Topic: markets

New Ventures: Voices of the Entrepreneurs

Sarah Parsons — Mon, 12 Nov 2012 18:20:42 -0500

Summary: Voices of the Entrepreneurs

Small and medium-sized enterprises (SMEs) can account for as many as four out of five jobs and more than 29 percent of GDP in developing countries. Environmental SMEs—enterprises that capitalize on commercial opportunities while generating clear, measurable environmental benefits—have an important role in shaping growth that is both economically and environmentally sustainable.

Yet the entrepreneurs behind these environmental SMEs face many challenges that limit their ability to grow their businesses. The main roadblocks highlighted by the environmental entrepreneurs whom we interviewed were: accessing finance, attracting and maintaining quality human capital, tackling limited markets and mind-sets, overcoming unsupportive policies, coping with risk and uncertainty, and distributing their products and services. New Ventures addresses these roadblocks by empowering entrepreneurs to develop solid business plans and skills, linking entrepreneurs to networks of mentors and supporters, and showcasing entrepreneurs to investors.

There is much more to be done. The barriers that prevent environmental entrepreneurs from scaling up their businesses are far from gone, but as Earth’s resources become increasingly constrained, our future well-being will depend more than ever on the success of these entrepreneurs. In addition to accelerators like New Ventures, donors, investors, policymakers, corporations, and international development institutions will need to step up to enable greater success for environmental entrepreneurs.

A Note on New Ventures’ Transition

With strong, distinct New Ventures programs in Brazil, China, Colombia, India, Indonesia, and Mexico, WRI has decided to conclude its role as global coordinator. WRI is immensely proud of New Ventures’ accomplishments and is confident that the program will reach new heights with greater local and regional independence.

RELEASE: Transition of New Ventures Global Network

James Anderson — Wed, 26 Sep 2012 11:46:24 -0400

After 13 years of building support for environmental entrepreneurship, the World Resources Institute will conclude its role as coordinator for the New Ventures global network at the end of 2012. WRI recognizes that the New Ventures Local Centers have built strong, distinct programs in their respective countries, and we are confident that greater local and regional independence will allow New Ventures to move into its next phase of development.

Following is a statement by Manish Bapna, Managing Director, WRI:

WRI is extraordinarily proud of New Ventures’ accomplishments and impact in enabling the growth of environmentally focused entrepreneurs in emerging markets. Founded by WRI in 1999, New Ventures has provided business development support to 362 innovative small and medium enterprises (SMEs) whose goods and services produce clear, measurable environmental benefits, such as clean energy, efficient water use, and sustainable agriculture. Oftentimes these goods and services address the challenges experienced by the world’s poor. New Ventures has also facilitated $290 million of investment into these SMEs, helping them scale their businesses and yield positive impacts.

WRI has been privileged to partner with expert local organizations in establishing New Ventures Local Centers in six of the world’s most dynamic emerging economies:

SMEs in emerging markets play a critical role in the economy by creating jobs and spurring growth. As the need for sustainable economic development intensifies, New Ventures enterprises continue to prove that innovative technologies and business models can deliver environmental, social, and financial returns.

Much has been accomplished in the world of entrepreneurship over the past decade, including the formation of new investment vehicles emphasizing environmental and social returns (alongside financial returns), the creation of associations and alliances that bring together key actors, and development banks’ and agencies’ capital and technical assistance commitments to pursue development solutions through private enterprise.

However, there is still much more to be done. As the world tackles environmental challenges such as water scarcity, climate change, deforestation, and pollution—against the backdrop of continuing population growth—entrepreneurs will continue to be sources of innovation and action. Organizations supporting these entrepreneurs on the ground, like the New Ventures Local Centers, will continue to play a vital role in nurturing their efforts, affording them the resources necessary to scale their impact.

New Ventures – and the entrepreneurs and investors it works with – have proven that profitable enterprises can be created and scaled while simultaneously protecting natural resources and improving livelihoods. It is a model that will endure and create pathways for many others with ambition and dedication to sustainable economic development. WRI looks forward to many more extraordinary accomplishments for New Ventures in the coming years.

Moving the Fulcrum: A Primer on Public Climate Financing Instruments Used to Leverage Private Capital

Christine Potochny — Wed, 25 Jul 2012 15:11:56 -0400

Executive Summary

The Problem: Projected climate change mitigation investment needs in developing countries–including for low-carbon sectors–are significant, growing, and may not be met. Experts estimate new investments of up to $300 billion annually by 2020, growing up to $500 billion annually by 2030, are required to mitigate developing countries’ greenhouse gas emissions to levels in line with global targets. While industrialized nations have committed to mobilizing new funds of $100 billion annually by 2020 to meet these needs, this level of funding is far from what is required.

One Solution: Redirect the private sector’s growing investment in developing countries to help fill the growing climate finance gap. McKinsey estimates that the financial stock—that is, the total value of outstanding stocks and bonds—of developing countries grew by $11 trillion in 2011. By intervening to improve the investment attractiveness of climate change-relevant markets, the public sector has a significant opportunity to harness and redirect these significant private sector capital flows away from fossil fuel-driven sectors and toward low-carbon development.

The Challenge: Mobilizing private sector investment will require better targeted public support that improves the risk-reward calculus of lowcarbon markets. The private sector seeks markets that exhibit (i) attractive returns relative to associated risks over an appropriate investment timeframe (“attractive risk-reward calculus”) as well as (ii) adequate size, liquidity, and transparency. These conditions are often absent in developing countries due to the nascent natures of both low-carbon and financial markets in these geographies.

Recommendation: To improve the risk-reward calculus of investments—arguably the most fundamental barrier to leveraging private capital—the public sector can complement support for low-carbon policies with direct finance that manages the following risks:

Political and macroeconomic risks. Political risk guarantees, interest-rate/currency exchange products, and local currency loans can help investors and project developers financially manage political (for example, political instability) and/or macroeconomic (for example, exchange rate volatility) risks. As these financing instruments are not easily accessible in poorer countries, by providing these instruments, the public sector can catalyze low-carbon investment in geographies where access to finance is most challenging.
Low-carbon market risks, including policy, technology, and operational risks. These risks, which range from unexpected policy changes to technology failures, can affect both new and mature low-carbon markets. In newer low-carbon markets, public financing instruments like first-loss equity and debt investments and concessional loans can be instrumental in encouraging early investment. Projects in more established low-carbon markets—like solar, wind, and energy efficiency—can benefit from flexible loans, partial risk and credit guarantees, and risk sharing facilities.

Given the varied investment conditions across developing countries and their respective low-carbon markets, each market will require a unique combination of finance and policy support to scale-up private sector investment. Future WRI publications, drawing on private sector perspectives, will delve deeper into how public climate finance providers—whether governments, development finance institutions, or export-credit/aid agencies—can tailor direct finance to scale-up private sector investment in different markets.

Parceria viabiliza inclusão de serviços ecossistêmicos nos planos de negócios das empresas

James Anderson — Thu, 10 May 2012 14:27:43 -0400

Ver texto em Português OR Read text in English here

Um grupo de empresas líderes brasileiras deu início hoje a uma parceria para incorporar serviços ecossistêmicos em suas estratégias de negócios. A Parceria Empresarial pelos Serviços Ecossistêmicos (PESE) representa um grande esforço para incluir a biodiversidade e os serviços ecossistêmicos na estratégia de negócios das empresas e melhorar o desempenho corporativo no Brasil, país sede da Conferência das Nações Unidas sobre Desenvolvimento Sustentável (Rio+20), no próximo mês.

A ideia é desenvolver estratégias que aliem o desempenho empresarial à gestão sustentável dos ecossistemas. Empresas líderes, como Anglo American, Grupo André Maggi, PepsiCo, Vale, Votorantim e Wal-Mart, estão entre as primeiras companhias participantes desta iniciativa. A parceria é coordenada pelo Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável (CEBDS), Centro de Estudos em Sustentabilidade da Fundação Getúlio Vargas (GVces) e World Resources Institute (WRI), com apoio da Agência dos Estados Unidos para o Desenvolvimento Internacional (USAID).

“A indústria depende dos serviços ecossistêmicos, como produção de alimentos, água doce e limpa, um clima estável, e proteção contra riscos naturais como enchentes, entre outros benefícios,” explicou Craig Hanson, diretor do Programa de Pessoas e Ecossistemas do WRI. “A PESE irá capacitar as companhias brasileiras a gerenciar proativamente riscos e oportunidades nos negócios, decorrentes de suas dependências e impactos sobre os serviços ecossistêmicos.”

A parceria irá impulsionar novas soluções de negócios em meio à larga degradação dos ecossistemas através da aplicação local da Corporate Ecosystem Services Review (ESR), ou Revisão Corporativa dos Serviços Ecossistêmicos, metodologia líder de avaliação de serviços ecossistêmicos, desenvolvida pelo WRI, em cooperação com o World Business Council on Sustainable Development (WBCSD) e o Meridian Institute. Aplicando a ESR, cada empresa parceira da PESE vai desenvolver estratégias para melhor competir e ter sucesso em um mundo que cada vez mais esbarra nos limites naturais dos ecossistemas.

“As companhias que já utilizam a ESR têm sido capazes de descobrir novas estratégias rentáveis enquanto protegem e restauram os ecossistemas. Nosso objetivo é replicar esse sucesso no Brasil,” disse Marina Grossi, presidente do CEBDS (Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável).

Um exemplo de uma companhia que registrou resultados positivos a partir do gerenciamento consciente dos escossistemas em que opera é a Mondi, maior companhia europeia de papel e celulose. A Mondi conduziu a ESR em três plantações de papel na África do Sul, em 2008. A ESR ressaltou estratégias que a companhia poderia implementar para aumentar o acesso à água doce, melhorando as bacias hidrográficas regionais, estreitando relações com a comunidade local e reduzindo custos operacionais.

Aproximadamente 300 empresas no mundo já implementaram a ESR, desde 2008. Conforme essa metodologia ganha força no Brasil, WRI, CEBDS e GVces promoverão assistência técnica e consultoria às empresas parceiras, com o objetivo de assegurar a qualidade e eficiência na aplicação da ESR.

Os parceiros também têm como objetivo criar uma rede de empresas ativas na gestão de serviços ecossistêmicos no Brasil, para comunicar resultados, contribuir com estudos de casos e intensificar as estratégias de sucesso. “Assim como a chegada do GHG Protocol há cinco anos, o lançamento da PESE hoje representa um passo adicional na gestão de serviços ecossistêmicos no ambiente empresarial brasileiro” explicou Mario Monzoni, coordenador do GVces.

O evento de lançamento da PESE aconteceu no dia 10 de maio de 2012, das 17h às 18h, no Jardim Botânico no Rio de Janeiro – RJ.

Para saber mais sobre a PESE, acesse o site http://insights.wri.org/pese

A realização da PESE é possibilitada pelo apoio generoso do povo norte-americano, por meio da Agência dos Estados Unidos para o Desenvolvimento Internacional (USAID). Seu conteúdo é de responsabilidade do WRI, GVces e CEBDS, e não reflete necessariamente a posição da USAID ou do Governo dos Estados Unidos.

Contact (in English)
World Resources Institute
James Anderson; Janderson@wri.org; +1 (202) 729 7600

Contato (em português)
GWA Comunicação Integrada
Kelly Souza; kelly.souza@gwacom.com; (11) 6620-2234

Contato (CEBDS)
In Press Porter Novelli
Tatiana Wolff; tatiana.wolff@inpresspni.com.br; (21) 3723-8095
Suzana Ribeiro; suzana.ribeiro@inpresspni.com.br; (21) 3723-8117

Corporate Leaders and NGOs Form New Partnership to Protect Ecosystems in Brazil

James Anderson — Thu, 10 May 2012 12:47:01 -0400

Read in English below OR Ver texto em Português

A group of leading companies and non-governmental organizations have embarked on a new partnership in Brazil today to incorporate ecosystem services into business strategies. The Parceria Empresarial pelos Serviços Ecossistêmicos (PESE), or Brazilian Business and Ecosystem Services Partnership, represents a major effort to demonstrate how biodiversity and ecosystem services can enhance corporate performance in Brazil, home of the UN Conference on Sustainable Development (Rio +20) next month.

The goal is to develop strategies that align business performance to the sustainable management of ecosystems. Leading companies, such as Anglo American, Grupo André Maggi, PepsiCo, Vale, Votorantim and Wal-Mart, are among the first companies participating in this initiative. The partnership was organized by the Brazilian Business Council for Sustainable Development (CEBDS), the Center for Sustainability Studies at the Getulio Vargas Foundation (GVces), and the World Resources Institute, with support from the U.S. Agency for International Development (USAID).

“Industry relies on ecosystem services, such as food production, clean water, a stable climate, protection from natural hazards, and more,” explained Craig Hanson, Director of the People and Ecosystems Program at WRI. “PESE will empower Brazilian companies to manage business risks and opportunities arising from their dependence and impacts on ecosystem services.”

The partnership will drive new business solutions to ecosystem degradation largely through local application of the Corporate Ecosystem Services Review (ESR), the leading assessment methodology developed by WRI in cooperation with the World Business Council on Sustainable Development (WBCSD) and the Meridian Institute. By applying the ESR, corporate partners will develop strategies to better compete and succeed in a world that is pushing against natural limits.

“Using the ESR, companies have been able to uncover new profitable strategies while protecting and restoring ecosystems. Our goal is to replicate these successes in Brazil,” said Marina Grossi, President of CEBDS.

One example of a company that has already experienced positive results from managing the ecosystems in which it operates is Mondi, Europe’s largest paper and pulp company. In 2008, Mondi conducted an ESR in three of its paper plantations in South Africa. The ESR highlighted strategies the company could implement to increase access to freshwater while improving regional watershed health, strengthening its relationship with local communities, and reducing operational costs.

An estimated 300 companies have already implemented the ESR worldwide since 2008. As this method gains traction in Brazil, WRI, CEBDS, and GVces will provide technical assistance and advice to corporate partners in order to enhance the quality and efficiency of applying the ESR.

The partners also aim to create a network of companies active in the management of ecosystem services in Brazil, in order to communicate results, contribute new case studies, and scale up successful strategies.

“As with the arrival of the GHG Protocol five years ago, the launch of PESE today represents another step towards sustainability for Brazilian business,” explained Mario Monzoni GVces coordinator.

Editor’s Note:

The PESE launch event will take place on May 10, 2012, from 5:00pm to 6:00pm at the Botanical Garden in Rio de Janeiro.

For more information, visit: http://insights.wri.org/pese

PESE is made possible by the generous support of the American people through the United States Agency for International Development (USAID). The contents are the responsibility of WRI, GVces, and CEBDS and do not necessarily reflect the views of USAID or the United States Government.

Contact (in English)
World Resources Institute James Anderson; Janderson@wri.org; +1 (202) 729 7600

Contato (em português)
GWA Comunicação Integrada Kelly Souza; kelly.souza@gwacom.com; (11) 6620-2234

Contato (CEBDS)
In Press Porter Novelli
Tatiana Wolff; tatiana.wolff@inpresspni.com.br; (21) 3723-8095
Suzana Ribeiro; suzana.ribeiro@inpresspni.com.br; (21) 3723-8117

Insights from the Field: Forests for Climate and Timber

Maggie Barron — Mon, 06 Feb 2012 12:25:59 -0500

The Carbon Canopy is a novel partnership among companies, landowners, and nongovernmental organizations (NGOs) that seeks to leverage markets for ecosystem services to increase the area of southern U.S. forests certified as sustainably managed. The partnership aspires to sustain southern forests for their economic, climate, water, and other benefits.

The Carbon Canopy’s first focus has been on linking forest carbon offset generation and certified forest management, wherein carbon offset revenue is designed to compensate woodland owners for the cost of certification and provide an attractive new revenue stream.
The Carbon Canopy’s experience to date provides a number of insights for other organizations seeking to build and expand markets for forest carbon offsets linked with forest certification. These insights were gleaned from the authors’ observations as well as interviews with several members of the Carbon Canopy partnership, including landowners, buyers, and NGOs. These insights apply to building demand, ensuring supply, and creating the transactional infrastructure for forest carbon offsets and certified saw timber or wood fiber.
To build robust demand, companies, NGOs, and other organizations seeking to replicate the approach of combining forest carbon offsets and certification should—
- Actively recruit buyers; and
- Secure an anchor buyer early on.
- To ensure sufficient supply of offsets and certified timber, these organizations should—
- Invest in woodland owner education;
- Make the business case to woodland owners;
- Find upfront financing; and
- Be sure to engage all parties with claims on the land.
To create an efficient transactional infrastructure, these organizations should—
- Select forest management and carbon offset certification standards early on;
- Select standards that are high quality and that facilitate market participation; and
- Leverage existing resources and landowner networks.

Forests for Carbon: Exploring Forest Carbon Offsets in the U.S. South

Maggie Barron — Thu, 01 Sep 2011 16:34:42 -0400

Southern U.S. forests remove carbon dioxide from the atmosphere and store it in the form of carbon in leaves, roots, branches, trunks, soil, and woody debris and other plant litter through a process known as “carbon sequestration.” Through this process, southern forests and other woodlands play a role in regulating Earth’s climate and moderating the effects of global climate change.
Emerging voluntary and compliance markets often have provisions for greenhouse gas emission reductions or emissions avoided by preventing forest conversion or changing forest management practices. These reductions or avoided emissions are considered “forest carbon emission reductions.”
A “forest carbon offset” is a metric ton of carbon dioxide equivalent (CO2e), the emission of which is avoided or newly sequestered and is purchased by greenhouse gas emitters as a cost-control mechanism to compensate for emissions occurring elsewhere. Four types of forest carbon offset projects exist—reforestation, afforestation, forest conservation/avoided conversion, and improved forest management.
Forest carbon offsets can create an incentive for southern woodland owners to engage in land management practices that retain or restore forests and bolster forest carbon sequestration capacity.
Forest carbon offset projects must meet a number of quality criteria if they are to become credible, eligible for markets, and financially feasible for southern woodland owners. The main quality criteria include: assurance that the offset is real (including handling the issue of negative leakage), additionality/surplus, verifiability, permanence, and enforcement.
Recently, a number of carbon offset standards have emerged that adhere to these quality criteria. These standards provide a detailed list of offset project eligibility requirements, or “protocols,” as well as methods for quantifying and verifying a project’s net emissions impact. These standards seek to provide consistency in determining offset eligibility and quantification, improve offset credibility, and lower transaction costs for offset providers.
At present, from the financial standpoint of many southern woodland owners, income from forest carbon offsets alone is likely insufficient to outcompete real estate development. However, depending on landowner management goals and circumstances, income from forest carbon offsets might be sufficient in some instances to help pay incremental costs of sustaining forests, such as property taxes or sustainable forest management certification.
Forest carbon offset markets, like all other markets, require robust demand, adequate supply, and good transactional infrastructure. In light of these three conditions, southern woodland owners can take several initial steps to explore and prepare for existing and upcoming markets: (1) monitor market demand for forest carbon offsets, (2) conduct a solid forest inventory to assess the potential to supply forest carbon offsets, (3) engage in project development, and (4) enroll in a credible offset registry.

MEDIA ADVISORY: 4th Annual Ecosystem Markets Conference - Making Ecosystems Work

Lauren Zelin — Mon, 27 Jun 2011 14:18:28 -0400

Experts and innovators meet to chart the future of ecosystem conservation

The World Resources Institute (WRI) and the American Forest Foundation (AFF) co-host the 4th annual Ecosystem Markets Conference in Madison, Wisconsin, June 29 – July 1, 2011. Hundreds of experts, innovators, land owners, government officials, investors and academics will discuss how to make ecosystem markets work to conserve natural resources; followed by a field trip through Aldo Leopold’s backyard to see ecosystem services in action.

At a time when state and federal budgets for conservation are dwindling, ecosystems are being degraded and threats to natural resources are increasing, more market-driven solutions are necessary to open the next chapter in conservation. Through ecosystem markets, the many benefits that well-managed lands provide, such as clean water and wildlife habitat, are assigned a value that results in payments to landowners for providing these services. This win-win for the public and landowners is necessary to protect the planet’s natural resources.

The 2011 conference theme “Ecosystem Markets: Making Them Work” underscores the need for innovative thinking to bridge the gap between ecosystem market potential and reality. Participants will gather for two days of open-format meetings on topics including payments to landowners, policy and ethics, private investment, water quality, bioenergy, and more.

The conference will open with a video address by Harris Sherman, Under Secretary for Natural Resources and Environment, U.S. Department of Agriculture. Senior representatives from the host organizations along with ecosystem services experts from around the world will participate in the conference and will be available for interviews.

What:
4th Annual Ecosystem Markets Conference. Website: http://ecomarketconference.com/

When:
June 29-30, 2011, conference sessions
July 1, 2011, field trip to working ecosystems and Aldo Leopold’s shack

Where:
The Madison Concourse Hotel and Governor’s Club
1 W. Dayton Street, Madison, WI
(Free parking is provided for our conference group)

Media Highlights:

Wednesday, June 29, 2011
* 8:15 a.m. – Welcome and video address by Harris Sherman, Under Secretary for Natural Resources and Environment, U.S. Department of Agriculture
* 8:35 a.m. – Plenary Session 1: The Current State of Ecosystem Markets
* 10:20 a.m. – Plenary Session 2: Policies to Support Ecosystem Services and Markets
* 12:40 p.m. – Lunch and preview of Green Fire documentary, hosted by the Aldo Leopold Foundation and followed by a Q&A session

Friday, July 1, 2011
* 8:00 a.m. – Field trip; See below for details. * Experts available for interviews during the tour

For the full conference agenda, visit http://ecomarketconference.com/agenda/.

RSVP and Media Requests:

Amanda Cooke | AFF | ACooke@forestfoundation.org | 202-463-2731
Lauren Cole | WRI | LCole@wri.org | 202-729-7736

Follow the Twitter conversation - #ecomarkets2011

Field Trip Information - PHOTO OPPORTUNITY

What:
Tour the Leopold family shack and farm, and see sites conserved for ecosystem services through public/private partnerships, including the Leopold Waterfowl Production Area, Baraboo Oak Street dam removal site, and the Leopold Memorial Reserve constructed wetland. Detailed agenda: http://ecomarketconference.com/field-trip/.

When:
July 1, 2011 from 8:00 a.m.-3:30 p.m.

Where:
Meet at the Madison Concourse Hotel for bus departure.

Who:
Experts from WRI, AFF and other conference attendees will be available for interviews and photo opportunities during the Field Trip. Please contact Amanda Cooke or Lauren Cole to RSVP.

Thanks to the Aldo Leopold Foundation and the Sand County Foundation for their generous assistance in hosting and organizing the field trip.

Protecting Forests to Protect Water in the U.S. South

Logan Yonavjak — Mon, 28 Feb 2011 17:21:59 -0500

When it comes to providing clean water, investments in forest conservation can save money.

Clean water doesn’t come cheap. Communities and businesses often rely on expensive water filtration infrastructure to ensure their clean water supplies. But what if they could save money by protecting upstream forests instead of building new, costly water treatment infrastructure?

The World Resources Institute (WRI) investigates this potential in Forests for Water: Exploring Payments for Watershed Services in the U.S. South. The issue brief provides an overview of how businesses and water utilities in the United States and Latin America are pursuing upstream forest conservation as a cost-effective means of ensuring clean water supplies. It also suggests how many of these approaches could be applicable in the southern United States.

Connecting Forests and Clean Water

Forests are often overlooked for the freshwater benefits they provide, but two-thirds of the nation’s water originates from forested lands in the United States. This water comes from precipitation that is filtered through forests, and much of it ends up in streams. In addition to filtering and purifying water, forests naturally regulate the timing and amount of water flows, which helps lessen flooding during heavy rainstorms. Forests also help curb erosion and prevent excess nutrients from fertilizer from entering nearby bodies of water.

Businesses and communities enjoy immense economic benefits from these forest “ecosystem services” (Figure 1). For example:

By naturally filtering water, forests can reduce drinking water treatment costs. For example, New York City famously saved billions of dollars in water filtration costs by conserving the forests and natural landscapes of the Catskills instead of paying for a new water filtration system.
By curbing erosion, forests can keep sediment and excess nutrients out of waterways. For instance forest buffers near streams can prevent nitrogen from entering waterways at approximately one-third of the cost per pound of nitrogen relative to wastewater treatment plant upgrades.
By filtering water through its porous soils, a forest can minimize wastewater treatment costs. For example, according to the Army Corps of Engineers a forest or forested wetland can filter water at approximately one-seventh of the cost per thousand gallons than can conventional wastewater treatment systems.

Figure 1: Green Infrastructure Can Be Less Expensive Than Gray Infrastructure: (Click to enlarge)

The Business Case for Conserving Forests for Clean Water

Public utilities, wastewater treatment plants, and governments are not the only ones that can benefit from conserving forests. Businesses that depend on a supply of clean water, such as beverage companies, power companies with hydroelectric facilities, microchip manufacturers, and housing developers may have a business case, as well.

However, these services that forests provide are threatened. In the southern United States, suburbanization has put forests, and thus the region’s clean water supply, at risk (Figure 2).

Figure 2: Watersheds of the Southern United States: (Click to enlarge)

One innovative approach for tackling this threat is to use “payments for watershed services.” Payments for watershed services provide landowners financial incentives to conserve, sustainably manage, and/or restore forests for one or more of the kinds of watershed services mentioned above. Such payments typically involve downstream beneficiaries paying upstream forest owners or forest managers.

There are three general types of payments for watershed services that companies and governments could take advantage of to cut costs:

voluntary payments to upstream landowners to reduce the cost of doing business;
payments to minimize the cost of meeting a regulation; and
payments made to generate public benefits like improved water quality.

“Payments for watershed services are a novel way to cost-effectively sustain clean water supplies while generating other benefits such as habitat conservation,” said Patricia Pineda, group vice president of philanthropy and the Toyota USA Foundation. “Innovative ideas like this one are the reason Toyota is proud to partner with WRI as part of the company’s commitment to the Clinton Global Initiative.”

From “Gray” Infrastructure to “Green” Infrastructure

Many payments for watershed services share a common trait: they are investments in “green infrastructure” instead of “gray infrastructure.” In other words, they are investments in forests and natural open space instead of in human-engineered solutions to address water quantity or quality problems.

Now that decision-makers are focusing sharply on budgets and cost-effectiveness, the time has come to see a forest for the water, not just for the trees.

To access this brief and other issue briefs in the Southern Forests for the Future Incentives Series, and to learn more about southern U.S. forests, visit: www.SeeSouthernForests.org. Developed by WRI with support from Toyota, this interactive site provides a wide range of information about southern forests, including current and historic satellite images that allow users to zoom in on areas of interest, overlay maps showing selected forest features and drivers of change, historic forest photos, and case studies of innovative approaches for sustaining forests in the region. To order free hard copies of this issue brief, and other briefs in the Southern Forests for the Future Incentives Series, please contact us.

PRESS RELEASE: Study Finds Federal Climate Policy Scenarios Would Have Modest Credit Impacts for Most U.S. Chemicals Subsectors

Michael Oko — Tue, 15 Feb 2011 09:09:10 -0500

S&P, WRI Release Report on Climate Policy Scenarios and the US Chemicals Industry

Government actions to reduce greenhouse gas (GHG) emissions would have a modest credit impact on most subsectors of the U.S. chemicals industry, according to a new analysis released today by Standard & Poor’s Ratings Services (S&P), the world’s foremost provider of credit ratings, and the World Resources Institute (WRI), a leading global environmental think tank.

The 36-page study– How U.S. Federal Climate Policy Could Affect Chemicals’ Credit Risk – examines how climate change policy drivers could be incorporated into the evaluation of credit quality. It analyzes two types of federal climate policy scenarios – (1) a market-based GHG emissions reduction policy (“cap-and-trade”) as approximated by the American Power Act (APA), and (2) Environmental Protection Agency (EPA) regulation of greenhouse gas emissions (GHG) – in the context of 13 energy-intensive chemicals subsectors. These 13 subsectors account for almost 90 percent of the US chemicals industry’s emissions, which in turn contribute to about 5 percent of total U.S. emissions. The report also includes two case studies detailing credit impacts on two hypothetical chemicals companies.

“Credit quality is directly related to oil and natural gas inputs and related raw materials, and policy impacts will largely depend on a company’s product mix, energy use, and GHG emissions,” said Kyle Loughlin, managing director and credit analyst at Standard & Poor’s Ratings Services. “While most subsectors would face only modest incremental risk under the APA legislative framework, energy-intensive chemical producers may have limited ability to pass along costs, depending on market conditions. This could make some energy- and emissions-intensive companies less competitive and ultimately weaken credit metrics.”

“This report will inform analysts and investors about the influence of emerging climate policies on credit quality” said Kirsty Jenkinson, Head of WRI’s Markets & Enterprise Program, “Companies that act now to improve their energy efficiency and reduce emissions are likely to gain a ‘first-movers’ advantage in a GHG-constrained economy.”

Among the key findings of the report:

Under the APA-based legislative (“cap-and-trade”) scenarios analyzed:

• Most chemicals subsectors analyzed experienced only modest costs related to the purchase of fuel and feedstocks and compliance with GHG permitting requirements.

• 10 of the 13 GHG-intensive subsectors analyzed faced limited compliance risk due to free GHG permits provided by the APA.

• U.S. specialty chemicals companies tend to be less GHG-intensive. As a result, any future climate change policy is less likely to significantly affect their credit quality.

Under the EPA regulatory scenarios analyzed:

• Petrochemicals, other basic organic chemicals, and nitrogenous fertilizer producers are likely to be regulated due to their high absolute emissions and potential to significantly reduce these emissions.

• Companies with older, less efficient facilities are likely to experience credit impacts as they expend more capital to achieve best-practice standards.

S&P’s involvement in this commentary, to which it provided its separate and independent input, reflects its credit risk analysis experience in the U.S. chemicals sector as well as its intention to enhance its knowledge of carbon exposure risk potentially faced by corporates depending on future legislative and policy developments.

Peter Jadrosich, Global Head of Credit Research at APG, the Dutch pension asset manager, which provided financial support for WRI’s analysis, said, “At APG, we are increasingly looking to integrate environmental factors into our fixed income investment decisions. This report is the first of its kind due to its unique focus on credit quality.”

The full report is available for download at:

S&P: http://www.standardandpoors.com (Click on Press Release under “About Us” section, lower right on home page); and

WRI: http://www.wri.org/publication/how-us-federal-climate-policy...

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For further information or to request a full copy of the report which outlines the assumptions used in the analysis, please contact:

S&P: Mimi Barker, Director, Communications, mimi_barker@sandp.com, (212) 438-5054

WRI: Michael Oko, Director of Media Relations, moko@wri.org, (202) 729-7684; (202) 246-9269

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Beyond Timber: New Economic Opportunities for Southern U.S. Forests

Logan Yonavjak — Tue, 01 Feb 2011 10:18:15 -0500

It’s time to raise awareness of the variety of incentives that can help forest owners in the southern U.S. keep their land.

Stretching more than 200 million acres from Texas to Virginia and from Kentucky to Florida, the forests of the southern United States provide billions of dollars worth of timber and other forest products each year as well as hundreds of thousands of jobs in the region. Though they comprise just two percent of the planet’s forest cover, they generate more pulp for paper by volume than any nation outside the United States. They also control erosion, ensure clean supplies of freshwater, and offer numerous hunting, hiking, and other recreational opportunities.

However, 31 million acres of these forests are expected to be lost to development between 1992 and 2040—an area the size of North Carolina. What strategies can halt this loss?

This month, the World Resources Institute (WRI), supported by Toyota, launched the first in a new series of issue briefs that explore incentives for ensuring that southern U.S. forests continue to supply the timber, water, recreation, and other benefits—known as “ecosystem services”—that people depend upon. The first brief, Keeping Forest as Forest, overviews a range of economic opportunities that are available to southern landowners.

Southern Forests by the Numbers

Area (2007): 214 million acres
Number of U.S. states in the region: 13
Share of world’s total forest area (2007): 2%
Share of world’s paper and pulp supply (2006): 18%
Share owned by government entities (2007): 13%
Share owned by industrial and financial companies (2007): 27%
Share owned by non-industrial private forest owners (NIPF) (2007): 60%
Share of NIPF owned by people 55+ years of age (2006): 75%

See citations for these statistics in Southern Forests for the Future.

“We have a short window of opportunity to increase the conservation and sustainable management of large tracts of southern forests,” explains Todd Gartner, Senior Associate of Conservation Incentives and Markets at WRI. “In many ways, the next 20-30 years will shape the fate of these forests. There is a large generational transfer of ownership among families on the horizon, as well as a likely return of housing pressure.”

Yet there is hope. As Keeping Forest as Forest profiles, there are a variety of incentives for maintaining southern forests while addressing the threats they face, including:

Market incentives such as markets for sustainable timber, payments for watershed protection, and recreational user fees;
Fiscal incentives such as cost-share programs and tax deductions that help finance the expenses associated with reforestation, conservation, and sustainable forest management on private lands;
Liability limitations that reduce liability risk to landowners for taking voluntary, proactive steps to protect or restore forests via prescribed burns, endangered species protection, and other actions;

Read the Issue Brief

Land use instruments such as conservation easements, working forest easements, and transferable development rights; and
Education and capacity building programs that ensure landowners have access to information about best forest management practices.

“Both corporate and family forest owners are increasingly interested in economic opportunities beyond just timber for their woodlands,” said Lee Thomas, Chairman and CEO of Rayonier, a real estate investment trust with landholdings in the South. “This and subsequent issue briefs should help southern landowners explore these opportunities in more detail.”

WRI has found that many of these incentives are currently underutilized in the region. Awareness of them is mixed. And some incentives such as markets for watershed protection are just emerging and therefore are relatively novel to most landowners.

What can be done to increase adoption of the most promising incentives? Each issue brief will explore this and related questions.

“We hope that WRI’s timely series will raise awareness about the incentive options available for conserving and sustainably managing southern forests for the future,” said Patricia Pineda, group vice president of philanthropy and the Toyota USA Foundation. “As always, Toyota remains committed to raising awareness of environmental issues of concern and is proud to sponsor WRI’s work as part of the company’s commitment to the Clinton Global Initiative.”

To access these briefs and to learn more about southern U.S. forests, visit www.SeeSouthernForests.org. Developed by WRI with support from Toyota, this interactive site provides a wide range of information about southern forests, including current and historic satellite images that allow users to zoom in on areas of interest, overlay maps showing selected forest features and drivers of change, historic forest photos, and case studies of innovative approaches for sustaining forests in the region.

To order free copies of the issue briefs, please contact us.

Hotspots of Urban Encroachment on Southern Forests (2000-2020)

Keeping Forest as Forest: Incentives for the U.S. South

Maggie Barron — Fri, 28 Jan 2011 15:25:05 -0500

Summary

Forests of the southern United States provide a wide variety of benefits—collectively known as “ecosystem services”—to people, communities, and businesses. For example, they provide timber, help purify water, control soil erosion, help regulate climate by sequestering carbon, and offer outdoor recreation, hunting, and fishing opportunities.
Over the coming decades, several direct drivers of change are expected to negatively affect the quantity and quality of southern forests and thus their ability to provide ecosystem services. These direct drivers include suburban encroachment, unsustainable forest management practices, climate change, surface mining, pest and pathogen outbreaks, invasive species, and wildfire.
A number of incentives, markets, and practices — collectively called “measures” — could help address these drivers of change and promote southern forest conservation and sustainable management. These measures fall into five major categories: land use instruments, fiscal incentives, liability limitations, market incentives, and education/capacity building. With such measures in place, these forests could continue to supply needed ecosystem services and the native biodiversity that underpins these benefits.
The South has experience with many of these measures. A few have been around for awhile, such as parks and protected areas, while many are relatively new, such as payments for watershed protection. However, adoption of even some of the most traditional measures is still relatively low in the South. Why is this the case? What can be done to increase adoption of these measures? Are there other innovative ideas that hold promise for more widespread application?
This issue brief sets the stage for these questions and introduces subsequent installments of the Southern Forests for the Future Incentives Series, which will answer these and related questions. This brief is designed for conservation and land use professionals, decision makers, and concerned citizens.

Growing Optimism for “Impact Investing”

Tracy Elsen — Tue, 07 Dec 2010 18:35:30 -0500

Is it possible to do good in the world while also making a profit? A growing group of investors, known as “impact investors”, believe that it is.

This piece is cross-posted from the New Ventures website.

Impact investors aim to make positive social or environmental gains alongside profits through their investments. A recent report by J.P. Morgan and the Rockefeller Foundation estimates the value of this emerging impact investing sector to be between $400 billion and $1 trillion, with profit potential between $183 billion and $667 billion over the next decade. According to the report, “Impact Investments: An Emerging Asset Class”, impact investing constitutes a new asset class.

The report analyzes opportunities in five impact investing sectors – affordable urban housing, rural access to clean water, maternal health, primary education, and microfinance – that serve the global Base of the Pyramid (BoP) population. The BoP is comprised of those who earn less than $3,000 annually.

BoP markets are typically underserved by traditional business, which may exclude this population from being considered as part of a potential customer base. However, WRI research has shown that the BoP population will often manage its finances to buy affordable products or services improving their productivity and reliability of income.

This market introduces operational challenges to otherwise proven business models. For example, the challenges often require innovative approaches to accommodating unreliable income streams or delivering products and services to remote rural areas. While government-led or philanthropic solutions can go part of the way, impact investment can further help capital to flow to profitable businesses with positive environmental and social benefits.

Impact investing is gaining increasing traction among a wide range of debt and equity investors, including pension funds, family offices, private wealth managers, foundations, individuals, commercial banks and development finance institutions. Many impact investors choose to focus either in emerging markets or in developed markets. Part of the reason for this specialization is the significant regional differences that require local expertise. But another driver is investors’ value sets: some prefer to help the world’s poorest in emerging economies; others prioritize their local neighbors in need.

Within the developing world, the growing suite of impact investors is focusing on particular regions and sectors. Gatsby Charitable Trust and the Bill & Melinda Gates Foundation direct some of their investment capital to positively impact the lives of smallholder farmers in sub-Saharan Africa. Gray Ghost Ventures, Acumen Fund, and Omidyar Network all have programs that actively invest in alleviating poverty by financing innovations directed at India’s low-income populations.

These trends, set against the backdrop of climate change, global population growth and finite resources, motivated New Ventures México to launch the first Latin America Impact Investment Forum. The forum, which will be held in Mérida, Mexico from February 2-4 2011, is designed to foster investments and alliances that will support impact investing initiatives throughout the region. It will provide an opportunity to celebrate the accomplishments and progress that the private sector and the investment community have made towards sustainable economic development.

New Ventures Mexico is part of the New Ventures Global Network, the World Resources Institute’s (WRI) center for environmental entrepreneurship, and is a leader in Mexico in promoting the growth of businesses that generate positive economic, environmental, and social impacts.

For more information about the Latin America Impact Investment Forum please visit www.inversiondeimpacto.org or write an email to inversiondeimpacto@nvm.org.mx

Leticia Gasca is the Manager of Public Relations and Communication at New Ventures Mexico.

Power to the People: Investing in Clean Energy for the Base of the Pyramid in India

Maggie Barron — Fri, 01 Oct 2010 12:52:23 -0400

Executive Summary

India, a rapidly emerging economy with the world’s second largest population, is facing a surging energy demand. Its rural Base of the Pyramid (BoP) consists of 114 million households, representing 76 percent of India’s rural residents and almost 60 percent of the country’s total population. Despite their low income, these households constitute a significant consumer market for the energy services and products required to provide daily necessities such as cooking and lighting. Using the most recent available expenditure data (2004/2005), we estimated that India’s rural BoP consumers spent INR 224 billion (US$4.86 billion) per year on their energy needs.

What is the Base of the Pyramid?

The Base of the Pyramid (also referred to as the Bottom of the Pyramid) refers to the estimated 4 billion people around the world who are poor by any measure and have limited or no access to essential products and services such as energy, clean water, and communications. Globally, people in this socioeconomic group earn US$1 to US$8 in purchasing power parity (PPP) per day. Yet these households often pay higher prices than wealthier consumers do for lower-quality goods and services because of uncompetitive markets.

Since this report focuses specifically on rural India, we define the rural Indian BoP market as households in the bottom four expenditure quintiles (based on data from the National Sample Survey Organization) that spend less than INR 3,453 Indian rupees (US$75) on goods and services per month. This definition represents a market of 114 million households, or 76 percent of the rural population.

In 2005, approximately 45 percent of India’s rural BoP households still did not have reliable access to electricity and relied on kerosene for lighting, and more than 85 percent of rural BoP households mostly used conventional free or inexpensive sources of fuel, such as firewood and dung, for cooking. These fuel sources, however, are not only harmful to users’ health but also contribute to pollution and environmental degradation.

A growing number of Indian companies see a market opportunity in providing rural BoP households with access to alternative cooking and electricity solutions and consequently are developing clean energy products and services for this market.

“Clean energy” refers to products and services that produce energy from renewable resources and emit fewer greenhouse gas emissions than does energy from conventional fuel sources. The lack of a reliable supply of power from the electricity grid and the availability of free and inexpensive fuels, such as wood and kerosene, are key influences on this market. In this report, we focus on two areas in this growing, high-potential market: clean energy electricity systems and clean energy cooking and light products. We examined a representative selection of companies selling solar lanterns, solar home systems, energy-efficient cookstoves, and electricity generated from decentralized sources, including small hydro power plants and biomass gasifier systems.

About this Report: Informing Investors

The goal of this report is to inform investors about the market potential of the clean energy industry serving India’s rural BoP market, by looking at its opportunities, challenges, and potential paths to growth. The purpose of our report is to present an overall picture of these growing clean energy sectors, rather than to provide investment advice on individual companies.

The potential opportunity for investors in the Indian clean energy market for the rural BoP is significant. We estimated the aggregated potential market for the four sectors studied in this report to be INR 97.28 billion (US$2.11 billion) per year, including INR 94.06 billion (US$2.04 billion) for decentralized renewable energy services and INR 3.22 billion (US$70.1 million) for energy products per year.

Our analysis shows that clean energy services and products may require an upfront investment three to ten times greater than that for conventional energy sources such as kerosene and firewood, which often are subsidized or free to India’s rural consumers. Yet despite these and other drawbacks, the average annual gross revenue of the companies profiled in this report has grown 36 percent since 2004.

Clean Energy Solutions Bringing Light to Millions of India's Poorest Households

Jonathan Lash — Wed, 29 Sep 2010 13:13:32 -0400

The under-served rural Indian market offers opportunities for investors to support the sustainable energy solutions of the future.

India is facing a severe energy crunch. Roughly four hundred million rural inhabitants – more than the entire U.S. population – still lack electricity, making energy access a development imperative. At the same time, economic growth is sending national energy requirements soaring. India’s GDP is on pace to grow by 8% in 2010, and domestic energy demand is predicted to more than double by 2030.

The energy shortage is most acute among India’s rural poor, the majority of whom rely on relatively inefficient, polluting and health-threatening fuels such as kerosene and firewood for their lighting and cooking needs. As India’s government and energy sector seek to provide more modern and reliable heating and lighting services to these communities, a fledgling market in cleaner, more efficient energy products is emerging. This huge and under-served rural Indian market offers significant opportunities for investors looking to support the sustainable energy solutions of the future.

Read the Report

In recent years, a number of domestic companies have developed clean energy products and services specifically targeting India’s rural “Base of the Pyramid” population – the 114 million households who spend less than US$75 a month on goods and services. About 45 percent of these families do not have reliable access to electricity and rely on kerosene for lighting, while over 85 percent largely rely on firewood and dung for cooking. Successful (though small scale) business models such as solar-based home electricity systems and lanterns, energy-efficient cookstoves, and electricity services generated from decentralized sources such as micro hydro and biomass gasifiers are increasingly finding a market among such households.

India’s government has also facilitated the emergence of this rural clean energy sector by supporting distributed generation in the form of community-based, self-sufficient biomass and solar power. The recently launched National Solar Mission seeks to achieve 20 gigawatts of solar power by 2022, in part through the installation of rooftop photovoltaic systems. It also sets the specific goal of providing 20 million solar lighting systems in place of kerosene lamps to rural communities within the next dozen years. Such measures serve the government’s dual objectives of providing electricity to rural areas and reducing the trajectory of India’s greenhouse gas emissions. Several Indian states, including Andhra Pradesh, Gujarat and Haryana, are also encouraging development of the clean energy sector by instituting statewide renewable portfolio standards. These mandate that a certain percentage of electricity is generated by solar, wind or other renewable, non fossil, fuels.

Realizing this potential would be a win-win for investors, for India’s people and for the global climate: profit-making clean energy solutions bringing light to millions of India’s poorest households.

Against this encouraging backdrop, this new report by India’s Centre for Development Finance at the Institute for Financial Management and Research (CDF-IFMR) and the World Resources Institute’s New Ventures Program, seeks to enhance understanding of the investment potential of the clean energy industry serving India’s rural poor. Based on extensive field work with clean energy companies and rural BoP consumers as well as rigorous secondary research, the report showcases eleven companies selling innovative products and services to sustainably meet the energy needs of the rural poor. It also analyzes both the market opportunities and the challenges to scale up that the industry faces.

WRI and CDF-IFMR hope that these research findings and recommendations will help investors – both in India and abroad - better understand the enormous potential of this market. We believe the expansion of this sector is highly achievable through the development of more efficient business models, additional favorable national policies, and increased, targeted capital. The potential opportunity for investors is significant. We estimate the aggregated potential market for clean energy consumer products and services to be INR 97.28 billion or USD 2.11 billion per year.

This piece originally appeared as the foreword to Power to the People: Investing in Clean Energy for the Base of the Pyramid in India.

Jessica Seddon Wallack is Director of the Centre for Development Finance.

The Centre for Development Finance at IFMR is a non-profit action research think tank focused on improving government systems and markets capacity to channel finance into sustainable, holistic development.

The Rural Market Insight group at CDF develops key insights using qualitative research methodologies and traditional market research tools to help companies and investors understand what it takes to create sustainable and scalable social enterprises in the rural context.