Still, it is hard work to develop transactions that fit this description in places like the Amazon where governance, currency and political risks are all too real, and yet those are the very places where investing in conservation most needs to happen. And even when the transaction structures are there, the financing challenges remain.
Why? Conservation investing is still a nascent field. Recent research shows that investor commitments to conservation are growing rapidly—a 62% increase between 2013 and 2015—yet investors continue to face fundamental challenges finding deals that meet their own specific guidelines, including size, track record and risk/return parameters. NatureVest has been at this for more than three years, with nearly $200 million of deployed capital and a very promising pipeline of hundreds of millions of dollars more, and we still experience the funding gap for “fully baked” investments. We also know that countless early-stage ideas are out there and that a small amount of funding and assistance can help them reach an inflection point and ultimately succeed.
To address this need, NatureVest launched the new Conservation Investment Accelerator, a grant competition open to applicants from both external organizations and from within the Conservancy. The Accelerator sought deals that complement NatureVest’s own investment approach—those in which catalytic capital can make a big difference in their chance for success and impact. Projects like Carlos Souza and Terras’ effort to help Amazonian farmers access credit and build their businesses while committing to zero-deforestation practices.
The response was even greater than we expected—the Accelerator received a tremendous response from for-profit and non-profit organizations and Conservancy colleagues from around the world. In fact, the quality of the applications made the selection process daunting, but we are fortunate to have had the help of an insightful advisory committee of experts from the conservation, philanthropic and corporate sectors including representatives from JPMorgan Chase & Co., the Lyme Timber Company, Rare, the W.K. Kellogg Foundation, the Heron Foundation, Treehouse Investments, Enterprise Community Partners and Walmart.
After much deliberation and due diligence, we were able to select the first Conservation Investment Accelerator winners. In addition to grant funding, recipients will be offered technical assistance, training and mentorship opportunities as they proceed with project development.
Included in this first round is Terras App Solutions, the Brazilian company referenced above. Funding from the Accelerator will support a pilot program intended to expand access to credit for smallholder cacao farmers along the Trans-Amazonian Highway who comply with zero deforestation policies. The Accelerator will also fund a project from the Environmental Defense Fund, a U.S.-based non-profit environmental advocacy group. Accelerator funding will support the development of a pilot bond that brings together government, corporate and non-profit resources to accelerate Louisiana’s coastal restoration and resiliency plans.
Two Conservancy projects were also selected for this first round. The Accelerator will fund work by the Conservancy’s Washington State program for conservation and business assessments for water rights investments that will be managed to support watershed restoration, water-use mitigation and long-term water provision for sustainable economic development in the Yakima Basin. The Nature Conservancy, Mexico and Northern Central America program, meanwhile, is developing a business plan to convert one of the largest dairy cooperatives in Chiapas to sustainable intensification via silvopastoral cattle ranching.