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Centre for Building Sustainable Value · Julia Bevacqua

New financial tool to revitalize natural environment in Southern Ontario

Nov 13, 2019

Conservation Bond

A new innovation in financial instruments is helping conserve the natural environment in Southern Ontario.

The recently launched Thames Conservation Impact Bond is being led by Carolinian Canada, a leading ecological group working to advance a collaborative conservation strategy for healthy ecosystems in Ontario’s Carolinian Life Zone. The project brings together many partners including Ivey Professor, Diane-Laure Arjaliès, Chippewas of the Thames First Nation, Thames Talbot Land Trust, and VERGE Capital.

The bond comes at a time when it is needed most. The natural environment in Canada’s far south ecoregion is one of the most fragile and diverse in the nation. Extreme weather events and 85% habitat loss have created an unprecedented urgency to protect our wildlife, water and way of life in southern Ontario.

However, a growing body of research shows that high quality natural infrastructure can protect the environment. Unlike traditional infrastructure, natural infrastructure grows in value over time.

The purpose of the Thames Conservation Bond is to incentivize investments in high quality natural infrastructure. Doing so could cut agriculture and other land use costs and provide critical resources for our youth and their future.

How it works

The process starts with habitat partners like Carolinian Canada, Chippewas of the Thames First Nation, and Thames Talbot Land Trust working together to develop a healthy landscape portfolio as well as metrics that will define the portfolio’s success. The portfolio will be the vision that the entire project works towards.

The next step is finding two types of funding partners. The first are community outcome partners that agree to pay a set price over time for the successful delivery of the healthy landscape portfolio, with no expectation of monetary returns. The second are impact investors that agree to pay up front for the delivery of the healthy landscape portfolio, with the expectation of a return of capital and interest if the outcomes are achieved.

Once the funds from the impact investors are received, the cross-sector partners begin work on delivering the healthy landscape portfolio. As progress is made, a third-party evaluator assesses the outcomes to determine whether community outcome partners will contribute funds and how much impact investors will make in returns.

The result is a self-sustaining cycle of improved natural infrastructure and ecosystem health supported by a diverse community willing to work for a better planet.