grants facility is also used to engage with local and national governments to create the conditions for similar investments throughout a given region or country.

Moringa uses a stakeholder engagement protocol when designing its agroforestry investments, and one of the key roles of the grants facility is to strengthen local landscape management efforts.

The Althelia Climate Fund discussed its approach to landscape investment coordination with its work in and around the Tambopata National Reserve in Peru. In this case Althelia coordinates with an NGO called AIDER that managed a REDD+ project in the area. AIDER is the engine of efforts to identify key drivers of deforestation and address them, and these efforts are supported by Althelia’s investment in cocoa agroforestry within the forest buffer zone.

Deeper discussion facilitated in workshop

This session on the 10th laid the foundation for a half day workshop on June 11th which explored these issues in greater depth and worked to develop design principles for investors and those seeking to mobilize landscape investment. During the workshop participants discussed what is working well for them within these themes, key challenges they face, and lessons that can be drawn from these experiences. The results of these discussions along with the other research being conducted by EcoAgriculture Partners, will be synthesized into a white paper to be launched at the Global Landscapes Forum in Paris in December 2015. Our hope is that these lessons will be relevant not only to investors (i.e. private fund managers; companies; commercial banks; banks; multilateral development banks; international donors and non-government organizations) but also to integrated landscape initiatives, policy makers and designers of regional and global land-related programs.

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