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IDB launches Natural Capital Lab to incubate public-private solutions for conservation

France commits $25 million to help fund the first round of projects

The Inter-American Development Bank today announced the creation of the Natural Capital Lab, a space where governments and businesses will work together to incubate concepts that can yield breakthroughs in financing conservation, biodiversity, and marine ecosystem projects.

The Lab, situated at the IDB’s headquarters in Washington, DC, will seek to attract public and private entities to craft high-risk, high-reward approaches to protecting and preserving natural capital. Successful projects may then be scaled and replicated using resources from the Global Environmental Facility, public funds such as the French Development Agency (AFD), private sector investors, and the IDB Group’s lending portfolio.

The Republic of France on Wednesday also announced its intention to make a $25 million contribution to the Natural Capital Lab.

“I want to thank President Macron, the French Secretary of State to the Minister for the Ecological and Inclusive Transition, Mme. Poirson, the Director General of the French Development Agency, Mr. Rioux, and the French Ministry of Finance, for this visionary commitment,” said IDB President Luis Alberto Moreno. “As the founding donor of the Lab, France will help to fund the first round of projects, and we are confident that many other donors will soon follow their example.”

The Lab will have three main objectives:

  1. Incubate a pipeline of projects.  By making small investments in entrepreneurs working on natural capital solutions and by linking them to larger investment opportunities, the Lab will help experimental concepts and pilot projects reach scale.
  1. Provide blended finance.  Working through the IDB Group, the Lab will leverage resources to develop guarantees, loans, equity investments, results-based payments, and technical assistance to remove barriers that prevent private investment in projects.  This can take the form of subordinated debt, first-loss mechanisms, high-risk tranches, or grant assistance that reduces the risk of associated reimbursable operations.
  1. Mobilize resources for scale.  Using its network, the Lab will link projects to resources from the IDB Group and the Natural Capital Lab Donor Fund and incubate projects for donor facilities such as the Global Environment Facility.  The IDB will also leverage its large network of impact investors.

“This Lab will show that natural capital projects can be good investments,” said Juan Pablo Bonilla, Manager of the Climate Change and Sustainable Development Sector at the IDB. “By developing solutions for the private sector and governments and supporting technologies that enable the mapping, tracking, and sensing of ecosystem data, we will also give decision-makers the tools they need to advance this agenda.” 

The IDB intends to solicit additional contributions from donor nations, with the goal of having at least 5 projects in execution by 2020. The Lab is currently developing its first call to source natural capital entrepreneurs for seed funding and is developing exchange mechanisms to value and trade natural capital assets on a market.

To learn more about the Natural Capital Lab, visit this site www.iadb.org/naturalcapitallab

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance and training to public and private sector clients throughout the region.