Lack of creativity is not among the barriers to investment in integrated landscape management, test of new Landscape Investment and Finance Tool in the Philippines shows.
Investment ideas were sprouting quickly from the stakeholders of the Cagayan do Oro landscape (CDO) in the Philippines. Participants proposed, “What if we went for wind power? What if we created a fund that seeded Payment for Watershed service projects throughout the landscape? I know about a cocoa development project in the district next door. I’m sure they’d be interested in talking to us!”
Once the potential investment ideas had been put on the table and explained by their champions, we began to talk about finance. Who would invest in these ideas?
These discussions were part of a process to help stakeholders in the CDO better coordinate financing for integrated landscape investments. Integrated landscape investments are investments that contribute to multiple elements of landscape sustainability (production, ecosystems, biodiversity, livelihoods) and are aligned with other investments in the landscape that are supportive of a Landscape Action Plan developed through a multi-stakeholder process.
Multi-functional investment still off the radar
Finance plays a critical role in achieving sustainable landscapes, however, investment ideas are rarely designed to achieve multiple objectives within a landscape context, and there are few efforts to coordinate finance within landscapes—to promote synergies and mitigate conflicts.
Furthermore, most investors do not operate with landscape context or goals in mind. Despite an uptick in interest for green or sustainable finance, most investors are still using models that focus on a single objective within a landscape, such as agricultural production, ecosystem health, forest restoration, or climate change adaptation or mitigation. Those financial institutions that are interested complain about a lack of investable projects, while landscape initiatives struggle to identify sources of financing for their integrated activities. Even for the limited number of investors currently exploring multi-functional investments, many of the available opportunities may be untested and have high risk profiles.
Giving landscape initiatives a LIFT
To fill these gaps, the prototype Landscape Investment and Finance Tool (LIFT), developed by EcoAgriculture Partners and IUCN Netherlands, helps landscape partnerships develop investment ideas, assess their financing needs, scope potential sources of financing, and devise a clear finance mobilization strategy.
In August, the first testing of the tool began in the CDO, this process led to the investment idea brainstorming session in September. It was obvious that the landscape partnership was bursting with investment ideas, but that these ideas needed to be refined and connected with appropriate sources of finance. Based on the discussions at the workshop, follow-up meetings with Kennemer International, Land Bank, and FMO (the Dutch Development Bank) plan to better understand how landscape investment deals might be structured. The process of fully implementing LIFT in CDO will continue for a number of months.
Commitment to continual improvement
A second trial of LIFT has now begun in partnership with Solidaridad on the Northern Caribbean Coast of Honduras. Meanwhile, we are rapidly incorporating feedback and observations from the trial in the Philippines. We’re honing and adding key pieces to the segment of the tool focused on business planning and social enterprise development. For communities like Cagayan do Oro, where there is no shortage of business ideas, creating investable business models from those ideas is among the biggest barriers to unlocking private capital for integrated landscape investments.
We expect to have incorporated feedback from the users in both Honduras and the Philippines by the end of the year, when LIFT will be made publicly available for all those interested in using it. EcoAgriculture Partners hopes that early adopters will continue to provide feedback to us so it can be continually improved. We are recruiting partners for further detailed testing, and looking for support to improve usability and effectiveness for the tool around the world, for instance through translation, software development, and partnerships with investment institutions.
More about Landscape Finance
The need to move towards a more integrated system of financial investment is apparent from our experiences working with stakeholders in the Cagayan do Oro landscape. Back in late 2015, in an article originally published on Devex, I and colleagues Krista Heiner and Aiden Irish highlighted the need for development projects to focus on building multi-sectoral, multi-stakeholder platforms with strong financial literacy. Locally customized finance coordination solutions will better attract and invest the private capital needed to drive environmentally and economically sustainable development that creates triple bottom line returns for companies, financiers and communities. That’s what LIFT seeks to do.
Read the entire article on Devex here.