Stockholm International Water Institute / African Development Bank / Inter-American Development Bank / The Nature Conservancy

Is there such thing as innovative financing for ecosystems management?

Tuesday 28 August | 14.00-15.30 | Room: FH 300
Susanna Starck, SIWI

Agenda 2030 acknowledges that sustainable management of natural resources is critical to achieving the Sustainable Development Goals. Innovative financing strategies built on a range of legal and market-based instruments can enable development of built and natural infrastructure alongside functioning ecosystem services. Such financing strategies require markets with clear enabling conditions, including regulatory, legal, and voluntary mechanisms that incentivize investments in ecosystems management and elicit demand through an understanding of social conditions.


This seminar will include discussions about enabling environments and innovative mechanisms that contribute to scaling up of financing for ecosystem services, focusing on cases that are currently being implemented. The seminar will ask: i) What are the enabling conditions that promote the development of markets? and ii) Can innovative mechanisms, such as impact investments, green bonds, climate funds, payment for environmental services, venture capital, pooled financing, be scaled up? Examples from around the world will be presented.

Gold standard events are committed to ensure the gender balance in speakers/panellists and young professional representation in the session.

Programme

SESSION 3: Ignite presentations of financial innovations for scaling ecosystems management

14:00 Recap of previous sessions and welcome by moderator
Rochi Khemka, World Bank

14:10 Introduction to the panel

  • Rachel Cardone, Redthread Advisors
  • Marc Robert, Water Asset Management
  • Philippe Rohner, Pictet Asset Management
  • Sophie Tremolet, The Nature Conservancy


Pitch by fire presentations of financial innovations (with questions from panel)

14:15 miParamo, environmental financing mechanism to strengthen  water funds in Colombia
Diego Arevalo, Good Stuff International

14:25 Cloud Forest Blue Energy Mechanism
Justus Raepple, The Nature Conservancy

14:35 Green Bonds Water Infrastructure Criteria
John Matthews, Alliance for Global Water Adaptation

14:45 OKACOM Endowment Fund
Eben Chonguinca, OKACOM Secretariat

14:00 Moderated discussion with panel and presenters
Rochi Khemka, World Bank

14:20 Closing remarks from panelists

14:30 End of session

Conclusion

The purpose of this session was to create an environment for creativity and critique in which new ideas for financing ecosystem management are tested for their level of innovation and potential for scale. Rochi Khemka from the World Bank moderated a ‘shark tank’ style session with a distinguished jury including Rachel Cardone from Redthread Advisors, Sophie Tremolet from The Nature Conservancy, Marc Robert from Water Asset Management and Philippe Rohmer from Pictet Funds. Diego Arevalo from Good Stuff International pitched miParamo, a results-based finance mechanism meant to motivate local families to contribute to conservation in the High Andean Wetlands of Colombia by connecting them to downstream water users through a certification programme. Justus Raepple from The Nature Conservancy pitched the Cloud Forest Blue Energy Mechanism, an innovative financing mechanism that connects cloud forest conservation with improved downstream hydropower generation. John Matthews from the Alliance for Global Water Adaptation pitched the new green bonds water infrastructure criteria, a certification framework from the Climate Bonds Initiative meant to verify the ‘green’ element of bonds that are ear-marked infrastructure investments. Lastly, Charles Reeve from the Climate Resilient Infrastructure Development Facility pitched the Okavango River Basin Commission Endowment Fund, which aims to bring finance to portfolios of small-scale, climate resilient projects in the basin. These pitches prompted discussion about the need for pilot projects to be intentionally designed with scalability in mind, the lack of track record of successfully scaled projects, the need to replicate the urgency of the start-up world in the development space, and the need for better articulated strategies for blended finance. A major conclusion from the session was that impact investors are a likely source of capital for ecosystem projects, but the lack of pipeline leaves potential funding on the table. These discussions raised questions about 1) who is willing to pay for cost of project preparation 2) are the criteria for impact investment understood by the water sector 3) which entities are suitable financial vehicles beyond government 4) whether financial flows ear-marked for green investments are fit for purpose, and 5) what social incentives can promote the consideration ecosystems investment and related partnership.

Policy recommendations:

  1. Design, test and evaluate pilot projects for financing ecosystem management with the goal of financing at scale.
  2. Invest in innovation and create more platforms for emerging solutions to share experiences, gain feedback and iterate.

Initiatives, tools or networks:

  1. Climate Bonds Initiative (https://www.climatebonds.net/), including the Green Bonds Water Infrastructure Criteria (https://www.climatebonds.net/standard/water)
  2. Cloud Forest Blue energy Mechanism (https://www.climatefinancelab.org/project/cloud-forest-blue-energy-mechanism/)