We are in the UN's decade of change: we need to rapidly change our habits to combat the effects of carbon emissions that cause climate change. One way of doing this is to ensure that the carbon and reforestation markets are free of any projects that might be counter-productive because they don't meet quality standards. However, at present, no quality standards have been set, either nationally or globally.
It is essential to define quality criteria for forest restoration, as this leads to many positive outcomes, such as higher prices for carbon credits. This benefits voluntary carbon projects and improves the efficiency and sustainability of all restoration efforts. By establishing strict quality standards, restoration projects can deliver real environmental and social benefits, increasing their credibility and market value.
The recent formation of the Symbiosis Coalition, which brings together four major technology companies keen to accelerate nature-based carbon solutions, underlines the importance of these quality criteria. This coalition shows that influential stakeholders recognize the need for rigorous quality standards to scale up impactful and reliable nature-based solutions. For funders, a focus on quality is essential to ensure that their investments have a substantial and lasting positive impact on the environment and communities.
On July 11, 2024, three change-makers on the ecological scene came together in a webinar to discuss the transformative impact of high-quality, nature-based carbon reductions. The combined expertise of Terraformation, MORFO and Restor offers detailed insight into the full lifecycle of restoration projects, from inception to long-term monitoring and impact assessment.
The speakers for this webinar were :
- Mick van Eck Santos, Restor's Regional Engagement Manager
- Damien Kuhn, Vice President, Forestry, Terraformation
- Pascal Asselin, co-founder and general manager of MORFO
- Moderator: Andy Haigh, Director of Positive Climate Solutions at Grosvenor Property UK
We'd like to thank everyone involved in organizing this webinar, a collaborative event designed to pool our knowledge and encourage open dialogue.
Understanding the right investments in nature restoration projects
In the fast-moving field of nature restoration, securing the right investment is a key factor in the successful launch and expansion of projects. This chapter examines the essential characteristics of a good investment, as outlined by experts at a recent webinar. It highlights the essential elements that investors need to consider to ensure that their contributions lead to sustainable, impactful restoration efforts.
Early involvement: preparing the ground
One of the recurring themes of the webinar was the importance of investing at an early stage. According to Terraformation's Damien Kuhn, it's essential to involve investors from the outset, usually during the project development phase, which lasts one to two years. Early investment not only provides landowners with the necessary financial guarantees, but also enables investors to fully understand the local context of the project. This early commitment is essential to meet the significant development costs and ensure the long-term viability of the project.
Understanding local and global contexts
A good investor needs to have a thorough understanding of local dynamics and the broader issues surrounding reforestation. This includes recognizing the social and economic drivers of deforestation, particularly in tropical regions where poverty and limited employment opportunities often lead to environmental degradation. As Mr. Kuhn points out, integrating social components into investment strategy is essential to creating viable economic alternatives for local communities and tackling the root causes of deforestation.
"We must always take into account the human aspect, which implies a comprehensive analysis of the dynamics and drivers of deforestation, including social and economic factors." - Damien Kuhn, Vice President Forestry at Terraformation
Commitment to long-term investment
Nature restoration projects are by nature long-term undertakings, often spanning 40 years. Both Mr. Kuhn and Pascal Asselin of Terraformation stressed the need for investors to make a long-term commitment. While it's understandable that investors are looking for returns, a long-term commitment is more in line with the slow maturation process of trees and the gradual development of ecosystems. This prolonged involvement guarantees the sustainability and success of projects, which makes a significant difference to short-term investments.
Strengthening local economies and creating jobs
Investors should also focus on the economic impact of their contributions. Investing in local economies by creating jobs and supporting local incomes has been identified as a key success factor. By doing so, investors contribute to building the local capacity needed for ongoing project maintenance and foster community buy-in, which is crucial to the project's sustainable success.
Building strong partnerships
Collaboration with local communities and stakeholders is another cornerstone of successful investment in nature restoration. Mr. Asselin described the importance of involving the local population in the various phases of the project, from soil preparation and planting to seed collection and monitoring. This collaborative approach not only improves project implementation, but also ensures that the knowledge and needs of the local population are taken into account, increasing the relevance and effectiveness of the project.
"Involving the local population in operations such as soil preparation, planting and monitoring is crucial." - Pascal Asselin, co-founder and general manager of MORFO
Leveraging technology for precision and transparency
The use of advanced technology , such as drones, remote sensing and computer vision, was highlighted as an essential element for accurate monitoring and transparency. These tools enable detailed monitoring of project progress and ensure that investors can see tangible results, thus fostering trust and accountability. Mr. Asselin emphasized that this level of precision is essential for transparency and high-quality project results.
"Cutting-edge technology enables highly precise analysis, ensuring a clear and accurate understanding of what we're dealing with." - Pascal Asselin, co-founder and managing director of MORFO
Innovative financial strategies
Finally, the financial strategy of pre-purchased carbon credits was presented as an innovative solution to financing problems. This approach enables projects to obtain the necessary funds before the trees reach maturity, ensuring that initial deployment and ongoing operations can proceed without financial hindrance. By investing in projects prepared in advance, investors can contribute to the early stages of reforestation efforts and facilitate their long-term success.
Communities seek long-term security and autonomy from investors
Communities generally prefer to work with investors who offer long-term security and stability. They value investors who provide reliable, long-term financing, rather than short-term or volatile funding. Secure investments enable them to concentrate on their core activities without the constant worry of financial instability.
"Most of the communities we work with want security as soon as possible. This will bring a lot of value to the investor by financing the project over the long term." - Damien Kuhn, Vice President of Forestry at Terraformation
What's more, communities appreciate investors who trust them and empower them. Communities also appreciate investors who trust them and empower them. This means giving them the autonomy to translate their visions into action without excessive administrative burdens. Good investors should also be able to support local capacity building, ideally by teaching skills that stimulate local economies and create sustainable jobs, rather than simply providing resources.
"We need to give visibility to local communities and revive our relationships with them. Offering pre-financing and prepayment on various aspects is a good way to build trust." - Pascal Asselin, co-founder and managing director of MORFO
In addition, investors who engage with communities in a meaningful and respectful way are preferred. This includes understanding their specific needs, making advance payments where necessary, and committing to long-term relationships rather than making empty promises. To foster productive partnerships, it's essential to build trust through transparency and constant support.
"A good investment should ideally teach people to fish rather than give them fish or make them dependent on outside resources. It should stimulate the local economy, promote alternative livelihoods and support what we often call ecopreneurs." - Mick van Eck Santos, Regional Engagement Manager at Restor
How to engage with local communities
To engage effectively with local communities, including indigenous peoples, it is essential to integrate their voices and views throughout the project development process.
One success story shared during the webinar came from a project in Ghana, where extensive consultation was a key element. The project team spent months talking to local committees and community members. These were not just initial meetings, but an ongoing dialogue to really understand their needs and preferences. For example, the team organized workshops to present the proposed strategy, to gather feedback and ensure that it matched the community's expectations. This iterative approach enabled important adjustments to be made, such as the inclusion of support for land security, which was a major concern for the community.
In addition, emphasis is placed on the importance of integrating community feedback into project planning. Ensuring that projects are developed in partnership with the local community not only promotes buy-in, but also improves project sustainability and effectiveness. It means engaging with the community on an ongoing basis, adapting plans in line with their feedback, and ensuring that financial benefits are ploughed back into supporting local development.
"Local communities are an integral part of the project. They are the ones implementing it and ensuring its sustainability for the next 40 years." - Andy Haigh, Director of Climate Positive Solutions at Grosvenor Property UK
Are restoration projects limited to protected land?
Restoration projects are not limited to protected lands. While working on protected land can offer certain advantages, such as legal protections and clearer boundaries, successful restoration can also take place on unprotected land.
"It's not just about planting trees. It's about ensuring that the community supports the project and that it's carried out properly. It's not about owning the land; rather, it's about working with communities to create leasing structures that empower them and protect their rights." - Andy Haigh, Director of Climate Positive Solutions at Grosvenor Property UK
Where unprotected land is involved, it is essential to work closely with local communities to put protective measures in place. This may involve creating lease agreements or other collaborative arrangements that help to ensure the sustainability of the project. For example, as mentioned in the Ghana project example, organizations can work with local communities to implement activities that not only restore land, but also provide economic incentives, such as community trust funds, job creation and sustainable livelihood opportunities.
Involving the community and providing it with tangible benefits from restoration efforts, such as improved livelihoods and local economic opportunities, helps reduce the risk of illegal activities such as logging and promotes the long-term success of the project.
"A community trust fund enables communities to invest in activities they deem a priority for their development, using the progress made and benefits shared through carbon credits." - Damien Kuhn, Vice President Forestry at Terraformation
How to boost investor confidence in high-quality projects
To boost investor confidence in the quality of carbon offset projects, by ensuring that they are capable of delivering on their promises, several strategies can be employed.
Transparency and verification
Transparency is one of the most important ways of building trust. This includes providing detailed metadata about the project, such as its objectives, geographical boundaries and specific interventions implemented. Platforms such as Restore emphasize the transparency of data and scientific information to build trust. By making project information accessible and verifying it using global standards, investors can more easily assess project quality.
"For us, the motto 'Restore Confidence' is based on transparency. We evaluate projects using self-reported data, which we call metadata. This includes the purpose or objectives of a project, as well as the associated sites, which are mapped and accessible to all." - Mick van Eck Santos, Regional Engagement Manager at Restor
Comprehensive due diligence
Effective due diligence is essential. It involves rigorous assessments of technical, legal and social criteria, often through documentary reviews and on-site inspections. A holistic approach takes into account not only the technical aspects, but also the social and ecological contexts of projects. It is essential to ensure that the team in place has the necessary skills and experience, and to verify relationships with landowners and local stakeholders. This in-depth assessment ensures that projects are sound and capable of achieving their objectives.
Scalability and reproducibility
To attract investors, it is essential to demonstrate that projects can be effectively scaled up. This means showing that the technology and methods used in the projects can be applied on a larger scale, from a few hundred to several million hectares. Investors will be all the more confident if they see that a project's success can be replicated and scaled up, ensuring that the approach is both practical and sustainable in wider contexts.
A holistic approach to ecosystem services
Quality projects are not limited to carbon sequestration. They must also take into account biodiversity, social impact and overall ecological health. Projects that integrate these aspects tend to offer greater value and resilience. Investors are likely to have greater confidence in projects that not only sequester carbon, but also contribute to wider environmental and social objectives.
"The first key factor in identifying a high-quality project is the human element. This means analyzing the drivers of deforestation from a 360-degree perspective, integrating not only technical skills, but also social and investor viewpoints." - Damien Kuhn, Vice President Forestry at Terraformation
Fair financial flows
It is essential to ensure that financial benefits are fairly distributed among all stakeholders, including local communities. This means structuring financial models in such a way that communities receive a fair share of the benefits, thereby promoting the long-term viability of the project and local support. Clear agreements on revenue sharing and the provision of immediate financial benefits, in addition to potential future gains, can boost investor confidence and project viability.
"The final key factor for high-quality projects is, in my opinion, financing. It's essential to find the right investors and ensure a fair sharing of benefits with landowners and communities." - Damien Kuhn, Vice President Forestry at Terraformation
Are we increasing restoration efforts fast enough?
"Restoration projects need to expand rapidly, not only by expanding existing projects, but also by identifying new projects and channeling capital to enable as many restoration efforts as possible to take place simultaneously around the world." - Andy Haigh, Director of Climate Positive Solutions at Grosvenor Property UK
On the positive side, there has been a noticeable shift this year towards more concrete actions and the deployment of restoration efforts. This is a shift from mere declarations to the implementation of projects on the ground. What's more, the market is benefiting from greater commitment on the part of investors, who are increasingly asking in-depth questions and financing long-term projects. This shift towards more sustainable and robust restoration efforts indicates that there is growing momentum in this area.
"We're seeing a growing interest in additional ecosystem services and associated payments, with stakeholders gaining a more nuanced understanding of the work involved. The increase in these relationships and the emergence of innovative approaches - such as carbon credits, biodiversity credits and other ecological credits - are very positive developments for the field." - Mick van Eck Santos, Regional Engagement Manager at Restor
However, challenges remain in scaling up these projects at the necessary speed. Despite the progress made, each restoration project remains highly unique and complex, complicating the process for investors who need to evaluate and invest in multiple projects efficiently. The need for greater standardization and transparency is obvious, as these improvements would help to simplify the scaling-up process. Improved methodologies and greater transparency are essential to facilitate faster and more effective scaling-up of restoration efforts.
What can we positively expect from high-quality nature-based projects over the next 3 years?
Over the next three years, we can expect to see significant progress in ecosystem restoration through the integration of diverse knowledge and technology. We can expect an influx of new players and investors who will bring innovative ideas and help foster fair carbon markets. We are likely to see notable advances and successes in restoration efforts, inspiring further innovation and attracting new participants. Finally, increased investment and improved monitoring capabilities for restoration projects, including satellite monitoring, will be aided by increased capital and government policy support.
MORFO will soon publish a new document defining high-quality forest restoration in 6 detailed steps. Pre-order the document by clicking here.
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