Investment property conservation finance initiatives focus on finding ways to channel private investments into the protection of critical land and natural resources. Such investment activities are not only good for nature, they can also generate healthy economic returns on capital and attract more investors. As a result, they have the potential to transform conservation finance from a niche to an institutional asset class.
Despite these promising developments, several challenges remain. The first has to do with the fact that conservation investments do not usually produce sizable cash flows shortly after they are initiated. As a consequence, it can be difficult to convince mainstream investors to invest their money in these kinds of projects. This challenge is partly due to the lack of awareness about the investment opportunities associated with conservation-based initiatives, but it can also be attributed to the difficulty in monetizing benefits that are hard to measure, such as reducing damage from storms by preserving and rebuilding coastal wetlands or barrier islands. Also read https://www.northwestrealestatesolutions.com/sell-your-house-fast-in-five-corners-wa/
The second challenge concerns the insufficient funding of conservation and restoration efforts. Traditional government and philanthropic funding is simply not enough to meet these needs, particularly in the light of climate change and biodiversity loss.
To address these challenges, a number of innovative financing tools have been developed. For example, there is growing interest in blended finance, an approach that seeks to bring together public grants, private investments and philanthropic donations. Another example is the use of guarantees, which help to reduce the risk of investing in a project by transferring some of the financial burden from the investor to someone else.
In addition to these types of financing instruments, there is a growing focus on “nature-based solutions” that seek to maximize the value of conservation by working with nature rather than against it. For example, reforestation and restoring wetlands can provide ecosystem services such as flood control and water purification.
There is even a growing practice of “conservation-lens investing,” an approach that seeks to identify conservation businesses that have the potential to achieve high commercial returns with minimum harm to priority ecosystems. Okavango Capital Partners, for example, supports conservation businesses in East and Southern Africa to help them achieve their full conservation and commercial potential.
Leigh Whelpton is the Program Director at the Conservation Finance Network (CFN), an initiative of Island Press, that seeks to accelerate land and resource conservation by expanding the use of innovative financing strategies. He leads CFN’s effort to build a community of public, private, and nonprofit professionals who can develop and deploy innovative financing solutions to protect nature. He has extensive experience in developing timberland and rural investment structures that support conservation goals, and speaks regularly at graduate schools and professional conferences on this topic. His work is supported by a fellowship from the McKinsey Center for Business and Environment. The studies considered in this article were obtained through a systematic search of the literature using the Scopus database.
The scope of the research was limited to studies that were peer-reviewed and published in English.
