The good news is that the area of Earth covered by protected areas is increasing. Over 14 percent of land, and a growing percentage of territorial oceans, are under some form of protection. The not-so-good news is that protected areas cost a lot to maintain and sustain, often suffering from the boom and bust of project financing that erodes their natural, financial, human, and institutional capital over time.
So what do fiscally-stretched governments wishing to meet their commitments to bio-diversity protection and poverty eradication do? The answer is partnership and financing innovation. Such a solution is clear when we examine the Latin America and Caribbean region’s experience with conservation trust funds (CTF).
In 2010, parties to the Convention on Biological Diversity (CBD) committed to conserving 17 percent of terrestrial and inland water, and 10 percent of coastal and marine areas, by 2020. The CBD focused especially on areas of particular importance for biodiversity and ecosystem services.
According to the 2014 World Development Indicators, countries have been making good progress toward this target for many years, with low and middle income countries reporting 14.6 percent of their total land under protection—up from 8.6 percent in 1990. In the Latin America and Caribbean region, the CBD target has already been exceeded with a massive 21.4 percent of total land in protected area management.
Key to the region’s progress has been solid regulation and institutional frameworks, as well as the development of sustainable financing mechanisms. CTFs—public-private institutions entrusted with long-term endowments for conservation—have played a pivotal role.
Incubators of conservation
A 2010 study found 22 CTFs functioning in 15 countries across Latin America and the Caribbean, with revenues flowing from them supporting 660 protected areas. These CTFs are generally set up as private legal entities independent from government, often including private sector representatives on their governing boards to help shape investment policies. Many of these CTFs have grown to become incubators of conservation that reach beyond the boundaries of protected areas. The Mexican Fund for Conservation of Nature, for example, applied 75 percent of the interest obtained from the protected areas fund it managed to new staff salaries for the federal protected area system.
Other innovative examples are also boundary-busters. In Brazil, for example, the World Bank supported the State of Rio de Janeiro to meet 43 percent of its financing needs by setting up the Atlantic Forest Fund. This is a financial and operational mechanism developed by the Brazilian Biodiversity Fund (Funbio) to provide greater agility, efficiency, and transparency for the State’s protected areas.
In this case, the Fund helps the State capture support from different sources, including environmental compensation from industry, domestic and international grants, and carbon credits. Environmental compensation from investment projects, which is mandated by Federal law, is by far the greatest contributor to the Fund. The State is now on track to further strengthen the financial sustainability of its protected area system—so much so that financing may no longer be a constraint to meeting ambitious goals of doubling the area of Atlantic forest under protection across five neighboring states.
All over the world, there is a dawning awareness within the private sector of the need to secure ecosystem services to ensure sustainable supply chains and manage risk. Each year, the merit of investment in natural infrastructure like forests and reefs becomes more obvious. Protected areas can conserve watersheds and regulate water flow, prevent soil erosion, influence rainfall regimes and local climate, conserve renewable resources, and protect breeding stocks, natural pollinators and seed dispersers. All of these actions boost industry and agriculture across the entire spectrum of the economy. CTFs, which support countries trying to meet their protected area commitments, are busting economic as well as geographic boundaries, bringing benefits beyond sectors or regions.