The innovative climate finance model that has protected over 120 million hectares of ecosystem

More and more governments around the world recognize that the climate and nature loss agendas are inextricably intertwined. One cannot be solved without the other. The challenge is financing.

Annual financing for nature-positive efforts stands between $124 billion and $143 billion from all sources. The UN Environment Programme calls for a doubling of finance flows to restore the nature on which we all depend. This will only be possible by supporting ambitious international, national and community commitments, and by combining all types of finance: public and private, domestic and international, and innovative new funding models including high-quality nature-based carbon solutions, debt restructuring and payments for ecosystem services. While all public and private actors mobilize more financial resources, all governments should revert, eliminate and phase out perverse incentives, subsidies and policies that are harmful to biodiversity. Doing so would substantially decrease the cost of conservation and restoration.

We see a premium being placed on initiatives that are grounded in places and communities, that support local leadership and rights, and that are benchmarked against performance-based mechanisms with real accountability.

Consider some of the most recent climate and nature platforms gaining momentum globally. Take, for example, the Forest and Climate Leaders’ Partnership, launched last year at COP27 to help make good on a pledge by 145 countries to halt and reverse forest loss by 2030, with the US and Ghana serving as co-chairs this year. It emphasizes accountability and annual reporting with independent assessments of progress toward the partnership’s goals.

At last month’s Paris Summit for a New Global Financing Pact, an array of global leaders called for a new and scaled use of creative financial instruments. They range from high-integrity, trusted nature-based solutions, to debt restructuring to relieve the burden of debt on developing countries and convert it to a stream of conservation finance, to payments for ecosystem services, and more.

We’re excited about one model in particular: Project Finance for Permanence (PFP). PFP is a tool to enable governments and local communities, in partnership with funders and NGOs, to take advantage of an array of financial instruments and secure long-term management and financing for networks of conservation areas. They are designed to withstand changes in national leadership and are adapted to the social, political and environmental context of the particular place.

Here’s how PFP agreements typically work. A national government presents investors with a plan to effectively manage its protected areas. The investors then create a “bridge fund” to help the government gradually assume the full cost of conservation over a period of at least 10 years. The government has to achieve a series of performance-based milestones to keep drawing from the fund. And the fund doesn’t go into effect until investors gather enough commitments to close the government’s funding gap, which means no investor risks backing a plan destined to fall short of its goal, and the government knows it has reliable funding as long as it keeps meeting the milestones.

This model has already been applied to conservation initiatives in Bhutan, Brazil, Canada, Colombia, Costa Rica and Peru. Together, these projects have financed the protection of over 120 million hectares – all to the benefit of local communities, biodiversity and the climate.

The most striking proof of the durability of the PFP model comes from Brazil. There, a PFP called ARPA for Life, launched in 2014 to fund the Amazon Region Protected Areas programme has withstood political changes over time. The programme covers 62 million hectares in the Amazon, an area larger than France. That makes it the world’s largest initiative for tropical forest conservation. The PFP agreement established in 2014 delivered $215 million to secure the long-term protection of the conservation areas covered under ARPA. It is the backbone for conservation across the country, enabling the value of nature to supersede partisan political views. It ensured that the sovereign pride communities have in their great ecosystems endured through elections and shifting political priorities.

According to a recent study published in the journal Biological Conservation and conducted by researchers from the Federal University of Minas Gerais (UFMG), WWF-Brazil, Fundo Brasileiro para a Biodiversidade (FUNBIO) and the University of Bonn, significant areas of the Brazilian Amazon have continued to see lower levels of deforestation in the face of immense pressures and threats. The authors look at the impact of the ARPA program on reducing deforestation and avoiding CO2 emissions in the Brazilian Amazon between 2008 and 2020.

The study reveals that during the monitored period, protected areas and Indigenous lands in the Amazon reduced deforestation by 21% (based on the difference between observed deforestation and estimated deforestation that would have happened if the areas were not protected). The protected areas supported by ARPA prevented nearly 260,000 hectares of deforestation. That’s the same as preventing 104 million tons of CO2 emissions, roughly equivalent to Belgium’s total emissions in 2021.

The secret to achieving this consistency is the combination of government commitments, corresponding closing and disbursement conditions for funding, and a vibrant local Brazilian institution, FUNBIO, that holds funds and disburses them based on progress over time – not just on the protection of nature, but also the provision of benefits and resources and jobs to local communities.

The World Economic Forum estimates that transitioning to a nature-positive economy could generate annual business opportunities worth $10 trillion and create 395 million jobs by 2030. What we need is to design and implement innovative financial mechanisms to help secure landscapes and seascapes on the scale required to realize these benefits. It is time to scale up performance-based mechanisms like PFPs, and platforms like the Enduring Earth partnership have been established to help. Our organizations stand ready to collaborate with national leaders interested in protecting their natural heritage.

If we work with willing governmental partners to put these agreements in place, we are more confident than ever they will stand the test of time. And we will, ultimately, deliver the long-term results needed to protect nature and turn the tide on the climate crisis.

This piece represents a shared vision from the following global conservation leaders: Carter Roberts, President and CEO of World Wildlife Fund in the US (WWF-US); Avecita Chicchón, Program Director, Andes-Amazon, the Gordon and Betty Moore Foundation; Rosa Lemos de Sá, CEO, Brazilian Biodiversity Fund (FUNBIO); Jennifer Morris, CEO, The Nature Conservancy (TNC); Carlos Manuel Rodríguez, CEO and Chairperson, the Global Environment Facility (GEF); Cristián Samper, Managing Director and Leader for Nature Solutions, the Bezos Earth Fund; and Sue Urahn, President and CEO, The Pew Charitable Trusts.