Financial Innovation CI-Atabey Foundation
Establishing a Blended Finance Facility for Marine Protected Areas (MPAs)
Project Lead: Blue Alliance Marine Protected Areas
Supporting partners: Governments of Indonesia, Philippines, and Tanzania during the initial phase, alongside AXA Climate, BNP PARIBAS, Blue Natural Capital Finance Facility (BNCFF), Fondation Hans Wildorf, Global Eba Fund, Global Fund for Coral Reefs, Howden Group, Mirova Natural Capital, Mirova Nature+, MAVA Foundation, UBS Optimus Foundation and UN Capital Development Fund
Financial Support: Government of Canada
Location: The Bahamas, Belize, Cabo Verde, Dominican Republic, Fiji, Indonesia, Mozambique, Philippines and Tanzania
Summary
ORRAA is working with Blue Alliance to structure a blended finance facility which will implement sustainable revenue-generating initiatives in marine protected areas (MPAs). These aim to enhance the protection of over 1,000,000 hectares of high-biodiverse coral reefs and have a positive impact on the local economy, including coastal fishing communities. The initial phase will focus on working with NGOs in Indonesia, Philippines, and Tanzania to manage ‘bankable’ MPAs, on behalf of Governments. It will also prepare new MPA financing mechanisms in Belize, Bahamas, Cabo Verde, Dominican Republic, Fiji, and Mozambique.
Challenge
Approximately 500 million people depend directly on coral reefs for food and income, but 60 per cent of those ecosystems are under immediate threat from human activity and climate change. MPAs are a proven tool to reduce the various drivers of coral reef ecosystem degradation. Benefits that flow from improved marine ecosystems include enhanced food supply and fishing incomes for coastal communities, opportunities for nature tourism businesses, shoreline protection, and greater resilience to climate change.
However, 70 per cent of the MPAs globally struggle to meet minimum management standards due to piecemeal, insufficient, and short-term funding, which is largely provided by public bodies and development finance entities. Blended finance – incorporating public and private funding – can play a key role in mobilising additional funds from impact investors.
“Generating critical finance for MPAs is vital for marine conservation and natural resource management. Revenues generated through this investment will sustain the financing of our team in their daily activities in community development, ecosystem conservation, environmental education, and compliance.” – Valdemar Andrade, Executive Director, Turneffe Atoll Sustainability Association (TASA).
Solution
Funding from ORRAA is supporting Blue Alliance to structure a blended finance facility to provide up-front and early-stage capital for the management of 10 sustainable MPA networks in the Global South. It will invest over US$22 million in grants, refundable grants, impact loans, loan guarantees, and innovative insurance solutions. The revenues generated from a range of sustainable sources, such as eco-tourism fees, blue carbon, and sustainable artisanal aquaculture, will create tangible returns for investors, and demonstrable impact for donors alongside contributing to the effective management and the financial sustainability of the MPAs.
The facility aims to protect over 1,000,000 hectares of coral reefs, benefiting approximately 20,000 vulnerable people in coastal communities and unlocking domestic and international private investment capital. This project replicates work by Blue Finance to implement an innovative blended finance mechanism for the effective management of the Turneffe MPA in Belize – one of the largest in the Caribbean.
Reef-Positive Businesses
Blue Alliance identifies and invests in reef-positive businesses in and around the Marine Protected Areas (MPAs). Each is designed to address specific drivers of coral reef ecosystem degradation, while simultaneously alleviating poverty and generating sustainable, long-term income for MPAs. A fundamental aspect of each project is the inclusion of local communities in participatory management practices.
Click here for examples:
Pipeline of Blue Economy reef-positive businesses:
- Responsible Ecotourism Programmes: These programmes aim to generate contributions to MPAs through the development of new products and facilities, destination and product marketing, tourism awareness, and engagement campaigns.
- Engaging Visitor Centers and Tourism Facilities: Designed to connect guests with the marine environment in innovative ways, these centers provide immersive experiences that highlight the beauty and importance of marine biodiversity.
- The Underwater Room: This globally unique facility offers guests an unparalleled opportunity to experience marine wildlife up close.
- Responsible Eco-Cruise Liveaboards: These eco-friendly cruise experiences emphasise small-scale, sustainable travel options that minimise environmental impact while maximising responsible guest engagement with marine ecosystems.
- Mangrove Restoration and Conservation: These projects focus on the restoration and conservation of mangroves, which act as significant carbon sinks and are crucial for coastal management. Through close partnerships with local communities, these initiatives will generate blue-carbon credits.
- Community-Based Aquaculture Companies: By preventing the overexploitation of wild stocks, these companies support coastal livelihoods and contribute to mangrove regeneration, thereby creating a sustainable source of income for coastal households.
- Fishery Supply Chain Companies: Specialising in high-quality fish products, these companies implement sustainable fishing practices around MPAs, enhancing the livelihoods of coastal fishers through increased revenues.
- Exploration of Additional Revenue Streams: Other revenue streams are being explored, including plastic recycling, fishery improvement projects, and other small-scale aquaculture businesses.
Scalability and Next Steps
The facility can be effectively tailored to the various contexts and needs of different sites and communities. During its initial phase (2022-2023), it will invest in three MPA networks located in Indonesia, Philippines and Tanzania — where Blue Alliance and local community partners have been working since 2019. The facility will then be upscaled to the other seven networks between 2023-2026.
The overall design and structure of the facility and its investment pipeline is readily transferable to other countries and regions. A pipeline of 200 potential opportunities has been identified worldwide, based on positive ecological and social impacts that can be achieved in protecting and enhancing critical natural capital in the regions, the business model feasibility, and the existence of local support and capacities. Whilst the initial sectoral focus will be revenue streams associated with eco-tourism and ecosystem service payments (particularly blue carbon), other sectors capable of driving sustainable income into MPAs can be bundled within the structure of site-specific projects.
