As purpose driven companies continue to gain a strong footing in the global business environment, the demand for effective and profitable sustainability solutions is on the rise.
Landscape restoration is often mentioned among such solutions and is said to offer a toolkit for building thriving sustainable businesses with high environmental standards and positive long-term social impact, while also helping to hold back climate change. With the growing demand for food, wood and fiber, the idea of producing more with less sounds pretty alluring.
So, can landscape restoration projects generate the promised value and money or is it yet another aspirational concept unable to deliver?
Risk is an opportunity
Land is an essential economic asset. Raw materials for industry, food production, mining, construction, clothing and cosmetics come from the land. That means that degraded land is an underperforming asset: land degradation reduces both the quality and quantity of raw materials, which diminishes production and limits growth, as well as driving up market prices, affecting other segments of supply chains. Obviously, some businesses are positioned closer to land than others, but digging deep enough, a company that invested into any of the industries mentioned above, sooner or later, will also be exposed to the risks of land degradation.
So, in fact, it is risky not to invest in sustainable land use. What’s more, the landscape restoration approach with its patchwork method, which includes a variety of land uses, offers the means to diversify business portfolios.
Companies do not have to choose between conservation and commercial agriculture. Instead the two can be combined and complemented by other types of land use. Opportunities also include entering and creating niche markets, brand value improvement, marketing advantage and partnerships with clean-tech companies.
Although it is true that landscape restoration does not offer a quick win, and that agricultural restoration can cost more than forest restoration, the economic benefits tend to come much faster and continue coming annually.
Policy in place, cash at hand
Landscape restoration and sustainable land use make good business sense. However, because land degradation tends to occur in areas of intensive agricultural production where people are living on the land, such projects usually require local government to engage in the process through regulation of land tenure, setting and enforcement of environmental standards, funding as well as project implementation.
While a Global policy framework sets the necessary pre-conditions for large scale land restoration, regional initiatives have particular potential to engage local leaders. By having a common network of research centers and development banks, regional initiatives also present an opportunity for immediate information exchange about success and failure, and also embody the principle of South-South cooperation.
Initiative 20×20 has achieved substantial momentum. Launched in Lima in December 2014, the initiative pledges to restore 27.7 million hectare, land area equal to the size of the UK, and has already engaged eight countries in Latin America and the Caribbean as well as three Brazilian states. The initiative also has strong technical support from leading research institutions.
However, what really defines this initiative is private sector participation which has encouraged impact investors to commit $730 million for implementation of the restoration pledges.
Initiative 20×20 has achieved a lot in a short period of time in terms of securing commitments. The key now is to put pledges into practice. 20×20 partners are already working with a number of projects and presented their progress at the Global Landscapes Forum 2015 in Paris.
There are many pilot projects that look promising and inspiring, but, of course, there are problems along the way. When asked about the bottlenecks in project implementation, investors mentioned the lack of reliable partners on the ground and financial infrastructure; NGOs criticized the lack of funds for initial project development; and businesses said that putting in place a commercially viable framework without sacrificing environmental and social values is a major bottleneck.
Leslie L. Durschinger, Founder and Managing Director Terra Bella Fund, said “It takes time to legally set up a facility and then make sure that the flow of money would actually go where it needs to go on the ground, and you cannot invest until this infrastructure is in place.” Mamerto Valerio Bueno, Director at Environment and Development Action in the Third World, ENDA, said “The demand for land restoration is huge and the reality in this field now is that there is more demand than offer. We have to simplify bureaucracy.”
Thriving partnerships and clear land titling are key for effective landscape restoration. And the bigger the project the higher the number of partners needed for successful implementation. Jose Iturrios, National Director at Peru Cocoa Alliance, noted that even though the model he works with is directly linked to Chocolateur, there is a “need for a smaller aggregating player who could work between the chocolate makers and the farmers.”
It also appears important to allocate enough time for research on the initial stage of the project, especially in terms of understanding the local culture. “Effective communication is key to success in landscape management because each of the sectors have their own grammar, and this is where we should take time,” said Juan Carlos Gonzales, Director at Athelia Latin America.
Despite promising success stories, there is still not enough money available to the sustainable land use sector and raising funds is still challenging.
“For institutional investors, like pension funds and insurance companies, land is an extremely new asset and they are not familiar with all the intricacies. They are used to invest in stock markets and bonds which are much bigger asset classes, while things like farmland and forestry are much smaller and are only emerging. So, there is a whole education process that has to be gone through to convince people that this actually works and that the risk return profile is adequate and that it actually is not as risky as it is perceived,” explained Paul McMahon, SLM Partners LLP.
Large scale landscape restoration would require a lot of alignment between what the investors think and what is happening on the ground. It is going to be about building trust and convincing people that sustainable land use is the base for better quality of life.
But it seems that the ice has broken: the 2015 Global Opportunity Report, based on a survey of 6,000 private sector professionals from 21 countries, lists investment in resilience, cost-effective adaptation, rural growth and water-effective agriculture among top business opportunities. Landscape restoration addresses all four of these, so the chances look good that they will become investment trends.
Successful pilot projects and accumulated knowledge and experience, as well as the fact that sustainable landscapes guarantee resilient business, are clear enabling conditions. Hopefully, it is now only a matter of months before the big money comes to landscapes.
This blog was inspired by the Discussion Forum “Putting pledges into practice in Latin America – an early assessment of Initiative 20×20 from science, policy and finance perspectives” hosted by the World Resources Institute, WRI and International Center for Tropical Agriculture, CIAT.