ICLEI - Local Governments for Sustainability, South Asia
Unlocking sustainable finance for people, nature, and climate in coastal communities
Key Details
Project lead: Rare
Financial Innovation: Bonds
Financial Support: The UK’s Blue Planet Fund
Location: Indonesia
Project timeline/status: January 2024 – December 2025
People Supported: 26,866
Area Conserved: 21,000 ha
Summary
The Small-Scale Fisheries (SSF) Impact Bond is an Outcomes-Based Finance (OBF) contract that supports sustainable, community-led coastal and marine management.
The project focuses on Indonesia’s Southeast Sulawesi region, where Rare is establishing three Managed Access with Reserves (MA+Rs) – community-managed marine areas that balance sustainable fishing with conservation. The MA+R sites strengthen local livelihoods and formalise small fishing enterprises while building inclusive governance for shared fishing grounds. With government recognition, they aim to qualify as Other Effective Area-Based Conservation Measures (OECMs), contributing to Indonesia’s 30×30 commitments.
The SSF Impact Bond measures outcomes at two levels: primary outcomes such as governance, management plans, and business development, and premium outcomes such as stabilised fish biomass and benthic coverage. This design is built on more than a decade of Rare’s Fish Forever program data, which demonstrates the effectiveness of the MA+R model across eight countries. The Bond also addresses the critical funding gap between upfront implementation and the delayed timeline for measurable ecological returns.
Challenge
Small-scale fisheries are vital to coastal economies, supporting food security, jobs, and climate resilience. Yet they remain informal, underfunded, and poorly integrated into national plans, with limited governance or long-term investment.
Without the local governance frameworks and tools to sustainably manage fishing areas, many communities face declining fish stocks, insecure incomes, and eroding coastal ecosystems. These pressures are intensified by climate change and ocean biodiversity loss, placing both people and nature at increasing risk.
Solution
Rare’s Small-Scale Fisheries Impact Bond is the world’s first impact bond tailored specifically to the needs of fishers and ocean ecosystems.
Here’s how it works:
- Investors provide upfront capital to implement the program
- Rare delivers on agreed milestones (such as MA+R boundaries and Fisheries Management Bodies) as well as premium ecological results (fish biomass and benthic coverage)
- Outcome funders, such as DEFRA via ORRAA, repay the investors when the outcomes are achieved
The “pay-for-success” model links financial returns to real conservation results, giving healthy oceans and coastal communities clear economic value. Early philanthropic support jumpstarts the sector by reducing risk, attracting blended finance, and enabling flexible, results-based management. Combined, these factors create efficiency, transparency, and proven impact.
Scalability and Next Steps
In 2023, Rare completed a feasibility study for the SSF Impact Bond. Now, with support from ORRAA through the UK Government’s Blue Planet Fund, they are piloting the proof-of-concept model, which will run for five years.
Rare is laying the groundwork for regional expansion, with early scoping and legal analysis for replicating the bond in other Indonesian provinces and eventually across Southeast Asia. These steps are designed to build a pathway from this pilot to a larger regional facility capable of attracting government outcome funding and significant private investment.
This pilot provides the proof of concept needed to de-risk the sector and attract larger flows of blended capital. In the long-term this model will be integrated into national policy and will expand into networked marine managed areas that protect ecosystems of global importance. To meet the scale of the challenge, it aims to mobilise public, private and philanthropic finance.
The SSF Impact Bond is currently sparking wider conversations on OBF in the sustainable blue economy, which highlighs how innovative finance can channel investment into people, nature, and climate resilience.
“This impact bond demonstrates how we can channel both public and private capital into ocean conservation at scale. By reducing investment risk and rewarding measurable outcomes, we are enabling communities to lead the protection of their fisheries and coastal ecosystems – delivering benefits for people, economies, and nature alike.” – Kate Schweigart, VP of Innovative Finance at Rare.
