Rare, an international nonprofit based in Arlington, Virginia, U.S.A., has created what it calls a first-of-its-kind small-scale fisheries (SSF) Impact Bond to finance community-led co-management of small-scale fisheries.
Rare announced the bond at the COP28 meetings in the United Arab Emirates, and is targeting early 2024 for the launch of the program. Its plan for the SSF Impact Bond program is to scale up through three rounds, with a goal of mobilizing up to USD 160 million (EUR 146 million) to support the protection, restoration, and sustainable management of coastal ecosystems. Rare said along with the ecological and community benefits, the model is aimed at de-risking future investment in communities and small-scale fisheries.
“Philanthropy alone is not enough to finance the conservation of ocean ecosystems, on which both nature and people depend,” Rare Innovative Finance Vice President Kate Schweigart said. “This first-of-its-kind Impact Bond creates a pathway to scale that attracts both private capital and public donors by lowering the risk of investing in community-led conservation, which we know is good for local people, economies, and nature. By paying for outcomes, we can attract the kind of investment we need to achieve ‘30 by 30’ [pledges] and the [U.N.] Sustainable Development Goals.”
The initial investment round will fund a pilot program for the bond, with the goal of establishing five new community-based conservation management systems in Southeast Sulawesi, Indonesia. The new systems, dubbed “managed access with reserves” (MA+R), are intended to deliver better management outcomes for people and nature.
The new bonds are part of Rare’s Innovative Finance program and are based on an outcome-based financing (OBF) structure. Through an OBF structure, investors are repaid by the “outcome funders” only when a set of pre-defined targets have been met and verified. Rare points to other sectors, such as health, education, and poverty alleviation where the OBF model has been successfully deployed. As a new blended finance model, the SSF Impact Bond can also offer countries a new opportunity to scale solutions that deliver on international “30 by 30” goals to create protective measures for 30 percent of the world’s land and sea area by 2030.
Rare said the bonds address an existing gap in effective financial models in the sector.
“Small-scale fisheries are predominantly in coastal waters where high human use meets high biodiversity,” it said. “Support for small-scale fisheries traditionally flows from the national budget to the sub-national government. Since the value of small-scale fisheries is not clearly defined and recorded catch is undervalued, they are chronically underfunded.”
Photo courtesy of United Nations
