This year marks the 10th anniversary of CI’s Global Conservation Fund (GCF), which has so far invested more than US$ 68 million and leveraged more than US$ 141 million to protect more than 79 million hectares (195 million acres) in 27 countries. I recently talked with GCF Managing Director Chris Stone — who is currently attending the World Conservation Congress in Jeju, South Korea — about one of the most sophisticated forms of conservation financing: conservation trust funds.
Q: How did conservation trust funds first come about?
A: Back in the ’90s, there was a realization that a lot of conservation work was suffering from the ups and downs and cycles of grant funding. Projects were often constrained by the availability of funds to support ongoing work. So over the last 20 years, the conservation field has increasingly emphasized sustainable financing.
GCF focuses specifically on sustainable financing for protected areas, which have steady, recurrent costs associated with them. Every year, park staff need to get paid, they need fuel for transport, they need equipment for monitoring — the list goes on. In many countries where we work, governments don’t have the flexibility to allocate additional resources to conservation. One of the key solutions to this problem has been the creation of conservation trust funds, also called endowments.
Basically how they work is, you contribute a significant amount of funding into some sort of permanent account, invest the principal and then use the income returns each year to provide core funding for conservation activities. I believe Bhutan was the first country to ever have a conservation trust fund back in the early ’90s. Since then, there’s been a pretty significant proliferation of conservation trust funds globally, with at least 50 of them today.
Q: Who establishes these funds?
A: For each GCF project, we work closely with our project teams to do a thorough analysis of what the most appropriate structure is for a long-term financing mechanism. Particularly in the Americas — places like Mexico or Brazil — there’s quite a bit of institutional capacity to manage these types of conservation trust funds. But in many places, the business and legal climate is different. In a lot of cases, we’ve actually had to design new trust funds from scratch — sometimes in-country, as was the case with Kiribati and the Phoenix Islands Protected Area, but in other cases, the legal framework may not be robust enough to provide the long-term safeguards that an endowment needs. In these types of situations we often rely on creating some type of offshore structure.
Q: It seems that GCF aims to bring together conservation organizations, governments, communities and corporations. Why is this important?
A: I think the most successful conservation projects are always instances where you have a broad level of stakeholder collaboration and support. Government and communities are often the resource owners and users, and you’re never going to get anywhere in conservation if you don’t have a deep level of buy-in, commitment and trust from local people. (Learn more about the people and places that have benefited from GCF in the video below.)
Q: How do these trust funds directly benefit local communities?
A: Over the last 15-20 years, I think conservation groups have done a much better job of recognizing that local communities are the main stakeholders in most conservation efforts, and that there are often some opportunity costs for them to agree to conserve a piece of land or ocean. I think conservation project design is getting better at incorporating community benefits. The trust fund is a very useful vehicle to ensure that those long-term benefits can be financed.
For example, in Fiji, we are setting up a Sovi Basin community development fund. Each year, about 30% of the revenue generated by the Sovi Basin Trust Fund will go to a community development fund. Participating communities are then eligible to receive grants that can support some of their priority development needs, such as education or health services.
Q: What do you see as the future of these trust funds?
A: Many conservation trust funds can grow to be sophisticated entities that can govern and manage a variety of funds. For example, these vehicles can potentially have a role in governing and administering revenue streams from payments for environmental services like REDD+, which is incredibly important — especially if REDD+ really does become a major source of revenue for forest conservation and protected areas. Part of the success of REDD+ will depend on transparent and equitable distribution of financial benefits to those responsible for avoiding deforestation — often local communities. Conservation trust funds are particularly well-suited to administer these types of funding flows to ensure that they reach the right stakeholders.
I also believe that trust funds can play an increasing role in financing long-term environmental offsets. Countries like Brazil have environmental compensation funds, where basically any kind of development with expected environmental impacts is required to pay a licensing fee to compensate for environmental impacts. This revenue goes toward long-term conservation of priority ecosystems.
GCF has recently been doing some interesting work on offsets. We’ve been directly engaging with some major mining, oil and gas companies working in sensitive ecosystems, advising them on how to structure long-term financing systems to support the conservation offset programs that they are required to establish. This is something we expect to build on in the next several years.
Q: In your travels, have you had a particular moment when the importance of conservation trust funds really resonated with you?
A: One of my most memorable field experiences was in the Philippines, in a multiple-use protected area called the Mount Mantalingahan Protected Landscape. This area is a striking example of the deep connection between people and nature. The protected area is a largely forested mountainous area, home to incredibly rich biodiversity and covering several watersheds that are extremely valuable to lowland agriculture in the region. The protected area also has hundreds of indigenous people living in it, directly depending on the ecosystem for things like soil quality for agriculture and timber for fuelwood collection.
With support from GCF, CI-Philippines has been working intensively in the area for over eight years. When I visited the protected area in 2010, we took a stunning hike up one of the river valleys. Along the way, we were greeted by some of the community volunteers who help enforce the rules of the park. In some simple conversations, it became quite clear to me how well these local representatives understood not only the rules and regulations, but the true value of the area to their culture and livelihoods.
It was truly a moment of inspiration for me — I remember thinking, “This is working!” It just seemed so clear to me that an important part of the equation was securing long-term financing to ensure that this type of collaboration can flourish for years to come. And that’s what we are working toward in many places around the world.
Molly Bergen is managing editor on CI’s news and publicity team. Chris Stone is the managing director of GCF.