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NATIONAL FOREST AND CLIMATE CHANGE STRATEGY PROMOTING PRIVATE INVESTMENT FOR GREEN GROWTH IN PERU Víctor Galarreta
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Page 1: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

NATIONAL FOREST AND CLIMATE CHANGE STRATEGY

PROMOTING PRIVATE INVESTMENT FOR GREEN GROWTH IN PERU

Víctor Galarreta

Page 2: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

SALIENT FEATURES OF THE PERUVIAN AGRICULTURAL SECTOR

Page 3: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

Climate Change and Agriculture

Page 4: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

Micro Deforestation: coffee and livestock

Peruvian agriculture is a plotter economy , where 85% of farmers have plots less than 10 hectares , predominantly productive units, with an area between 3 and 10 hectares (33%)

Page 5: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

Megadiverse Peru = Risky

Page 6: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

Mega Diversity: High Risk (Adverse

Selection). High interest rates

Smallholders: High transaction costs

Incomplete or nonexistent markets

Only 10% of agricultural units requested a credit (CENAGRO 2012) and only 9% had access.

FINANCIAL MARKET FAILURES: DEFORESTATION DRIVER?

Page 7: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

Promote the development of climate-smart territories

How can we make this happen ?

Page 8: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

GREEN DEVELOPMENT OF RURAL TERRITORIES

Green Growth of Agriculture:

Inclusive, Sustainable and

Competitive

“Boutique” Productos, not Commodities

Low Carbon Coastal Agriculture ,

competitive and complementary to the

Amazon.

Financial and Business Models

Innovations

y PaisajesDesignation of

Origin. Associated with diversity, ABC

and Landscapes

Page 9: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

Peru maintains an Investment Grade, stable

macroeconomic basis and liquid institutional

investors

Green financial ecosystem has much room to grow in the

country: Green Infrastructure; Low Carbon Agriculture;

Energy efficiency; Bio-business.

The pipeline of initiatives presents a gap in its early stages. Lack of

Green Startups: Incubation and

Acceleration

Available International financing offer from credit lines to Green Bonds and hedging instruments. The

available capital is growing.

The Business Climate

Page 10: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

Challenges and Opportunities

Many small players involved in green projects: Farmers,

Service users, Communities

High risk perception of potential projects for the portfolio: Track Record,

volatility, social risk

Innovate business models that bring these medium and long term

enterprises closer to the capital market

Page 11: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

The Challenge

Innovate and reduce distance

between entrepreneurs and

investors

Incubate and accelerate the

portfolio of green projects

Build a Risk Capital Fund, which invests in the

development of Green Startups and “adjusts“

them in the capital market

Page 12: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

Promoting Startups towards the capital market

Gestation Birth Development Expansion Maturity

Financing

Business support

Policies development

Green business incubators Business ‘accelerators’

Seed capital(FFF*)

Green angel investors (networks)

time

Green Bonds

Funds for green

innovation

Green loans

IPOs Venture Capital

PrivateEquity

i

Self-regulatory and regulatory mechanisms in the sectors (green banks, etc.)

Green Bonds

Carbon trading system

Public risk management instruments for green projects (DCA, MIGA, PPPs, etc.)

Page 13: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta

A TEST OF GREEN PORTFOLIO: OUR "GREEN CHIPS"

COASTAL

EXPORT

AGRICULTUR

E

•Greening agricultural exports as ABC, exploring carbon neutrality.•Complement investments on the coast with reforestation in the Amazon.

Green Infrastructure

•Investment in Major Basins: Rimac, Jequetepeque Santa.•Link basins with Landscapes (territories).•Promoting collective systems for modern irrigation.

Silvicultural

Sector

•Promote Reforestation, using existing plantations as collateral.•Develop proposal of Green Corridor parallel to Trans-Oceanic Railway Project.•Promote Prime forest cluster with designation of origin .

Biodiversity

Portfolio

•Enhance the sale of biodiversity products on the basis of Gastronomy, Eco Tourism, Cosmetology, “shamanería”.

Page 14: Promoting Private Investment for Green Growth in Peru- Víctor Galarreta