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Blog: Can Innovative Financing Bring Landscape Restoration to Scale?
Submitted by Paola Agostini, Lead Environmental Economist, and Werner Kornexl, Senior Natural Resource Management Specialist
Vibrant landscapes are not just beautiful to look at, they are productive and resilient. They provide the natural resources and ecosystem services that underpin economic activities like agriculture, mining, and energy, and are thus vital to national economies and the jobs and wellbeing of billions of people. However, in many areas across the globe, economic activities are being carried out at an unsustainable level, undermining the very landscapes on which we depend. FAO estimates that worldwide land degradation costs US$40 billion per year.
By contrast, restoring landscapes could bring renewed economic opportunity, improved water supply, and climate resilience. More than two billion hectares worldwide - an area larger than South America – could be restored, with tremendous value to national and local economies. IUCN estimates the annual net benefit of restoring 150 million hectares of land at approximately US$85 billion per year. In addition, such restoration would sequester massive amounts of greenhouse gases and go a long way towards stabilizing climate change at 2 degrees C.
The arguments for landscape restoration are compelling. But making it happen is complex, especially at scale. Substantial change requires a complete rethinking of the rural economy. It also requires a favorable policy environment; coordination across government agencies; new consumption patterns; support to small and medium scale enterprises; the right incentives; and ultimately financial investment.
This is a tall order under the best of circumstances. However, we are cautiously optimistic. Business norms are rapidly changing for the better as more and more companies take action to support sustainable forest landscapes all along the value chain. A number of companies have already come forward to stop impacts on tropical forests. For instance, the Consumer Goods Forum, whose 400 member companies represent over US$3 trillion in revenue, is committed to achieving zero net deforestation in key commodity supply chains by 2020. The Tropical Forest Alliance 2020, a public-private coalition, aims to reduce commodity-driven deforestation by 2020.
At the recent Global Landscapes Forum in London, we posed a question to experts from the financial services industry and corporate sector, and to senior government officials, project developers and leading thinkers: “What are the main barriers for private investments in forest landscape restoration?”
The answers weren’t surprising: a lack of coherent spatial planning, contradictory policies, the need for stronger incentives, and the lack of capacity across sectors to understand and deal with trade-offs at a landscape level. More interesting were the solutions put forward: public-private partnerships, bonds for landscape programs, and project financing and credit funding for small- and medium-scale enterprise (SMEs) in developing countries, where financing is not yet offered at the scale needed to address the challenge.
Paraguay offers an example of a public-private partnership that is reversing degradation within the productive landscape of the Paraguayan Atlantic Forest. The partnership is between Itaipu Binacional - the company that runs the world’s largest generator hydroelectric power plant - and the Ministry of Agriculture and Livestock, the Secretary of Environment, and local farmers. The partnership has successfully promoted sustainable land management practices on 125,015 hectares of Paraguayan forests.
Yes, landscape restoration is complex, but so was investment in renewable energy 20 years ago. There are viable models being implemented which now need to be brought to scale. To do this, we need to create an enabling business environment and work on the three “I’s”: institutions, incentives and investments. Most importantly, we need to work in partnership across private and public sectors, because nobody can effect large-scale change on their own.
Last Updated : 03-03-2017