The Big Picture…
Conservation Finance is a broad term that
encompasses the many tools and strategies for
securing the funds needed to implement and
sustain a given conservation objective.
Conservation Finance 101
This introduction describes conservation finance tools which range from simpler to more complex types of funding and finance to support conservation. In many cases, charitable and government grants are the most suitable and straightforward for conservation projects.
Increasingly, new sources of conservation finance are emerging from efforts to monetize “nature’s goods and services” in new ecosystem markets involving carbon, water and biodiversity. As private investment grows, conservation practitioners are utilizing financial tools from other parts of government, banking, and asset investment to unlock new project possibilities.
This growing medley of options for securing project funds is what we call conservation finance.
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Conservation Finance Sources & Uses
Gifts & Grants
- Individual Donors
- Foundations
- Corporate Engagement/Partnerships
- Institutional & Nonprofit Collaborations
- Voluntary Private Transfer Fees
- Trade Lands
- Donor-Advised Funds & Aggrevators
- Crowd Sourcing
- Federal Grants
- State Grants
Tax Benefits
- Federal/State Tax Deductions
- Bargain Sale or Easement Donation
- State Tax Credits
Public Funding
- International Sources: ERBD, CEB, EEA & GEF
- EU: ESIT, LIFE, Horizon 2020, NCFF, NCFF TA
- Member State Funding Programs
- Lottery Funds
- State/Local Specific Use Taxes/Fees/Incentives
- Municipal Bonds
- Tax Levy Authority
- Pay for Success
Private Capital
- Function Trading (water, nutrients, carbon)
- Watershed Service Payments
- Habitat & Species Mitigation / Banking
- Green Bonds
- Blue Bonds
- Payment for Ecosystem Services (PES )
- Tradable Land Use Rights (TDRs, etc.)
- Conservation Development / Buyers (parcel states)
- Agriculture, Timber, Energy & Other Income
- Water Transactions (partial or full sales, leases, etc.)
- Cause-Related Marketing
- Conservation Investing
- Insurance
- Debt-for-nature Swaps
- Certifications
- Pay for Success
Bridge Financing & Loans
- Philanthropic
- External Revolving Loan Funds
- Internal Land Trust Protection Funds
- Foundations (including PRIs)
- Conservation Lenders & Guarantors
- Private
- Commercial & Farm Credit Lending
- Seller Financing
- Public
- Federal / State Revolving Loan Funds
- Tax-Exempt
Who Does Conservation Finance?
Many organizations have expertise in specific elements of conservation finance. For example, national organizations such as The Nature Conservancy and Trust for Public Land each have Conservation Finance programs that are expert in accessing state and federal funds for conservation.
Organizations like Quantified Ventures can help put together pay-for-success deals and other outcomes-based financing tools while global organizations such as the World Resource Institute and World Wildlife Fund have developed financing tools and initiatives. Organizations like The Nature Conservancy have created impact investment branches. Agricultural companies like Danone are increasingly focused on sourcing from farms using sustainable practices. Government agencies like the U. S. Forest Service and Department of Defense are creating new conservation finance strategies. Private investment firms like Lyme Timber, Sustainable Land Management Partners and Dirt Capital Partners, among others, use private capital to achieve sustainable land management and long-term conservation outcomes. Land trusts across the country are creatively adapting and using local, state, federal, and private resources to sustain their work.
Internationally, various groups focus on conservation finance. The Conservation Finance Alliance has developed a helpful guide and established various working groups focused on specific financing issues, while the International Land Conservation Network has made conservation finance a key focus. Forest Trends has established an Ecosystem Marketplace to track key trends in these markets. Other organizations within specific countries, as well as collaborating globally, are monitoring and helping to advance conservation finance initiatives.
In short: the suite of conservation finance players is long and growing. We look forward to learning from and sharing success stories across our network!
The Four Categories of Sources
Government Grants
Government grants have traditionally funded the vast majority of conservation projects.
Government grant programs provide support for a range of activities that include the acquisition of land or conservation easements, restoration, planning and capacity building across multiple landscapes that include forests, farmland, wetlands and coastal habitats. A perennial conservation finance strategy has been the use of ballot measures, typically known as referenda or initiatives, that have generated significant amounts of conservation funding at the state and local levels.
Charitable Grants/Donations
Philanthropic support can be provided by individuals, foundations, and corporations.
This is a lesser but still significant source of funding for conservation. Traditionally, philanthropic funding has been provided in the form of grants, either targeted to specific projects or less often for “general operating support.” Increasingly, foundations are putting both their endowments and grant funds to work by providing other kinds of support such as program-related investments, low-interest loans, guarantees, interest rate sweeteners, and more. Internationally, some philanthropies, in collaboration with governments, have helped to capitalize conservation trust funds in 50 countries to manage long term financing for protected areas, biodiversity conservation or other purposes.
Cashflows or Earned Income
When there is a source of income, or cashflow, attached to a conservation outcome, this can unlock a new source of conservation finance.
Cashflows can come from a wide range of sources including municipal, state or federal tax revenue for government-funded conservation projects; entrance or use fees for parks and other valuable resources; sustainable timber harvest; and payments for ecosystem services like carbon credits.
For-Profit Investments
Cash flows also create an opportunity to attract private investment, a complex but growing source of funding for conservation.
Because investors require a return, this can create challenges for nonprofit organizations accustomed to utilizing grants, or “free money.” But there are numerous ways in which private capital can advance conservation outcomes, ranging from parallel investing in sustainable forestry and regenerative agriculture to blending market rate capital with public and philanthropic funding to increase the scale of conservation. Private investment in conservation has grown significantly over the past 10 years with the proliferation of “impact investment” firms that are deploying capital in sectors that range from forestry and agriculture to wetlands and fisheries, typically balancing “financial return” with “impact.”
Looking to Explore
Specific Conservation Finance Tools?
See examples of these specific tools and how they work via the Conservation Finance Tools page.
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