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Natural Capital, Investment Banking and Biodiversity

PhD student, Andrew Neill, reflects on his summer placement at the European Investment Bank…

Introduction

If you had asked me a year ago if I had any interest in banking, I probably would have said no. As a natural sciences graduate passionate about sustainable development, it just wasn’t a path I associated with my interests. Yet in March 2019, I set off for Luxembourg to undertake a traineeship at the European Investment Bank (EIB). Not just any bank, the biggest multilateral bank in the world, responsible for lending over EUR 50 billion in 2018 alone.

The reason for this sudden change in direction was discovering a new pilot program at EIB called the “Natural Capital Financing Facility” (NCFF). It seemed like a unique project attempting to use traditional investments to support and conserve Europe’s ecosystems and biodiversity. The interdisciplinary aspect of combining finance with biodiversity, economics with environmental sustainability, really appealed to me and was too good an opportunity to miss. I applied for a traineeship position with the NCFF, crossed my fingers, and a few months later, had packed my bags for Luxembourg!

Andrew 1.png

Natural Capital and the Business Case for Biodiversity

Natural capital is a tool that captures the valuable benefits provided by nature, termed ecosystem services. These services, such as food provision, water regulation and retention, nutrient cycling, clean air provision and waste decomposition, are the fundamental building blocks for society and economy. The estimated value of these services provided by natured is 125-140 trillion USD per year, over 1.5x the global GDP (OECD, 2019). The global economic system is embedded within the Earth’s stock of natural capital, and so future development and growth depends upon preserving natural capital and its associated services.

Despite the vital importance of ecosystem services, natural capital is being lost and biodiversity eroded away. Over one million species are threatened by extinction making this the greatest mass extinction event in natural history (IPBES 2019). Once natural capital has been lost, it can be very costly or even impossible to replace it. To preserve biodiversity, an investment of USD 150-400 bn per year is required but only USD 50 bn per year is currently mobilised (CBD, 2012, UNDP BIOFIN, 2018). There is a financial gap for nature and biodiversity and until that gap is closed, natural capital will continue to be lost.

While the scale of the problem appears to be insurmountable, the biodiversity financial gap is equal to only 0.2-0.6% of global GDP. The costs of replacing these services provided freely by nature far outweigh the investment required to maintain the natural assets we currently have. There is a clear business case for investing in nature, spending 0.2-0.6% global GDP in order to safeguard the world stock of natural capital that provides over 150% global GDP in ecosystem services!

What is the NCFF project?

The NCFF project housed at EIB contributes to bridging this financial gap for nature in Europe. By acknowledging the financial need to safeguard nature, and the vast potential of private finance, it brings together two disciplines that traditionally are viewed in opposition.

The NCFF is a collaboration between the European Commission (EC) and EIB. It consists of a sum of EUR 125 m to be invested across a portfolio of natural capital based projects in Europe. The key component is a EUR 50 m contribution sourced from the EC LIFE budget (public finance), while the remainder is sourced from EIB’s capital (private finance). The public finance envelope acts as a first-loss guarantee for investments, essentially “de-risking” a project that would traditionally be viewed as too risky for private investors. This is an example of a blended financial model that can combine the strengths and advantages of both public and private financial streams in order to mobilise capital for nature.

But why would a conservation or nature-based project consider an investment from the private sector?

The majority of biodiversity finance comes from public sources such as grants, subsidies or development assistance (Global Canopy Program 2012). While this is attractive because it does not require repayment, it is highly competitive with uncertain supply, and a lack of long-term reliability.  Grant finance often comes with specific targets and objectives that lead to project design optimised for securing grants rather than achieving the best outcomes for nature. On the other hand, private finance can be reliable, flexible, long-term and less competitive to secure. Private sector actors can also unlock a new realm of expertise, networks and resources that would otherwise be unavailable. For these reasons, private finance may sometimes be a better fit for a particular nature-based project.

So far this all seems sensible and straight forward. There are advantages from diversifying investment for nature, and benefits for business and industry to support the preservation of ecosystem services and natural capital assets. But there is one major stumbling block that I am sure has become obvious…

How can private investors earn any returns on their investments? How can nature-based projects repay a loan or equity investment?

This is what makes the NCFF so interesting. It aims to demonstrate how nature-based projects can have sustainable, profitable business models. The value from the benefits derived from nature are internalised and central to the evaluation of these potential investments. This is a shortcoming of traditional economic evaluations that treat the environment (and its services) as an externality. The NCFF outlines four potential models for natural capital focused activities that generate revenue or provide cost savings for business, municipalities, NGOs, financial partners or public bodies (further details here):

  1. Payments for ecosystem services e.g. flood defence.
  2. Pro-biodiversity or pro-climate adaptation businesses e.g. ecotourism.
  3. Habitat banking e.g. offset essential infrastructure projects.
  4. Green infrastructure e.g. green roofs for city cooling.

Since 2015, the NCFF has successfully signed 5 investments totalling EUR 40 m, benefitting environmental projects across Europe. Examples include continuous cover forestry in Ireland, urban climate resilience in Athens, and habitat restoration in France. The NCFF program also includes EUR 10 m as a technical assistance package (a maximum of EUR 1 m per investment) for project partners to fully unlock the potential of their project through appropriate training and resources.

Reflecting on my NCFF experience

As a pilot program, the NCFF was, and remains, an ambitious venture. The first of its kind to demonstrate blended environmental financing at a large scale to tackle some of the biggest challenges for society today. The program is not due to finish its investment window until 2021 but there are some considerations for the future.

First is the financial demand from environmental projects in Europe. The EIB and the NCFF are specialised at delivering large scale investments of EUR 5+ million. However, many environmental organisations and businesses may be better suited to smaller investments or struggle to meet the oversight of such large sums. A more nuanced understanding of the demand characteristics of environmental financing would allow for more tailored solutions. Supporting financial intermediaries that can disburse more specialised investment sizes, finding new ways to connect the demand and supply actors of environmental finance, and building capacity for natural capital investments across sectors will be key considerations moving forward.

Secondly, many environmental business models depend on stable, long-term policy support which is not always present, and can differ within countries or across borders. It is hoped that the new EU Biodiversity strategy 2020+ can provide support and guidance on this issue and further strengthen the united approach to nature conservation across the EU. The recent green-wave observed in the 2019 European Elections is a promising sign combined with the strong sustainability commitment of the incoming European president.

Finally, there is a need to raise awareness and connect different stakeholders that may be unaware of the opportunities within the NCFF. Many stakeholders may be unaware of the opportunities of the NCFF or lack the financial experience to engage with private investors. Creating networks of stakeholders and building capacity within the environmental sector will be important for unlocking new key partnerships and investment for nature. As I have learned over the past year, when thinking of ecology, financial institutions should not be forgotten, ignored or discounted.

Conclusion and Reflection

The five months I spent at EIB opened my eyes to the importance of interdisciplinary approaches to environmental problems. I learnt a lot from working in an office of investment bankers, and I hope I was able to provide some useful insights as a natural scientist. We are inclined to think of nature and biodiversity focused projects as ecologists wearing wellington boots, surveying plants and animals in the most remote wilderness but this is no longer the norm. Important project discussions are going on in offices with people wearing suits rather than wellies (and with much less exciting scenery I must admit). But these less traditional actors for environmental conservation may prove to be vital for closing the gap for nature.

The natural capital concept may not be applicable to every biodiversity focused project, but it can contribute significantly by connecting otherwise unrelated stakeholders. These different groups possess different skills, resources, capital and expertise for the preservation of nature. Success stories from the NCFF signal to the market that these types of investments are viable, profitable and attractive, hopefully mobilising much greater sums of money to safeguard our stock of natural capital.

More Information:

EIB NCFF webpage – here

EC NCFF webpage – here

Investing in Nature Guide – here

NCFF Application Guide – here

Literature cited:

CBD, 2012 Convention on Biological Diversity, Resourcing The Aichi Biodiversity Targets: A First Assessment Of The Resources Required For Implementing The Strategic Plan For Biodiversity 2011-2020.

IPBES. 2019. Summary for policymakers of the global assessment report on biodiversity and ecosystem services of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services.

Global Canopy Program, 2012,  Parker, C., Cranford, M., Oakes, N., Leggett, M. ed., 2012. The Little Biodiversity Finance Book, Global Canopy Programme; Oxford.

OECD (2019), Biodiversity: Finance and the Economic and Business Case for Action, report prepared for the G7 Environment Ministers’ Meeting, 5-6 May 2019.

UNDP (2018). The BIOFIN Workbook 2018:Finance for Nature. The Biodiversity Finance Initiative. United Nations Development Programme: New York.

 

About the Author: Andrew Neill is a first year PhD student in Prof. Jane Stout’s group, working on a natural capital approach to the bioeconomy, as part of the SFI Beacon centre

Post-doc position – Developing risk assessment models for bees

We are seeking programmers for a post-doctoral research assistant (PDRA) position to develop an agent-based model for bumble bees, to complement similar models for honey bees and solitary bees, contribute to integrative analysis of bee health and production of tools for risk assessment, and develop a multi-species Environmental Risk Assessment tool, as part of an EU Horizon 2020 research project. The successful applicant will be based in the research group of Professor Jane Stout in the School of Natural Sciences, Trinity College Dublin, will work closely Professor Chris Topping and his team in the Department of Bioscience, Aarhus University, and will join the dynamic and interdisciplinary PoshBee[1] team. The PDRA is required to: design (create a formal model), develop (implement the formal model), and test an agent-based model for bumble bees (Bombus) within the ALMaSS framework[2], utilising landscape simulation models for a large part of the EU. The final model should integrate multiple stressors, including explicit incorporation of pesticide-related effects to predict impacts of changed agricultural management on bumblebees. The model is to be developed in cooperation with ALMaSS researchers associated with PoshBee and EcoStack H2020 projects, to create a simulation modelling system to inform risk assessment procedures for bees in agricultural systems.

 

Key skills

Essential:

  • Proven programming ability in an object-oriented language, ideally C++.
  • Experience in developing scientific programming and/or modelling projects.
  • Good communication abilities will be important to be able actively engage the geographically distributed team.
  • Structured approach to project planning and execution
  • Languages skills – must be fluent in English.

Desirable:

  • Ecological/behavioural knowledge of bees, particularly bumblebees.
  • Programming in Python, GIS skills, experience with R, and application of mathematical and statistical analysis will all be helpful skills to have.
  • Knowledge of pesticide environmental risk assessment, or toxicology.
  • Flexibility to be able spend periods in Denmark.

 

Salary: This appointment will be made at point 1 of the PDRA scale from the Irish Universities Association Researcher Salary Scales i.e. €37,874 per annum (gross) for 18 months from 1st January 2020.

 

To apply: please send letter of application, outlining suitability for the post, and a CV, to Prof. Stout stoutj@tcd.ie.

 

Project description

Pollinators face multiple threats including agrochemicals, pathogens, habitat loss and climate change. A major project PoshBee (Pan-European Assessment, Monitoring and Mitigation of Stressors on the Health of Bees) aims to understand the impacts of these multiple pressures on a range of bee species and develop novel tools to help reduce risks and negative impacts. Our findings will help to ensure that pesticides can be used safely while protecting wildlife, health and the environment, both in Ireland and internationally.

The PDRA will contribute to a workpackage on systems and agent-based modelling approaches to assess the synergistic effects of multiple stressors on bee health.

poshbee logo

[1] This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 773921

[2] www.almass.dk

Wildflowers – to plant or not to plant?

One of the most common questions I get when talking about bee decline, what causes declines and the consequences, is “what can I do to help?”. Given that one of the key drivers of decline is loss of forage resources, i.e. flowers that provide nectar and pollen, which is food for bees and many other pollinating insects, then the obvious thing to do is to increase the number of flowers for these insects.

But…  it’s not quite that simple:  not all flowers are equal.

Our native insects have co-evolved with native flowering plants, and so respond to their colour, scent, size and location, and thrive on a particular suite of species. Just like us, bees and other insects need certain nutrients in their diets to keep them healthy and to stave off illness, as well as for basic growth and functioning. Bees also need food throughout their lifetimes, some from the first flushes of early spring, others later at the end of autumn. So, a diverse, season-long diet of native species is best.

Marketed as ‘pollinator-friendly’, wildflower seeds and ‘seed bombs‘ are widely available from many well-intentioned supporters. Should these be scattered across our gardens, roadsides and amenity areas to provide much-needed food for bees and other insects? Actually, in many cases, no, they should not. For several reasons:

  1. Seed mixes can contain non-native species (“wildflower” is not the same as “native species” – it’s just something that can grow in the wild), that could become invasive and reduce diversity in our native plant communities, and not provide the right kind of food at the right time of year for our native insects.
  2. Mixes could contain native species, but from genetically distinct populations that are not adapted to the local conditions. Any seed set from these plants, or gene-flow between local and non-local plants, could potentially swamp the locally-adapted populations, which can be better suited to the local environmental conditions and able to cope with local biological pressures (e.g. disease, competition and herbivory).
  3. Seed mixtures could contain horticultural varieties of native species, that are bred for their colour, hardiness, ease of growth rather than their nutritional value to native insects. Some of these varieties contain less nectar and pollen, or less of the essential nutrients that our native insects need.
  4. Mixtures may not contain species that provide flowers right through the season, providing a bounty of food at one time of year, but nothing at other times (e.g. see this study, although US-based, the principles apply).

 

So what’s the best way for people to make sure they provide the right kinds of flowers to support our native insects?

Firstly, the best source of seeds is the local soil seed bank. This is where seeds are naturally stored, often in a dormant state, in the soil of nearly all habitats. Given the opportunity, these seeds germinate and grow. What we need to do is give them that opportunity. To do this, we often just need to do less. Stop mowing the grass and see what comes up. This has been demonstrated as a really successful approach by projects like “Don’t Mow, Let it Grow” and local communities and other land managers who have reduced their mowing regime (e.g. see case studies here). You might be surprised at what will come up in a lawn that has been mown for decades.

This is a ‘wildflower meadow’. Unfortunately, thanks to lush images of cornflowers and other showy non-native varieties on the front of packets of wildflower seed, we tend not to recognise our own native wildflower meadows. Natural regenration from the existing seed bank is always the best option, so reducing grass-cutting and removing clippings to reduce fertility is the best and most economic way to encourage wildflowers to grow.

 

Secondly, if you are trying to create a wildflower patch in soil that has previously been planted with non-native/ornamental species, or is dominated by a single fast-growing species that crowds everything else out, then help might be needed with some additional locally-collected seed. The Collecting and using pollinator friendly wildflower seed guide from the All-Ireland Pollinator Plan contains great tips and advice on how to find the right seeds to collect, how to collect and store seeds, and how to sow them.

Finally, where there is no seed bank (e.g. if the soil has been covered by plastic or buildings for many years), then you can consider buying native, local-provenance seed. This is easier said than done, however, as there are not that many places we can buy such seed. Many online sites claiming to sell native wildflower seed have small-print somewhere that says it might not be from native sources. Check what you are buying carefully, and don’t use non-native, non-local seeds in wild areas (roadsides, farmland, brownfield/open sites). Small patches in urban gardens that are already full of non-native horticultural plants are probably ok.

For other pollinator conservation dos and don’ts, see my recent blog.

 

 

About the author: Jane Stout is a Professor in Botany at Trinity College Dublin, an ecologist who has studied bees and their foraging behaviour for >20 years. She was one of the instigators of the All-Ireland Pollinator Plan and is deputy Chair of its Steering Group.

 

This article originally appeared on the All-Ireland Pollinator Plan webpage on 19.09.19

Postdoc position: Developing risk assessment models for Bombus and multispecies risk assessment tools

We are seeking applicants for a post-doctoral research assistant (PDRA) position to develop an agent-based model for Bombus, to complement similar models for honey bees and solitary bees, contribute to integrative analysis of bee health and production of tools for risk assessment, and develop a multi-species Environmental Risk Assessment tool, as part of an EU Horizon 2020 research project. The successful applicant will be based in the research group of Professor Jane Stout in the School of Natural Sciences, Trinity College Dublin, will work closely Professor Chris Topping and his team in the Department of Bioscience, Aarhus University, and will join the dynamic and interdisciplinary PoshBee[1] team.

poshbee logo

The PDRA is required to: design (create a formal model), develop (implement the formal model), and test an agent-based model for Bombus within the ALMaSS framework, utilising landscape simulation models for a large part of the EU. The final model should integrate multiple stressors, including explicit incorporation of pesticide-related effects to predict impacts of changed agricultural management on bumblebees. The model is to be developed in cooperation with ALMaSS researchers associated with PoshBee and EcoStack H2020 projects, to create a simulation modelling system to inform risk assessment procedures for bees in agricultural systems.

Key skills

Essential:

  • Proven programming ability in an object-oriented language, ideally C++.
  • Experience in developing scientific programming and/or modelling projects.
  • Good communication abilities will be important to be able actively engage the geographically distributed team.
  • Structured approach to project planning and execution
  • Languages skills – must be fluent in English.

Desirable:

  • Ecological/behavioural knowledge of bees, particularly bumblebees.
  • Programming in Python, GIS skills, experience with R, and application of mathematical and statistical analysis will all be helpful skills to have.
  • Knowledge of pesticide environmental risk assessment, or toxicology.
  • Flexibility to be able spend periods in Denmark.

 Salary: This appointment will be made at point 1 of the PDRA scale from the Irish Universities Association Researcher Salary Scales i.e. €37,223 per annum (gross) for 18 months from 1st August 2019.

 To apply: please send letter of application, outlining suitability for the post, and a CV, to Prof. Stout stoutj@tcd.ie by 14th June 2019.

Project description

Pollinators face multiple threats including agrochemicals, pathogens, habitat loss and climate change. A major project PoshBee (Pan-European Assessment, Monitoring and Mitigation of Stressors on the Health of Bees) aims to understand the impacts of these multiple pressures on a range of bee species and develop novel tools to help reduce risks and negative impacts. Our findings will help to ensure that pesticides can be used safely while protecting wildlife, health and the environment, both in Ireland and internationally.

The PDRA will contribute to a workpackage on systems and agent-based modelling approaches to assess the synergistic effects of multiple stressors on bee health.

 

[1] This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 773921

Bees are in decline, but what can I do? The Dos and Don’ts of pollinator conservation

It seems as if everyone is concerned about bees. With 50% of our Irish bee species in decline and 30% threatened with extinction, we are right to be concerned. A recent survey found that >90%* of Irish citizens want to protect bees & benefits they provide. And the number of news stories over the past week alone (which happened to be Biodiversity Week, incorporating World Bee Day) is testament to the fact that people are interested in bees.

But one of the most common questions I get asked is “What can I do?”.

So, here are some links to practical things you can do to help bees and other pollinators (and a few things not to do):

1. Encourage bees and other pollinators at home, in your work place, local community or school by implementing the All-Ireland Pollinator Plan guidelines. These are tailored for specific audiences and provide information on providing food and homes for bees, with practical tips and advice, written by the experts, based on evidence. All the guidelines are free to download.

herb garden.png
Herb gardens can provide lots of resources for bees and other pollinators – especially if you let them run a bit wild (like mine…)

2. Contribute to creating the evidence base by becoming a citizen scientist – you can count bees, flowers or the bees visiting the flowers. Whether you have 15 minutes or much longer to invest, there is something you can do…

3. Stop using biocides in the garden at home – ditch the bug spray, ant bait, and weed killers and use non-chemical control methods. Most insecticides are not target-specific – meaning they kill beneficial insects as well as the pests. Some pesticides are also very persistent and contaminate soils and water courses for years to come, as well as getting into the nectar and pollen of plants. So if in doubt, don’t use them. View dandelions and clover as food for bees not weeds, view aphids as food for ladybirds and blue-tits, and distract colonies of ants away from your home (they are amazing creatures with incredible societies – see here for some suggestions to non-chemical control).

 

Don’t do these things…

1. Feed bees sugar water – a drop of sugar water to revive bees on a cool spring day is ok, but they shouldn’t feed on it for long and you shouldn’t put out containers of it during smmer. It doesn’t contain all the nutrients of nectar and is like junk-food for bees.

2. Start beekeeping to “save the bees” – honey bees are not in decline, need care and attention from trained beekeepers, and poorly managed hives can contribute to disease and depletion of resources for wild bees. By all means keep them if you want to make honey, take up a new hobby and are prepared to invest. Just don’t do it thinking you are helping to conserve bees.

3. Expect a full-house in a bee hotel – only 10/77 of our native solitary bees will nest in a garden nest box. Most of the other species nest in the ground – try leaving some bare earth banks, piles of grass clippings, undisturbed vegetation instead.

Pollinator Plan Infographics_Bee Hotels
From the All-Ireland Pollinator Plan www.pollinators.ie

4. Chuck “wildflower” seed bombs around – unless you know what the seeds they contain are, and where they are from, you could be doing more harm than good to the local plant population. Non-native plants can look unnatural along road-sides, not provide the right kind of resources for native insects, and outcompete or damage native plants. Your best bet is to stop cutting/mowing and leave the native plants to flourish.

 

For more information, see www.pollinators.ie

 

*data from Pollival project – to be published soon…

 

About the author: Prof Jane Stout leads the Plant-Animal Interactions Research Group in Botany, School of Natural Sciences, Trinity College Dublin and is deputy chair of the All-Ireland Pollinator Plan.