By Frederick Smith
NatureVest, the impact investment team within The Nature Conservancy (TNC), is spearheading a number of initiatives to retool traditional finance to benefit marine ecosystems and help local communities adapt to climate change. One innovative example is the Debt-for-Nature Swap (DFNS) that NatureVest spearheaded in the Seychelles, an island nation of 115 granitic and coral islands in the western Island Ocean.
I was fortunate to be able to meet with Martin Callow, Chief Executive Officer of the Seychelles Conservation and Climate Adaption Trust (SeyCCAT), the conservation trust created to independently manage the financial flows from the debt for nature swap for the nation’s conservation benefit.
“It is…rewarding to start seeing innovative finance routed towards helping solve crucial ocean issues and towards developing new “blue economy” business models here in Seychelles,” said Martin. “We’re starting to see new organizations and partnerships drawn to the field, a key goal of ours.”
Under the terms of the 2016 deal, the Seychelles government agreed to protect one third of its Exclusive Economic Zone (EEZ) – twenty to two hundred miles offshore – as marine protected areas (MPA) in exchange for its Paris Club creditors restructuring $22 million of its sovereign debt. The payments from the debt restructuring are redirected to the SeyCCAT conservation trust to independently allocate the funds for conservation and climate adaption projects.
In February the Seychelles government designated 81,000 square miles of marine habitat as marine protected areas, including part of Mission Blue’s Outer Seychelles Hope Spot, highlighted for its ecological importance. It is currently engaged in a six-year long, multi-stakeholder spatial planning process, facilitated by TNC, which will double the size of the existing MPA network. Half of the MPAs will be no-take marine reserves, which prohibit fishing, to allow fish to replenish and restock outlying areas.
In addition to the debt-for-nature swap deal, the Seychelles government is issuing the first ever Blue Bond – a debt instrument specifically created to fund marine conservation and climate adaption projects. The DFNS and bond assets will only be routed to projects that can demonstrate alignment with robust environmental and social principles.
“SeyCCAT is excited to be co-managing proceeds from the Seychelles Blue Bond,” said Martin. “We will be co-managing US$15M to provide blended finance in the form of grants and concessionary loans.”
The additional $15 million generated from the Blue Bond sale will allow it to expand its Blue Grants by 179% to $780,000 per year and add $12 million to the Blue Investment Fund. SeyCCAT recently announced its first round of Blue Grant project partnerships.
“It is our hope that this unique financial instrument and partnership can be replicated elsewhere to support fisheries transition to sustainable practices,” said Martin. “Seychelles has taken on a pioneering role when it comes to developing innovative financing mechanisms and we are focused on demonstrating success in Seychelles,” said Martin, “so the model can be taken on by other coastal and island nations.”
While it is vitally important to continue to hold the companies accountable to environmental laws based on good science, we also need to proactively collaborate with the business community to seek solutions that are a win-win for their bottom line and the environment. Financial strategies like debt-for-nature swaps and blue bonds are powerful solutions for rewarding countries and companies whose activities help to protect marine ecosystems and fight climate change.
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All photos, other than banner image, at attributed to Frederick Smith at Epic Ocean Adventure.
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This piece was edited and posted onto SEVENSEAS Media by: Bharamee Thamrongmas.