Engaging Beneficiaries
It is challenging to privatize the benefits of public goods and make a strong case for any one stakeholder to pay for them. Payment does not guarantee exclusive access to the benefits of public good interventions thereby failing to incentivize individual stakeholders to cover the costs. While this is the root of the challenge in financing NbS, there are specific interventions where it is possible to determine beneficiaries who will either profit or avoid large losses from these interventions.
The cases below demonstrate that NbS may benefit stakeholders including insurers, community organizations, and utility companies. Engaging with them to show the tangible value of NbS can enable the privatization of certain (though not all) benefits of nature and engage stakeholders to pay for them.
Key Learnings on Engaging Beneficiaries
Engaging beneficiaries can create much-needed revenue streams for NbS, but deep local familiarity and place-based connections are needed to identify them. Positively engaging with beneficiaries can help show them the financial and environmental benefits of NbS, increasing their likelihood of contributing to these interventions.
Engaging multiple stakeholders in the same financial vehicle often generates complex structures. Forging the local connections and partnerships to implement NbS vehicles is time-consuming and resource-intensive. As a result, replicating NbS models requires long implementation timelines to secure new local partnerships. This was observed in the case of RISCO, described below, which has taken time to implement all its components. A modular approach can help to adapt to different contexts and implement solutions in stages, with instruments evolving over time to respond to the realities of their sectors, biomes, geographies, and regulatory environments.
Beneficiaries can be engaged in multiple ways, including by de-risking their loans to producers in their supply chain. It is important to clearly quantify and demonstrate the value of the investment for beneficiaries. In the case of the Forest Resilience Bond, valuations were key to engaging utility companies. Benefits may be strategic as well as financial. For example, the Food Securities Fund, engages offtakers in de-risking. Similar to the Living Amazon Mechanism, corporations offer guarantees or direct loans, generating supply chain integrity and consistent supply.
