Scaling up Conservation Finance

A RedLAC Initiative to build capacity in market solutions for biodiversity conservation

July 2010

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Contact Information: RedLAC Latin American and Caribbean Network of Environmental Funds Based at Funbio Brazilian Biodiversity Fund* Largo do Ibam, 1 6o andar Rio de Janeiro 22271-070 - Brazil

Camila Monteiro camila@funbio.org.br +55 21 2123 5305 Local partner contacts are listed for each country in Annex 1. *RedLAC is not a registered corporate entity. It is legally represented by the individual trust fund that chairs the network, via its Presidency and Executive Secretariat. These are designated by the RedLAC Assembly every two years and have a maximum mandate of up to four years. The Brazilian Biodiversity Fund, Funbio, currently holds this seat, with its mandate extending through 2012. RedLAC can also be represented by any of its members, on an as needed basis, as long as this decision is approved by the networks General Assembly and Executive Council.

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I. Executive Summary Over the last fifteen years, Conservation Trust Funds (CTFs1) have been set up in more than 50 developing countries in Latin America, the Caribbean, Africa and the Asia Pacific regions. CTFs have been recognized as one of the most efficient mechanisms to ensure the long-term support of biodiversity conservation programs and protected area systems as demonstrated by their ability to mobilize significant financial resources from a variety of sources and to involve a diverse set of stakeholders in the implementation of biodiversity conservation and sustainable management conservation programs. CTFs are increasingly seen as the choice strategic partners for taking advantage of emerging funding opportunities for biodiversity conservation and for contributing to the implementation of national conservation policies. In 1999, a regional network of trust funds - RedLAC2 was established to enhance learning, collaboration and best practice sharing in conservation finance among trust funds in Latin America and the Caribbean. RedLACs broader goal is to support increased efficiency and effectiveness in resource allocation and to enhance impacts in biodiversity conservation in the region. RedLAC has identified the evolving opportunities around market based instruments and their potential to provide lasting and integrated solutions to the pressures that threaten biodiversity, while also offering new resource streams for biodiversity conservation. Recognizing the strategic position of its members, RedLAC is positioning itself to enhance the knowledge and operational capacity of CTFs to provide innovative solutions in conservation finance. To do so, RedLAC proposes to utilize the existing knowledge and best practices of its members to enhance and improve CTF capacity in topics related to market based financial mechanisms, such as global carbon markets (REDD type mechanisms) and other payment for ecosystem services mechanisms. Aimed at scaling up biodiversity conservation programs and providing a solid financial platform for
CTFs are flexible structures that raise as well as invest funds in grant programs targeted at a variety of partners nongovernmental organizations (NGOs), community based organizations (CBOs), and governmental agencies (such as national parks) acting as financing mechanisms rather than implementing agencies. They serve to strengthen civil society, and to make protected area management agencies more transparent, accountable and effective. More recently, CTFs have also served as catalysts in the creation of new partnerships with private businesses bringing new resources to biodiversity conservation programs. RedLAC is the Latin America and Caribbean Network of Environmental Funds. Currently made up of 19 CTFs from the region, its mission is to set up an effective system of learning, strengthening, training, and cooperation through a Network of Environmental Funds aimed at contributing to the conservation and sustainable use of natural resources in Latin America and the Caribbean. For more information, please visit: www.redlac.org
2 1

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implementing lasting programs, RedLAC is seeking support from donors that see CTFs as effective mechanisms to structure a capacity building and grants program focused on innovative financial mechanisms and enhancing the operational capacity of CTFs. This initiative is structured around the following three major components: 1. Capacity Building for Conservation Trust Funds Open workshops with experts, based on RedLACs funds best practices, focused on sharing knowledge and delivering cutting edge technical capacities to implement innovative financial mechanisms, as well as funds establishment requirements and operational practices. 2. Competitive Grants Facility to encourage CTF pilot programs on innovative conservation finance schemes. Implement a competitive grants facility to co-finance innovative mechanisms within CTFs existing funding portfolios. Grants would contribute start-up costs for new initiatives, such as the development of a business plan and market viability study, hiring new staff or consultants, developing operational manuals, and benefit sharing solutions with on the ground partners. 3. RedLACs Organizational Development Establish an operational support structure to coordinate capacity building activities, complementing the current structure of RedLACs Executive Secretariat. A description of the strategy for delivering each of these components is spelled out in the subsequent sections of this concept paper. A total of about US$ 3.85 million will be invested over three years (2010-2013) to directly support the involvement of all RedLAC funds in 13 countries from the region as well as of about 10 to 15 funds in Africa. Of the total programs costs, RedLAC CTFs will invest about US$ 1.1 million, in travel expenses related to training, in matching resources for the pilot grants facility, and in support for the operation of the RedLAC Executive Secretariat (through membership fees). The Gordon and Betty Moore Foundation and FFEM/AFD would contribute US$951K and US$983K, respectively. The proposed program will rely on an administrative platform, structured within the Brazilian Biodiversity Fund Funbio given its current capacity as RedLACs Chair and Secretariat. The capacity building component will also include collaboration and engagement with other key trust funds from Africa, enabling Funds to benefit from the peer-to-peer learning and exchange here described, making this a truly global conservation finance initiative.

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II. Justification Environmental issues were once regarded as irrelevant to economic activity, but today they are dramatically rewriting the rules for business, investors, and consumers. Current changes in the global context demonstrate an increase in concerns for and the relevance of environmental issues, given pressures from consumers and policy makers, and a response from productive sectors to identify appropriate responses to these trends. This is especially evident in the discussions and proposals being implemented around climate change mitigation opportunities, where an estimated more than US$100 billion is being spent annually by pioneering entrepreneurs, organizations, and governments that are taking steps to incorporate environmental criteria into economic systems. As an example, in 2006, an estimated US$52 billion was invested in wind power, biofuels, and other renewable energy sources, a rise of 33 percent from 2005 figures. Preliminary estimates indicate that the figure soared as high as US$66 billion in 2007.3 Carbon markets have been especially significant, growing substantially every year and reaching an estimated US$30 billion in 2006, nearly triple the amount traded in 2005. The over reliance on international funding sources and the limited national capacity to integrate financial and market based solutions into conservation programs are some of the main challenges for conservation trust funds. Despite the ongoing success of trust funds to provide financial support to conservation programs in their national (or sometimes regional) contexts, most CTFs have so far, focused on traditional funding streams. These include debt-swap agreements, from which a number of trust funds have emerged, as well as other bi-lateral and multi-lateral commitments to fund conservation programs administered by CTFs. As a result, few conservation initiatives throughout the world can be considered financially sustainable. Support for protected areas is especially vulnerable in this scenario. Recognizing the need to incorporate market trends and dynamic threat analysis into the design of their funding strategies, CTFs would like to explore and identify the different roles they can play in providing a platform for bridging the gap between markets and conservation objectives.4 Ultimately, CTFs can act as intermediaries designing and guiding market strategies that support biodiversity, administering resources and programs, and delivering a gamut of services to project implementers. In the Latin America and Caribbean region, RedLAC is well positioned to organize the conservation
3 4

Worldwatch Institute, State of the World, 2008. Lampman, S. Possible Roles for Environmental Funds in Payment for Ecosystem Services Schemes, October 22, 2007 - Paper prepared for the El Salvador EAI/TFCA Annual Meeting organized by USAID.

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finance community to take advantage of new market opportunities for conservation finance, by strengthening local capacity to manage and innovate their programmatic and funding strategies. Networks, like RedLAC, can act as a powerful means to share information and knowledge around specific topics. RedLACs focus on promoting communication and collaboration to achieve conservation finance solutions is a solid example of a cadre of committed local organizations focusing on these issues and learning from one anothers best practices. The network is capable of structuring ambitious regional initiatives such as the Ecofunds Database, which is the first project overseen by RedLAC, involving 10 member Funds and covering 9 countries in the region. This system will track conservation investments as well as needs and opportunities for funding. This program is funded through a grant of USD 618K from the AndesAmazon Initiative of the Gordon and Betty Moore Foundation. RedLAC plays a key role in the LAC region by uniting the biodiversity conservation players and helping them to take advantage of new markets to fund conservation. Thus, it contributes to strengthening its members capacity to manage but also develop innovative approaches in their programs and funding strategies. In Africa there are already 13 CTFs in place, six are being created, and at least four others have had feasibility studies. Most CTFs established in Africa before 2002 were intended to provide support to one or two protected areas, and were in English-speaking countries. However, most of the new CTFs in Africa are located in French-speaking countries and have been created to help funding the whole network of protected areas of a country. This shift also reflects the shift of the GEF (which is the largest donor to African CTFs), which increased support to protected areas networks management. The trust funds are less advanced in Africa than in Latin America. A recent study on the financial performance of CTFs showed that the 5 African funds that responded to the questionnaire were able to raise only USD 42 million (with an average of USD 8.5 million per fund). By contrast, the 12 Latin American funds were already topping USD 268 million. This difference comes from the fact that Latin American funds have benefited from debt for nature swaps with the U.S. government, which have enabled them to create capital funds. Moreover, Latin American funds have also networked strongly over the past decade, thereby sharing practices and shortening learning curves in conservation finance and trust fund management. The absence of a financial gap analysis at the national networks of protected areas in most African countries (with some notable exceptions such as Madagascar) complicates the design and creation of CTFs to support an entire national network of PAs.

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During 2009, a working group on the development of African CTFs was established under the Conservation Finance Alliance (CFA). This group congregates currently 9 African trusts and representatives from RedLAC, WWF, the Royal Society for the Protection of Birds (RSPB), the European Commission, GEF, AFD, FFEM and KfW. The group is now co-chaired by WWF and the South African SKEPPIES fund. One of the groups activities has been to identify needs and support for capacity building of African funds, which could be delivered through training seminars and exchange of experiences with the RedLAC network under a South-South cooperation scheme between the regions. Although this is not a specific target of the RedLAC Capacity Building Project, most African funds contacted confirmed the usefulness of setting up a network to share experiences, reduce costs and facilitate the exchange of information. III. Objectives With the broad goal of scaling up the participation of CTFs in environmental service financial markets this initiative has the following objectives: 1. Strengthen the capacity of CTFs to take advantage of and develop new market based resource streams for biodiversity conservation and to establish new CTFs, by systematizing and sharing proven best practices in funds day to day operation; 2. Facilitate the implementation of new financial mechanisms demonstrating greater resource flow to biodiversity conservation through support for a CTF grants facility and demonstrating real conservation results. Going from theory to practice is the best way to showcase, learn, and capitalize on innovative conservation finance solutions. 3. Document and share best practices of CTFs in their day to day operation as well as in innovative finance mechanisms with the broader conservation finance community, enhancing learning, collaboration and exchange among practitioners. Ultimately, RedLAC aims to secure additional expertise and resources for biodiversity conservation in partnership with the Gordon and Betty Moore Foundation, the French GEF, the Global Development Alliance, as well as other financial and technical allies interested in engaging in this initiative. IV. Activities The proposed initiative contains three broad sets of activities, each corresponding to the objectives listed above.

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1. Capacity Building for Conservation Trust Funds: The first set of activities relate to developing the necessary skills within CTFs to both improve their operational capacity to manage existing conservation programs and financial assets, as well as to develop new areas of expertise related to innovative market instruments. This component would be open to participation from non-RedLAC CTFs, offering an opportunity to expand knowledge exchange to other regions, as well as to engage additional donors interested in supporting CTFs. There are 21 RedLAC member Funds and about15 CTFs in Africa including those in a design stage. There are just a few Asian Funds that are in RedLACs contact list and whose existence was documented in the Rapid Review study in 2007-08. Thus, it is expected that the vast majority of participants will hail from LAC and from Africa. Asian participants will be expected to be willing to travel to Latin America and Africa to attend workshops and also to pay for their travel costs. As mentioned below, the tentative content of the three tracks has been based on surveys conducted with African CTFs in late 2009 (Training Needs Assessment) and in April 2010 (consultation in the form of three conference calls facilitated by P. Taeb) and with RedLAC members in 2008. A final questionnaire will be sent by the RedLAC secretariat (Funbio) to all potential participants to not only finalize the list of 10 topics that will be picked for the workshops but also get a first sense of the level of participation. This information will be helpful to decide where a workshop should be organized (in case, there is mainly interest in a given topic on the part of African CTFs, the workshop will take place there) and whether any one topic should be covered twice (in case, there are 30+ people expressing interest in a topic, Funbio might consider organizing a workshop on the subject twice since participation will be limited to roughly 20 people per workshop.) Here are the 16 topics that will be included in the survey: Administrative costs and fees for services provided by CTFs Support to Protected Areas (financial and technical) Strategic communication and marketing Fundraising Impact monitoring and evaluation Asset management and investment strategy Issues related to starting a CTF (first 3 years) Governance Grant-making and operating manual Strategic planning and institutional development

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Leadership for conservation Networking and regional collaboration Energy and Climate Payment for Ecosystem Services Forest Carbon / REDD Mechanisms Biodiversity offsets 1.1. Workshops on the establishment of trust funds This cycle of seminars focuses on exchange of experience to support CTFs in development or newly established, in Africa but also in Latin America and the Caribbean. These seminars - two per year for two years - would all take place in Africa where the main public concerned is, but the speakers would be mainly Latin American CTFs members or experts involved in this region. A survey with African funds participating in the CFA Working Group has achieved an initial assessment of topics for exchanging experience. The themes requested for support by the African funds are mainly related to the establishment of the CTF (defining mission, legal framework, governance rules) and to the day-to-day operation (such as strategic and operational procedures, financial and auditing guidelines, fundraising and communication, monitoring and evaluation, and hiring human resources). 1.2. Workshops on strengthening capacities of trust funds This cycle of three seminars aims to exchange experiences during the second year of the project among funds already established both located in the LAC region and Africa. These seminars should all be held in Latin America where the main public concerned is based. The topics of exchange were determined following a needs assessment within the RedLAC members and should include: monitoring and evaluation of impacts on biodiversity of the projects financed by the CTFs; strategic communication; and asset management and investment strategies. 1.3. Workshops on innovative financial mechanisms This cycle would focus on delivering cutting edge technical capacities and knowledge to prepare CTFs for using new financial arrangements. It would be composed of three seminars during the first year and is focused on funds already experienced mainly located in Latin America and the Caribbean, but would be open to some African funds established and that want to start familiarizing themselves with these new tools. As in the previous cycle, the themes were identified following an assessment of needs within the RedLAC members and should include carbon markets, climate-friendly technologies, energy efficiency, Payment for Ecosystem Services, strategic impact evaluation and biodiversity compensation.

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The workshops would be designed and run by top experts on the selected topics and would be complemented by RedLACs members own case studies, emphasizing direct experiences which can be utilized to demonstrate and explore the necessary steps towards the implementation of a program, analyzing opportunities for adaptation to local contexts. The week-long workshops would be organized and hosted by rotating CTFs, enhancing the projects ability to capitalize on existing best practice experiences in different countries. The rotating workshop scheme would also serve to promote local international conservation finance event in their countries and strengthening CTFs connection to the RedLAC network. All workshop and course materials would be documented (in English, Spanish and French) and turned into materials which can be made available through different online platforms (e.g. RedLAC and other key websites) to facilitate their replication and sharing with other conservation finance practitioners. Measuring the Impact of CTFs on Biodiversity Within the Capacity Building Component, there is an effort to develop a methodology on measuring the impact of Conservation Trust Funds on biodiversity. This theme has been identified as one of CTFs shortcomings (most Funds devote the majority of their resources to measuring the outcomes of the projects they fund but not these projects impacts per se). As a result, RedLAC launched a working group in 2008 whose purpose was to study this impact measurement question more in depth. The goal of this sub component of the Project is to produce an impact measurement methodology, i.e. second-level (more macro) meta-evaluation methodology measuring impact vs. outcomes. Every RedLAC Fund will have the opportunity to apply it to its own work eventually. A budget will be set aside so that the RedLAC working group can recruit an independent expert to help the network in that endeavor. First, a survey of the few existing M&E systems (e.g. FPAA in Colombia, Fundacion Natura in Panama, or PUMA in Bolivia) will be conducted. The consultant will then integrate best practices on M&E to expand the RedLAC M&E working groups horizons. The working group will thus be in a good position to decide on a pilot impact measurement methodology with the consultants help. This methodology will subsequently be tested with actual projects funded by RedLAC Funds, members of that working group. After this second phase, another report will be produced, laying out lessons learned from the application of the pilot methodology and proposing one for the entire network. The material produced by the M&E working group and the consultant will potentially be integrated into the corresponding experience sharing track (in the course of year 2).

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In sum, this component will include the following activities: Consolidation of existing impact monitoring experiences in RedLAC (types of methodologies used, categories of indicators, typology of projects funded by RedLAC Funds, operational and financial implications of M&E) Production of a report (presentation of past experiences - see previous bullet point - and of best practices in M&E) to inform the working groups discussion. Organization of a workshop to decide on pilot methodology Testing of pilot methodology by three to five Funds on their project portfolio or a set of projects Production of a final report presenting feedback on implementation of pilot methodology by each of the Funds and finalization of M&E methodology. That methodology will then be presented to the RedLAC Executive Committee and subsequently to the General Assembly. Transfer of knowledge outside the workshops: The strengthening of CTF capacity cannot stop for participants when workshops end. They have to be able to pursue their learning once they are back at their organizations and to transfer the knowledge they have acquired to their co-workers. However, the responsibility of knowledge transfer to other CTF employees will not rest only on their shoulders. Tools will be offered by the Project so that everyone in the CTF universe can enrich his/her knowledge. Knowledge sharing and continuous learning: A web platform featuring a number of different tools and varied material will be put in place. The Funbio colleagues lean toward using the current RedLAC websites knowledge platform that they admit is imperfect and needs to be improved. However, using the existing platform would avoid replicating efforts and incurring costs resulting from setting up a new one. The platform will present: 1. Complete content of workshops (i.e. workshop summaries drafted by Project Coordination (Funbio), presentations and attached comments provided by presenters for those who could not attend (available in French / English / Spanish), materials/hand-outs distributed, and participants and presenters contact information. 2. List of additional resources (articles, publications, books) related to workshop topics that every presenter will be asked to submit for those who want to further study the subject matter 3. Video testimonials of workshops participants and presenters/experts and picture gallery of each workshop 4. Availability of the workshop presenters / experts to answer questions for 2 months following the seminars they will have attended: when they are contracted by Funbio, presenters will be asked if

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they accept to remain available to respond questions post-workshop. Their fees will reflect this extra time commitment (that will be evaluated to a few hours a month). 5. Discussion and exchange forum enabling the formation of a learning community featuring: Feedback from workshop participants on quality of seminars they attended Discussion threads (with optional alert system) Open-ended comments on subjects of interest (e.g. suggestions of articles, upcoming conferences, mini blog entries, opinions) Requests for short-term assistance 6. Thematic updates every three months submitted by the RedLAC Secretariat: the most popular topics (e.g. fundraising, M&E) will have dedicated sections on the platform. In addition to workshop material and additional resources, topical updates (e.g. upcoming conferences on the subject, RedLAC reports on that topic, recent articles or books published) will be posted regularly. 7. Link to Environmental Funds Tool Kit: table of contents and web link available on platform Application of knowledge acquired Workshop participants will be asked to draft an action plan at the end of the seminars they will attend detailing a) how they will use the knowledge they have acquired in their work in the 6 months following their return, and b) how they will transfer what they will have learned to their colleagues. They will already have filled out a tentative action plan in their applications (see section 1.5. below) and thus they will able to finalize this plan at the end of the workshop. At the six-month mark, they will receive an email from the Project Coordination (Funbio) asking them to report on what actions items they will have carried out and what results those will have contributed to produce.

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Operational aspects: This component of the initiative will be coordinated and overseen by the Project Coordination (Funbio). a) Number of participants: A total of roughly 20 participants per workshop seems the best compromise in order to combine maximum participation and workshop effectiveness. The ten workshops will guarantee participation by about 200 individuals. There are currently 21 RedLAC member Funds and about 15 in Africa (including those in formation). Adding a few CTFs from Asia we can expect that around 40 CTFs will be involved in those seminars, i.e. on average 5 slots per Fund. Thus, for instance every Fund could send 2 employees to 2 workshops. The consultation of African CTFs carried out in April 2010 has revealed that most of them would be interested to attend more than one workshop, including from different tracks. Some of the more advanced one are interested not only in those on capacity strengthening (track #2) but also in those focusing on innovative mechanisms. By the same token, we heard from the Funds that are still in the early stages of their life cycles that they would benefit from the start-up seminars (track #1) but also from those on capacity strengthening (track #2). b) Timing of workshops: The four workshops of Track #1 and the three Track #2 seminars will take place over the three years of the Project. It has been tentatively planned that the four Track #1 workshops will take place in Africa while the rest will be based in the LAC region. However, it will depend on the level of interest that the upcoming questionnaire that Funbio will send to all potential interested CTFs will be able to gauge. Synergies can be found between this Project and African CTFs current regional structuring and capacity building efforts. Indeed, representatives from African CTFs made it clear during the consultation organized in April 2010 that they were keen to form a formal or informal network of CTFs for the region modeled after RedLAC. Their first regional meeting will take place in Dakar in September 2010 and the Capacity Building Project will be presented to them during that event, although it wont be a workshop of the Project. By the same token, future annual meetings of African CTFs would be perfect venues for other Africabased experience sharing workshops. Funbio and the CFAs African Committee will coordinate accordingly.

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c) Experts and working groups: All the training and experience sharing seminars / workshops will be run by experts in the particular areas that will be covered on the occasion. These experts will be recruited by Funbio through invitations based on terms of reference reflecting the wishes of those that will attend those workshops. The content of these will draw upon case studies presenting Funds actual experiences or projects that are representative examples. Procurement transparency: hiring external personnel with institutional links with the RedLAC member funds should be avoided, and exceptional cases must be approved by the Project Committee. Thus, if an expert from the staff of a RedLAC fund is recommended to run a workshop, this can be hired only if also approved by the Project Committee. Reports will also be presented at RedLACs annual General Assemblies relating the progress and outcomes of this capacity building endeavor. d) Process and selection criteria: Interested individuals will need to provide the following information and documentation as part of their application: i. Individual application form; which will include: a) a description of the applicants role within the CTF, b) rationale for participation (i.e. why that workshop would be beneficial for his/her work), b) tentative plan for follow-up actions leveraging his/her participation and benefiting the organization after the candidate returns from workshop (assuming that the CTF has enough knowledge transfer capacity), and c) skills self-assessment (will include self-assessment on three to five dimensions related to the workshops topic the Project Coordination (Funbio) will thus have a better sense of each participants level, which will help in the workshop design) ii. Curriculum Vitae of applicants iii. Letter from leadership showing support for participation and commitment to support follow-up actions: in case the Executive Secretary or Director is applying, the letter will come from governance body (Board or governing committee when Funds are in the process of being created). When technical staff applies, the letter will come from the Director. iv. Language preference and restrictions; v. Demonstrated organizational commitment to pay for travel and local costs (note that candidates will be notified that some financial support will be available on a limited basis) The applications will be reviewed by the Project Coordination (Funbio), except for applications coming from Funbio employees that will be examined by the Project Committee (to avoid potential conflicts of interest). Applications for the same workshop coming from employees of the same Fund will be reviewed separately.

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The selection criteria will include: Convincing explanation about how the candidate will benefit from workshop and how s/he will implement follow-up action plan to leverage lessons learned Demonstrated support of individuals candidacy and commitment to let candidate execute his/her action plan upon his/her return on the part of organizations leadership (Board or management) CTF has a knowledge transfer capacity that will leverage the workshop content and increase the number of staff people that will have access to the material The first two criteria are critical and are considered to be requirements. Given the varied level of capacity of CTFs around the world, the third criterion is not required. However, the Project Committee sees it as a key to a successful follow-up to the workshops. The review process is competitive and there is a limited number of participants, around 20. All candidates will be notified by Funbio whether their applications have been selected or not. In the case they have not, candidates will receive substantive feedback from Funbio to help them apply to future workshops if they wish to do so. In case a workshop is under-subscribed and an application is not deemed acceptable, the Project Coordination (Funbio) will provide feedback to the candidate and give him/her the opportunity to revise his/her application right away to allow for his/her participation in that workshop. In order to ensure wide participation of CTFs from LAC / Africa / Asia there will be a limit of two participants per CTF per workshop. We expect to see different employees from the same CTF apply to multiple workshops as the topics covered will be far-ranging and the audience of these seminars consists mainly of technical staff. However, when the Project Committee considers the applications of two candidates coming from two different CTFs, one of which has already sent staff members to previous workshops and the other has not, preference will be given to the latter. e) Financial support: Candidates are expected to pay for part or all of their travel costs. However, to allow maximum participation some financial support has been budgeted in this Project. It includes: For African CTFs: All participants lodging and per diem expenses will be paid for the workshops that will take place in Africa The Project will offer full financial support to 18 participants attending workshops in the LAC

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region (6 workshops should take place in the region): given that the number of participant hailing from African CTFs is uncertain for every workshop, we recommend that there be flexibility and the number of 18 be taken as a total. This means that there will not be necessarily 3 participants from Africa receiving full support for every workshop in LAC but rather than a total of 18 participants will get that support over the 6 workshops. It is also important to note that participants from some African CTFs may be willing and able to take part in workshops in LAC without financial support. Thus, it is possible that there will be more than 18 African participants in these workshops overall. For RedLAC CTFs: The Project will offer full financial support to 12 participants so that they can attend workshops in Africa: as in the case of the African CTFs, it seems to make sense that 12 employees from RedLAC Funds overall will benefit from that financial support over the 4 workshops currently planned in Africa rather than 3 per workshop systematically. Contingency: the budget includes a contingency fund supposed to cover unexpected expenses, such as expensive visa or immunization costs. However, after the consultation conducted with African Funds representatives, we realized that they were generally in agreement with covering their travel costs but pointed to the possible need for financial support for very expensive airline tickets. As a result, unusually or unpredictably high airfares were added to the list covered by this contingency fund.

In order to avoid excluding candidates from cash-strapped Funds who could clearly benefit from the workshops, the ability to pay travel-related costs has not been included in the selection criteria even though a commitment to do so is among the items that each candidate will be asked to submit. After candidates have been selected, they will be notified and asked to confirm their attendance within a short time frame (two to three weeks). They will also be expected to confirm that they can pay for part or the entirety of their travel costs. In case they inform the Project Coordination (Funbio) that they are not able to pay for the share of costs they were expected to assume, their cases will be examined one by one and the Project Coordination (Funbio) will proceed to the decision, with the Project Committee or RedLAC Executive Committee (for African and LAC participants cases, respectively) whether the candidates can receive financial support. To avoid complications and maintain a climate of trust, no justification of financial hardship will be asked from the candidates. Thus, financial support will be provided on a first come first served basis and when the 30 fellowships (12 for RedLAC members and 18 for African CTFs) and the contingency fund are exhausted, candidates requests will be turned down.

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Also, potential participants will be advised that organizations whose employees have not been granted financial support in the context of the Project will come before those whose staff has.

2. Competitive Grants Facility to encourage CTF pilot programs on innovative conservation finance schemes: CTFs often operate with restricted resources from donors for specific programs. In very few cases do CTFs possess reserve funds which they can direct towards starting new programs. Even if CTFs receive training and participate in the capacity building activities spelled out under component 1 of this proposal, launching a new program would necessarily involve start up costs to support a business plan and market feasibility study, hiring new staff or consultants, developing new materials (e.g. operational manuals, communications and marketing materials, ). Moving from theory to practice in what pertains to CTFs involvement with innovative financial mechanisms would require external financial inputs which can be used to leverage CTFs own investments. In order to kick start new programs and reduce the burden on CTFs, RedLAC has proposed the design of a Competitive Grants Facility which would co-finance the development of innovations within CTFs existing funding portfolios. This Facility would co-finance pilot projects on innovative financial mechanisms (including all topics delivered through the workshops), funded by the programs donors. The Grants Facility would have the following characteristics: Only RedLAC member funds would be eligible to participate. Each CTF interested in developing a pilot project/program on Innovative Financial Mechanisms would need to provide an investment of US$50K, in order to leverage an additional US$100K from the Facilitys donors (Moore Foundation & FFEM), thus bringing the total proposed investment in each pilot to US$150K. The application and selection process would be open and transparent. A budget has been set aside for a consultant to be hired who will help to finalize the selection process and structure the grant facility. However, the following components are likely to be carried out. The project proposal and selection process will be coordinated by the Project Committee, a monitoring and selection committee composed of RedLAC representatives, representatives from some donor agencies, and conservation finance experts. As FFEM generally does not sit on that type of committees, it will be represented by an outside expert whose references will be submitted by the RedLAC secretariat for approval (or non objection). Every member on this committee will work on a voluntary pro-bono basis and will only be defrayed for the costs they will incur to attend those meetings.

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The following selection criteria are likely to be considered: 1. Market-based aspect 2. Innovative nature Those two criteria are the cornerstone of what this Grant Facility is about. Indeed, the initiative seeks to foster the emergence or replication of market-based mechanisms. Furthermore, the innovative nature of these projects is essential, i.e. projects featuring types of mechanisms that are under-represented in the RedLAC member Funds portfolios will be encouraged. Thus, the respective weights of those two criteria will probably be higher than that of the other six criteria. 3. Financial sustainability: the ability for the mechanism to generate income that will help fund future projects of the same nature 4. Financial amount / volume/ size: amount in $ / Euros generated by the mechanism. It is likely that the positive impact of the mechanism will increase as the amount generated is higher. 5. Programmatic impact: whatever the focus of the mechanism (e.g. energy efficiency, PES), it will be important to assess its programmatic impact, for example in terms of volume of reductions of emissions or of avoided emissions, or change in conservation status 6. Return on investment: the ratio between the amount of money invested to set up the mechanism and make it operate and the income that it will bring 7. Leverage effect: the ability to attract other investors to the project or indirectly to channel additional funds towards conservation and/or development 8. Social impact: the mechanism will have to produce social benefits for the populations and communities as well Projects that will be presented should feature innovative financial mechanisms that have not yet been tested yet by the CTF candidate. It is recommended that proposals have a focus on trying out new market-based instruments. Mechanisms that are likely to be supported include (this list is not exhaustive): 1. Payment for Ecosystem Services (PES): regular payments made for beneficiaries to maintain/or increase the provision of certain ecosystem services, such as: a. Carbon: includes payments for avoided carbon emissions that may come from the use of new technologies and reforestation (Clean Development Mechanisms defined by the Kyoto protocol) or may be the result of forest carbon projects (REDD - Reducing Emissions from Deforestation and Degradation); b. Water: payments made by users to providers (communities, protected areas, companies, etc.) that maintain water flow with adequate volume and quality or that refrain from degrading watersheds.

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2. Offsets schemes: offer private landowners or companies a means to meet obligatory or voluntary compensation for their impacts on natural areas, such as by renting preserved areas. 3. Species/ Biodiversity, wetlands banking creating a clearing house and a registry of species conservation projects or preserved lands to be traded, as a tool for compensation schemes. 4. Markets for green products: new businesses that offer products and services that have an added value because of an environmental friendly production process, or that use natural resources as an asset (such as the examples created within New Ventures Mexico). 5. Revenues from tourism and other user fees: charge users visitation fees or for ecosystem services and use resources to conserve these areas. 6. Mortgage-backed securities, derivatives and bonds use such financial sector instruments for environmental purpose, making hedge payments for future use. 7. Pollinators rental facility: promote renting schemes for species with agricultural benefits such as pollinators. There are also financial mechanisms that can be used by CTFs which are not traditional revenue sources, even though they are not directly related to market activities, such as: 8. Fines and penalties conversion: direct resources from court decisions to a fund with a specific purpose in agreement with government agencies that apply penalties. 9. Royalties conversion: direct resources received by governments from royalties (e.g. oil exploitation) to a fund with environmental purposes. 10. Green lottery: create a lottery that dedicates part of the revenues for environmental projects through a specific fund. 11. Fiscal incentives: reduce taxes in proportion to donations made to an environmental fund or facilitate loans for activities that are environmentally friendly. 12. Biodiversity/ conservation auctions: leverage individual donations for conservation projects through environmental auctions, which conserve natural areas. 13. Pollution taxation scheme: direct resources from taxation on polluting sectors towards the conservation of natural areas. 14. Bioprospecting payments: receive revenue payments for the access and use of natural resources. Proposed projects will be expected to result in financial income (that will be channeled towards additional resources for conservation projects) and measurable social and environmental outcomes. All projects supported by CGF will be monitored and evaluated. The Grants Facility will have the following timeline: - The call for proposals will be announced to RedLAC members in July 2011

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Deadline for submitting proposals within 2 months is September 30th, 2011 Applications will be evaluated by the Project Committee within 30 days (until the end of October) Project Committee meets to select pilot projects during the RedLAC Assembly in early November 2011. Selected pilot projects will be announced during the RedLAC Assembly.

3. RedLAC Organizational Development: Support will be provided to RedLACs Executive Secretariat to coordinate the capacity strengthening and competitive grant fund efforts. The Executive Secretariat will work together with the Project Coordination team to organize the capacity building activities, the grants facility and the sharing and capitalization of the experience of the Project as a whole. The following activities will be carried out as part of this component: Set up an operational structure to support the capacity building component: RedLAC currently operates with one Executive Secretary. This position is in charge of implementing RedLACs annual work plan, putting together the networks annual General Assembly, organizing two RedLAC Executive Committee meetings per year, representing the network in events, identifying and sharing information sources relevant to the network, producing the networks newsletter and all other communication materials, and carrying out projects that are part of RedLACs strategic plan. In order to implement the capacity building component described above, the current staff of the secretariat will need to be reinforced by a full-time person who will focus on the planning, coordination, and execution of the component in close collaboration with RedLACs Executive Committee (terms of reference will drafted describing the position and the person will be recruited through a selection process). Set up an operational structure dedicated to the Competitive Innovation Fund (the projects component #2): four main tasks will have to be carried out to put that structure together: i. Put a technical committee in place (composed of Funbios technical agents) and an independent monitoring and selection committee made up of RedLAC members, representatives of certain donor agencies, and conservation finance experts. ii. Organize the call for proposals, the technical review and selection process for the proposals submitted to the Grants Facility that will include: a) the creation of its operating manual; b) the structuring of internal resources mobilized by Funbio to execute the various tasks on behalf of the Project Coordination; c) the creation of an independent monitoring and selection committee (Project Committee).

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iii. iv.

Support Grants Facility grantmaking and the project monitoring activities Support the production of promotional material that will document and report on the progress and outcomes of the projects. A final report presenting the Project activities will be published and widely distributed.

The Project also plans to support the design of a business plan for the network, as an effort to strengthen RedLACs sustainability. To have a business plan will enable RedLAC to define the follow-up activities of the Capacity Building Project or the development of new ones. Timeline

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V. Expected Results It is expected that at the end of the three years, Conservation Trust Funds, especially RedLACs members, would have acquired significantly relevant new skills to operate market based instruments to increase funding and resource flow to conservation programs. This means the capacity building for CTFs should have a high impact on the amounts managed by the funds through long term initiatives. This increase is measurable and would be monitored to evaluate the success rate of the program. Given the focus of this proposal on capacity building for CTFs, it is expected that the operational efficiency and quality of programs implemented by RedLAC and other participating CTFs would strongly improve, in existing programs as well as in the new schemes developed. The documentation of best practice standards and lessons learned by Conservation Trust Funds would also bring new and invaluable content to the conservation finance community, helping existing and new CTFs to build on the lessons of the past. The focus on documentation would also enhance the position of conservation finance topics and leaders in the biodiversity conservation debate. With innovative programs underway CTFs would be able to take advantage of new private sector partnerships that enhance the response to the conservation crisis, offering creative solutions to partners interested in new emerging green economies. Furthermore, the new market mechanisms which would be put in place through the Grants Facility would provide new resource for biodiversity conservation programs improving their capacity to meet the funding gap for providing incentives against opportunity costs and competitive land uses and towards the enhanced protection of fragile ecosystems.

VI. Proposed Estimated Cost External donors would cover the following main items: Workshops structure (room rental, catering, material) Contracting thematic specialists for workshops Workshops content development and materials translation Co-financing for pilot projects Administrative support for the grants facility Consultant for structuring grants facility - operational manual, thematic lines, call for proposals, reporting, monitoring and evaluation

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Grants facility adhoc coordination and technical committee meetings Pilot projects monitoring - visits and reports Pilot projects final independent evaluation Pilot projects documentation and materials for sharing and replication Final publication: case studies, workshops documentation and conclusions, pilot projects final reports Development of a Business Plan for RedLAC RedLAC funds would cover their own travel expenses (component 1), commit to raising matching funds for the pilot projects (component 2), and provide support for the Secretariat structure through their membership fees. In-kind contributions are not considered in this cost estimation.

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Annex 1 RedLAC members

BELIZE PACT - Protected Areas Conservation Trust Sharon Perera sharon@pactbelize.org BOLIVIA FUNDESNAP - Fundacin para El Desarrollo Del Sistema Nacional de reas Protegidas Sergio Eguino seguino@fundesnap.org PUMA - Fundacin Proteccin y Uso Sostenible de Medio Ambiente Juan Carlos Chvez jcchavez@fundacionpuma.org BRAZIL FUNBIO Brazilian Biodiversity Fund Rosa Lemos de Sa rosa.lemos@funbio.org.br FNMA - Fundo Nacional do Meio Ambiente Fabricio Barreto fnma@mma.gov.br COLOMBIA Fondo para la Accin Ambiental y la Niez Jos Luis Gomz R. joselgomez@accionambiental.org Fondo Patrimonio Natural Francisco Alberto Galn agalan@patrimonionatural.org.co Fondo Biocomercio John Bejarano jbejarano@fondobiocomercio.com ECUADOR FAN - Fondo Ambiental Nacional Samuel Sangeza fan1@fan.org.ec

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EL SALVADOR Fondo Iniciativa para las Amricas - FIAES Jorge Oviedo jorge.oviedo@fiaes.org.sv GUATEMALA FCG - Fideicomiso para la Conservacin en Guatemala Yvonne Ramrez yramirez@fcg.org.gt FONACON - Fondo Nacional para la Conservacin de la Naturaleza Marco Tulio Daz del Valle fonacon@intelnet.net.gt MAR Fund - Mesoamerican Reef Fund Mara Jos Gonzlez mjgonzalez@marfund.org JAMAICA EFJ - Environmental Foundation of Jamaica Joan Grant-Cummings jgrantcummings@efj.org.jm MEXICO FMCN - Fondo Mexicano para la Conservacin de la Naturaleza Lorenzo Rosenzweig lorenzo@fmcn.org PANAMA Natura - Fundacin para la Conservacin de los Recursos Naturales Zuleika Pinzn zpinzon@naturapanama.org PERU Fondo de las Amricas Juan Gil fondam@fondoamericas.org.pe Profonanpe - Fondo Nacional para las reas Protegidas por el Estado Alberto Paniagua apaniagua@profonanpe.org.pe

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FONAM Julia Justo jjusto@fonamperu.org SURINAME SCF - Suriname Conservation Foundation Leonard Johanns johanns@sr.net

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