- Issue: Spring 2016
- Author: Kevin Nance
At the turn of the 21st century, President Fernando Henrique Cardoso of Brazil made a groundbreaking pledge: to triple the amount of forests under protection in his country’s portion of the Amazon and create a network of protected areas larger than the state of California. At the time, Brazil’s commitment was a powerful claim that the country could, and would, secure the globally important ecosystem services the Amazon provides, from freshwater and biodiversity to carbon sequestration.
But while that pledge—made with the support and input of WWF—was a major victory for conservation, it wasn’t enough. The funds needed to fully implement and support Cardoso’s ambitious Amazon conservation plans simply weren’t there.
It is a problem faced by many developing nations. Despite a growing understanding of the power of protected areas to shelter biodiversity; store and sequester greenhouse gases; and provide income, fuel, water, and food for more than a billion people worldwide, their protection is woefully underfunded. It is estimated that $2.5 billion is needed annually to properly manage existing protected areas within developing countries, but only $800 million is available.
Cardoso’s administration knew they needed new partners and new ways of thinking to protect Brazil’s growing network of protected areas, called the Amazon Region Protected Areas program (ARPA), in perpetuity. They knew that they needed time, and national economic growth, before they could devote adequate resources to that work. They needed a team to help turn their vision into reality, and a transition fund to bridge the funding gap that would take multiple years to fill.
From pledge to protection
But how would Brazil and its partners know just how large that fund would need to be? And how could large public and private donors, including major multilateral institutions and philanthropic foundations, be confident that their contributions would make a difference? Perhaps most important, how could those funders be certain that Brazil’s government would secure long-term funding to use after transition funds ran out?
Luckily, a small group of visionary conservationists, including the Linden Trust for Conservation and The Nature Conservancy, had already begun to answer those questions.
Together, they had developed a new model to secure ambitious, financially sustainable funding to properly manage Costa Rica’s network of protected areas and western Canada’s Great Bear Rainforest. So when WWF began working with Brazil to create the transition fund, we collaborated with those experts and used their model, called Project Finance for Permanence (PFP), which borrowed some of the project-development tactics of Wall Street and applied them to conservation.
But ARPA for Life, as the Brazil PFP initiative came to be called, represented a project on a scale never attempted before. The network of areas ARPA protects is nearly five times the size of the Great Bear and Costa Rica projects combined, and the level of logistical, financial, and diplomatic effort the team rallied had to match that ambition.
So the team laid out a plan.
The key steps for the ARPA for Life project—which took nearly four years to finalize—included defining an ambitious project with specific, finite conservation goals; using rigorous financial analysis to determine the cost of reaching those goals; working out the administrative details of the plan and extracting an iron-clad commitment from the host government to follow through with the ultimate goal of leaving the conservation project self-sustaining; and finally, bringing together all of the financial partners at a closing, where the financial commitments are signed. (Any PFP project, whatever the scale, requires the same series of steps.)
At that closing—the metaphor is that of closing on a house, with all the financial details and legal paperwork spelled out, signed, and sealed—the entire deal is formally agreed to, conserving a large chunk of the natural world forever.
“The Wall Street-style process of closing a deal was a very innovative approach,” says ARPA’s project manager and global lead for biodiversity at the World Bank in Brazil, Adriana Moreira. “The key was understanding what size fund we would need to generate enough revenue to cover the basic running costs of this network of protected areas. The amount was huge, and so the fundraising had to be both national and international, and it had to involve multiple partners. When those two worlds—Wall Street and conservation—came together, it was groundbreaking and very influential.”
Tom Dillon, WWF’s senior vice president for forests and freshwater, agrees. “Often in the nonprofit conservation sector, you move forward with a project even if you don’t have all the money at the start—which means you have to continually raise money with little to no certainty that you will raise as much as you actually need to do the project successfully,” Dillon says. “If we were trying to help the Brazilians raise the amount of money—in this case, $215 million—that was needed without the PFP approach, we probably would’ve been at it for decades—perhaps forever. But because the PFP approach defined a specific problem with a finite solution, it was much more attractive for partners to jump in. That allowed us to define and package a large conservation program, get everything in place for it to be funded, and end up with something that’s sustainable on its own.”
The result, when the project closed in 2014, was the largest tropical conservation project in history.
Now, with much of the planet’s natural habitat at a critical juncture due to deforestation, climate change, and other threats, WWF hopes to expand and accelerate the use of PFP as a game-changing model for other large-scale conservation projects. We are currently working on PFP projects in Peru and Bhutan, and recently signed an agreement to start the process in Colombia.
Taking the long view
“The key advantage of PFP is that it can change the trajectory of conservation in a country,” says Larry Linden, a former managing director of Goldman Sachs, a former WWF board chairman, founder of the New York–based Linden Trust for Conservation, and a principal architect of the PFP approach in Costa Rica and Brazil. “It’s an intervention, really, where you take a moment in time—two or three years, which is how long it can take to negotiate one of these agreements—and by mobilizing the world of funders, conservation leaders, and the government itself, you can shift a country in an upward, positive direction.” The challenge is massive. WWF estimates that there is a shortfall of nearly $1.7 billion annually between existing funding and what’s required to adequately manage protected areas in developing countries. “That’s a big gap, and because of that gap, these areas are under threat and being lost or degraded every year,” Dillon says. “What the PFP approach can do is identify those countries where this solution is needed and where it can work.”
Guillermo Castilleja, chief program officer for environmental conservation at the Palo Alto–based Gordon and Betty Moore Foundation—the nation’s largest private foundation dedicated to preserving biodiversity—says that PFP is attractive to donors in large part because it spells out the exact goals, scope, and duration of a project well before the donor is required to write the actual check at the closing.
“PFP ensures that we are not just putting money into a project that has no chance to get the results we want,” says Castilleja, who worked at WWF before moving to the foundation. “We can put money into other projects, but in some cases we have much less transparency, or the contributions and expectations aren’t clear. We believe that is not a very efficient way of doing things. What we like about PFP, on the other hand, is that it brings transparency and visibility to a bigger, higher-level deal that helps us really understand—through complementarity, rigor, and good financial analysis—what difference we’re making.”
But the task of scaling up PFP around the world won’t be easy. According to Linden, a combination of several conditions must be in place at a particular moment in a country’s history for the approach to be successfully applied. These conditions include large ecosystems that are intact enough to justify a major conservation effort; strong donor interest and awareness of a particular country’s international profile and strategic importance; unwavering political support from the national government, especially at its highest levels; and good governance in a country with a well-organized national parks system, a credible legal system, and a significant track record of honoring its agreements.
“In the three countries where PFP has been done—Canada, Costa Rica, and Brazil—you did have this combination of things,” Linden says. “But the key to scaling up PFP is to be extremely selective, extremely targeted in terms of where and when you do it. If you have an anti-environmental government, then you’re not going to get anything done, obviously. If the parks department is poorly managed, you’re not going to fix that with this type of project. If the government is highly corrupt, or the country is in a civil war, there’s no point in trying this there. The court system has to be working. When you write an agreement in a country, there has to be a history of keeping agreements there. You don’t have to trust that the bargain will be kept; you have to know it.”
What’s more, he says, donors are more likely to engage if they are familiar with a country and its significance in terms of biodiversity. “It’s very hard to sell conservation to big donors if people don’t already have a real awareness of the country. Brazil and Costa Rica, for example, are known to be important. But if you’re talking about lesser-known places in Latin America and Africa, for example, too many people still say, ‘Where’s that?’”
Bhutan, on the other hand, strikes Linden as fertile ground. “It’s a beautiful country with lots of great biodiversity to be saved,” he says. “It’s got a supportive populace and a supportive government. It’s strategically important, because it’s on the border between China and India. And it has a very strong political commitment at the very top, by the king and the prime minister, to preserving the biodiversity they’ve got. For all those reasons, PFP has a good chance for success there.”
On the horizon
The good news is that PFP doesn’t have to be applied in a vast number of locations to make a huge difference.
As Dillon points out, nearly 90% of the Amazon region—which is 14 times the size of California and essential to the survival of the planet because of its role as a habitat, natural resource, and carbon-sequestration mechanism—is located in just three countries: Brazil, Peru, and Colombia, all of which are now PFP project sites.
In particular, Peru’s Amazon landscapes pack a major conservation punch, because the country’s huge variations in altitude and topography create even more biodiversity, acre-per-acre, than Brazil. The Peru PFP also represents an expansion beyond the Amazon biome, and includes coastal and high-mountain Andes ecosystems that are highly important for such things as freshwater delivery, biodiversity, jobs, and food. “Multiple benefits like that,” Dillon says, “show how you don’t have to do PFP everywhere in order to make a big difference.”
WWF is looking beyond Brazil, Peru, Bhutan, and Colombia for the right places—whether forests, mountains, grasslands, or ocean reefs—to carry out more of these projects. We’ve made PFP a core part of our conservation strategy, and have a plan in place for choosing promising sites, executing PFPs more efficiently, and building the right teams to get them done.
In any case, Dillon says, it’s essential to recognize that the challenge of global conservation is becoming more urgent with every passing year. “It’s really important to ensure the permanent protection of vital ecosystems now—and at scale, rather than area by area, which we don’t have time for,” Dillon says. “We’ve got to move to the biggest scale we possibly can, and as quickly as we can. And so far, PFP is one of the best ways we’ve figured out to do that.”