Internship in Paradise, Bali, Indonesia

This summer, in between my first and second year of Darden Business School, I'll be working as a summer associate at the Community and Conservation Investment Forum, a consulting group that works on behalf of private, corporate, and multilateral investors seeking direct and immediate conservation returns on their investments. CCIF specializes in applying the tools, strategies, and capital sources of the private sector to address urgent conservation issues worldwide. For my internship, I'll be going head deep into the world of conservation finance, but...

What is Conservation Finance?

The first time I heard the term was in the job description for the phone interview. I promptly adopted it to sum up to classmates what I would be doing over the summer – you know what conservation is, right? You know what finance is, right? Well, that’s what I’ll be doing this summer—conservation finance, QED.

After a couple weeks in Bali, Indonesia, practicing this ‘conservation finance’, I still struggle to understand what it really means. Today, I would define it broadly as understanding the economics that underlie a wetland or a forest or a coral reef and the resources required to protect it, but I hope that over the course of the next couple months and throughout the development of this blog, I will be able to explain it better.

‘Conservation finance’ seems like a relatively new catchphrase in the conservation world and totally unknown in most business circles. I imagine it is partly the result of new philanthropic foundations such as Moore, Packard, Gates and Walton demanding more tangible returns from their investments than those historically demanded by the US Government, partly the result of this HUGE SNAFU called global warming which is making people try to develop market-driven solutions to problems like deforestation.

It is an attempt to value natural resources (a damn hard thing to do which I will discuss in more detail later), and estimate and finance the cost of conservation based on a range of preservation scenarios—for example, status quo, what is currently being done; minimum, what needs to be done to achieve a minimum set of realizable conservation requirements (in the case of the Pacific Leatherback Turtle this encompassed things such as protection of direct take of eggs, increasing hatchling rate success, starting to provide communities with reasonable economic opportunities other than the collection of eggs and turtles); optimum, which is like a dreamland scenario where habitat is not destroyed, fisherman switch to more sustainable livelihoods, etc. There are not any three standard scenarios – but a range of different levels of conservation that need incrementally higher levels of financial resources to be achieved.

Most of the work I will do centers around developing cost and endowment models for two protected areas – Raja Ampat, Papua, Indonesia, and the Cardamom Mountains, Cambodia. These models use an approach similar to the Net Present Valuation method used in corporate valuation, and are very dependent on the quality of the inputs used. As they say, ‘garbage in, garbage out.’ It is therefore very important to understand the local context, such as (among other things) the capacity of the local government to contribute money for conservation, the difficulties involved in physical enforcement of laws in ~million-plus-hectare territories, and the impacts that will form the basis of evaluating the success or failure of conservation efforts.

One Focus of Conservation Finance

The Raja Ampat (“Four Kings”) archipelago is located just off of the Bird’s Head Peninsula in North Western Papua and has to be THE coolest place on the planet. From 100,000 feet the peninsula resembles an overweight goose in flight (thus the name); it is home to leatherback, green and hawksbill turtle rookeries, and migratory cetacean aggregations of sperm and Bryde’s whales, orcas and dolphins.

Raja Ampat itself is made up of four large islands--Waigeo, Batanta, Salawati, and Misool--plus hundreds of smaller islands. Raja’s 9.8 million hectares have possibly the richest variety of species in the world. In a 2002 survey researchers tallied 535 species of coral (75% of all known coral Species), and 1,071 different species of fish. The area’s massive coral colonies show that its reefs are resistant to threats like coral bleaching and disease—threats that have severely degraded corals in many other regions.

Map 1: The best map I could find that targets the Bird’s Head Seascape

To give you some comparison, the Hawaiian archipelago, to the best of my knowledge, has 700 species of fish and 62 species of coral.

I am trying to understand why such biodiversity exists in Raja Ampat? I’m no scientist, but I think it has something to do with the way that new species evolved (over thousands of years) when parts of the archipelago were isolated from one of the two surrounding oceans, the Pacific and Indian oceans, and the interchange of water and species between the two oceans. There are probably thousands of factors that cause the biodiversity experienced in Papua.

This area is the focus of conservation not only because of the mouthwatering volume of fish, but also because of the encroaching threats to this ecosystem, such as cyanide and dynamite fishing, turtle poaching, and unsustainable logging. It’s attractive for conservationists, divers, fisheries, oil and gas, mining and forestry products alike.

Right now a couple massive environmental NGOs are battling it out for control in the area – Conservation International, Nature Conservancy, WWF. The organization I work for, Community and Conservation Investment Forum, sees using an endowment mechanism to ensure a more reliable, stable in-flow of cash to core conservation activities as a priority. Having worked in the NGO world for four years this seems like a good strategy. The problem with grant/project money is that one day it’s here, the next it’s gone and the communities, who have come to depend on it, are left holding the bag, (which has no money in it).

In such an endowment, a pot of money is set aside and invested on which only the interest revenue (not the principle) from the investment is used for finance conservation activities. The size of the endowment can be thirty times the size of the annual need, or more. I don't want to make it sound easy because it's not. More on this and other things in the next blog, which should be up by next Monday. Until then, sampait chumpa (Bahasa Indonesian for goodbye!)