Problem Is Shortage of Capacity, Not Revenue Sources: Proposing a New Approach to Financing Protected Areas

MPA News

The shortage of funding for protected areas often spurs conservation planners to search for new revenue sources outside the conventional support realm of governments, donors, and multilateral agencies. But a strategy focused solely on new revenue generation is likely to fail, says Andreas Merkl, executive director of the US-based Conservation and Community Investment Forum (CCIF). A considerable pool of potential capital is actually available from conventional sources, he says. The real problem is that this capital is unlikely to be committed unless the capacity to deliver protected area services at a meaningful scale with unassailable accountability is dramatically improved over current levels.

"The combined pool of capital potentially available for biodiversity conservation and protected areas is vast," says Merkl, a former management consultant and investment banker. He cites the size of foreign-aid deals routinely struck by multilateral organizations, the size of endowments of major foundations, and the ability and need of multinational corporations to become major conservation funders in many countries. To access this capital, the conservation field must prove it has the capacity to accommodate it. While governments and NGOs have shown they can manage individual protected areas, he says, the effective management of entire networks has remained an elusive goal in the developing world. A new management entity - a professionally managed, conservation-focused, protected area management company - is therefore needed.

Merkl uses the marine national parks of Indonesia and the Philippines as an example: many of them are "paper parks", he says, lacking planning and enforcement. A CCIF cost analysis showed that for an endowment of US$175 million at 5% annual interest, it would be possible to develop functioning marine national parks for the countries, with fully implemented management plans and long-term benefits to fisheries from protected spawning areas. Merkl points out that several private philanthropists could singlehandedly provide this level of financing. "But who would they invest in?" he asks. "Who could deliver an integrated set of protected area services in Indonesia in a professional, transparent, and accountable fashion?" He says it has already become clear to NGOs working at the ecoregional scale that the legal, financial, operational and community aspects of planning and running an entire network of MPAs are so complex as to elude the abilities of any one organization.

What Merkl proposes is this: a nonprofit entity with the scale, expertise, independence, accountability, and transparency to coordinate investments ranging from small loans, to conservation concession agreements, to large scale protected area endowments, and everything in between. While it would contract with all the existing capacity in the field - including international NGOs, local groups, and government agencies - it would provide the full range of intermediary services required to attract meaningful investment. The management company would be run by personnel with significant operational experience in target countries and be assisted by a small staff of experts in law, operations, community development, and micro-finance.

Merkl compares the management company to a venture capital firm, with its rigor in defining and measuring outcomes; its flexibility; its transparency and accountability to funders and investors; and even its ability to de-fund underperforming investments.

He acknowledges that underlying the CCIF proposal is a call to put overall management of MPA networks in the hands of experienced private-sector professionals, not the biologists or other scientists who more typically manage sites. "This is more about the science of handling managerial complexity than about the science of fishery management," he says. "A highly experienced manager with a background in, for example, building multi-location manufacturing operations in Southeast Asia has a set of skills that matches pretty closely what we need."

A common criticism of top-down MPA management is that it ignores the interests of local stakeholders, thus limiting community buy-in to MPA management efforts and increasing enforcement costs. Merkl says the CCIF plan, although managed by a private-sector, third-party organization, would actually increase community buy-in. "The NGO community has probably been too reluctant to provide direct compensation for conservation," he says. "There is no reason why we should not use tools such as conservation concessions to provide structured compensation for short- and medium-term MPA-related resource losses to neighboring communities. A pragmatic, third-party management organization will be more amenable to using such instruments than NGOs have proven to be in the past." He adds that the private sector, particularly in Asia, arguably has more experience than any other sector in building community support for complex projects, although the track record is admittedly mixed for some extractive industries.

CCIF is still considering how many of these management companies would be needed worldwide. "Given the limits of complexity, my in-going hypothesis is that we probably need one management company for every major ecoregion," says Merkl. CCIF is now developing a full-fledged business model for an MPA management organization in the "Coral Triangle" of central Indonesia and the southern Philippines.

For more information:

Andreas Merkl, Conservation and Community Investment Forum, 423 Washington Street, 3rd Floor, San Francsco, CA 94111, USA. Tel: +1 415 421 4213; E-mail: andreas [at] ceaconsulting.com; Web: www.cciforum.org

Readers interested in applying the costing model that CCIF uses to calculate costs of MPA networks should contact Jason Winship at CCIF. Tel: +1 415 421 4213, ext. 19; E-mail: jason [at] ceaconsulting.com