1 00:00:16,180 --> 00:00:19,460 Hi, I'm Helen Avery with the Green Finance Institute and 2 00:00:19,460 --> 00:00:21,380 you're listening to Financing Nature. 3 00:00:21,700 --> 00:00:23,980 Today. I'm joined by Vanessa Garcia of 4 00:00:23,980 --> 00:00:27,300 Terra Sauce to talk about how regulated mechanisms like 5 00:00:27,300 --> 00:00:30,780 mitigation banking for unlocking investment into nature and 6 00:00:30,780 --> 00:00:39,280 communities in Colombia. Compliance market, they create 7 00:00:39,280 --> 00:00:44,960 real demand, they are a way of anchoring biodiversity finance 8 00:00:44,960 --> 00:00:50,160 to legal obligations and they are able to ensure that you have 9 00:00:50,160 --> 00:00:52,800 predictable revenue streams for conservation. 10 00:00:53,600 --> 00:00:59,000 So with voluntary market it shifts based on corporate 11 00:00:59,000 --> 00:01:04,760 priorities, whereas compliance market, they are there because 12 00:01:04,920 --> 00:01:09,680 governments, companies, civil society, we acknowledge that 13 00:01:09,680 --> 00:01:13,800 nature it's part of the businesses and and we 14 00:01:13,800 --> 00:01:17,560 acknowledge that nature it needs to be accounted for. 15 00:01:17,840 --> 00:01:28,520 It cannot be an externality. Hello and welcome back. 16 00:01:28,680 --> 00:01:32,880 We took a brief hiatus over London Climate Action Week where 17 00:01:32,880 --> 00:01:35,760 we saw, I think it's fair to say, nature firmly on the agenda 18 00:01:35,760 --> 00:01:39,640 actually, and a lot of discussion specifically around 19 00:01:39,640 --> 00:01:42,800 private sector investment. It was a really busy week. 20 00:01:42,800 --> 00:01:45,120 I'm sure if you were there you'd feel the same as us. 21 00:01:45,120 --> 00:01:48,960 You're still recovering over 700 events, I believe. 22 00:01:48,960 --> 00:01:53,320 Not sure how many of those were nature, but I know that there 23 00:01:53,320 --> 00:01:55,280 were many, many, many nature events. 24 00:01:55,640 --> 00:01:59,480 What we didn't hear discussed so much throughout the week though 25 00:01:59,600 --> 00:02:03,120 was actually the role of compliance or regulatory models 26 00:02:03,120 --> 00:02:07,280 and markets in moving private sector investment forward into 27 00:02:07,560 --> 00:02:09,440 nature restoration and protection. 28 00:02:09,759 --> 00:02:11,720 And that is what we're going to discuss today. 29 00:02:11,720 --> 00:02:15,160 And in fact, we are going to be revisiting this government LED 30 00:02:15,160 --> 00:02:18,320 model a few times in the coming weeks because I think it's 31 00:02:18,320 --> 00:02:21,760 really, really important. But today I am joined by Vanessa 32 00:02:21,760 --> 00:02:24,600 Garcia at Teresos in Colombia to hear specifically about their 33 00:02:24,600 --> 00:02:28,480 work in establishing habitat banks and selling biodiversity 34 00:02:28,480 --> 00:02:31,760 units into the regulated market there. 35 00:02:32,080 --> 00:02:34,800 And we'll also be touching on where else in the world this is 36 00:02:34,800 --> 00:02:38,840 being looked at and also the role of local communities. 37 00:02:47,680 --> 00:02:49,960 So welcome, Vanessa. Thank you for joining us today. 38 00:02:50,240 --> 00:02:53,120 Thank you, Helen. So we're gonna be talking about 39 00:02:53,120 --> 00:02:56,720 mitigation banking compensation regulatory models today. 40 00:02:56,960 --> 00:02:59,560 But Vanessa, before we get going, would you mind telling us 41 00:02:59,560 --> 00:03:02,440 a bit about Terra Sauce for those who may not have heard 42 00:03:02,440 --> 00:03:06,320 about your great work yet? So thank you for having us here 43 00:03:06,320 --> 00:03:09,840 and being part of this podcast. The resource is a company that 44 00:03:09,840 --> 00:03:12,840 structures and implement biodiversity conservation 45 00:03:12,840 --> 00:03:17,120 mechanisms, including habitat banks and biodiversity credit 46 00:03:17,120 --> 00:03:23,840 systems that was founded in Colombia and our work it's based 47 00:03:23,840 --> 00:03:29,240 on the intersection of conservation finance and policy 48 00:03:29,280 --> 00:03:32,280 to enable large scale environmental outcomes. 49 00:03:32,960 --> 00:03:35,920 So some people are saying today might not be familiar with what 50 00:03:35,920 --> 00:03:39,280 mitigation banking is or what habitat banks are. 51 00:03:39,560 --> 00:03:42,880 So would you mind just walking us through the basics so that as 52 00:03:42,880 --> 00:03:46,360 we drill down into your work in Columbia, we're all fully up to 53 00:03:46,360 --> 00:03:47,400 speed? Sure. 54 00:03:47,920 --> 00:03:53,240 So habitat banks are basically areas in which conservation 55 00:03:53,240 --> 00:03:58,640 actions take place in the long term and they issue biodiversity 56 00:03:58,640 --> 00:04:01,520 units. So they are market based 57 00:04:01,520 --> 00:04:05,280 mechanisms that allow projects to compensate for the year for 58 00:04:05,280 --> 00:04:09,280 their impacts by purchasing those biodiversity units. 59 00:04:09,880 --> 00:04:16,480 Our view is that habitat banks are ensuring ecological gains 60 00:04:16,880 --> 00:04:19,519 that are following the mitigation hierarchy. 61 00:04:20,680 --> 00:04:26,240 So they are basically areas in which companies that are causing 62 00:04:26,360 --> 00:04:30,960 impacts are able to purchase units to compensate for their 63 00:04:30,960 --> 00:04:34,880 impacts after they have applied the litigation hierarchy. 64 00:04:36,000 --> 00:04:38,840 And typically these companies are what kind of companies? 65 00:04:39,440 --> 00:04:44,360 They are companies in very different sectors, so you can 66 00:04:44,360 --> 00:04:48,480 find companies from the energy sector, mining companies, 67 00:04:48,480 --> 00:04:52,920 infrastructure and so on. So any type of companies that 68 00:04:52,920 --> 00:04:58,360 has any licencing requirements and that are causing any impacts 69 00:04:58,360 --> 00:05:03,880 to the environment are able to use habitat banks as a way of 70 00:05:03,880 --> 00:05:07,600 compensating for their impacts. And and just to confirm, this is 71 00:05:07,600 --> 00:05:12,040 all driven by regulation, that's that's a clear demand driver 72 00:05:12,040 --> 00:05:14,680 that requires companies to offset their impacts and 73 00:05:14,680 --> 00:05:18,400 therefore purchase biodiversity units from habitat banks. 74 00:05:18,920 --> 00:05:22,560 Yeah. So habitat banks are mostly used 75 00:05:22,640 --> 00:05:27,640 for compliance purposes, but they are also a mechanism that 76 00:05:27,640 --> 00:05:31,200 is used for voluntary purposes, so for doing voluntary 77 00:05:31,200 --> 00:05:35,280 investments as well. But most of the demands for this 78 00:05:35,280 --> 00:05:37,640 type of units is coming from the compliance market. 79 00:05:38,160 --> 00:05:40,400 Right. So could you talk us through 80 00:05:40,400 --> 00:05:44,280 that regulation that sits behind mitigation banking, Colombia, 81 00:05:44,280 --> 00:05:47,360 and perhaps even before that, why? 82 00:05:47,360 --> 00:05:50,880 Colombia has been the pioneering country, I think I can say, in 83 00:05:50,880 --> 00:05:53,840 Latin America when it comes to mitigation banking. 84 00:05:54,360 --> 00:05:58,000 So Terrasus is a Colombian company, but we operate in 85 00:05:58,000 --> 00:06:00,840 different countries, especially in Latin America. 86 00:06:00,840 --> 00:06:06,440 We are currently working in Mexico, Brazil, Peru, Chile, and 87 00:06:06,440 --> 00:06:11,320 we are exploring opportunities in other regions in Southeast 88 00:06:11,320 --> 00:06:13,760 Asia and in some countries in Africa. 89 00:06:14,240 --> 00:06:18,000 So the Rasos was founded in Colombia and our CEO is 90 00:06:18,000 --> 00:06:22,720 Colombian. And it was an intentional choice 91 00:06:23,040 --> 00:06:26,280 to start working in Colombia because it is one of the most 92 00:06:26,280 --> 00:06:28,120 biodiverse countries in the world. 93 00:06:28,600 --> 00:06:32,600 But it also has a lot of pressures from infrastructure 94 00:06:32,600 --> 00:06:37,880 development, from projects that are required to compensate for, 95 00:06:37,960 --> 00:06:41,680 for their impacts and so on. It is also a country, as you 96 00:06:41,680 --> 00:06:44,920 might know, that faces a lot of pressures because of illegal 97 00:06:44,920 --> 00:06:50,640 deforestation. So 30 years ago, maybe the 98 00:06:50,640 --> 00:06:55,120 country allowed for like, for like biodiversity compensation, 99 00:06:55,680 --> 00:06:59,560 but that system faced serious challenges. 100 00:07:00,120 --> 00:07:03,240 So it was very expensive for companies. 101 00:07:03,880 --> 00:07:06,400 It had limited ecological impact. 102 00:07:06,920 --> 00:07:13,360 And at the end you didn't have any permanence in the outcomes 103 00:07:13,360 --> 00:07:15,840 that you were looking for through those type of 104 00:07:15,840 --> 00:07:19,280 mechanisms, right? Because basically each company 105 00:07:19,280 --> 00:07:23,920 that was causing an impact was doing their own compensation in 106 00:07:23,920 --> 00:07:30,560 the best way they could, right? So in 2012 we had some changes 107 00:07:30,560 --> 00:07:35,520 in the legislation and we allowed third parties to fulfil 108 00:07:35,880 --> 00:07:40,960 compensations for companies. That was a very important shift 109 00:07:41,560 --> 00:07:45,920 because it allows Terrazos to establish how the banks as a 110 00:07:45,920 --> 00:07:49,360 compensation mechanism for companies that were doing this 111 00:07:49,360 --> 00:07:53,800 type of inputs. And then in 2017, the Ministry 112 00:07:53,800 --> 00:07:57,720 of Environment issue the Habitat Banks Regulation. 113 00:07:58,960 --> 00:08:03,000 And since then, we have been able to register more than 10 114 00:08:03,000 --> 00:08:06,440 habitat banks. And there are other companies 115 00:08:06,920 --> 00:08:10,120 that are participating in this type of markets. 116 00:08:10,560 --> 00:08:15,040 And currently, I think in Colombia, we have around 18 to 117 00:08:15,040 --> 00:08:18,920 20 habitat banks from different providers, from different 118 00:08:18,920 --> 00:08:22,120 companies operating in different ecosystems. 119 00:08:23,600 --> 00:08:27,280 So you're establishing habitat banks in Colombia to fulfil 120 00:08:27,320 --> 00:08:30,920 those compensatory requirements from, as you said, could be 121 00:08:30,920 --> 00:08:33,559 infrastructure companies, energy companies. 122 00:08:34,360 --> 00:08:39,400 What does that process entail? So to start Habitat bank, we use 123 00:08:39,400 --> 00:08:43,720 a multi variable analysis to determine where they should be 124 00:08:43,720 --> 00:08:48,280 allocated. So we evaluate ecosystem values, 125 00:08:48,720 --> 00:08:54,120 regional conservation needs, and we also evaluate the demand from 126 00:08:54,120 --> 00:08:56,200 companies that are needing the offsets. 127 00:08:57,280 --> 00:09:01,480 And this is possible because this information is available 128 00:09:01,480 --> 00:09:05,280 for us. So licencing like environmental 129 00:09:05,280 --> 00:09:11,080 licence are available through the National licencing Agency. 130 00:09:11,480 --> 00:09:15,000 So you're able to see where those projects are taking place 131 00:09:15,000 --> 00:09:19,360 or will take place. And from there we're able to 132 00:09:19,360 --> 00:09:25,480 analyse where it's suitable to establish a habitat bank so that 133 00:09:25,480 --> 00:09:29,600 those companies that are in the in the same area are able to buy 134 00:09:29,760 --> 00:09:32,160 the biodiversity units from that bank, right? 135 00:09:32,600 --> 00:09:36,440 That's a very important shift from previous legislation. 136 00:09:37,120 --> 00:09:43,120 So once we find the area, we start a negotiation process with 137 00:09:43,120 --> 00:09:47,600 the land owners. So land owners are investors, 138 00:09:48,200 --> 00:09:50,960 they're part of the investors of habitat banks. 139 00:09:51,520 --> 00:09:56,520 And land owners are we, we don't usually purchase the land, but 140 00:09:56,520 --> 00:10:02,840 we our aggregated value is that we engage land owners through 141 00:10:02,840 --> 00:10:06,920 this type of mechanism and they're able to keep the land 142 00:10:07,680 --> 00:10:12,560 and they're able to receive payments for 30 years because of 143 00:10:12,560 --> 00:10:17,160 the services that nature is providing within their land. 144 00:10:18,520 --> 00:10:23,080 So when we find the areas with resources from investors, we 145 00:10:23,440 --> 00:10:27,600 structure the banks, we establish a financial vehicle, 146 00:10:27,960 --> 00:10:32,160 we establish contracts with the land owners, and then we've 147 00:10:32,160 --> 00:10:35,280 registered the bank with the Colombian Ministry of 148 00:10:35,280 --> 00:10:39,680 Environment. It's kind of like a step forward 149 00:10:39,800 --> 00:10:45,480 into recognising habitat banks as part of the national 150 00:10:45,720 --> 00:10:49,920 protected Area system. And in each of the banks, we 151 00:10:49,920 --> 00:10:54,720 have a set of indicators that we measured during the 30 years 152 00:10:55,120 --> 00:10:59,280 that we manage the banks. And we need to provide updates 153 00:10:59,280 --> 00:11:03,560 to the Ministry of Environment every six months so that they're 154 00:11:03,560 --> 00:11:07,160 able to understand what's happening in each of those areas 155 00:11:07,240 --> 00:11:11,480 and how those areas are supporting the accomplishment of 156 00:11:11,480 --> 00:11:15,320 national goals. So for example DMV, SAP and 157 00:11:15,320 --> 00:11:19,600 after the registration we start selling the units to companies 158 00:11:20,280 --> 00:11:24,440 and companies they usually after they get their licence they need 159 00:11:24,440 --> 00:11:30,560 to start a compensation plant. So we established a contract in 160 00:11:30,560 --> 00:11:33,760 which companies pay us per results. 161 00:11:34,240 --> 00:11:40,360 So having the banks are are an outcome based mechanism in which 162 00:11:40,360 --> 00:11:45,120 the bank only receives payments when we accomplish management 163 00:11:45,160 --> 00:11:50,240 and our biodiversity goals. And could you give a sense of 164 00:11:50,240 --> 00:11:52,280 what a management plan would entail? 165 00:11:52,280 --> 00:11:54,560 And you also mentioned KPIs there. 166 00:11:54,760 --> 00:11:58,360 Could you share a bit more about how those outcomes are measured? 167 00:11:58,600 --> 00:12:01,640 Obviously, in the UK, we're familiar with our own mitigation 168 00:12:01,640 --> 00:12:04,200 banking metric, the Defra metric as it's called. 169 00:12:04,400 --> 00:12:06,280 Is there something similar in Colombia? 170 00:12:06,920 --> 00:12:10,240 It varies between between the different ecosystems that you 171 00:12:10,240 --> 00:12:13,720 have, like each bank is located in different areas. 172 00:12:14,040 --> 00:12:17,480 So we have banks that are located in the tropical dry 173 00:12:17,480 --> 00:12:21,880 forest, we have banks that are located in Sawanas. 174 00:12:22,400 --> 00:12:25,440 So the management and the actions that you develop in 175 00:12:25,440 --> 00:12:30,320 those areas are very different. But basically what we do is that 176 00:12:30,320 --> 00:12:36,480 when we find the areas, we establish A baseline, we develop 177 00:12:36,600 --> 00:12:40,120 a management plan that allow us to understand where do you need 178 00:12:40,120 --> 00:12:45,440 to preserve natural ecosystems and where do you need to restore 179 00:12:45,520 --> 00:12:49,440 to a those ecosystems. And then from there, from that 180 00:12:49,440 --> 00:12:52,960 baseline, we establish indicators that are assessing 181 00:12:53,400 --> 00:12:58,480 biodiversity, habitat quality and and some other variables. 182 00:12:58,840 --> 00:13:02,720 We also engage local people in the management, local 183 00:13:02,720 --> 00:13:05,440 communities in the management of the of the habitat banks. 184 00:13:05,760 --> 00:13:09,480 So we also have indicators associated with social impact. 185 00:13:10,320 --> 00:13:14,200 And when we when we've registered the banks, we provide 186 00:13:14,200 --> 00:13:17,440 the information that we collect in the baseline. 187 00:13:17,840 --> 00:13:20,520 And then from there we start monitoring throughout the 30 188 00:13:20,520 --> 00:13:23,720 years that the bank is is managed. 189 00:13:24,560 --> 00:13:25,960 Right. Oh, that's super clear. 190 00:13:25,960 --> 00:13:28,480 Thank you. So you mentioned local 191 00:13:28,480 --> 00:13:31,920 communities and the social impact, which I think is really 192 00:13:31,920 --> 00:13:34,960 fascinating and not something I'm seeing in other mitigation 193 00:13:34,960 --> 00:13:39,280 banking models at the moment. I mean how what's that been 194 00:13:39,280 --> 00:13:40,840 like? What's the reception bin of 195 00:13:40,840 --> 00:13:44,440 local communities? It has been very positive. 196 00:13:44,680 --> 00:13:49,640 So traditional habitat banks, we were engaging private land 197 00:13:49,640 --> 00:13:54,440 owners and these people, they were very excited to be able to 198 00:13:54,440 --> 00:13:58,120 have resources to keep their land and to continue working in 199 00:13:58,120 --> 00:14:01,520 rural economies. So usually what was happening 200 00:14:01,520 --> 00:14:04,880 before is that families and people because of the prices to 201 00:14:04,880 --> 00:14:09,360 support and because the cost associated to support having 202 00:14:10,040 --> 00:14:15,720 farms or having areas for conservation was too high. 203 00:14:16,080 --> 00:14:21,680 So having incentives to maintain their lands and to conserve and 204 00:14:22,160 --> 00:14:26,760 restore forest, it was a very important shift. 205 00:14:27,280 --> 00:14:31,840 And being able to maintain the property of the land was also 206 00:14:31,840 --> 00:14:33,800 very important for for these families. 207 00:14:34,680 --> 00:14:38,000 Couple of years ago we started working with a collective 208 00:14:38,000 --> 00:14:40,760 territory. So it's an Afro Colombian 209 00:14:40,880 --> 00:14:46,120 community called Asokasan. They're located in the Choco, so 210 00:14:46,120 --> 00:14:50,640 in the Pacific side of Colombia. And they are a very strong 211 00:14:50,640 --> 00:14:54,080 community with a very interesting governance 212 00:14:54,080 --> 00:14:56,960 structure. And they have been taking care 213 00:14:57,360 --> 00:15:01,880 of around 60,000 hectares of forests. 214 00:15:02,720 --> 00:15:06,120 And actually the that area, it's a biodiversity hotspot. 215 00:15:06,720 --> 00:15:11,840 So we started talking with Asoka San in regards of how are we 216 00:15:11,840 --> 00:15:17,120 able to bring resources to the conservation of this land. 217 00:15:17,520 --> 00:15:22,760 And that area is suffering a lot because of illegal gold mining, 218 00:15:22,760 --> 00:15:26,920 because of of the violence that we suffer in Colombia, because 219 00:15:26,920 --> 00:15:32,920 of climate change and so on. So with Azokasan and with the 220 00:15:32,920 --> 00:15:39,400 local leaders, we were able to propose a habitat bank to 221 00:15:39,760 --> 00:15:45,600 maintain and to restore around 1500 hectares. 222 00:15:46,560 --> 00:15:51,080 And those resources going to that area will be able to 223 00:15:51,080 --> 00:15:55,080 provide support not only to the area, but also to the families 224 00:15:55,080 --> 00:15:58,760 that are around that area that are part of the collective 225 00:15:58,760 --> 00:16:02,600 territory. So it's it's super interesting. 226 00:16:02,600 --> 00:16:04,840 That's something that we want to continue doing. 227 00:16:06,080 --> 00:16:09,280 We're actually structuring a project with local communities 228 00:16:09,280 --> 00:16:14,240 in Brazil in the state of Para. And those communities are part 229 00:16:14,240 --> 00:16:18,360 of local economies. They are harvesting non timber 230 00:16:18,360 --> 00:16:21,880 forest products. So being able to develop this 231 00:16:21,880 --> 00:16:25,960 type of incentives with those communities and having them as 232 00:16:26,480 --> 00:16:30,360 investors in in habited banks, it's super interesting. 233 00:16:30,360 --> 00:16:34,720 But also it's something that give us a lot of joy because 234 00:16:35,440 --> 00:16:39,560 habited banks are not only a way to maintain ecosystems and 235 00:16:39,560 --> 00:16:44,360 maintain our forest and our biodiversity, but they are also 236 00:16:44,360 --> 00:16:46,840 a way of incentivizing local economies. 237 00:16:47,400 --> 00:16:50,360 And that for us is is very, very important. 238 00:16:51,120 --> 00:16:53,920 So it's a really important point you make and I think one that 239 00:16:53,920 --> 00:16:57,160 can also help make the case to governments to introduce these 240 00:16:57,160 --> 00:17:00,720 statutory models. So I imagine just from our own 241 00:17:00,720 --> 00:17:03,160 experience in the UK that the development of habitat banks in 242 00:17:03,160 --> 00:17:05,880 Colombia may have been quite challenging. 243 00:17:06,119 --> 00:17:11,319 So it has that been the case? Now we have around 10 habitat 244 00:17:11,319 --> 00:17:16,720 banks in different ecosystems protecting more than 15,000 245 00:17:16,720 --> 00:17:20,880 hectares more or less. And those banks are located in 246 00:17:20,880 --> 00:17:24,400 very different geographies. And if you know the Colombian 247 00:17:24,400 --> 00:17:27,720 context, you you can see that each area has its own 248 00:17:28,000 --> 00:17:30,560 challenges. So not only environmental 249 00:17:30,560 --> 00:17:33,360 challenges, but also social challenges. 250 00:17:33,760 --> 00:17:38,800 So there's a lot of uncertainty in some, in some areas, in some 251 00:17:38,800 --> 00:17:42,520 jurisdictions. And we need to continue 252 00:17:42,520 --> 00:17:45,200 providing awareness among buyers. 253 00:17:45,560 --> 00:17:48,240 That's that's a constant challenge that we face. 254 00:17:49,040 --> 00:17:53,240 And then there's also technical complexity because of the long 255 00:17:53,240 --> 00:17:56,840 term monitoring and the land tenure arrangements. 256 00:17:57,520 --> 00:18:01,840 In regards to plant tenure, we usually work with private 257 00:18:01,840 --> 00:18:05,120 owners, but we've recently started working with collective 258 00:18:05,120 --> 00:18:09,440 territories and land tenure for collective territories is very 259 00:18:09,440 --> 00:18:13,800 different to private ownership because you need to have a very 260 00:18:13,800 --> 00:18:17,560 clear governance structure in place when you're working with 261 00:18:17,720 --> 00:18:20,160 local communities and with collective territories. 262 00:18:20,600 --> 00:18:24,880 So that's that's a challenge, but we continue working to 263 00:18:24,880 --> 00:18:28,520 understand what's the best, best way of of developing this type 264 00:18:28,520 --> 00:18:32,160 of initiatives. So it sounds like definitely 265 00:18:32,160 --> 00:18:35,440 some challenges around both supply and demand. 266 00:18:35,440 --> 00:18:39,320 As you shared on specifically the demand side, you mentioned 267 00:18:39,320 --> 00:18:41,840 that previously companies were able to set up their own 268 00:18:41,840 --> 00:18:44,720 conservation projects to compensate for their actions. 269 00:18:45,160 --> 00:18:48,080 So to what extent is that now changing with this sort of 270 00:18:48,080 --> 00:18:51,520 introduction with the parties like yourselves that enable 271 00:18:51,640 --> 00:18:54,440 companies to purchase units from Habitat Banks? 272 00:18:54,880 --> 00:18:59,080 Companies are realising and they have been in the last couple of 273 00:18:59,080 --> 00:19:03,800 years of this in Colombia that is easier to buy biodiversity 274 00:19:03,800 --> 00:19:09,240 units from habitat banks because their business is not restoring 275 00:19:09,280 --> 00:19:13,400 or preserving nature. Their business is building 276 00:19:13,400 --> 00:19:16,880 roads, energy infrastructure and so on. 277 00:19:17,320 --> 00:19:21,400 So they see biodiversity units and habitat banks as so as a way 278 00:19:21,400 --> 00:19:26,840 of the risking their operation of doing cost efficient and 279 00:19:27,360 --> 00:19:31,040 durable interventions. And they also see how it advance 280 00:19:31,040 --> 00:19:33,880 as a way of supporting local economies, right. 281 00:19:34,320 --> 00:19:37,960 Some companies are still doing their own compensation 282 00:19:38,000 --> 00:19:44,120 programmes, but that's happening less because for them I guess is 283 00:19:44,560 --> 00:19:47,400 they need to have the internal capacities and the internal 284 00:19:47,400 --> 00:19:51,600 structure to be able to manage those areas and those assets. 285 00:19:52,080 --> 00:19:56,040 And if they end up buying land, for example, it's very difficult 286 00:19:56,040 --> 00:20:01,520 to manage in the long term. So as companies, as Terrazzos or 287 00:20:01,560 --> 00:20:06,120 other companies in in the sector are developing this type of 288 00:20:06,120 --> 00:20:08,280 initiatives and this type of mechanisms. 289 00:20:09,400 --> 00:20:13,280 Companies that are in need of compensation schemes are 290 00:20:13,280 --> 00:20:17,760 realising that it's cheaper to have someone that are experts in 291 00:20:17,760 --> 00:20:20,720 this area instead of doing that on their own. 292 00:20:21,000 --> 00:20:22,680 So that's kind of supply and demand. 293 00:20:22,680 --> 00:20:25,880 You mentioned earlier investors and I'm assuming there is some 294 00:20:25,880 --> 00:20:30,320 upfront financing required to make the interventions that are 295 00:20:30,320 --> 00:20:32,400 needed on those in the Habitat banks. 296 00:20:32,640 --> 00:20:35,200 Can you tell us how that works in particular and if there are 297 00:20:35,200 --> 00:20:37,080 any challenges with that financing piece? 298 00:20:37,960 --> 00:20:41,600 OK. So the first habitat bank that 299 00:20:41,600 --> 00:20:46,920 we established was established with resources from the IDD and 300 00:20:46,920 --> 00:20:52,680 that was through grant that we received from them because it 301 00:20:52,680 --> 00:20:55,800 was a pilot project. So it was the first project of 302 00:20:55,800 --> 00:20:57,720 its kind that was developed in Colombia. 303 00:20:58,320 --> 00:21:02,480 But then once we started developing more habitat banks, 304 00:21:02,960 --> 00:21:05,840 we are trying to access different type of resources, not 305 00:21:05,840 --> 00:21:09,400 grant money, but investors. And that's the challenge because 306 00:21:10,080 --> 00:21:14,440 the risk associated with this type of projects is higher than 307 00:21:14,560 --> 00:21:17,920 other sustainable projects such as renewable energies for 308 00:21:17,920 --> 00:21:21,560 example. So the risks are higher and 309 00:21:21,560 --> 00:21:28,120 usually investors they want to have, they want the Russians to 310 00:21:28,120 --> 00:21:31,760 have off takers for each of the banks that we are developing. 311 00:21:32,880 --> 00:21:36,760 And that's that's hard because the processes for companies to 312 00:21:36,760 --> 00:21:42,520 get a compensation plan approved by the national agency and the 313 00:21:42,520 --> 00:21:48,960 processes that entail hiring a third party to do those offsets 314 00:21:49,000 --> 00:21:54,400 are still very slow. So we can get the resources from 315 00:21:54,400 --> 00:22:00,920 investors very easily, but getting those biodiversity units 316 00:22:01,080 --> 00:22:07,680 issued and getting the buyers, that will take us around two 317 00:22:07,680 --> 00:22:09,200 years. Wow. 318 00:22:09,440 --> 00:22:11,320 OK, yeah. So, gosh, I mean, yeah. 319 00:22:11,320 --> 00:22:13,480 Obviously if you have. Finance to step in unless they 320 00:22:13,480 --> 00:22:19,200 see that contract done. I mean, presumably is that just 321 00:22:19,320 --> 00:22:22,000 an issue of? I hate to use of a bureaucracy, 322 00:22:22,000 --> 00:22:25,280 but I mean. Government. 323 00:22:26,040 --> 00:22:30,200 Yeah, it's, it's because in a way it's still a new mechanism 324 00:22:30,240 --> 00:22:31,960 for for the Colombian government. 325 00:22:32,600 --> 00:22:34,680 So there's a lot of bureaucracy in place. 326 00:22:35,120 --> 00:22:39,560 Buyers of these biodiversity units, they need to get approval 327 00:22:39,880 --> 00:22:44,640 on their compensation plan and they need to get approval within 328 00:22:44,640 --> 00:22:49,000 their companies to engage in this type of alternatives. 329 00:22:49,600 --> 00:22:54,600 So it's still a little bit slow. So that gap between the time 330 00:22:54,600 --> 00:22:58,960 when you receive the resources and the time where you start 331 00:22:59,280 --> 00:23:03,360 getting revenues from selling day by diversity units is still 332 00:23:03,440 --> 00:23:08,960 long for for some investors and that's, that's, that's something 333 00:23:08,960 --> 00:23:11,120 that is not so interesting for them. 334 00:23:12,040 --> 00:23:15,680 So that's one of the challenges. And then the other challenges is 335 00:23:15,680 --> 00:23:18,960 that this type of projects, so doing restoration, doing 336 00:23:18,960 --> 00:23:23,640 conservation, it is not providing yields that are 337 00:23:23,640 --> 00:23:26,160 comparable with other type of businesses. 338 00:23:26,960 --> 00:23:33,080 And but I think impact investors and with the hotel banks are 339 00:23:33,080 --> 00:23:37,120 understanding that this is an issue that goes beyond raising 340 00:23:37,120 --> 00:23:41,280 funds or getting profits. It's an issue beyond that. 341 00:23:41,480 --> 00:23:45,040 So I think that's changing and it's it's improving. 342 00:23:45,440 --> 00:23:47,000 Right. And you could imagine that 343 00:23:47,000 --> 00:23:50,640 Colombian habitat banks might be quite an attractive investment 344 00:23:50,640 --> 00:23:53,880 for European or or even North American impact investors. 345 00:23:54,120 --> 00:23:57,040 Is that where the investor interest predominantly lies? 346 00:23:57,400 --> 00:24:01,720 Yeah, we're we'll see another of investments from European impact 347 00:24:01,720 --> 00:24:07,080 investors, but more and more companies are understanding that 348 00:24:07,920 --> 00:24:12,000 this type of businesses are worth their time and their 349 00:24:12,080 --> 00:24:15,160 money. And we have a couple of Habitat 350 00:24:15,160 --> 00:24:17,360 banks that are receiving local investments. 351 00:24:17,960 --> 00:24:20,120 Which is probably the better option because I would think 352 00:24:20,120 --> 00:24:22,800 that is the cost of capital lower from local investors. 353 00:24:23,360 --> 00:24:24,280 Yeah. It is. 354 00:24:24,560 --> 00:24:27,000 I mean, I know you're familiar with the US mitigation banking, 355 00:24:27,000 --> 00:24:29,640 what's going on in the UK with BNG and other markets. 356 00:24:29,840 --> 00:24:32,480 Are there any sort of major differences that you see between 357 00:24:32,480 --> 00:24:35,360 the way Colombia is working versus others, any sort of 358 00:24:35,360 --> 00:24:38,560 lessons learned from others or that Colombia is doing in a way 359 00:24:38,560 --> 00:24:42,360 that that others can learn from? One of the main difference 360 00:24:42,360 --> 00:24:46,080 between the US and the UK markets with the Colombian 361 00:24:46,080 --> 00:24:50,120 markets is that the US and the UK markets are highly 362 00:24:50,120 --> 00:24:55,960 standardised and they have centralised registry systems and 363 00:24:55,960 --> 00:25:00,800 they also have a broader option. So as I was mentioning, in 364 00:25:00,800 --> 00:25:03,360 Colombia we have different alternatives for companies. 365 00:25:03,360 --> 00:25:07,240 So they can do offsets themselves, but they can also do 366 00:25:07,640 --> 00:25:11,640 payment for ecosystem services, They can also do investments in 367 00:25:12,320 --> 00:25:14,280 national protected areas and so on. 368 00:25:14,800 --> 00:25:17,240 So how it depends is not their their only option. 369 00:25:17,840 --> 00:25:21,360 Whereas in the UK, for example, you have a very clear step by 370 00:25:21,360 --> 00:25:24,880 step and the options are very well established. 371 00:25:25,440 --> 00:25:28,520 One of the main differences between the US and Colombia is 372 00:25:28,520 --> 00:25:32,600 that in the US habitat banks, Oregon mitigation banks are 373 00:25:32,600 --> 00:25:37,880 operating in perpetuity. In Colombia, because of legal 374 00:25:37,880 --> 00:25:42,280 constraints, the maximum duration is 30 years, which is 375 00:25:42,280 --> 00:25:43,960 long. But it's not. 376 00:25:44,920 --> 00:25:47,640 Forever. Yeah, even though the Colombian 377 00:25:47,640 --> 00:25:53,600 model is, it's grounded and we have legislation, it's still 378 00:25:53,600 --> 00:25:58,600 evolving and we need to have better enforcement and 379 00:25:58,600 --> 00:26:02,760 institutional capacity to be able to understand what 380 00:26:02,760 --> 00:26:06,280 companies are trying to do through their investments, 381 00:26:06,280 --> 00:26:09,280 inhabited banks. So, yeah, there are there are 382 00:26:09,280 --> 00:26:15,920 many differences, but still I think Colombia is thriving in 383 00:26:15,920 --> 00:26:19,960 this type of mechanisms. And what we're seeing as cerasos 384 00:26:19,960 --> 00:26:23,680 is that these models can be used in different countries. 385 00:26:24,120 --> 00:26:28,360 So as I was telling you before, in Perdue, for example, they 386 00:26:28,360 --> 00:26:32,880 recently approved new policy for habitat banking. 387 00:26:33,440 --> 00:26:36,560 So we are working with the Ministry of Environment in 388 00:26:36,560 --> 00:26:40,880 Perdue to be able to understand what's the most suitable way to 389 00:26:40,880 --> 00:26:45,480 implement habitat banks there and what are the changes that 390 00:26:45,480 --> 00:26:49,200 need to be done to legislation in order to have habitat banks 391 00:26:49,200 --> 00:26:52,800 that are useful for for their context. 392 00:26:53,240 --> 00:26:58,320 We are also seeing that Chile, Argentina, Paraguay, Brazil, 393 00:26:58,320 --> 00:27:03,160 Mexico, the Dominican Republic are places where habitat banking 394 00:27:03,200 --> 00:27:07,760 or aggregated compensations would be very useful because of 395 00:27:07,760 --> 00:27:09,720 the type of impact that they can have. 396 00:27:10,400 --> 00:27:15,160 And because in those countries you see that there's companies, 397 00:27:15,600 --> 00:27:19,440 large scale companies that are willing to invest and that are 398 00:27:19,440 --> 00:27:23,080 willing to outsource their their compensations. 399 00:27:23,520 --> 00:27:25,960 And just to clarify, that's companies that are willing to 400 00:27:25,960 --> 00:27:29,120 pay for Habitat banks, not necessarily investors. 401 00:27:29,640 --> 00:27:31,200 Yeah, they're, they're willing to pay. 402 00:27:31,240 --> 00:27:32,640 Yeah, that's, that's what I meant. 403 00:27:32,680 --> 00:27:37,120 So companies actually companies that are working not only in 404 00:27:37,120 --> 00:27:42,360 Colombia, but also in Peru, Ecuador, Brazil, such as ESA, 405 00:27:42,360 --> 00:27:47,040 for example, who's the company building the transmission lines 406 00:27:47,320 --> 00:27:50,200 for energy. They were early adopters of 407 00:27:50,200 --> 00:27:55,000 habitat banks in Colombia and now that they're developing 408 00:27:55,040 --> 00:27:59,080 infrastructure in those other countries, they might be 409 00:27:59,680 --> 00:28:03,400 suitable kind for for this type of mechanisms in in those areas. 410 00:28:03,720 --> 00:28:06,240 Yeah. So it's, it's amazing, isn't it? 411 00:28:06,240 --> 00:28:09,120 So Colombia and the work that you've done there is kind of 412 00:28:09,120 --> 00:28:11,080 leading the. Way for habitat. 413 00:28:11,080 --> 00:28:14,280 Banking mitigation banking to be rolled out across the whole of 414 00:28:14,280 --> 00:28:17,080 Latin America. You also mentioned Southeast. 415 00:28:17,080 --> 00:28:21,960 Asia, I believe, yeah. So we're currently analysing 416 00:28:21,960 --> 00:28:26,720 different options in the Philippines, Indonesia and 417 00:28:28,280 --> 00:28:32,280 Thailand, Cambodia. So we see many opportunities to 418 00:28:32,280 --> 00:28:38,600 expand and we have many lessons learned from the application of 419 00:28:38,600 --> 00:28:44,320 habitat banks in biodiversity rich countries such as Colombia 420 00:28:44,720 --> 00:28:48,720 that also has many challenges associated with conflict and 421 00:28:48,720 --> 00:28:55,000 social issues and so on. So we we think that if you have 422 00:28:55,160 --> 00:28:59,560 a clear regulatory framework that allows third party 423 00:28:59,560 --> 00:29:04,760 compensation, if you have enforcement mechanisms for this 424 00:29:04,760 --> 00:29:10,400 type of policies and if you have clear technical standards and 425 00:29:10,400 --> 00:29:14,840 monitoring and evaluation standards, these type of markets 426 00:29:14,840 --> 00:29:19,040 so habitat banking or aggregated compensations are able to 427 00:29:19,040 --> 00:29:21,400 thrive. So Southeast Asia is very 428 00:29:21,400 --> 00:29:26,320 interesting, but also countries in Africa such as Mozambique, 429 00:29:26,640 --> 00:29:30,960 Uganda, Kenya are also very interested in learning what's 430 00:29:30,960 --> 00:29:35,480 happening in Latin America and seeing how they could adapt 431 00:29:35,840 --> 00:29:39,640 habitat banks to their context. So it really feels like 432 00:29:39,640 --> 00:29:42,280 governments around the world are considering these compliance 433 00:29:42,280 --> 00:29:45,160 markets as a means to get private sector investment into 434 00:29:45,160 --> 00:29:47,080 nature restoration and protection. 435 00:29:47,760 --> 00:29:51,120 I mean, how important do you think they are these these 436 00:29:51,120 --> 00:29:55,080 regulated models? I think compliance market, they 437 00:29:55,080 --> 00:30:00,120 create real demand. They are a way of anchoring 438 00:30:00,120 --> 00:30:02,920 biodiversity finance to legal obligations. 439 00:30:03,640 --> 00:30:06,800 And they are like with compliance market, you're able 440 00:30:06,800 --> 00:30:10,560 to ensure that you have predictable revenue streams for 441 00:30:10,560 --> 00:30:15,120 conservation. So with voluntary market it 442 00:30:15,120 --> 00:30:21,960 shifts and they fluctuate based on corporate priorities. 443 00:30:22,720 --> 00:30:27,960 Whereas compliance market they are there because governments, 444 00:30:28,040 --> 00:30:33,440 companies, civil society, we acknowledge that nature it's 445 00:30:33,440 --> 00:30:38,160 part of the businesses and and we acknowledge that nature, it 446 00:30:38,160 --> 00:30:42,160 needs to be accounted for. It cannot be an externality. 447 00:30:42,680 --> 00:30:46,200 And and that's very important because through compliance 448 00:30:46,200 --> 00:30:49,680 markets we're able to acknowledge that if you impact 449 00:30:49,960 --> 00:30:54,840 and if you use nature, you need to compensate for that. 450 00:30:55,680 --> 00:30:59,600 So confines markets are very important and we are sustained 451 00:30:59,600 --> 00:31:05,120 that being able to provide support into improving local 452 00:31:05,120 --> 00:31:09,600 legislation, into streamlining different mechanisms, not only 453 00:31:09,600 --> 00:31:15,640 habitat banks but also other type of mechanisms into national 454 00:31:15,640 --> 00:31:19,000 and sub national legislation. And also being able to work with 455 00:31:19,000 --> 00:31:21,760 the private sector into understanding what's interesting 456 00:31:21,760 --> 00:31:24,600 for them. Because it's not only a matter 457 00:31:24,600 --> 00:31:28,560 of what governments think, but it's also important to 458 00:31:28,560 --> 00:31:31,680 understand what companies are thinking in regards of their 459 00:31:31,680 --> 00:31:34,680 impacts, in regards of their resources, in regards of the 460 00:31:34,720 --> 00:31:38,600 type of projects they're willing to pay for and how they see 461 00:31:38,600 --> 00:31:43,560 themselves as companies that are doing this type of investments 462 00:31:43,560 --> 00:31:46,440 in nature. So you mentioned. 463 00:31:46,640 --> 00:31:51,080 Earlier that. In Colombia, the original setup 464 00:31:51,080 --> 00:31:53,680 was like for like, but that has shifted. 465 00:31:53,920 --> 00:31:56,560 Obviously. In the UK we've got a net gain 466 00:31:56,800 --> 00:31:58,920 of 10%. Do you think that's where we 467 00:31:58,920 --> 00:32:02,120 need to be going towards what and where are we in Colombia in 468 00:32:02,120 --> 00:32:06,520 terms of that sort of positive uplift that net the net gain, if 469 00:32:06,520 --> 00:32:09,160 you will? Yeah, I think we need to shift 470 00:32:09,160 --> 00:32:15,400 from that life for like policies or status, because what we're 471 00:32:15,400 --> 00:32:19,840 seeing is that when you cause an impact in nature, it will take 472 00:32:19,880 --> 00:32:24,440 many, many years to be able to go back to the same place. 473 00:32:25,000 --> 00:32:29,960 And also, nature doesn't recover at the speed that we're 474 00:32:29,960 --> 00:32:33,960 expecting. So in order to have that, you 475 00:32:33,960 --> 00:32:36,080 cannot have like for like systems. 476 00:32:36,080 --> 00:32:38,440 It doesn't work. You need to provide a positive 477 00:32:38,440 --> 00:32:42,240 uplift, as you were saying. And Colombian legislation is 478 00:32:42,240 --> 00:32:46,000 pushing that. And it's still very difficult to 479 00:32:46,000 --> 00:32:49,480 measure. If you're providing gains in 480 00:32:49,480 --> 00:32:53,000 biodiversity, it's still difficult to measure and it will 481 00:32:53,000 --> 00:32:57,960 take time, but we are convinced that we need to go towards that. 482 00:32:59,080 --> 00:33:02,160 Well, it's been fantastic. Thank you so much, Vanessa for 483 00:33:02,160 --> 00:33:04,840 all your insights today and sharing with us the work that 484 00:33:04,840 --> 00:33:07,440 you're that you're doing. We've talked about a lot that 485 00:33:07,440 --> 00:33:10,520 you are working on here across that in America and Southeast 486 00:33:10,520 --> 00:33:13,600 Asia and the work that you've just explained in Brazil as 487 00:33:13,600 --> 00:33:15,600 well. But is there anything else that 488 00:33:15,600 --> 00:33:18,520 is coming up for Terra Source that you want to leave us with 489 00:33:19,080 --> 00:33:22,720 today? So we are continuing working 490 00:33:22,720 --> 00:33:26,880 with the governments in understanding how these type of 491 00:33:26,880 --> 00:33:30,200 mechanisms are suitable for their context. 492 00:33:30,840 --> 00:33:37,640 We have issue a protocol for for biodiversity units, for issuing 493 00:33:37,640 --> 00:33:40,360 biodiversity units, they're called Tibos. 494 00:33:40,360 --> 00:33:46,400 So the Rasos biodiversity units and our protocol, it's free and 495 00:33:46,400 --> 00:33:51,320 if anyone can use it and, and what's next for us is to be able 496 00:33:51,320 --> 00:33:56,040 to continue supporting local land owners, continue supporting 497 00:33:56,040 --> 00:34:01,680 communities into developing real businesses where they can 498 00:34:01,920 --> 00:34:06,280 maintain their land, their property of the of their land, 499 00:34:06,400 --> 00:34:10,880 and also being able to conserve some of the most beautiful 500 00:34:10,880 --> 00:34:13,679 places in the world. So that's that's what's coming. 501 00:34:15,120 --> 00:34:16,480 Wonderful. It's been such a pleasure having 502 00:34:16,480 --> 00:34:18,000 you on. Thank you so much for your time. 503 00:34:18,000 --> 00:34:21,120 Looking forward to continuing to follow all the great work that 504 00:34:21,120 --> 00:34:23,880 you do Thank you. Thank you, Helen, for having us 505 00:34:23,920 --> 00:34:24,400 here. Thank you. 506 00:34:24,400 --> 00:34:34,760 Thank you. Well, that is all from us this 507 00:34:34,760 --> 00:34:36,679 week. You can actually find a whole 508 00:34:36,679 --> 00:34:40,400 guide book on the Columbia mitigation banking model on the 509 00:34:40,400 --> 00:34:44,120 Revenues for Nature site. As I mentioned all the time, 510 00:34:44,120 --> 00:34:48,880 it's a very lengthy URL. So just Google GFI or UNFFI, 511 00:34:48,880 --> 00:34:52,840 another partner alongside UNDP Biophin and Revenues for Nature 512 00:34:52,840 --> 00:34:55,480 and it will all come up. So definitely head there if you 513 00:34:55,480 --> 00:34:58,960 want a really detailed guide on how the Columbia market was 514 00:34:58,960 --> 00:35:01,640 developed. As mentioned, we are going to 515 00:35:01,640 --> 00:35:05,080 look at mitigation banking. Again, Tim Male at the 516 00:35:05,080 --> 00:35:09,000 Environmental Policy Innovation Centre, Epic in the US is going 517 00:35:09,000 --> 00:35:11,520 to be joining us to discuss those markets there. 518 00:35:11,800 --> 00:35:15,240 And also the folks at The Nature Conservancy are going to be with 519 00:35:15,240 --> 00:35:19,480 us to run through biodiversity net gain in the UK and also this 520 00:35:19,480 --> 00:35:23,360 shift across Europe actually to more regulatory models. 521 00:35:23,760 --> 00:35:26,520 But next week, actually, we'll be dropping back to a supply 522 00:35:26,520 --> 00:35:31,000 chain model with Tom Curtis from Landscape Enterprise Networks, 523 00:35:31,000 --> 00:35:33,840 which is really exciting. And then in the coming weeks, we 524 00:35:33,840 --> 00:35:38,680 also have the TNFT and FSD Africa joining us as we start to 525 00:35:38,680 --> 00:35:41,720 wrap up this current season of financing nature. 526 00:35:42,040 --> 00:35:44,880 So lots on and do. Stay tuned and we hope you have 527 00:35:44,880 --> 00:35:45,600 a great week.