First study of conservation impact investment market is released

New Report Finds $23 Billion Global Market for Conservation Investing, with $2 Billion from Private Investors

(November 6, 2014) As the impact investment market has grown, so has the research coverage across sectors and thematic areas of focus. Today, the first study of the market for conservation-related impact investments was released by EKO Asset Management Partners, JPMorgan Chase & Co., The Nature Conservancy, the David and Lucile Packard Foundation, and The Gordon and Betty Moore Foundation.

Investing in Conservation: A landscape assessment of an emerging market reveals a fast-growing market totaling approximately $23 billion in the five-year period from 2009-2013. During the same period, private investments accounted for almost $2 billion of this market – an amount that is growing at an average of 26 percent annually, and is expected to reach more than $5.6 billion by 2018.

The report shows that private investments in this space are expected to more than triple over the next five years (2014-2018). However, the report also finds that a substantial amount of potential private capital has not been deployed, demonstrating the need for a significant increase in the number of risk adjusted investment opportunities.

According to survey findings, the approximately $23 billion committed to conservation impact investments from 2009-2013 was invested in three main categories:

  • Water quantity and quality conservation, including investments in watershed protection, water conservation and storm water management, and trading in credits related to watershed management
  • Sustainable food and fiber production, including investments in sustainable agriculture, timber production, aquaculture, and wild-caught fisheries
  • Habitat conservation, including investments in the protection of shorelines to reduce coastal erosion, projects to Reduce Emissions from Deforestation and Degradation (REDD+), land easements, and mitigation banking

Other key findings include the following:

  • Private investors expect to deploy $1.5 billion of already-raised capital over the next five years, and to raise and invest an additional $4.1 billion
  • Of the nearly $2 billion already invested by private investors, 80 percent came from only 10 sources
  • The total market for conservation investment is expected to increase to $37.1 billion over the next five years
  • Of the three categories of conservation investment studied, DFIs invested largely in water quality and quantity projects ($15 billion), while private investors invested largely in sustainable food and fiber production (about $1.2 billion)
  • Survey respondents noted a shortage of investable projects and opportunities, indicating that they need more deals with adequate risk-return ratios and more seasoned management teams

Impact investment is one way to address the critical global deficit in conservation funding. An estimated $300 billion annually is needed to meet the world’s conservation challenges, according to a Global Canopy Programme report. Yet current levels of investment, mainly from governments, multilateral agencies, and philanthropic sources, total only about $50 billion.