What is a Conservation Trust Fund

Long-term Sustainable Funding
Options for the Mediterranean MPA
Network
Barry Spergel
Lawyer and Environmental Financing Consultant
email: [email protected]
Slide # 1
What is a Conservation Trust Fund (CTF)?
• Legally independent institution (not part of
government) & a majority of its Board comes from civil
society or donors
• A CTF’s Charter or Articles of Association state that money
can only be used for conservation, not for other
purposes
• Can provide long-term funding in 3 ways:
– Endowment (the capital is never spent, only the annual interest)
– Sinking Fund (interest and part of the capital is spent each year)
– Revolving Fund (new money each year from earmarked fees,
taxes, etc.)
• CTFs have been established in more than 50 countries
• 3 CTFs (Brazil, Mexico, Peru) each have capital of more than
Slide # 2
Examples of Regional MPA Trust Funds
• Meso-American Reef Fund (“MAR Fund”):
Mexico, Belize, Guatemala and Honduras
• Caribbean Biodiversity Fund:
Jamaica, Bahamas, Dominican Republic, Antigua,
Grenada, St. Kitts, St. Vincent, St. Lucia
• Micronesia Conservation Trust:
Palau, Federated States of Micronesia, Marshall
Islands, Northern Mariana Islands, Guam
Slide # 3
Meso-American Reef Fund
• Each country already had a national CTF
• MAR Fund’s purpose is to finance MPAs in each of the 4
countries, all its grants go through the national CTFs
• Legally incorporated in US, but its HQ is in Guatemala
• Board includes 4 national CTFs; local NGOs; and donors
• Operated for 7 years as a sinking fund, and its only
donors were US and Swiss foundations
• in 2012 it received € 10 m from KfW and € 1 m from
FFEM for an endowment. KfW also gave € 20 m for two
5-year projects to support 19 MPAs
• Spends 15% for administrative costs, has 4 staff
Slide # 4
Caribbean Biodiversity Fund
• Based on the “Caribbean Challenge”, a commitment
by governments of 8 small island countries to
establish 20% of their coast as PAs.
• US $40 million endowment from KfW, World BankGEF, & TNC. Different % allocations by country.
• Each country must establish a national PA trust fund
which must raise a 1 to 1 match each year from new
fees, taxes, or PES in order to receive its allocation
of income from the endowment.
• CBF is legally incorporated in UK. The Boards of the
CBF and of the national PA trust funds must each
have at least 50% non-government members.
Slide # 5
Micronesia Conservation Trust
• Legally incorporated in the Federated States of
Micronesia, and has its HQ there. Started as a
national CTF, but now includes 3 countries plus 2 US
territories.
• Based on the “Micronesia Challenge”, a commitment by heads of all 5 governments to establish
30% of their coastline as MPAs.
• Board is entirely non-government. Has 12 staff.
• Each country’s allocation of endowment income is
based on how much it contributed plus matching
contributions by TNC and CI. Trust fund’s role is
only to invest & disburse. Each country decides how
to spend the money on its own MPAs
Slide # 6
The purpose of creating a Mediterranean
MPA long-term financing mechanism is:
• To sustain recurrent and operating activities of
MedPAN association (that otherwise would be
difficult to finance through project funding)
• To directly support activities of MPAs
• To support activities of regional MedPAN partners
that contribute to MedPAN network strategy
• To support establishment of national trust funds in
the Mediterranean that support MPA creation and
functioning
Slide # 7
3 possible approaches for a Med trust fund
that could be implemented in parallel :
1. Provide funding for some MPAs and for 2/3
of the operating costs of MedPAN network
1. Provide long-term funding for all Mediterranean MPAs that need financial support
2. Provide technical assistance to individual
countries or individual MPAs to each
develop their own PA funding mechanisms
Slide # 8
Approach 1: Provide funding for some MPAs and
the MedPAN network
– 1st step
•
Cover 2/3 of MedPAN association costs (€ 500 000/year)
•
Costs for supporting at least 3 MPAs per year (€ 300
000/year = € 100 000 / MPA/year) that are in a critical
situation;
–
these MPAs will be identified through a call for
expressions of interest or linked with a regional
conservation vision.
•
Endowment’s long-term average rate of return = 5%/year
(compare 7%/year average 5-year return for CTFs, and 5%
in 2011 for Norway’s sovereign wealth fund)
•
Therefore would need to raise €16 million for endowment
earning 5% per year = €800,000/year
Slide # 9
Approach 1: Provide funding for some
MPAs and for MedPAN network
– 2nd step
Also provide support to regional partners to carry
out activities of the MedPAN network strategy:
– This might require raising €56m for an endowment in
order to generate €2.8 million/ year
• €800,000/year for MedPAN association + 3 MPAs in critical
situation
• and €500,000/year for each of the 4 regional partners that
provide support to the MedPAN network (WWF-MedPO, IUCNMed, RAC/SPA, Conservatoire du Littoral)
– Would need to decide how to allocate funds among
different partner organizations
Slide # 10
Approach 2: Fill the long-term funding
gaps for all Mediterranean MPAs
--- Could be done in 2 steps:
1. a detailed financial gap analysis to better
know MPA funding needs in each country
2. a study to assess the motivation of some
national countries to support and create a
regional trust fund, perhaps linked to
national-level trust funds
Slide # 11
Approach 2: Fill the long-term funding
gaps for all Mediterranean MPAs
• Not practical in the short-term, but could be
possible in the long-term. If the institutional,
legal and political structure of the trust fund is
well designed, it might attract funding from new
sources besides current donors.
• Together with parallel national- and local-level
mechanisms for financing MPAs
Slide # 12
Approach 2: Fill the long-term funding
gaps for non-EU Mediterranean MPAs
Might require €500 million endowment, in order to
generate €25 million/year (at 5%/year),
Based on the following conclusions from Alfredo’s study:
• Estimated needs for MPAs in non-EU countries = 2042 M€/year (but let’s use higher figure of 42 M€)
• Total non-EU Med MPA budgets in 2006 = 12 M€/year,
of which 50% from international sources, which are
expected to continue at approx that level
• Non-EU national governments should cover 20% of
MPA costs
Slide # 13
Approach 3: a 10-year sinking fund to
support countries developing new national
financing mechanisms
The idea would be to cover:
• Salaries of 1 or 2 experts in conservation finance who
could advise & assist Med countries over 10 years to
each develop their own MPA funding mechanisms
• Costs of national-level workshops, travel,
communications, short publications
---This might require raising € 2 million in order to
generate approx. € 225 000/year
Slide # 14
Plan of Action – 2013-2014
1.More clearly define the 3 approaches
after the General Assembly
2.Prepare TORs for study in approach 2
(to estimate MPA financial gaps by
country)
3.Organize a Trust Fund Steering
Committee for approach 1
4.Meet with potential donors
5.Draft very detailed proposals for
approaches 1, 2 and 3
Slide # 15
Options for legally establishing a
Mediterranean MPA Network Trust
Fund
1. Under an existing international organization or
convention (e.g., Barcelona Convention) --Hard to attract private donors, maybe too
bureaucratic and too political
2. As an independent charitable foundation registered
in Switzerland or UK, which have very flexible laws
and tax rules for foundations and trust funds
3. As a “fonds abritée” (sub-fund) under WWF-France,
Fondation de France or Fondation Albert II
Slide # 16