Investment Opportunity Helps Balance Water Needs in Australia
Innovative Water Fund to Benefit Communities, Farmers and Nature in Australia’s Murray-Darling Basin
Arlington, VA | April 25, 2016
The Nature Conservancy Australia announces the launch of the Australian Balanced Water Fund, the first impact investment-driven solution to use water markets to balance the water needs of farmers, communities and nature. The AUD$27 million, or approximately USD$20 million, Fund provides a unique opportunity to invest in permanent water rights that will provide water security for agriculture and restore critical wetlands, while delivering financial returns to investors.
The Fund was developed by the Conservancy’s Global Water program, its Australian division along with the Conservancy’s local partner the Murray Darling Wetlands Working Group (MDWWG) and NatureVest®, the Conservancy’s impact investment unit which was established in 2014 with founding support and ongoing guidance from JPMorgan Chase & Co. Under the management of Kilter Rural, an Australian based asset management firm, the Fund will work proactively with farmers to acquire and hold a portfolio of permanent water rights. It will then sell, or lease the majority of the annual temporary water allocations back into the agricultural community, while donating the remainder of the allocations to the environment each year. The Fund is structured in such a way that the majority of the environmental donations will occur in years of high rainfall when farmers need the water least.
“The Australian Balanced Water Fund offers an attractive opportunity for investors to align their portfolios with their values—they can earn financial returns while generating important social and environmental outcomes,” said Mark R. Tercek, President and CEO of The Nature Conservancy. “We're proud to launch this water fund—together with our partners—to help balance water use and ensure that there’s enough water for farmers, communities and nature to thrive.”
The Fund demonstrates how an impact investment-driven solution can generate environmental and social benefits at a far greater scale than what could be achieved under a traditional philanthropy-funded model. Following the launch, the Fund will seek to raise additional investor capital, with a goal of scaling the Fund to AUD $100 million, or approximately USD$76 million within the next four years.
“The Australian Balanced Water Fund is the world’s first investor-funded solution that seeks to address the needs of people, agricultural communities and the environment in balance,” said Marc Diaz, Managing Director of NatureVest at The Nature Conservancy. “This Fund represents a concept that The Nature Conservancy is hoping to replicate in other areas of the world where active water markets are used to manage and balance water across users.”
The Fund’s environmental watering program will target wetlands rich in conservation value located on private lands that are not currently targeted by the Australian Commonwealth’s existing environmental watering plan. Additionally, the Fund will also look to restore important Aboriginal cultural and spiritual lands, many of which include wetland areas.
“A water market creates important opportunities for conservation,” said Giulio Boccaletti, Global Managing Director, Water for The Nature Conservancy. "By allowing water to assume an appropriate financial value, all water users are incentivized to conserve because unneeded water entitlements can be sold on the market. These entitlements can be purchased by conservation interests to return water to depleted freshwater ecosystems.”
The MDB is one of the world’s largest and most productive river basins, accounting for AUD$19 billion dollars, or more than USD$14 billion dollars, of agriculture production and providing one-third of Australia’s food supply. The basin covers a huge area, over 1 million square kilometers (386,102 square miles) spanning five states and territories. It also plays an important role in supporting biodiversity for a vast array of plants and animals and ecosystems including many threatened species.
Over 80 percent of the MDB wetland ecosystems are in poor health due to the Basin’s extensive canal and dam system that captures any excess runoff, over allocation of water entitlements and the drying effects of climate change. The Fund’s long-term conservation goals include improving waterfowl, fish and amphibian breeding and migration, as well as restoring the health of native plants.
In addition to the direct environmental watering outcomes, donations from the Fund may also be invested in projects that can increase water use efficiency within the MDB, including the installation of infrastructure regulators and levee banks on floodplains and storage systems to reduce evaporation.
The Conservancy is now in the process of scoping various river basins across the Western United States and Latin America, where a similar model of water reallocation through investor-funded solutions can be applicable.
The Nature Conservancy launched its impact capital strategy in 2010 with support from the Robertson Foundation that continues today, and built a global network with subsequent support from the Jeremy and Hannelore Grantham Environmental Trust. In early 2014, with founding sponsorship from JPMorgan Chase & Co., NatureVest was launched as a concerted effort to change the way we invest in nature. Visit NatureVest on the Web at www.naturevesttnc.org.
The Nature Conservancy is a global conservation organization dedicated to conserving the lands and waters on which all life depends. Guided by science, we create innovative, on-the-ground solutions to our world's toughest challenges so that nature and people can thrive together. We are tackling climate change, conserving lands, waters and oceans at unprecedented scale, and helping make cities more sustainable. Working in more than 65 countries, we use a collaborative approach that engages local communities, governments, the private sector, and other partners. To learn more, visit www.nature.org or follow @nature_press on Twitter.