A fund focused on conservation in the ‘jaguar corridor’ area of Latin America aims to raise between $100-130 million by mid-2024, Carbon Pulse has learned.
The figure marks a potential increase of $30 mln from a previous target, following encouragement to include an equity envelope for investors, though managers will not know for a few months whether they will follow through with it, according to Sid Embree, founder of the fund for Atmosclear Canada.
The jaguar corridor is a vast area of land stretching from Mexico to Paraguay where jaguars travel to find mates and prey.
Jaguar presence is indicative of a healthy ecosystem, but the species has lost nearly 50% of its historical range in the Americas due to agriculture, fires, highway construction, and poaching, according to the fund website.
Corridors help to nurture the species by enabling jaguars to move through protected areas.
The fund aims to invest in mature and emerging conservation markets to restore biodiversity around the jaguar corridor through initiatives such as forestry, agroforestry, and land restoration.
It will target increasing the population of jaguars in areas where they have declined through land restoration to improve ecosystem connectivity.
The fund originally eyed $200 mln as an “ideal size for a fund to demonstrate that investors can make returns in conservation”, Embree told Carbon Pulse. However, it scaled back its ambition to $100 mln as it was “challenging to attract private capital into conservation”.
The main investors so far are development finance institutions and family offices, as nature markets are not yet mature enough for most institutional investors, she said.
The fund will use impact measures including carbon, land area under stewardship, species abundance, jobs, and gender equality, she said.
BIODIVERSITY CREDIT EXPERIMENTS
The structure of the capital will be 60% carbon and 40% debt, although 15% could be allotted to equity, Embree said.
“The debt portion of the fund will invest in conservation-positive climate smart projects on ecotourism and farms around the jaguar corridor, some through financial intermediaries.”
“I’ve worked on International Finance Corporation (IFC)’s Forests Bond and also designs for a jaguar bond in Latin America,” she said. She worked at IFC for over 18 years.
The fund could be attached to a conventional bond, or to a carbon-linked bond, she said. With the latter, the coupon for the bond would link to key performance indicators or impact metrics such as the number of farmers engaged, land area under improved stewardship, or carbon credits backed by a guarantor.
The strategy is also interested in exploring the fledgling biodiversity credits markets, she said.
“We will experiment with them. I don’t want to rely on them as a sole source of income for an investment, especially considering what carbon markets are going through.”
“I don’t think local communities would want to be too tied up with biodiversity credit documentation. Individual farmers don’t have the bandwidth to participate in the carbon markets without significant support.”
By Thomas Cox – t.cox@carbon-pulse.com
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