1. Financing Strategies for Integrated Landscape Management Blending Public-Private Capital & CapacityDr Margot Hill Clarvis Associate, Earth Security Initiative Landscape Forum 16.11.2013 Warsaw, Poland

2. Goals: ILM Financing Innovations1. CURRENT LANDSCAPE2. SCALING UP STRATEGY Identify types of mechanisms Scope levels of finance available Map public/private innovation Challenges and opportunities Roadmap for public finance institutions to work with private investors. 3. Scoping Finance Institutions and Financing Mechanisms for ILM > 200 Institutions; > 250 Mechanisms; Range of interfaces with ILM components 4. Mapping ILM Finance REVENUE STREAM Public Donors Sovereign Wealth Funds Government Donors (ODA) Public Funds (IOs , UN) Charities (NGOs)Multilateral Development Banks and Aid OrgsPrivate Donors HNWI / Family Offices / Endowments/ FoundationsEnabling InvestmentsPPP Warrants/CertificatesDirect Investments Land Owners / Small Holders AgribusinessAsset InvestmentsBilateral Development Banks / Aid OrgsGrants Concessional LoansPublic Sector Banks National Development BanksSubsidies / Loans Tax Credits/Relief Guarentees PESAgribusiness Smallholders Policy Public Institution Capacity CommunitiesPortfolio Investors Carbon/ Forest Funds Fund Managers Asset Managers Offset BrokersOften by FIs with no expectation of financial reward.Tax Revenues Carbon; General National Budget National FundsCapital MarketsOffset Markets Carbon Market Biodiversity Offsets Watersheds Offset Specific Company InvestmentsFees / Services PES (water, carbon, biod) User Fees Concession al Fees Taxes Protected Area Entrance Fees Recreation License Fees Special Access PaymentsCarbon /Biodiversity offset flowsFunding the generation of the incentive to invest.Other Asset Owners Pension Funds Insurance CompaniesInstitutions Research Policy Shaping /Initiatives National / Regional public institutionsCommercial Banks Impact Investors Conservation FundsREDD+ Funds Blended / Whole Earth Funds NGOs Offset BrokersMarket Rate Loans Micro-finance Investment Capital/ Equity (PE, VC) Securitisation Debt for Nature Swaps Certification Marketing Labels OffsetPPP Community PPPFinance for an activity that creates tangible value. Adaptation/ Mitigation Smallholders Policy Public Institution Capacity Communities Offset IntermediariesProducts Sales of goods: Agricultural CommoditiesProducts Sales of goods: Wood Products Non Wood Forest ProductsMostly through loans and equity investments. Utilities (Water / Energy) WSS Utilities Communities Land Owners Local Authorities Biodiversity Forest/Park/Land Managers Conservation Orgs Communities Offset InternediariesEnablingAssetSocial Returns Gender Equity Economic Stability and Security, Living Standards Social Resilience Improved Health Environmental Returns Environmental Resilience Hazard Reduction Reduced Inputs Biodiversity 5. Mapping ILM Finance BlendedPublicLivelihoodsUNFCCC Adaptation Funds (NAPAs) Environmental Development Funds PPPCarbon Funds Clean Energy cofinancing Impact FundsClimate Change Funds Environmental & Development Funds Carbon Mitigation Funds Feed-in Tariffs Technology Transfer Pilot Projects / Seed CapitalPPP Funds for Investment and Technical Advisory of Public and Private Sector Technology TransferConcessional finance & loansREDD Readiness GrantsDebt for Nature Swaps PES Capacity Building Conservation BanksGlobal Mechanism UNCCDAdaptationPPP Concessional finance and loans Impact FundsCarbon: Energy Carbon: REDD Sustainable AGBioCarbon FundWatershedImpact FundsBiodiversity Water Funds PES, PPPPESEnablingAssetForest Funds Offsets & Certification Impact Investment (supply chain)Offsets & Certification Carbon Funds Project Finance Renewables Equity Alternative InvestmentsInsurance Climate ChangeMicro-finance Lending Direct InvestmentsValue chain / RIskCSRPortfolio Investors Blended FundsOffsetting PPPImpact InvestorsPrivatePES / Offsetting 6. Plotting Innovation for Integration Public ILM Entry Points Norads NICFI USD 480Carbon Credit Focussed Global Environmental Facility-5 CC : USD 324 BioD: USD 968 Land Deg: USD 324REDD / Forest Carbon Focussed AG/Farmland FocussedGlobal Mechanism UNCCDWorld Bank BioCarbon Fund USD 65US AID WB BioCF Plus USD 6EnablingSavoury Institute Livelihood's Fund USD 35MixedMacquarie Bank/FFI BioCarbon USD 25Asset AgroEcological (USD 200)Inari Althelia USD 90 (200)Rabo Development & FoundationMoringa USD 68 (180)Bunge Environmental MarketsNestl Rabobank AG LendingPPPs Finance available USD million (USD in brackets is target size)PrivateEcoEnterprises Fund USD 35 /6.3TIAA CREF USD 2, 500 7. ILM Innovation Challenges and opportunities to financing ILM at scaleCase Study Private Sector e.g. Althelia Ecosphere Moringa Fund EcoEnterprises FundPublic Sector e.g. World Bank BioCarbon Fund Global Environmental FacilityKey ChallengeOpportunities- Market uncertainty & complexity - Access to finance - Up-front financing & risk capital - Track record & unfamiliar business case - Lack of investable deals - Exits/Illiquidity - Finance for technical assistance- Diversification of risk through blending multiple revenue streams; Commitments & Guarantees - Partnerships; leverage PPP networks; field presence & aggregating partners; VC/SC - Mezzanine instruments, long-term risk capital to accelerate. - Grant funding for technical assistance- Siloed conventions - Predictability of financing acrossconventions - Uncertainties in demand and market for land-based carbon and forest finance - Complex methodologies and fragmented accounting - Leveraging private sector finance- Predictability and simplicity of financing for countries to plan in a more integrated way - Simplified yet robust carbon accounting at the landscape level - Innovative financing approach (e.g. bond financing, guarantees, price support); linking to other financing mechanisms (e.g. climate finance) - Funds to target private enterprise to leverage private investment 8. Barriers to Scaling up Integration/Coordination Shifting barriers into risk opportunitiesDEMONSTRATING THE BUSINESS CASE Complexity, Deal Flow, Risk. Unfamiliar business case & lack of track record Complex metrics and accounting Limited pipelines - lack of commercial opportunities & investment ready enterprisesPortfolio Approaches Risk DiversificationENABLING ENVIRONMENTSUPPLY OF FINANCELack of coordination and integration across sectors and ecosystems. Governance gaps, siloes & lack of clear policy signals Siloed convention objectives Fragmented financing Lack of guarantees Lack of co-ordination & aggregationRisk Capital, Capacity & Aggregating ForceLack of patient and risk capital; Lack of investable deals. Transaction costs Exit options Investment horizons & scale Risk/Reward profile Risk insurance / guaranteesRisk Minimisation & Portfolio Diversification 9. ILM Innovation: Key Value Drivers Opportunities to provide value Increasing value of arable & fertile land Growing demand for sustainable & certified commodities Potential new markets for PES beyond just carbon finance Reducing transaction costs of fragmented projects New business models creating efficiencies Better response to context specific risks Diversified revenue streams risk management Value chain development / integration Supply chain security Shifting global and national legal & market conditions Growing interest in & regulatory requirements for green growth 10. Larg eBlending public-private approaches to scale-up Sovereign Wealth Funds RiskCapital Commitments Start-up Capital AccelerationInstitutional InvestorsDeal SizeDevelopment Finance Institutes (ML & BL)Portfolio approach Composite Assets Private Equitye.g. Bonds, PE Venture Capital Funds Commercial / National BanksLowMicrofinance / Impact Investors Direct Investments by small-holders or agribusinessLow ShorterTermRisk ToleranceFoundationsHigh Longer-TermTime Horizon 11. Integrated approaches to address interdependent land and resource security Deforestation, governance gaps, climate exposure and land risks security Combined & inter-dependent market risks/barriers Governance gaps Drive & undermine REDD+, ILM, climate investments. Blending PP capital and capacities Directing public capital as risk capital & acceleration Support unfamiliar & unproven business models for diversification & integrationEarth Security Index 12. Diverse combinations of market risks REDD+: market risks and opportunityIndonesia- Position integrated and diversified approaches as key to addressing market risks. - Public and private interests, capital and capacities converge to invest in resilience within diverse country contexts. 13. For more information: margot@earthsecurity.org www.earthsecurity.org www.ecoagriculture.org