The Long Run 4C Call webinar series: Financing conservation through new entrepreneurial tools and incentives

DEVELOPING CONSERVATION ENTERPRISESThe LONG RUN Neil Birnie, CEO - 19 November 2015

www.conservation-capital.com

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Founded 2004 (10+ years)

25+ countries (Africa, Europe…)

75+ enterprises (all going concerns):- 60%: conservation tourism sector - 40%: food production, residential

property, bio-enterprise

Strong focus on conservancy development - 20+ (both private and community based)

Diverse partner / client base: - 50% private sector- 30% NGOs- 20% public sector

Diverse contexts:- 40% private conservation initiatives- 30% local community based - 30% public protected areas

US$ 220+ million investment finance mobilised and structured (60% conservancy development, 40% direct enterprise investment)

US$ 40 million annual commercial revenues

US$ 6 million of direct annual cash flow support to conservation

First ever conservation enterprise investment entity in Africa (African Wildlife Capital)

First ever conservation enterprise investment entity in Europe (Rewilding Europe Capital)

5,000 jobs

100,000 new outgrowers engaged

10,000’s of households economically benefiting

100,000’s Ha DIRECTLY SUPPORTED

RELEVANCE OF COMMERCIAL BUSINESS TO CONSERVATION:

A 2014 study produced by Credit Suisse, WWF and McKinsey & Company (‘Conservation Finance – Moving beyond Donor Funding towards an Investor-Driven Approach’) has suggested that the current gap between available supply of funding for conservation (c. US$ 40 billion of aid and charity and US$ 10 billion of investment) and actual need is at a staggering magnitude of US$250-350 billion per annum

CONSERVATION ENTERPRISE: A DEFINITION

Any commercial venture that generates economic and social benefits in ways that actively supports meaningful conservation outcomes in high value conservation landscapes

CONSERVATION OUTCOMES: GENERATING FINANCE

1. Generating Finance: for example via user rights or entry fee revenues that directly support the development or management of a conservation area or initiative;

CONSERVATION OUTCOMES: BUILDING INCENTIVES

1. Generating Finance: for example via user rights or entry fee revenues that directly support the development or management of a conservation area or initiative;

2. Building Incentives: by creating or increasing ownership of nature-based revenue flows to relevant stakeholders (typically local communities or public sector agencies) to increase associated conservation incentives;

CONSERVATION OUTCOMES: OPTIMISING SUSTAINABILITY

1. Generating Finance: for example via user rights or entry fee revenues that directly support the development or management of a conservation area or initiative;

2. Building Incentives: by creating or increasing ownership of nature-based revenue flows to relevant stakeholders (typically local communities or public sector agencies) to increase associated conservation incentives;

3. Optimising Sustainability: by deploying or promoting sustainable alternatives to damaging commercial or livelihood activities that threaten critical natural assets;

CONSERVATION OUTCOMES: REDUCING ENCROACHMENT

1. Generating Finance: for example via user rights or entry fee revenues that directly support the development or management of a conservation area or initiative;

2. Building Incentives: by creating or increasing ownership of nature-based revenue flows to relevant stakeholders (typically local communities or public sector agencies) to increase associated conservation incentives;

3. Optimising Sustainability: by deploying or promoting sustainable alternatives to damaging commercial or livelihood activities that threaten critical natural assets;

4. Reducing Encroachment: by increasing the economic productivity of buffer areas to reduce the need for encroachment into core conservation landscapes;

CONSERVATION OUTCOMES: STIMULATING ENGAGEMENT

1. Generating Finance: for example via user rights or entry fee revenues that directly support the development or management of a conservation area or initiative;

2. Building Incentives: by creating or increasing ownership of nature-based revenue flows to relevant stakeholders (typically local communities or public sector agencies) to increase associated conservation incentives;

3. Optimising Sustainability: by deploying or promoting sustainable alternatives to damaging commercial or livelihood activities that threaten critical natural assets;

4. Reducing Encroachment: by increasing the economic productivity of buffer areas to reduce the need for encroachment into core conservation landscapes;

5. Stimulating Engagement: by facilitating access to, and educational / inspirational experiences with nature that foster the increased engagement of relevant constituencies.

CONSERVATION ENTEPRISES: STRATEGIC BENEFITS

1. CONSERVATION OUTCOMES!

2. Financial Sustainability: Their conservation outcomes can be generated on a sustainable basis by virtue of being supported by a commercial going-concern.

CONSERVATION ENTEPRISES: STRATEGIC BENEFITS

1. CONSERVATION OUTCOMES!

2. Financial Sustainability: Their conservation outcomes can be generated on a sustainable basis by virtue of being supported by a commercial going-concern.

3. Funding Diversification: They can be funded with commercial investment capital that does not compete with the increasingly stretched public/philanthropic funding sources that have traditionally dominated the conservation development sector (see further below).

CONSERVATION ENTEPRISES: STRATEGIC BENEFITS

1. CONSERVATION OUTCOMES!

2. Financial Sustainability: Their conservation outcomes can be generated on a sustainable basis by virtue of being supported by a commercial going-concern.

3. Funding Diversification: They can be funded with commercial investment capital that does not compete with the increasingly stretched public/philanthropic funding sources that have traditionally dominated the conservation development sector (see further below).

4. Promotion of Sustainable Values: Interaction with wide supplier and customer stakeholder base can make conservation enterprises effective distribution channels for promoting conservation messages and values.

CONSERVATION ENTEPRISES: STRATEGIC BENEFITS

1. CONSERVATION OUTCOMES!

2. Financial Sustainability: Their conservation outcomes can be generated on a sustainable basis by virtue of being supported by a commercial going-concern.

3. Funding Diversification: They can be funded with commercial investment capital that does not compete with the increasingly stretched public/philanthropic funding sources that have traditionally dominated the conservation development sector (see further below).

4. Promotion of Sustainable Values: Interaction with wide supplier and customer stakeholder base can make conservation enterprises effective distribution channels for promoting conservation messages and values.

5. Enhanced Political Relevance: By using nature-based enterprises to create jobs, sustain rural livelihoods, generate taxes and contributions to wider local and national economies.

KEY INDUSTRY SECTORS:

TOURISM

HUNTING

AGRICULTURE

LIVESTOCKFISHERIES*

NTFP*

ENERGY*

TECHNOLOGY*

RESIDENTIAL PROPERTY*

CONSERVATION ENTERPRISE: THE DEVELOPMENT PROCESS

1. Establishing Contextual Relevance

2. Evaluating Commercial Viability

3. Building Conservation Linkages

4. Optimising Capital Structures

5. Managing Execution Fundamentals

1. ESTABLISHING CONTEXTUAL RELEVANCE

Conservation CONTEXT

- Values (C&P)- Threats (C&P)- Multiplier Potential- Property Rights- Policy Environment- Stakeholder Context

Enterprise OUTCOMES

- Generating Finance- Optimising Sustainability- Offsetting Encroachment- Building Incentives- Stimulating Engagement

2. ESTABLISHING COMMERCIAL VIABILITY

Options+

Viability

Products

Markets

Fulfilment

Property Rights

Policy & Regulat

ory

Conservation

Outcomes

Risk

3. BUILDING CONSERVATION LINKAGES

Conservation Covenants

(Outcomes Drivers)

Enterprise Context(Outcome Enablers)

Conservation Context

(Required Outcomes)

CONSERVATION COVENANTS

1. Environmental Impact Management

2. Conservation Financing

3. Engagement in Conservation Management Planning

4. Conservation Marketing and Promotion (External)

5. Conservation Education and Training (Internal)

6. Local Stakeholder Engagement

7. Regulatory Compliance

8. Monitoring and Evaluation

4. OPTIMISING FINANCIAL STRUCTURES

Capital Structure Yield Structure

Driver 1: Conservation

Context

Driver 2:Stakeholder

Context

Driver 3: Enterprise

Context

Driver 4: Capital

Requirements

Driver 5: Risk Context

5. MANAGING EXECUTION FUNDAMENTALS

Conservation covenants

Business planning Property

rights

Partnership structuresOperators

Financing

FINANCING OPPORTUNITIES FOR CONSERVATION TOURISM:

• AFRICAN WILDLIFE CAPITAL

• REWILDING EUROPE CAPITAL

• CONSERVATION ENTERPRISE RESTRUCTURE FUND

• CONSERVATION TOURISM INVESTOR NETWORK

• GLOBAL CONSERVATION ENTERPRISE INVESTMENT FUND

DISCUSSION……