BioeconomyThe bioeconomy unlocks the use of biotechnology to create economic productivity solutions around the use of biological resources and ecosystem services to establish a regenerative economy, sustaining the conservation and restoration of biodiversity.
As the importance of natural capital is increasingly recognized, international support such as the Bonn Challenge seeks to regenerate 9 million degraded hectares of forest in an initiative that has been recognized by several LAC governments.
In response the Inter-American Development Bank has established key funding programs to encourage the bioeconomy in the LAC region, such as the Amazonian Accelerator, the Jaguar Bond and the Peru Biodiversity Fund. These unique programs seek to overcome regional challenges in scaling and leveraging a bioeconomy through a combination of blended finance with loan and grant funding, each awarded through their own methodologies and with their own objectives.
Scope of Activities
Provide to different national economic sectors, with particular focus on areas such as human resources and the environment.
Encourage private and public capital funding for climate-related investment.
Strategic Dialogue and Partnerships
Promote dialogue with regulators, capital markets and financial sector stakeholders and mobilize financing, knowledge, and networks.
Why Bioeconomy?Bioeconomy involves integrating conservation of biological resources and related knowledge into all economic sectors as part of a movement towards a sustainable economy using biological wealth to strengthen production and development while safeguarding and regenerating existing biodiversity. It is also compatible with meeting the objectives of the Millennium Development Goals, and more recently the Sustainable Development Goals, closely connected to the concept of the Green Economy to operationalize development goals within the global economy. Moreover, while significant private investment is needed to close the funding gap for restoring and conserving ecosystems, currently only 1% of new or renewed private sector capital investment is applied towards closing the biodiversity investment gap. Crucially, in doing so creating as potential economic benefits quality employment, exports, growing productive capacity, and regional growth and productivity.
Bioeconomy and barriers to investment:
Provides innovative financial products and technical assistance to enable market growth to overcome barriers facing private investment and increase finance availability to scale the region’s bioeconomy. Seeks to accelerate the progress of Leticia Pact countries towards a restorative economy which can preserve and sustain biodiversity within the Amazon rainforest region. Expand market for ecosystem services such as carbon credits while connecting to Nationally Determined Contributions (NDCs) prescribed under the Paris Agreement as well as complying with the Convention on Biological Diversity (CBD). trengthen stakeholder and institutional capacity for blended finance, bringing together public and private capital to invest in high growth potential industries and activities around the bioeconomy. Create an investment pipeline to support early stage business with a minimum viable product (MVP) of US$ 500,000 up to US$2M that feature high risk tolerance investment to provide grants and pre-investment aligned with the objectives of the CBD. Develop a network that will allow regional incubated business across the LAC region to share best practices and knowledge, as well as close investment gaps and integrate these programs with national and global commitments to tackle climate change, biodiversity loss and create a global “lighthouse” for the bioeconomy sector. Use of technology to generate regional development solutions for the conservation and restoration of biodiversity within the IDB’s member countries pertaining to the Leticia Pact. French Government as the founding partner of the Natural Capital Lab with a total initial commitment of 24M Euros. The Natural Capital Lab is an IDBG venture partnership between the Climate Change and Sustainability Division with the IDB Lab.
Jaguar Bond Mesoamérica
Central American biodiversity is almost unique in its intensity and richness, as although the region makes up just 0.5% of the Earth’s surface it contains 8% of the world’s biodiversity. The Jaguar Bond involves overcoming limitations to bioeconomy development through fostering international collaboration across countries and private sector organizations, providing financial incentives for sustainable development projects aligned with the Sustainable Development Goals (SDGs). The Jaguar Bond represents a collaborative global effort to conserve the species, as 14 jaguar range states have come together for the launch of the 2030 Conservation Roadmap for the Americas, which seeks to protect jaguars and the ecosystems in which they live. The Jaguar 2030 Conservation Roadmap, agreed at the Conference of the Parties (COP) 14 of the Convention on Biological Diversity, strengthens conservation efforts of the Jaguar Corridor, ranging from Mexico to Argentina, by identifying and securing 30 priority jaguar conservation landscapes by the year 2030 (Natural Capital Lab, 2020). The Jaguar Corridor strategy connects ecosystem habitats for roaming and has been pursued by some nations such as Costa Rica and Guatemala since 2000. The 2030 Conservation Roadmap supported by the Jaguar Bond is scaling this up. The Jaguar Bond is to play an essential role in doing this by addressing environmental pressures, encouraging alternative and more sustainable economic activities in the range of the jaguar such as eco-tourism and regenerative agricultural practices. The initiative aims to raise the funds needed to ensure that these sustainable businesses enable income generating opportunities and improve local livelihoods. Forest and landscape restoration in Central America require government coordination for sustainable long-term finance and enabling the investment pipeline to become attractive for private investors. To improve this, effective distribution channels together with risk monitoring and analysis are necessary institutional innovations, which the IDBG have pioneered in the LAC region. The Jaguar Bond initiative empowers the appropriate vehicles for landscape-scale investment to reduce risk for the private sector by enabling more strategic oversight and coordination between public and private sector investments.
Producers and local governments in the Peruvian Amazonian region have shown increased demand for a new bioeconomy productive model that will conserve and preserve biodiversity via sustainable forest and land management while enabling new incentives for employment and income generation. The Peru Biodiversity Fund highlights and identifies shortcomings in technology and knowledge as a hindering factor for the development of the bioeconomy. The IDBG and partnership funds created to support the bioeconomy seek to overcome limitations through sharing and enhancing knowledge and research capacity across the regional bioeconomy. The fund focuses investments on high growth potential industries and activities, that provide innovative financial products and technical assistance to enable new markets and lift the barriers facing private investment. Supporting the Peruvian Bioeconomy through a blended finance approach directed towards initiatives with high growth potential that may not match conventional financing requirements in their early stages. In particular, the Natural Capital Lab through the Fund targets cross-sectoral development of new financial models and involvement for private sector investment for conservation and restoration of Amazon rainforest biodiversity.
The Intrinsic Value Exchange (IVE) brings innovation by bridging of traditional finance stock exchange model with monetization of natural capital and ecosystem services. IVE is listed as “stock exchange designed to value and price natural capital, that creates innovative financial products and employs exchange technologies to value and convert natural capital to financial capital”. IVE secures Conservation International (CI) as a strategic partner attributing to CI’s active experience in conservation and monetization of ecosystem services, as well as country expertise and joint public-private partnership efforts in Surinam. Surinam is prominent for its biodiversity as the world’s country with most forested areas, with a total of 80% being primary forest and holds 8% of world’s surface fresh water. Current global Green GDP is estimated to be over $146 trillion a year (Natural Capital Lab, 2020). The Intrinsic Value Exchange (IVE) conducted a natural capital appraisal for the Central Suriname Nature Reserve (CSNR) where a surveyed 1,600,000 hectares of tropical rainforest are estimated to produce between $1.3 billion and $3.8 billion in ecosystem services per year (Natural Capital Lab, 2020). Program will account for a range of key thematic area indicators that include avoided deforestation rate, carbon storage and net job creation through sustainable practices (IDB, 2020).
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