Climate Resilient Landscape Finance (CRLF) is an innovative climate finance instrument that aims to address the challenges of sustainable and climate-resilient land management in African conservancies. This instrument combines microfinance, private debt, and technical assistance to provide economic incentives for landowners to forgo commercial development and prioritize conservation efforts.
Africa’s protected areas play a crucial role in safeguarding the continent’s biodiverse ecosystems. However, agricultural and industrial development outside of protected areas pose a significant threat to land used for biodiversity conservation. In order to meet the 30×30 goal of protecting 30% of protected areas, an annual investment of USD 20-25 billion is needed. However, traditional revenue streams, such as government funding, donor support, and tourism, only cover 10-20% of management needs. This means that there is a significant funding gap for sustainable land management.
CRLF aims to bridge this funding gap by driving diversified expansion strategies through microfinance and venture financing support. The instrument seeks to tap into the growing market for sustainable goods and services and nature-based attributes, increasing revenue flows to conservancy areas and enabling scaling. By creating investment opportunities in conservancy debt and microfinance portfolios, CRLF attracts private investors who are interested in impact-seeking investments in nature-based and conservation projects.
The pilot target market for CRLF is the Maasai Mara in Kenya, which is home to approximately 25% of Kenya’s wildlife. The instrument has the potential to transform the economics of conservation-critical areas by monetizing the value of tourism, climate, biodiversity, and sustainable production and sharing these benefits with local communities. Over its first decade, CRLF aims to conserve and restore over 90,000 hectares of land and sequester over 1 million tons of CO2e. It is expected to directly benefit 3,000 micro, small, and medium enterprises (MSMEs) and unlock USD 70 million in value for the region.
In terms of design, CRLF is an umbrella facility with a representative governance body that sets investment strategy and policy and monitors the operation of three synergistic facilities. The microfinance facility offers concessional lease-backed loans to local landowners in local currency to foster financial inclusion and support sustainable livelihoods. The private debt facility provides patient and concessional growth financing to conservancy enterprises and potentially sustainable agriculture and forestry operators around conservation areas. The technical assistance facility offers business development and support services to enhance the growth and governance of local enterprises and establish linkages to international carbon and biodiversity markets.
CRLF is designed as an evergreen structure, meaning that all surpluses generated will be reinvested in conservancy areas. Borrowers must adhere to environmental, social, and governance covenants tied to preferential loan terms, providing incentives for sustainable land management in biodiversity-rich areas.
In conclusion, Climate Resilient Landscape Finance (CRLF) is an innovative financial instrument that aims to address the challenges of sustainable and climate-resilient land management in African conservancies. By combining microfinance, private debt, and technical assistance, CRLF provides economic incentives for landowners to prioritize conservation efforts and contribute to the protection and restoration of biodiversity-rich areas. This instrument has the potential to transform the economics of conservation and unlock significant value for local communities and the region as a whole.