CEADIR Series: Assessing Business Models for Sustainable Landscapes in Asia
Sustainable landscapes play a prominent role in addressing major global challenges of meeting greenhouse gas emission targets, providing valuable ecosystem services, and supplying global demand for food and wood products. Dalberg estimates the financing gap for smallholder projects in 2016 is $150 million, a gap that private investors could partially close. Credit Suisse’s global investments group estimates that wealthy investors and pension funds could put $200-300 billion a year into sustainable land use—if market-rate returns were offered. What are the ingredients needed to scale up this investment opportunity?
- Aurelia Micko, Deputy Director of the Environment Office of USAID/Asia, who discussed the Agency’s approach to increasing LEDS investments in AFOLU in the region, as well as various financing options and interventions for scaling up investments in sustainable landscapes.
- Rajen Makhijani from Dalberg Global Development Advisors, who presented the results of a 2016 assessment commissioned by USAID/Asia that identified high-value business models for sustainable landscapes in Cambodia, Indonesia, the Philippines and Vietnam.
- Mikell O’Mealy, CEADIR lead for Asia, who moderated the discussion, following a description of CEADIR’s work to help USAID/Asia mobilize finance for implementation of NDCs in the region, including both sustainable landscapes and clean energy.
- In Asia, USAID is looking at financial models on the ground from a private sector perspective, in order to attract private sector investment. Through Green Invest Asia, USAID hopes to build on previous efforts and bring in investors to fund more mature business models, develop new business models, if necessary, and aggregate smaller projects across borders. Through this approach, USAID aims to move business models from less mature to a more mature stage to address the massive private sector investment gap for sustainable landscapes management.
- If USAID can help expand and enhance sustainability, and scale existing investments in low-emission land use, then it can greatly reduce commodity-driven deforestation and resulting GHG emissions.
- Of Dalberg’s seven identified business models, sustainable agriculture and forestry production show the greatest promise for mainstream private-sector engagement. Within the four countries of study—Cambodia, Indonesia, the Philippines, and Vietnam—Dalberg selected Indonesia and Vietnam as the two countries with the most opportunities to implement any of the seven business models, given the enabling and policy environments in these countries.
- Donor interventions can more broadly catalyze supply-side inflows by de-risking fund portfolios to create attractive risk-return profiles at the scale necessary to crowd-in private capital at greater volumes.
- Several key risks will continue to hinder access to private sector financing in these sectors, including macro/micro-economic characteristics, regulatory and policy frameworks, social and local community dynamics, and geography and biophysical context. The continued development of the broader ecosystem will help mitigate some of these challenges going forward.