The Land Degradation Neutrality Fund: An Innovative Financial Mechanism In The Making (16 October 2015)
On Friday 16 October, a COP side event took place on the conceptualization and further development of the Land Degradation Neutrality Fund - a collaborative undertaking, anchored on achieving the Land Degradation Neutrality target of the Sustainable Development Goals.
Opening the event, the Executive Secretary, Monique Barbut explained that the Global Mechanism of the UNCCD had taken up the challenge of spearheading the development of a financial instrument to channel private sector resources and substantially contribute to the restoration of 12 million hectares of land that is being degraded each year. Public resources would be sought to complement private resources, covering investment risks and contributing to the setup of a technical assistance facility.
The Fund is being designed to mobilizing resources from impact investors -investors who aim at investing according to environmental sustainability criteria and who are interested in making long term investments. Impact investment is a growing market worth around USD 60 billion today “We want to ensure the Land Degradation Neutrality Fund adheres to strict environmental and social standards” she added.
Marco Lambertini, Director General of WWF International, has addressed the participants in a video message, saying that the Land Degradation Neutrality Fund represents a model of long-term, affordable finance for large-scale land rehabilitation. By supporting diverse and sustainable land use, the Fund affirms that land integrity and productivity is key to the future of humanity.
The Global Mechanism’s Simone Quatrini, coordinator of the project, explained the Fund’s business model. The Fund will finance land rehabilitation by providing loans or co-investments to landowners and land users; by channeling finance to smallholders through financial intermediaries; and through collaboration with other sustainability funds. It is expected to generate:
- revenues for investors, through interest on loans or dividends from equity investments
- environmental benefits through regeneration of the productive capacity of soil, restoration of ecosystem functions, improved biodiversity, and climate change mitigation and adaptation
- social benefits such as employment opportunities, increased food and water security to benefit local communities
The debate that followed hinged on what aspects should be considered in further developing the fund. Wrapping up the event, Markus Repnik, Managing Director of the Global Mechanism called on participants to inject their ideas into the Fund at this phase of its development. “It is a fund in the making” he said “Private sector interest has been raised, initial partnerships formed, and the Fund concept is evolving. Please be part of this exciting process”.
For more information:
The Global Mechanism
Tel. +49 228 815 2856
smarchant (at) unccd.int