In the Lake Naivasha, Kenya region, lake water levels reached an all-time low in 2009, stirring a crisis and motivating a range of stakeholders to take action. The stress on local ecosystem services was nothing new—water scarcity, deforestation, degraded pastures, and pollution from poor agricultural practices was increasingly apparent, due in part to the population increasing 1600% in the region between 1963 and 2011. But it was Lake Naivasha’s role as a major supplier of cut flowers destined for the European market that raised concern beyond Kenya. The crisis allowed stakeholders to understand their shared risks and see the connections between the forest, water, communities and economy. Floriculture producers and the major UK retailers that sold the flowers pitched in, as did the Kenyan Embassy of the Kingdom of the Netherlands, the Kenyan government, the municipality, NGOs and others. The incentive for each stakeholder to invest varied depending on their risk and exposure in the lake catchment area. However, the uniting factor was that a broad-based public-private partnership was created to carry out the integrated landscape management solutions, and thus each stakeholder knew they were part of something bigger than what they could achieve acting alone.
This post is part of an online discussion on large-scale land interventions. Can these initiatives fulfil their promises? Read more here and comment below.
Developing long-term finance mechanisms
The Lake Naivasha example is not unique among integrated landscape initiatives. Many of the other 29 cases reviewed as part of the Landscapes for People, Food and Nature report Financing Strategies for Integrated Landscape Investment: Integrated Landscape Initiative Analysis also experience investor and donor confidence due to the broad-based platforms created and shared commitments to carrying out coordinated activities. However, what is rarer is for these initiatives to develop long-term finance mechanisms to carry out their interventions. Yet, creating changes in land use patterns can take years, and if finance is fickle, longer-term interventions may go un-financed.
Developing longer-term finance mechanisms sounds like the perfect solution, and some new innovations are taking shape. For instance, the Landscape Fund aggregates investments in a networked financing approach in order to catalyze capital investments for sustainable land-use practices among smallholders and supply chains, while also generating other benefits such as poverty alleviation and improved biodiversity management. Another example is the International Fund for Agricultural Development’s Adaptation for Smallholder Agriculture Programme, which seeks to mainstream climate finance into development finance, in order for climate risks to be incorporated into investments across a broader portfolio, thus affecting a greater scale and likely creating longer-term commitments.
Finding the right stakeholders
However, the key to the challenge is to get the right stakeholders vested in the outcomes. The state of Espírito Santo in Brazil operates the Reflorestar programme, which directs payments for ecosystem services (PES) to landholders for improved practices in maintaining standing forest, planting seedlings for forest recovery, natural regeneration, agroforestry, silvopastoral systems and managed forests. The payments are targeted to cover the transition costs for the landholder to improve their practices, so that the intervention becomes financially viable, and once the initial investment is covered, the landholder can support the intervention in the long-run with their own operation and asset investments. The awareness of the need to change land use practices upstream came primarily from the city of Vitória, which faced increased water treatment costs, flooding and erosion. However, rather than devise a way for the municipal water company to abate their rising costs through paying farmers to improve agricultural practices, abundant offshore oil and gas revenues were tapped. While this brought financial security to the programme, it did not engage the water company in the solution to the degree it could have.
Whether this solution will stand the test of time is unknown, but Espírito Santo is on a successful path to taking the programme beyond the first two watersheds to the entire state. It may well achieve the high participation rates that the urban-rural partnership for New York City’s drinking water achieved, which continues to draw inspiration as a model voluntary PES programme that covered its expenses from the cost savings brought about by improved land management practices, by proceeds of the water and sewer tariffs, and by factoring the programme into the City utility company rate base. This created a viable long-term finance solution supported by city government, farmers and water users alike. Almost a quarter of a century after it was started, it is still one of the strongest examples of long-term finance for integrated landscape management.
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