A tool for conservation and poverty alleviation in the Coral Triangle region and beyond. 

by Luis Rodriguez, Resource Economist, CSIRO Sustainable Ecosystems

There is increasing evidence that poverty and environmental degradation are strongly interlinked, and the best conservation initiatives may be able to identify common causes and solutions to the environmental and poverty problems.

This is particularly true for the Oceania region due to the trans-boundary character of many of our conservation problems. Australian based conservation initiatives for marine turtles, coral reefs, and many other assets may be unsuccessful if they are not also tackling the deepest roots of conservation/poverty problems in the Asia-Pacific.

Our team, from the CSIRO divisions of Sustainable Ecosystems and Marine and Atmospheric Research, is working on novel approaches that make use of market forces, economic incentives and institutional analysis to design and test instruments for natural resource management and biodiversity conservation, linking environmental objectives with poverty reduction goals. 

This project has grown from the fundamental insight that unsustainable uses of natural resources may often result from the fact that the resources have no economic value until they are extracted.  We are currently engaged in finding mechanisms to allow households and communities to access the value that the global community puts on the resources the community controls, but without forcing the community to extract those resources to get this value.  Improving access to financial capital through microfinance, subject to a set of conditions on the use of natural resources under a household or community’s control, is one tool we are exploring to promote environmental conservation and livelihood enhancement.

We are currently working on several different models for the design and implementation of the linked microfinance and conservation concession approach using the information collected from interviews with microfinance institutes, a research visit to a South Pacific Regional Environment Program (SPREP) in Samoa, and a recent workshop we organised in Queensland (17 to 19 June 2009) with representatives of research organisations, microfinance institutions, conservation agencies and grass-root organizations from the Asia-Pacific Region, the US and Europe.

One promising model is illustrated below.  In this scenario, a community-based trust provides capital to a microfinance institution, which then provides loans to selected households previously identified in a targeting process. The loans are released subject to a contract that defines an environmental concession, such as establishing no take zones in fishing grounds that the household has control over.  Borrower’s future access to capital is conditional on maintenance of the agreed environmental assets, with deviations from the agreement resulting in a decrease in funds in the community-based trust, ineligibility of borrowers, or additional concessions such as larger set aside areas.

Figure 1: A model microfinance initiative for environmental conservation and poverty alleviation

While this model is more complex than just making conditional credit available to households or communities, the lesson from previous social programs in the region is that partnerships with established livelihood organisations are essential to ensure that households not only have support to produce products for sale, but also have access to external markets – a critical shortcoming in integrated conservation and development programs attempted in the 1990s.

Local economic development institutions, like Samoa’s Women in Business, have been able to achieve high repayment rates, paying back the capital received from the investors, and achieving self-sufficiency in a relatively short term without external support.  Conservation mortgages, the name we have attached to the conditional microfinance scheme, extend the funding base for these agencies and provide a means for ensuring that their development activities also lead to more environmentally sustainable economies.  From a conservation perspective, the conditional loans concept takes the efficiency of payments for ecosystem services programs and moves them from a charity based model requiring ongoing payments to a once-off investment that can be repaid, allowing funds to be invested elsewhere to generate further biodiversity benefits.

If you would like more information on the project, please contact either Chris Wilcox or Luis Rodriguez, who can provide reports and journal publications from the study.  We are currently developing the model further, and preparing a pilot study in the Asia-Pacific region.

Contacts:  chris.wilcox@csiro.au, luis.rodriguez@csiro.au