Hi, I'm Helen Avery with the Green Finance Institute, and
you're listening to Financing Nature this week.
I'm joined today by Nicholas Pascal, founder of the Blue
Alliance, to talk about how their model is bringing
investment into the protection of marine protected areas.
Today and for the next 6-7 years, we're going to pay them
with grants. We have more or less 120
permanent staff on the payroll, on our payroll.
These people are locals, they're Indonesian, Filipinos and and
Tanzanian. We pay them with grants, OK.
We have long term partnership. We're looking for new ones also.
Meanwhile, we are deploying our portfolio of reef positive
businesses. We also show enterprises, if you
want, in aquaculture, in fisheries and in the
culturalism, and these companies will generate dividends.
Hello and thank you for joining us for Episode 3 in our special
Revenues for Nature series. Just to remind you that Revenues
for Nature is a programme we run with UNEP FI and UNDP Biofin
that seeks to scale and replicate models that are
already unlocking private sector investment into nature
restoration and nature based solutions.
And we are continuing this week looking at oceans and marine
models with a deep dive today into the work of Blue Alliance.
We've been looking at some collective action models already
where multiple corporates are brought together to invest,
chiefly for resilient supply chains, but also reporting
requirements. So we've seen responsible
commodities facilities and the fisheries improvement Fund.
Next week we'll be looking at the Remba Collective and also
the following week the Lens model.
But Blue Alliance is a little bit different.
As founder Nicholas Pascal is going to explain to us today.
It essentially supports the development of local reef
positive businesses, supporting that local economy.
And a percentage of the profits then go to paying for the work
conducted by Blue Alliance on ensuring Mpas are in fact
protected but far better. We hear about it from Nicholas,
so let's invite him on. Well, Nicholas, firstly, thank
you so much for joining us today.
It's a real pleasure to see you. And I know you've been
travelling furiously around the world, so thanks for fitting us
in in what must be a pretty difficult jet lagged period.
It's my pleasure. Thank you.
So obviously we're going to talk about Blue Alliance today.
And you know, as we've discussed the, the theme of this
particular series of the podcast is really like, how do we get
investment moving for our nature restoration goals?
And you know, but a lot of people start at the end and look
at, well, you know, how let's do 100 billion commitment with a
fund when actually it's, it's there's nuts and bolts are
needed much further down than that, sort of developing revenue
models. And I think Blue Alliance has
done this incredibly well for the marine protected area
sector. So I suppose before we get going
on what Blue Alliance has done and and then get your views on
more generally what how we can move things forward, could you
just share with us the challenge of marine protected areas at the
moment when it comes to investment and funding?
First of all, if you if you talk about investment, it's a big
word because investment brings together with some kind of of
return, OK. So financial return, there's no
financial return in a very protected area in PA, but it can
be a lot of impact returns, OK. So in terms of investment, it
depends what you're looking for. But usually speaking for for
usual investor, there's no financial return putting money
into NPA, OK, this is grant funding philanthropy.
So basically this is one of the main challenge we have for most
of the APS in the world. I think we have 18,000, so, so
one 870% are paperbacks, OK. So meaning that they are
designated, but nothing is happening on the field.
So you don't have any patrol or Rangers enforcing the illegal
fishing or the districtive fishing.
So you have a lot of things happening on the field, OK,
especially in the countries where we are working on
Tanzania, Philippines and Indonesia.
So I would say one of the main challenges is also is financing,
OK. So bringing philanthropy into
the MPA world is something we are working on is not that easy
because philanthropists like to solve an issue with a magic
wand. So this is not going to work
like this because we need a long term commitment.
And it's if agreed, when you start helping an MPA, you will
never know when you have to stop because you'll never stop.
Accepted government comes and increase the fund.
But I mean in the countries where we are working, this is
not going to happen very soon or or or never again.
So we have to find another model.
OK, we have some other models working around and some you have
some what they call debt swap, you have some Conservation Trust
funds, a thing like this, but it's part of a solution, OK, we
need to find other solution. So what's why we have developed
in our case something very original that exists in the
terrestrial but does not exist so much in the marine side,
which is creating around the vast justificate, so vast a
large MPA. So we're talking about 500,000
hectares or or more, creating a whole economy around the
conservation, the conservation LED economy, a blue economy.
So you're creating something which is good for people and
good for nature. And at the same time you're
creating something which is bankable.
And the bankability brings obviously new money because
you're not only digging into philanthropist, but you're also
digging into impact investment. So it's about creating this
sustainable long term funding stream for Mpas provided by
profit making businesses in economies local to those areas.
But before we delve into that part in more detail, I wondered
if we could just back out a bit and if you could share with us
where in the world do you work and and give us a bit of an
overview of how that work has developed since you established
Blue Alliance in 2015. So today as you mentioned, we
were born in 2015, since 2023 in the Philippines, we have
mandates to manage approximately 900,000 hectares of MPs or O
ECM. Now all very effective
conservation measures that, but basically we, we have a mandate
to manage 900,000 hectares of coral reef ecosystems in
Indonesia since 2023. We have a mandate to manage
800,000 hectares. And in Tanzania since twenty
20s, our two years, we have a mandate to manage 27,000
hectares and we're going to grow and expand next next year.
So pick up yours. I don't know if we take, for
example, the case of Indonesia. So we sign maybe a provincial
government. So so you have central
provincial and you have to have the the local government.
So we sign a long term delegation of of the MPA.
So we say, OK, you have the paper part here.
We think we can help you manage this MPA together with
government. So basically they're not doing a
lot of things and that's so it's just not very hard to have them.
But can we sign something for 10 years that says exactly what we
do, what we bring in terms of what we finance or what we going
to Co finance and this kind of thing.
So this agreement is signed in in the three countries for 10
years renewable. So that means that we are there
for many years, many, many many years and 2030, fifty years or
more. And this MPA is something we Co
manage together. So basically there's a real
mandate as a delegation of management reverted to us where
for example in Indonesia we can patrol with the authorities.
So we have our own boats, we have our own vessels, we have
our own motorcycles and cars and things like this.
And we bring the authorities that don't have most of the
equipment needed. And we patrol together.
But we do also science community engagement, community
development. There's a lot of work going on
here. So really working alongside
governments to manage Mpas, as you say, and that mandate is not
only impressive but super helpful in being able to deliver
that the work that you're doing. I'm sure you have a lot of
stories from those patrols that you're doing together, but could
you talk us also through how that work is subsidised or
supported by the business development that you're also
doing in those countries? So, so basically today and for
the next 6-7 years, we're going to pay them big grants.
OK. So all this stuff, we have more
or less 120 permanent staff on the payroll, on our payroll.
These people are locals, they're Indonesian, Filipinos and and
Tanzanian. We pay them with grants, OK.
We have long term partnership. We're looking for new ones also.
Meanwhile, we are deploying our portfolio of reef positive
businesses. We also saw enterprises, if you
want, in agriculture, in fisheries and in the culturalism
and these companies. So today we have 7, these seven
companies will generate dividends because we own them.
We own these companies and they are ours.
They will generate dividends enough to finance the whole MPs.
OK, So that's the business model.
OK. So it's it's a bit like the EKR
Foundation, you know the EKR model where you have the EKR
foundation that owns all the stores and all the for profit
businesses. Everything is reverted to the
non profit, OK. So we have a Blue alliance
holding company, which is a non profit entity that owns the
social enterprises for the for profit entities.
And all these dividends or all these profits created by these
companies will revert. It's important to mention that
the social enterprise are also creating jobs and also reducing
impacts or even positive impacts on the coral reefs, OK.
That's fantastic. So let's dive into that then.
So how do you go about finding the businesses?
I mean, I don't know if you can use a live example picking
either the Philippines, Indonesia or Tanzania.
So how do you find those businesses?
How do you help them get off the ground?
What kind of businesses are they?
Basically we have three sectors where we are looking at it's
community based aquaculture. The second sector is sustainable
seafood and the first sector is eco tourism.
OK, So we conduct A feasibility study and usually can last six
months to two years, depends on the factor.
We do some pilot also, for example for aquaculture, are we
doing some pilot on cucumber or member of probably the
Philippines and and and so on. So once we did this feasibility
and this pilot, we say, OK, this is a bankable project.
It can generate enough dividends to interest as in terms of flows
of capital to the MPA. It can also create enough jobs.
So all these businesses are designed with the communities
for the communities and they are together.
OK. So, so it's important to mention
this because we're not selling shoes and making profits and
reverting to the MPs. We are also creating a business
that makes sense with a see cucumber.
For example, if you take 1, the aquaculture of see cucumber has
two components. It has a component of a archery.
So we're removing all the pressure from the wild stocks.
We are creating our own archery. So the baby see cucumber will be
produced in our facility, but the grow out is done in the
villages, OK. So as you have a grow out done
in in 100 of hectares in front of the villages and this is done
by local farmers, this is done by local people and women in
this areas. So that's the kind of community
centred for business that we are developing.
Yeah, well, I have so many questions, including I, I don't
think I actually knew anything about sea cucumbers before.
And that they have a a hatchery, you said?
We have a hatchery, yeah. Wow.
OK. That's one for me to look up
afterwards. So you work with communities to
sort of understand what's a viable business model that fits
into the three categories you mentioned and then you fund them
to get going. How does that work?
So no, but the reef versus in businesses even if it is
community centred is a business, OK.
So it, it has to be structured as a business.
So a business as a business plan, as a financial plan, as
the marketing plan and innovations, some differences.
We are social enterprise. So we are impact first.
So we look for including communities, we look for
reducing our impacts on the field or even have a positive
impact. So from the very start, we are
designing for this positive impact on the people and on the
other. So beyond sea cucumbers, are
there other examples that you could share with us of the types
of businesses that you're developing, I suppose, OK.
So just to follow up on sea cucumber on the aquaculture
side, so the company is called Aqua Hub.
This Aqua Hub is in each other countries, so in Tanzania,
Philippines and Indonesia. So Aqua Hub is mostly in sea
cucumber. We have one Aqua Hub Minecraft
crab also in Philippines, just something that we are developing
in other businesses. In terms of seafood, the company
is called Samaki Blue, OK, So far it is only in Tanzania.
So what they are doing is that they are working with fishers.
So cultural fishers, they're telling them or we're telling
them to go fish some pelagic fish on a hand line and 1 by 1
and very sustainable. We got this fish, so high value
fish and tuna, wahoo, this kind of fish and we send it after to
high end resource or to we export it to to restaurants or
restaurants or platinum. The thing we do with the fishers
is that we pay them double price or what they would get normally.
OK, so, so there's some kind of of a partnership.
I'm telling you, we are we are impact first.
So really most of the profits go back to the community and part
of a profit go back to the MPA. So that's the kind of thing we
do. We want to scale up.
Today we are 50 fishers. We're going to scale up to 203
hundred 400 fishers in the area where where we are.
That's for the agriculture, the seafood, for the ecotourism.
So we have a liver boat company in, in Indonesia.
But on the one boat so far it's a 5 cabinets.
But we can grow to more, more vessels as as soon as the
business model is confirmed, We have a call with Safari in
Philippines, Tanzania and we own also the underwater room in
Tanzania. But you have to look on the on
the web page. It's a floating structure.
It has a so much part when you can sleep wow under the water
and you can be and you are surrounded by coral reef and
fish. Meanwhile, you're not sleeping
because you don't sleep really, but does.
Anyone sleep in there? Yeah.
So that's the kind of facility we have also for the ecotourism
side. Wow, okay, so how do you finance
the social enterprises? So this social enterprises are
financed we say mostly with a loan, OK.
We have an impact loan facility which is the we receive initial
commitments from UBS and BEP Parga assuming several millions
of dollars. We are looking for more because
this social enterprise are expensive, OK, you need to
invest and you need to cover the working capital for for the
first years, but they can pay back, OK, they're all bankable
because through a lot of due diligence and two years of due
diligence with PNP, but they can pay back a lender, OK.
So a passion lender and not a greedy lender neither.
So if it is a reasonable lender and it's very long term, so
we're talking about 10 years, 10, this kind of money we are
looking for. And that's like single digit
returns presumably, yes, yeah. And it's performance oriented,
so the more positive impact we have on the reef and the people,
the less coupon we pay. Oh.
OK. Oh, that's really neat, right.
And at the moment, you said just BNP Power Bar and UBS Optimus
Foundation are there. OK.
You could really see how that could scale up if you had some
further patient investment. Yeah.
We are looking for more. We are looking for new, new or
free more ones. Yeah.
So you mentioned there about the environmental impact, social
impacts and you know, in the case of the social enterprises
that their return on the the loan is lowered.
How are you measuring that? And it'd be great.
I mean, I know it's it's early days, isn't it?
But if there's any examples that you've had already of that
social environmental impact that you've seen, we'd love to hear
them. So we have our battery of KPI,
OK, we have 6 KPIs, but we have narrowed down because there were
a lot of them. We have more than 25, but we
narrowed down to six KPIs on nature deport and climate, OK.
So on nature, we are measuring the fish biomass to know if we
are regenerating any fish biomass on the on the coastal
areas. This is something which is done
by underwater surveys and and so on.
So I will spare you the the technical details, but there's a
real target for each year, for example, for for the 10 years,
but the impact loan facility is on, there's a target for each
year. But we have to define in terms
of recovery, you usually assume that the first five years not a
lot of fingers are going to happen on the on the water just
to be on the safe side. OK.
But strictly speaking, I think Indonesia for example, where you
have a lot of illegal and destructive fishing, as soon as
we stop it, there will be a recovery of the fish bymass, but
we keep it low profile for the for the investors.
The second one is really how many call with are we
protecting. So basically it's an indicator
of effectiveness of the management of the MPA.
The third one is fish productivity.
So we have developed what we call CPUE.
So cash per units of effort where it is possible to measure
how much fish will catch a Fisher in a one hour, OK.
And we do it on a multiple occasion, multiple situation.
And we're going to measure this all over the years, OK.
And we're going to measure if we leave the MPH is improving the
fish productivity, not only improving fish by underwater,
but it's also improving the fish crunch.
OK, that's the three. I would say our, our 2 1/2
ecology for indicators, we have social indicators.
So we measure the number of jobs, we measure the number of
people we are supporting. We measure also the number of
fishers benefiting from the KPII just told you where we increase
the fish productivity. And for climate, we are
measuring how much carbons, we are avoiding emission through
the conservation of mangroves that we have.
OK. And is that so how does that
relate if you're a social enterprise and you're being
measured against those KPIs? Obviously those KPIs are being
delivered, some of them through the foundation.
Yeah. No, we, we don't measure them at
the level of the of the social. OK.
But that's, that's something I didn't say the impact loan
facility is aggregated, OK. So all the money goes to all the
businesses. OK.
There's not money going directly to one business, OK.
It's aggregated. So when you invest into Blue
Alliance, you invest in the three Mpas, you invest in all
the impacts. So we put all together.
Got it. So as you say, a pulled
investment with really multiple outcomes delivered oceans huge
and they've had a lot of air time this week at the United
Nations Oceans Conference. And it feels like the question
of how we can unlock private investment into oyster
restoration is finally getting some attention.
And maybe we'll come back to that point in a in a minute.
But can you tell us sort of how replicable is the model that
we've created? Presumably there are many other
countries in which this could be applicable.
Given you said we have 10s of thousands of Mpas around the
world and and most are just paper parks, it would seem a
good idea if we could replicate this model elsewhere.
What's that main challenge you're seeing as you're thinking
about scaling and replication? I mean, the main challenge is
government. We know how it impacts
investors, we know how it grantors.
There's a lot of challenge also, but it's not the same level.
It's complex. It's very random with
governments to know where where we're going.
So our starting point is the PPP.
It's a public and partnership. We need this delegation of
management for the MPs from the government, OK.
This is our main challenge. That's why we're not going into
too much countries, OK. We have three countries today.
We are very happy. We know that Indonesia and
Philippines, we can grow a lot. Don't forget that how many
focuses are coral reefs and people.
So Philippines and Indonesia have more than 45% of the
world's coral reef, OK? So that's a lot.
That's a lot, a lot. And they have a lot of paper
packs also. So we can grow from there, OK?
So it makes sense to grow from inside this country.
And this is what we're doing in Indonesia.
We started to three, two years ago in 800,000 hectares, which
was a large MPA, but we're already you're looking at
1,000,000 hectare in another province, OK, In Philippines we
are also growing to more MPs and more areas.
So I would just say it's a challenge when you breakthrough,
I think to, to go for the first, the first MPA in a new country
because you have to breakthrough delegation of management.
What, what happened with the authorities and then there's a
lot of legal framework you have to work with.
But once you did it, it's easier.
Yeah, I can imagine it's, I mean, that's a huge relationship
to build, isn't it, If you're going to be going in with
government, with your own vessels, policing some of those
waters, which I imagine it's not the easiest thing to do so.
Yeah, you said it, you said it. And enforcement is only one
aspect, but they usually stop in many things.
But that review or like the user fees where I go, the user fees
if there's an insurance fees, I don't care about it because I
have my own business model. So but they can spend 8 months
discussing about this and after suddenly the most 9 they change
minister. So you have to redo everything.
So that's a bit frustrating. Yeah, I know, I bet governments
can move very fast when they want, but also very.
One of the challenge here we have and, and where we are
reducing the challenge is because we learnt our lesson.
We thought we were going only for the NPA management, but now
we go for NPA management. Link to a blue economy
investment. And really this is different for
government because you're not only talking about managing an
NPA and blah, blah, blah and biodiversity because they care,
but they don't really care. But blue economy means a lot of
jobs and a lot of investment and private money.
So it's a bit different. So this is a kind of approach
that we are dealing with. And I think that's the key,
isn't it? I think the models that we see
that are gaining traction have such a kind of regional economic
resilience angle to them that they're just much more likely to
be supported by governments, maybe with some public sector
funding thrown in. But also they've got that really
strong business case because businesses are thinking about
their own business resilience. It all ties in.
And so the word nature is just a bit of a, we don't even have to
mention it in meetings, but we all know that at the end.
Well, some of us are there to know that at the end it's being
delivered for. But perhaps the impetus is more
about the economic resilience and the jobs, as you say, for
governments. Yeah.
I mean governments are about jobs.
They need to be, they need to be clear and re elected business is
about money and we are about impact.
So we're trying to put all together that's.
Great. So just wrapping up, I've got a
couple of questions I'd love to ask you.
Nicholas. While this model is focused on
marine, presumably this is a model we can use for protected
landscapes as well on, you know, terrestrial landscapes.
Harvey Locke, who have the pleasure of working with
alongside Juniper Phi is looking at this sort of wicked problem.
He calls it right now of how can we fund and finance or have
revenue models that support protected areas, areas that are
already intact and marine. Obviously there is clear uplift
being developed, sorry, being delivered by the work that
you're doing. But are there similar models
you're seeing that work on the land?
I think so. I think so.
I think. I would think that the
terrestrial is even easier because you can own the land or
you can develop some, some businesses with some kind of a
concession, you know, these things you don't have on the
side. So I'm not expert in land, but I
would say that the model is replicable and it's being
replicated. I mean, if you look at the NGOs
like Peace Park Foundation and African Parks and all of this,
they have delegation of management.
They have a business model behind and they mixed it with
revenues from these businesses, you know, so, so it's not
something totally new in the in the green, in the blue, it's
quite new. But we're confident that we can
grow. I mean, today we have 2,000,000
hectares. We want to grow to 9 million
hectares by 2013. So it's five years.
We are confident that we can manage this and we can do it.
And we want to grow to 70 million hectares with partners,
not alone with strategic partners in very strategic
countries and to be able to save 25% of the world's coverage.
OK, so that's that's the end. Gosh, 70 million hectares, that
would be incredible. So final, final question is
we're focusing on oceans this last two weeks.
Are you feeling positive about where we are in terms of
unlocking investment into our oceans?
Yeah, Yeah. No, no, Yeah, yeah.
I mean, there's definitively the last 2-3 years, there's more
focus on the ocean. Does that mean more money?
I don't know, because there's a lack of investable project.
OK. But I mean money.
They can give away money. Yeah, that's fine.
They can find maybe some depth swap, that's fine, but makeable
project where they can invest is not so common.
So we hope there will be more Blue Alliance in the future.
This is what we are aiming at and developing new businesses
in. And this episode is going out
the very end of UNOC, the UN Oceans conference, as you know.
What are you hoping will come out of the week in these?
I think the PPP applause, the public and product partnership
is a good solution, not for all 20,000 NPS or or 18,000 NPS in
the world, but for a big part of it, OK, So I don't understand
why we are doing this so much in the green but so little in the
blue, OK, We're doing a lot of delegation and management in the
green. That's very, very, very little
in the blue, OK. The NGOs are not very keen also
managing NPS because they know they have to get married for
many years and they don't want to except in few cases.
But definitively, this is part of the solutions because if we
rely on government, but then you're going to make it OK.
If you rely on your public sector, it's not going to work.
Never. Because a private sector would
take care only of his business and his bottom line a little bit
more, but not too much. So we need to find this missing
middle. And this missing middle is with
a public and private partnership.
So we need a delegation of management, but it has to be
done with a non profit entity with a business model.
Yeah. Well, thank you so much,
Nicholas again for coming on. And yeah, good luck with all the
great work you're doing and look forward to hearing more about
it. All right, take care.
Bye bye. Well, thank you very much for
listening today. That is it from us.
If you want to find out more about Blue Alliance and their
work, their website is Blue Alliance dot Earth.
And if you want to find out more about revenues of nature, as I
mentioned it is a bit of a mouthful of a URL.
So my advice is just to Google revenues for nature and GFI and
you will end up getting to the site.
And we do have several new guidebooks out actually, one
that details the living Amazon mechanism, super interesting
model that UNFFI have been leading on, another that looks
at the Great Bear Rainforest project, finance for Permanence
PFP and it's work with First Nations there.
And there's also an expanded water model guidebook and they
are all available or assume will be in multiple languages.
But next week, Mike's Rust at the Story Capital joins us to
talk about the Rimba Collective that's operating in Southeast
Asia and working with businesses sourcing palm oil from that
region. And then, crikey, it's London
Climate Action Week. But until next time, I hope you
all have a great week.