Bogotá, Colombia - A Colombian environmental fund has created a financial mechanism to tackle one of the most vexing problems facing conservation organizations—how to provide stable, long-term financing in a world of shifting political demands and uncertain budgets.
The fund, Fondo para la Acción Ambiental y la Niñez (Fondo Acción), has set up an endowment to conserve the Colombian island of Malpelo and its surrounding waters, an ecological jewel in the eastern tropical Pacific. Though endowments are nothing new in the nonprofit sector, they are rarely employed by environmental organizations in developing countries.
Both the U.S. and Colombian governments have endorsed the new financial mechanism. And international donors have signaled their approval by contributing to the endowment and by joining forces with local conservation partners. Proceeds from the endowment will cover the operating expenses of an alliance of public and private entities that are charged with protecting the island and its marine ecosystem.
The Malpelo endowment will be officially launched on June 25 by Francisco Santos, Colombia’s vice president, and Juan Lozano, Colombia’s Minister of the Environment, Housing and Territorial Development.
Malpelo: A “Globally Significant” Marine Ecosystem
The Colombian government declared Malpelo a fauna and flora sanctuary in 1995. Located almost 300 miles west of the port of Buenaventura, the rocky island is uninhabited (except for a small naval outpost that is part of the conservation team). The island rises more than 200 feet from the sea floor, and its underwater ledges provide a foundation for extensive coral formations—uncommon in the eastern Pacific—which are home to vast numbers of fish and other marine species. Ocean currents meet near Malpelo, churning nutrients into the food web and bringing animals from as far away as the Indo-Pacific basin. Together, the island’s geology, coral reefs, and currents have created a spectacularly rich ecosystem.
Large predatory species, attracted by the abundance of prey, gather in Malpelo’s waters in remarkable numbers. Divers have encountered massive schools of hammerhead and silky sharks. Whale sharks, tuna, giant groupers, and the rare ragged-tooth shark also frequent the area. To date, almost 400 coralline and pelagic fish species have been recorded in the waters around Malpelo. Great numbers of marine mammals and sea turtles also make the sanctuary their home. Above sea level, the island is a crucial stopover and nesting site for close to 60 species of birds, and it boasts the largest colony of masked boobies (more than 40,000 individuals) in the world. It is also home to 10 endemic species, found only in the island or surrounding waters.
Recognizing the ecological importance of Malpelo, the United Nations Educational, Scientific and Cultural Organization (UNESCO) placed the island on its list of World Heritage Sites in 2006.
“[T]he Malpelo Fauna and Flora Sanctuary is a globally significant and largely pristine marine protected area with unaltered and non-threatened ecosystems, free of invasive species, that is essential to maintain and replenish the population of sharks, giant grouper and billfish in the Eastern Tropical Pacific . . . Malpelo’s pristine underwater environment is of striking natural beauty because of the incredibly rich and diverse marine life and major aggregations of large predator fish.”
- UNESCO World Heritage Committee
Colombia’s National Parks Unit (UAESPNN), a division of the Ministry of the Environment, Housing and Territorial Development, is charged with conserving and protecting Malpelo. However, the Parks Unit is also responsible for Colombia’s other 53 national “protected areas.” To leverage its limited budget and staff, UAESPNN has therefore developed a series of working partnerships with private environmental organizations. The Parks Unit sets policy guidelines, supervises operations, and ensures compliance; while the nongovernmental organizations (NGOs) provide the scientific, technical, and administrative expertise needed to manage the protected areas.
In the case of Malpelo, the choice of partner was clear: Fundación Malpelo has a long record of working to preserve Colombia’s marine biodiversity and promoting the conservation and sustainable use of marine ecosystems. Together, the Parks Unit and Fundación Malpelo gathered data and presented arguments that convinced the national government to expand the sanctuary from 113 to 2,500 nautical square miles. “At that point,” recalls Sandra Bessudo, Director of Fundación Malpelo, “we could begin preparing the case that would eventually persuade UNESCO to put the island on its list of World Heritage Sites.”
The partners also developed a management plan—a framework for making decisions about Malpelo’s conservation. This far-reaching document outlines objectives in several arenas, including scientific research and monitoring, institutional strengthening, and public awareness and education. But in an era of factory trawlers, global overfishing, and collapsing fisheries, the greatest threat to the island’s ecology is illegal fishing. Here the management plan sets an ambitious objective upon which the island’s fate will ultimately rest: prohibition of fishing within the sanctuary and enforcement of sustainable fishing limits outside the sanctuary. Meeting this objective is a formidable challenge. Malpelo is an oceanic island hundreds of miles from the nearest major Colombian port. Neither the Parks Unit nor Fundación Malpelo had the means to confront illegal fishing ships in Malpelo’s waters.
The Colombian Navy would have to do the job. And it was willing, since it would be able to perform two duties at once—enforcing Malpelo’s fishing laws while patrolling Colombia’s territorial waters. The problem was that the Navy lacked a suitable ship for the new task. Here the island got an “assist” from a wider strategic public private partnership. The international environmental community stepped in, paying the tab for refitting the ARC Sula, a 69-foot, 19-passenger Navy vessel. A new set of partners—including not only the Colombian Navy, but Conservation International, the Walton Foundation, and UNESCO—thus joined the effort to protect Malpelo. Their cooperation has proven a resounding success. Today the ARC Sula patrols the sanctuary and visits the island at least once a month. The Navy also maintains a backup speed boat for enforcement operations, plus a small outpost on the island.
About three-quarters of Malpelo’s annual $1 million conservation budget goes to this “marine enforcement and surveillance” program—operating the ARC Sula and maintaining the island outpost. This portion of the budget, which comes from UAESPNN and the Navy, is considered secure and stable because of the ARC Sula’s double function. The ship is enforcing Malpelo’s fishing regulations and protecting Colombia’s national sovereignty.
The rest of Malpelo’s conservation budget, however, was not secure or stable. “The sanctuary’s management plan calls for expenditures to meet crucial conservation goals,” explains Julia Miranda, Director of the Parks Unit. “We have to carry out scientific research, strengthen our institutional capacities, and develop public awareness campaigns. But finding the money for these programs wasn’t easy.” To meet the plan’s objectives, Fundación Malpelo and the Parks Unit needed to come up with an additional $250,000 each year. Persistent budgetary shortfalls occurred, and, like environmental organizations throughout the hemisphere, the partners were forced to cobble together short-term projects and grants in order to advance long-term conservation goals. Uncertainty crept into the planning process, casting doubt over the sanctuary’s future.
The Malpelo Endowment: Focusing on Long-Term Conservation
In 2007, José Luis Gómez, the Executive Secretary of Fondo Acción and Fabio Arjona, Executive Director of Conservation International’s Colombia office, began to think about creating an endowment to solve the financial problems faced by Malpelo’s public and private caretakers. An endowment would provide a steady stream of income to Malpelo’s conservation programs. More importantly, it would allow Malpelo’s managers to shift their attention from short-term budget gaps to long-term conservation measures.
But environmental endowments are uncommon in the developing world. Donors are hesitant to support endowments because of the perceived risks and uncertainties. To fulfill their mandates, donors must be able to verify that their money is tackling identified environmental problems. The fear is that in difficult political or economic circumstances—perhaps years after the initial investment—the proceeds of an endowment might be diverted to other purposes. Without proper oversight, an endowment could end up feeding bureaucracies instead of promoting conservation.
The board of directors of Fondo Acción nonetheless urged Mr. Gómez to begin looking for international donors. The directors knew that an environmental endowment could succeed, provided that it follow rigorous and transparent financial practices—and equally rigorous and transparent rules of project oversight.
Created in 2000 with a debt-for-nature swap between the governments of Colombia and the United States, Fondo Acción has become one of the most important funding sources for conservation and sustainable development projects in Colombia. It manages the country’s Tropical Forest Conservation Account as well as the Enterprise for the America’s Account. Several years ago, the fund converted a significant portion of the latter account into an endowment. So Fondo Acción already had experience managing an environmental endowment, and that experience would prove crucial for setting up the Malpelo endowment.
Fondo Acción’s board of directors is composed of U.S. and Colombian government representatives (from USAID, Colombia’s National Planning Department, and Colombia’s Ministry of the Environment), along with leaders from NGOs, universities, business, and community organizations. The board supervises the endowment account, approving its investment policy and monitoring its financial performance. The board also makes sure that endowment proceeds are invested in projects that promote Fondo Acción’s environmental and social objectives. By providing clear and timely oversight, therefore, the board guarantees that the endowment stays on track. Rules are followed; performance is assessed; corrections are made.
Based on this record of transparency, accountability, and effectiveness, Fondo Acción applied to Conservation International’s Global Conservation Fund (GCF) for a $2.5 million contribution to establish an endowment for the Malpelo sanctuary. As part of the deal, Fondo Acción would match the amount, bringing the total endowment to $5 million.
The Global Conservation Fund (made possible by a grant from the Gordon and Betty Moore Foundation) finances long-term conservation initiatives in high-biodiversity wilderness areas across the globe. Its primary goal is to provide assistance to local communities, NGOs, and governments that are managing parks and reserves.
Confident in Fondo Acción’s ability to manage such an endowment, GCF recently approved a contribution of up to $2.5 million.
Jennifer Morris, GCF’s Vice President, explained “GCF believes that endowments are one of the most effective devices available to help ensure long-term effective management of protected areas. The Malpelo endowment will generate a steady stream of funding that will advance key objectives of the Management Plan. Coupled with the surveillance and enforcement activities of Colombia's National Parks Unit and the Colombian Navy, the new endowment will bolster activities such as biological research and monitoring, communications, outreach and training. These are key elements to ensuring that Malpelo's marine biodiversity is conserved for future generations.”
To manage the Malpelo endowment, which will be structured as a sub-account of Fondo Acción’s existing endowment, the fund has contracted one of the most reputable private-asset managers in the world, UBS Institutional Consulting –The Arbor Group. An administrative committee has been established to set investment priorities and monitor the endowment’s financial performance. And a technical committee—including representatives from the donors, UAESPNN, Fundación Malpelo, and other public and private stakeholders—has been formed to make sure that proceeds from the endowment support programs that advance the goals set by the sanctuary’s management plan. Within a year, the endowment is projected to cover the core operational costs of conserving Malpelo.
A Model for Conservation Investment
Fondo Acción’s board of directors believes that the endowment model holds great promise for conservation efforts elsewhere in Colombia—and indeed across the Americas. Getting secure, long-term funding for a critical environmental project is a major accomplishment. But just as important is showing that public and private organizations can work together, thereby attracting support from international donors. “We’re demonstrating some important synergies here,” says Armando Garrido, a businessman and board member. “Dedicated, top-notch environmental NGOs are helping public entities advance national conservation goals. A Colombian conservation trust fund is managing an endowment to the highest standards, providing a steady flow of revenue to public and private partners that are protecting a natural treasure. International donors have stepped in when needed, making sure that budgetary shortfalls don’t keep Colombia from fulfilling its environmental goals. Done correctly, this endowment, based on these kinds of partnerships, can usher in a new era of long-term cooperation and achievement.”
Gómez and Arjona see an immediate opportunity to expand the Malpelo endowment. They want to bring in more national and international partners to protect one of the most important marine areas on the planet. The Malpelo sanctuary lies at the heart of a “conservation seascape” in the eastern tropical Pacific. This seascape links Malpelo with other island World Heritage Sites—Galápagos of Ecuador, Cocos of Costa Rica, and Coiba of Panama—and includes the Colombian National Park of Gorgona. Biologists consider its protection essential for the survival of many marine species. One challenge is getting various regional actors—private and public, national and international—to work together on conservation initiatives within the seascape. Another challenge is financing the endeavor. “Malpelo”, argues Mr. Arjona, “shows how both challenges can be met. This endowment is the perfect vehicle to begin a broader, regional effort.”
Sandra Bessudo, Fundación Malpelo y Otros Ecosistemas Marinos
Fundación Malpelo is a private, nonprofit NGO that focuses on the preservation of biological diversity, and the conservation and sustainable use of natural resources in the marine and coastal environment.
Luis Alfonso Cano, Unidad Administrativa Especial del Sistema de Parques Nacionales Naturales
UAESPNN is a special administrative unit of the Colombian Ministry of the Environment, Housing and Territorial Development, in charge of the National Natural Parks System and of the National System of Protected Areas.
Luz Mery Cortés, Conservation International Colombia
Conservation International uses science, economics, public policy, and community participation to protect regions of great plant and animal diversity, demonstrating that human societies can live harmoniously with nature.
José Luis Gómez, Executive Secretary, Fondo para la Acción Ambiental y la Niñez
Fondo Acción is a private, nonprofit foundation that sponsors conservation and sustainable-development projects by NGOs, community organizations and other relevant institutions in Colombia.
Bobbie Jo Kelso, Senior Director for External Affairs, Conservation Funding Division, Conservation International
GCF finances the creation, expansion, and long-term management of protected areas in the world’s biodiversity “hotspots” and other high-biodiversity wilderness areas.