Natural Capital Lab

The France-IDB NCL Trust Fund, launched by France in 2018 with a French contribution of €24 million, and hosted by the IDB, contributes to combating deforestation in Latin America and seeks to turn natural capital into a new investment asset.

In the framework of the Alliance for Rainforests, its operations focus on key priorities: combating deforestation, encouraging the transition towards sustainable agriculture, preserving biodiversity and developing transboundary cooperation.

The fund aims to (1) develop, incubate, and address the lack of financial and technical infrastructure for natural capital entrepreneurs, (2) provide financial resources for mature projects, and (3) draw on public-private financing mechanisms to de-risk investments and raise private capital.

Since 2020, the fund has given approval to six concrete projects, totalling $10 million in French funding:

• Program to Promote Sustainable Financing in the Peruvian Amazon Region: This technical assistance fund aims to increase investment in bio-businesses in the Peruvian Amazon. This will contribute to the long-term economic growth of the region, support the sustainable use of natural capital and stimulate the restoration of the Amazon Biome. This fund will be managed by COFIDE (the Peruvian Development Bank) on behalf of the Ministry of Environment and accompanies a $20 million loan from the IDB that seeds a special purpose vehicle that will attract additional capital to on-lend to regenerative biobusinesses.
• Amazonia Regenerate Accelerator: This trust and accelerator program for start-ups and SMEs located in the Amazon basin will help them raise private funding to scale up their operations. The investment vehicle will be managed by Kaeté Investimentos, a private fund manager with a long track record in green markets and sustainability. The project will bring environmental benefits by tackling deforestation and biodiversity.
• Program for Conservation and Sustainable Biotrade in the Bolivian Amazon: This program will support a local financial institution that is part of the IDB Lab EcoMicro Program in Bolivia to strengthen local capacity for sustainable natural capital management, promote reforestation, and to develop the bioeconomy in the country, focusing on indigenous and rural community initiatives.
• Scaling the Habitat Bank Program in Colombia: This program will support the Ministry of Environment of Colombia to update policy related to its Habitat Banking Program. This project aims to facilitate further scale-up and investment in this proven tool for ecosystem conservation and restoration in Colombia. It will be based on lessons from the successful pilot funded by IDB Lab in 2016.
• Support Efforts for the Conservation and Restoration of the Natural and Cultural Capital of Ciudad Blanca in Honduras: This project aims to strengthen local capacities and to develop innovative financial mechanisms to support the conservation of Ciudad Blanca in the Mosquitia region, the second largest continuous tropical forest area in Latin America after the Amazon.
• Science, Technology and Innovation to Protect the Biodiversity of the Amazon Basin: This project will contribute to protect the Amazon through biodiversity research and the incubation of early-stage science-based start-ups that transform renewable resources into bio-based and sustainable products.

These projects will leverage an additional $22.9 million in IDB funding and $7.8 million from executing partners.

The momentum created following the France-BID NCL Trust Fund inception has encouraged other donors, such as the GEF and the government of UK to contribute to IDB efforts to promote natural capital finance and innovation. Thanks to their support, circular economy, marine ecosystems conservation and blue carbon projects are also core parts of the NCL’s work.

At the same time, the NCL is working to include nature in post-COVID recovery programs, as in the case of (1) support for the development of Costa Rica's Blue Economy Recovery Strategy, and (2) support for the mainstreaming of biodiversity into Colombia’s national planning. The IDB has also supported the Intrinsic Value Exchange, which establishes nature as a new public asset class, where shares of “natural asset companies” can be shared and traded, in a very similar way to companies listed on the stock market. At the strategic level, the NCL led the IDB’s work to convene MDB’s around the Joint Statement on Nature, People and Planet at COP26.  Internally, the Bank is developing a Natural Capital Mainstreaming Action Plan and is leading work to update fifteen country strategies with natural capital inputs to promote an inclusive and sustainable recovery.