The World’s First Small-Scale Fisheries Impact Bond
Rare is launching the world’s first small-scale fisheries (SSF) Impact Bond, focused on increasing sustainable, community-led management of coastal and marine resources while improving the livelihoods and formalisation of the SSF sector.
Through the Impact Bond, Rare will establish five Managed Access with Reserves (MA+Rs) areas, a system for artisanal fishers that balances sustainable use and protection through reserves. The MA+Rs will be implemented within Marine Protected Areas (MPAs) or as Other Effective Conservation Measures (OECMs) in Southeast Sulawesi, Indonesia.
By establishing and sustainably managing new MA+R sites, Rare will help strengthen coastal marine habitats including coral reefs, mangroves, and seagrasses. The MA+R sites will help build capacity and formalisation of micro and small businesses, bringing artisanal fisher microbusinesses into the formal economy and strengthen their capacity along the domestic value chain.
Small-scale fisheries play a vital role in coastal communities, contributing heavily to food security, employment, economic growth, and climate resilience. Unfortunately, they face a variety of systemic challenges. Chronic underfunding and shortage of resource, compounded by the sector’s informality, hinders its ability to absorb necessary capital. Such a lack of sustainable management and marine resource protection is reflected within the Ocean, leading to plummeting Ocean biodiversity, and creating an existential crisis.
Rare’s Impact Bond is an Outcomes-Based Financing (OBF) Model to exclusively support SSF. The model will offer a return on investment when predetermined project milestones are achieved.
The core repayment metric is in square kilometers of protection, which Rare aims to achieve by establishing MA+Rs. The outcome metrics for interest being considered include biomass stabilization and/or recovery and coral reef health. The structure therefore contributes to the protection and regeneration of valuable coastal and marine natural assets and resilience of climate vulnerable coastal communities.
- Investors: The total investment is size is $3.6 million, to be provided by one or more investors.
- Outcome funders: The Department of Environment, Food, and Rural Affairs (DEFRA) via a Contribution Agreement with ORRAA is supporting the structure as an outcome funder. Rare is in active conversation with additional outcome funders to be announced at contract closing.
- Service providers: Levoca (performance manager), Reed Smith (legal counsel), PKSPL IPB (independent third-party evaluator).
- Initial Funder: Pershing Square Foundation provided the funding to complete the impact bond’s feasibility study and design.
- Data provider: Government of Indonesia.
With ORRAA’s support through the UK’s Blue Planet Fund, Rare aims to:
(1) Mobilise USD $3.6M in investment to unlock USD $9.7M in grant capital in the first Cohort.
(2) Support 70,000 people.
(3) Increase an estimated 60,000 ha of ocean protection by establishing 5 MA+Rs.
(4) Stabilise biomass and benthic coverage through sustainable MA+R management.
(5) Establish community-led Fisheries Management Bodies as legal entities.
(6) Formalise SSF microbusinesses and strengthen their capacity.
Scaling and Next Steps
Rare completed a feasibility study for the SSF Impact Bond1 in 2023. Now, with support from ORRAA through the UK’s Blue Planet Fund, this project will pilot the proof-of-concept model, aiming to unlock around USD $10M of private, philanthropic and public funding in the first cohort.
The Project has a clear scaling pathway. Cohorts 2 and 3 are planned to be launched in 2026 and 2027-2028, respectively, covering between 25 and 50 new MA+Rs across Indonesia and the Philippines (Cohort 2) and between 50 and 100 new MA+Rs to be determined in Rare Fish Forever countries across the Global South. There is a planned implementation period of five years, respectively.