A new first-ever survey of conservation impact investing reveals a market of approximately $23 billion across just the last five years, and finds that investments in this space are expected to more than triple over the next five years (2014-2018). However, the report also finds that a substantial amount of potential private capital has not been deployed, demonstrating a need for a significant increase in the number of risk-adjusted investment opportunities.
The survey shows that the approximately $23 billion committed to conservation impact investments from 2009-2013 fell into three main categories:
Water quantity and quality conservation, including investments in watershed protection, water conservation and storm water management, and trading in credits related to watershed management
Sustainable food and fiber production, including investments in sustainable agriculture, timber production, aquaculture and wild-caught fisheries
Habitat conservation, including investments in the protection of shorelines to reduce coastal erosion, projects to Reduce Emissions from Deforestation and Degradation (REDD+), land easements and mitigation banking.
Other Key Findings:
Of the three categories of conservation investment studied, Development Finance Institutions (DFIs) invested largely in water quality and quantity projects ($15 billion), while private investors invested largely in sustainable food and fiber production (about $1.2 billion)
Of the nearly $2 billion already invested by private investors, 80% came from only 10 sources
Private investors expect to deploy $1.5 billion of already-raised capital over the next five years, and to raise and invest an additional $4.1 billion
The total market is expected to increase to $37.1 billion in the next five years
While there is not a shortage of money for conservation impact investment, surveyed investors say there is a shortage of investable projects and opportunities for impact investment in the market. They say that they need more deals with adequate risk-return ratios, and seasoned management teams.
The report, “Investing in Conservation: A landscape assessment of an emerging market,” was co-authored by EKO Asset Management Partners and The Nature Conservancy’s NatureVest division. It was overseen by a steering committee that also included the David and Lucile Packard Foundation, The Gordon and Betty Moore Foundation, and JPMorgan Chase & Co. The report presents findings from a survey of 56 investors, including five for-profit and nonprofit development finance institutions (DFIs) and 51 private investment organizations.