Stanford Social Innovation Review : Informing and inspiring leaders of social change



Response to "Making Conservation Finance Investable"

Conservation financing is difficult because we don’t place financial values on most of nature.

John Maynard Keynes once said that the importance of money is as a link between the present and the future. If that is so, what does our present use of money say about our future? Will our children live in a world populated by Apple gadgets, reality TV, and video games? Will anything truly be “natural” anymore? Will the concept of wilderness even exist? And if that is the world we are headed toward, how will we get our fresh water, our clean air, our liveable climate?

To create a more environmentally sustainable future we need to change the way we invest money today, and that is precisely the issue that Fabian Huwyler, Juerg Kaeppeli, Katharina Serafimova, Eric Swanson, and John Tobin tackle in their article. They argue that saving the global environment is not only possible, but it might even be made profitable if only we can make some small changes to how we invest private capital. They suggest as much as $200- to $300 billion a year can be channeled to environmental protection from institutional investors, high and ultra-high net worth individuals, and retail investors.

I have absolutely no doubt that they are right. I also have absolutely no doubt that doing this will be exceedingly difficult. The main problem is the first barrier they cite in their article: we don’t value most of nature’s goods and services. This means that most conservation investments cannot compete on returns with what may in some cases be “un-environmental” investments, like soy and palm oil.

It boils down to the risk-reward equation. For the world’s investors to want to put down even 1 to 2 percent of their capital into conservation investments, they will be looking for a return on investment that makes sense given the risk, even if it is nothing more than a return of principal.

Sadly, because we don’t properly value conservation, most current conservation projects don’t generate cash flows, and when they do, it is usually from either tourism, or the production of traditional commodities (coffee, cocoa, other agricultural products, or forestry). Some of these activities may be “sustainable.” But in a world where the environment isn’t given a value, there can be trade-offs between generating returns and conservation.

The authors know this, and they write about it, and they make a compelling case for change. In giving us hope, and a roadmap going forward, the paper is immensely valuable. But, after more than 20 years in conservation finance, I can say that it will not be easy, and it will require some fundamental re-thinking of the way our economic systems operate.

As a more modern day philosopher, Yogi Berra, once said: “In theory there is no difference between theory and practice, but in practice there is.”

Read the rest of the responses.

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  • James Cook's avatar

    BY James Cook

    ON April 23, 2014 09:51 PM

    How is Melissa Bos connected to theft of conservation funds under conservation international?

  • Joann Trennis's avatar

    BY Joann Trennis

    ON April 23, 2014 10:06 PM

    It is understood that Melissa Bos illegally misallocated funds for conservation projects in Hawaii for her own personal use, including fraud, including employing and coercing staff to perform babysitting for her children as well as housekeeping, while paying them a salary from project funds. Employees spoke up and revealed this behavior. Melissa Bos and conservation international then made an agreement that she would quietly step away from her lucrative program in exchange for them not pressing criminal charges. Immediately after Melissa Bos received her bonus, or keep quite money, she escaped to Australia leaving behind a tarnished reputation, and valudated mistrust. She violated the trust of the a Hawaiian people, for money. Where did all the conservation money go? There was something like $10 million us dollars involved. Why do we spend money on conservation finance projects when corruption within the conservation finance community like that of Melissa Bos is so rank!

  • Joshua K.'s avatar

    BY Joshua K.

    ON April 23, 2014 10:18 PM

    Please, don’t let Melissa Bos involvement in finance fraud tarnish the respected work and characters of the likes of Joe Whitworth and Susan Silver. Sometimes people like Melissa Bos do awful terrible and selfish things that have impacts on those whose motives are honest and heartfelt. I can assure you that Melissa Bos and her involvement with conservation international and her global fish trust strategy in Hawaii it’ll finance of conservation systems is an isolated incedent. Please, know the facts as it pertains to her and conservation international internal workings, and don’t punish the community. I call for more transparency of organizations that harbor these individuals, as these organizations have tremendous resources and financial clout. Thank you,
    Joshua K.

  • Joshua K.'s avatar

    BY Joshua K.

    ON April 23, 2014 10:27 PM

    Ricardo, what exactly did Melissa Bos do, and what can it tell us about the complexities of financial system influence on resource management? Specifically, are there sufficient safeguards in place to protect the interests of stakeholders from corporate conservation and financial interests if those who so cheaply buy there way through the proverbial back door?

  • Jeff Hamaoui's avatar

    BY Jeff Hamaoui

    ON July 24, 2014 11:49 AM

    Making Conservation Finance Investable

    If corruption of an individual in a specific financial institution was just cause not to do finance we would have to shut down every single financial institution in the US - probably in the world. 

    Focusing on the role of conservation finance in an age of ever decreasing environmental assets is the critical issue here.  The authors have done a terrific job in beginning to compile a conservation finance playbook for exploration in this area…

    What matters from here is how we create the tools and market processes to meaningfully connect the environment into the marketplace.  Building on that idea - I have been recently been inspired by some work done by Alex Dehgan at Duke who has posited that ‘conservation’ will need to shift towards the nexus between new technology innovation, entrepreneurship and finance innovation…

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