Output of 20 years of a Nature Based Project based on Blended Financing, next is Impact Investing

Species aren’t evenly distributed around the planet. Certain areas have large numbers of endemic species — those found nowhere else. Many of these are heavily threatened by habitat loss and other human activities. These areas are the biodiversity hotspots. Success in conserving species of these areas can have an enormous impact in securing our global biodiversity. Of the 40,283 plant species known to be used by humans worldwide, 5% of them (1,916 in total) are found in Madagascar. Of these, 1,596 are endemic. These include plants with medicinal properties, numerous food plants, and species with more modern uses such as mitigation against climate change. Madagascar forests are disappearing threatening biodiversity and accelerating climate change.

The community-based production areas launched in 2001 include currently:

-       385 hectares of western natural forest habitat of the critically endangered Coquerel’s Syfaka and 100 hectares of restored forest

-       600 hectares of primary mid altitude eastern rainforest hosting 12 species of lemurs, including 3 of them critically endangered and around 500 hectares of degraded habitat being restored for agroforestry and biodiversity.

All together the program allows habitat conservation for 70 threatened species (on IUCN Red List), 42 of them, including 9 critically endangered classified by the scientific community as EDGE threatened species, not enough represented in the Protected Area system.

A local private company has been founded in parallel to these community-based conservation zones in 2001 to ensure the export of local productions. The company has generated incomes on average during the last 5 years for around 6.000 farmers representing around 1000 full time paysan salary.

It is Olivier Behra’s research work for FAO[1], UNEP[2] and USAID[3] on environment management, and my non-conventional background that brought me to design and launch this complex program in 2001 on the island of Madagascar. The main idea was to support the conservation of the incredible biodiversity which occurs outside of protected areas. Enhancing the value of natural resources for local communities, especially through the production of essential oils was a key business development opportunity to support conservation. However even organic and fair trade certified was not enough to generate interest and the framework for biodiversity conservation and the support of an NGO was indispensable.

Deforestation trends in the west confirms that without intervention 12 years ago the forest would have been gone and that restauration is possible after fire. A small patch of 70 hectares of “primary” forest that has been protected is hosting 7 endangered species, including 4 critically endangered one and 5 of them are considered underrepresented in the national protected area system.

On the mid altitude rainforest site (Vohimana) a scientific paper reporting on an amphibians survey in 2001 was estimating that the forest cover of the site would disappear in a few years. A forestry work conducted in 2005 was confirming that without the intervention of the NGO, looking at non sustainable agriculture practices the forest cover would have had disappeared by 2015.

 Deforestation has been slowed down and totally stopped in 2017 and currently more a 500 hectares block of forest is ensuring a sanctuary for 12 species of lemurs, more than 80 species of frogs, more than 50 species of reptiles, 87 species of birds, 26 of them being considered EDGE species underrepresented in the overall protected areas network, including 5 of them listed as Critically Endangered. In terms of plants, it is more than 120 species of orchids, 20 species of palm trees, including 9 threatened ones, 160 plant reported having medicinal properties, and many species threatened and probably still unknown to science (a new species of moss has been described from Vohimana in 2020: Riccarida vohimanensis).

The analyzes of the business development shows that the company has grown as well as it did only because 100% of its profits have been reinvested. Indeed, margins generated by a bulk export company from a developing country are in fact very limited by international customers, up to now interested in quality standards but mainly by price competitivity in global markets.

Local communities need before all the economic value chains, and once the natural resources use have been designed to be sustainable, organic … and included into positive biodiversity management the needs are to:

-       Organize forest and biodiversity protection and restoration on the long term;

-       Support basic human needs not provided by the state, especially health and education.

Management plans have been agreed with local communities mixing natural forest protection and agro-forestry development and community forest guards have been equipped and trained.

A health center and a school has been built at the border of the Vohimana site in the east and a school built in the Besatra village in the west.

Nurses and teatchers salaries are very cheap in Madagascar but state is too poor to pay for it, at laest in total. Calculation has been made that proper paiment of the essential oils at the community base production units level allows an autonomisation plan of health and basic education.

To ensure this access to health and education the essential oils produced locally need to be paid a fair price. We analysed that it can easily be done for small quantities if the products could find a direct market.

European customer are more and more demanding for ethical production of natural products for heath and well beeing. The essential oil market is predicted a steady growth over the next 10 years and there is a lack of companies having the proper impact and real link to field production that can be put into valuable story telling.

It has therefore been decided to create a Nature Based Solution company in France to promote direct sales : Aroma Forest SAS.

Aroma Forest is just launching its sales but the business plan shows margins of up to 70% in France and that the company shall bring attractive profits with an EBITDA of 23% in year 4 and up to 28% in year 5. The business plan has been designed so that in year 5 conservation zones management cost, field forestry officers as well as research and development can be funded by the business incomes.

This will make the company Aroma Forest SAS the one ensuring the sustainable conservation of the biodiversity and forest cover of the sites developped up to now.

Euro 800,000.00 out of the euro 1,200,000 non for profit funding required for the 2020-2030 program set up have been secured and the rest should be found the NGO Man And The Environment.

Euro 270,000.00 have been seen needed for the private company Aroma Forest SAS until the end of year 2 to reach the autonomy of the company.

408 share are currently offered for investors at the price of euro 485,30 each, representing up to 20% of the company.

Olivier Behra, the founder of the Man And The Environment – Aroma Forest program has recently been working for the government of Madagascar and the private sector to help define a common strategy for plant extract sector development until 2040. Following a private – public Pact has been co signed in July 2023 by the Prime Minister and the private sector representatives and includes strategies to have a carbon neutral production and positive impacts on poverty alleviation and the environment. This makes it very likely that the current Nature Based Solution presented here could serve the use of the coming outputs for much larger development and impact in the future.

Olivier.Behra@NetPositiveImpact.earth

[1] Behra O. 1994. Diversification des productions naturelles pour la conservation et le développement durable. Rapport final FAO/TCP/MAG 2358. FAO publication.

[2] Behra O. 1998. Analyse de la problématique de la valorisation de la biodiversité pour la conservation. Office National de l’Environnement de Madagascar. Rapport dans le cadre du sous-programme GEF-PNUD/MAG/96/G-31.

[3] Behra O. and M. van Schaik. 1994. Development of Experimental projects to enhance the benefits from the trade of wild fauna and flora for conservation. USAID Madagascar report cont. # 678 0510 C 00 4115 00.