Ecosystem Services Partnership Africa Conference 2016

To further understand and build the business case for private sector engagement, the Incentives for Ecosystem Services (IES) project hosted the session Incentives for agro-ecosystem services: The business perspective during the First Conference of the Regional Africa chapter of the Ecosystem Services Partnership (ESP) held in Nairobi, Kenya on 21-25 November 2016.

Ms Andrea Erickson, Managing Director for Water Security at The Nature Conservancy and who currently leads TNCs Global Water Funds and Global Market teams, opened the session, drawing attention to TNC's development of public-private co-financing of Water Funds across the globe.

The IES approach presented an overarching mechanism to coordinate private sector investment in agro-ecosystem services to support their responsible investment, enable co-benefits and spread the burden of investment risk. The business perspective was made through presentations were made by Frigoken Ltd, VegPro Kenya, ICRAF, Sustainable Commodities Assistance Network (SCAN), TNC Upper Tana Nairobi Water Fund and Lake Naivasha LANAWRUA.

The session aimed to use these examples to illustrate:

The varied motivation for private sector investment in integrated landscape approaches for sustainable agro-ecosystems
The diverse entry points and spectrum of incentives that can be used to enable their engagement and responsible investment, ranging from REDD+, investment along the commodity value chains, in-built sustainability, and supporting the wider sustainability of farmers to ensure long-term production
The mechanisms through which co-financing from public and private sector can support a broad package of incentives for sustainable production and the provision of agro-ecosystem services.

Key motivations for investment included: Avoidance/ addressing regulations, Seeking opportunities for co-financing; Savings or reducing costs of production/ managing supply; Greater access to markets

Challenges and bottlenecks faced by the private sector in investment in agro-ecosystem services were identified as: Unstable policy environments making it difficult to plan/ invest, Macro-economic factors (e.g. fluctuating carbon prices); Risks of investment - lack of clear return of investment, policy restrictions, distraction from core business; Lack of credible and accessible data to support business cases; Price and cost internalization

This highlighted the need for mechanisms to provide appropriate enabling conditions to support their responsible investment and spread the burden of risk of this investment through public-private co-financing. Well-established co-financing mechanisms from TNC's Upper Tana Nairobi Water Fund and Lake Naivasha's LANAWRUA public-private partnerships were shared as examples of frameworks to support farmers with incentives to transition to more sustainable practices and provide agro-ecosystem services.

Key messages

Responsible investment in agro-ecosystem services is good for business to ensure the long-term supply of products, develop good reputations and reduce long-term costs. Their engagement is therefore crucial to mobilize additional financial resources from multiple sources
Investment in agro-ecosystem services should be in-built as part of core-business, not just a side distraction or obligation to fulfil
There are diverse entry points for private sector investment in agro-ecosystem services. These can provide a spectrum of incentives to promote sustainable agricultural practices and ecosystem services conservation
Improved coordination of existing public and private sector co-financing can spread the burden of investment risk and provide a package of multiple incentives. These incentives can support farmers improve sustainable productivity, livelihoods and food security, and protect ecosystem services

Next steps

The IES project will continue to track progress on engagement with the private sector. Specifically, working with TNC and Frigoken Ltd to document the incentives provided within the Upper Tana Nairobi Water Fund example, and with VegPro and LANAWRUA to document how incentives are supporting farmers in Lake Naivasha to transition to more sustainable practices.

IES will also work closely with SCAN to further develop our understanding of private sector motivations, across a spectrum of business types, to build the business case for their responsible investment.