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Natural Capital Lab

Why the Natural Capital Lab?

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Although it represents only 16% of the planet’s land, Latin America and the Caribbean (LAC) holds 40% of the world’s biological diversity and contains seven of the world’s 25 biodiversity hotspots, six of the 17 “megadiverse” countries, 11 of the 14 terrestrial biomes, and the second largest reef system worldwide. More than 30% of the earth’s available freshwater and almost 50% of the world’s tropical forests are found in the region and LAC possesses a vast array of terrestrial, freshwater, coastal, and marine ecosystems containing some of the richest collections of birds, mammals, plants, amphibians, and landscapes on the planet. This unique source of capital -- natural capital -- generates important life-supporting benefits for people called ecosystem services.

However, natural resources are under threat.  A recent study by WWF showed that South and Central America have lost 89% of their populations of mammals, birds, fish, reptiles, and amphibians.  Global Forest Watch data shows that 4 of the top 10 countries for tropical tree cover loss in 2017 were in Latin America.  Mangrove deforestation rates are 3-5 times higher globally than terrestrial forests.  In our oceans, 90% of fish stocks are either fully fished or over-fished, and plastic pollution has been detected in all major marine environments.  Chemical and air pollution continues to advance, with the WHO estimating that 90% of the world’s population lives with toxic air.

McKinsey and company estimates that $300 billion to $400 billion is needed each year to preserve and restore ecosystems, but conservation projects receive just $52 billion, mostly from public and philanthropic sources.  This shortfall in funding can be partially addressed through mobilization of private investment – by supporting private actors that are sustainably leveraging natural capital, facilitating private investment in conservation and restoration projects, and fostering private innovation in sustainability solutions.  It can also be addressed by helping all actors – the public sector, corporates, entrepreneurs, and civil society begin to quantify the value of natural capital in economic terms.

As countries seek to reach their commitments under the Convention on Biological Diversity, the Paris Climate Accord, and Sustainable Development Goals 14 and 15, the sustainable use of natural capital will become vitally important to the achievement of these national commitments, national development strategies, and local livelihoods.

There is a major opportunity to catalyze innovative ways to efficiently and sustainable put LAC’s natural capital ecosystem services at the service of the region.

What does the Natural Capital Lab do?
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IDB’s Natural Capital Lab serves as a one-stop shop for the IDB Group to drive innovation in the conservation, landscape, regenerative agriculture, biodiversity, and marine ecosystem finance spaces.  It seeks to bridge the gap between traditional environmental and financial actors from the public and private sectors to incubate, accelerate, and scale new solutions to pressing problems.

The Natural Capital Lab is a risk-tolerant hub within the IDB Group.  Given that the solutions to many natural capital problems are cross-cutting, it pursues an agenda of blended finance projects with all parts of the IDB Group (IDB, IDB Invest, IDB Lab), in addition to its own projects, knowledge, and strategic partnerships.

 

 

As a lab for financial innovation, activities include the deployment of funding in the form of grants, loans, equity, risk capital, or guarantees to:

•    Test new models in natural capital finance across the public and private sectors
•    Accelerate the deployment of new technologies
•    Create enabling regulatory frameworks for innovation in natural capital
•    Identify entrepreneurs and projects, and support them with risk capital and linkages to innovation ecosystems
•    Link projects to existing investors, international funding sources (such as the GEF), and IDB finance for scale
•    Test large-scale financing models for conservation
•    Experiment with investments based on natural capital valuation/risk
•    Work with anchor companies in valuing and leveraging natural capital in their supply chains

The achievement of the SDGs will only happen if the diversity of actors involved in advancing an innovation agenda learn to partner with each other. Government, academia, private sector, entrepreneurs, and civil society cannot solve problems alone. The Natural Capital Lab prioritizes multi-stakeholder partnerships to provide evidence on how inclusive innovation facilitates results. 

As a lab for strategic dialogue and partnerships, activities include:

•    Detailing the economic case for investment in natural capital sectors
•    Partnering with large global initiatives that convene leaders in technology, science, conservation, and business to develop dialogues on natural capital innovation
•    Developing a network of ministries of finance and international actors, such as the Convention on Biological Diversity, to discuss how natural capital can be an asset and driver of development, not a cost

Some of the sectors to be developed include:

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Call to Action:

The Natural Capital Lab is a joint venture of the IDB’s Climate Change and Sustainability Division with the IDB Lab.  At the 2018 One Planet Summit President Macron of France announced the French Government’s commitment to become the founding partner of the Natural Capital Lab, with a 24M euro contribution.   

The Natural Capital Lab is targeting preliminary results for the 2020 IUCN Congress in Marseille and the Biodiversity COP 15 in China. 

How to Engage:

Donors can support the Natural Capital Lab by contributing to the Lab’s pool of funds for projects, knowledge, and operations.

Corporations can join forces with the Natural Capital Lab by jointly developing projects to value and conserve natural capital within their operations or supply chains, by using and scaling technologies or solutions incubated by the Lab, or by contributing to the Lab’s fund.

Implementing partners can join forces with the Natural Capital Lab to jointly develop projects, to source pipeline, or to become strategic partners in our dialogues.

Entrepreneurs can receive funding, mentor other Natural Capital Lab companies, or participate in calls for proposals.