Wild Idea

Blue Bonds for Conservation helps countries protect their marine resources by easing their debt burden. Many small countries want to develop robust systems for protecting their marine resources, but planning and maintenance come with a price tag. And many of those same countries are already struggling to pay down loans for things like infrastructure projects.

In the Blue Bonds program, TNC helps buy back sovereign debt at a discount using loan funds from investment banks to restructure the debt. The next part should be familiar to anyone who has refinanced a home: The lower interest rate and longer repayment term provide savings compared with the original loan. Unlike a home refinancing, however, a Blue Bonds restructuring requires a portion of those savings to be directed to protecting at least 30% of the country’s marine waters.

The debt-swap mechanism has been used for decades, often to protect forests around the globe. Since 2001, TNC has completed 11 debt-conversion projects for tropical forests in Latin America and Southeast Asia. But nothing on this scale has been done before, let alone focusing specifically on marine conservation, says Rob Weary, deputy managing director of Blue Bonds, part of NatureVest, TNC’s impact investing arm.

The pilot project in the Seychelles offers a glimpse of how such transactions can dramatically boost marine conservation. At the start, only 0.04% of the country’s waters—off the east coast of Africa—was under protection. Thanks to a deal that restructured $22 million of the country’s debt, that had jumped to 26% by February 2019.

“Seychelles is already quite ahead of schedule,” says TNC Director of Ocean Planning and Mapping Joanna Smith, noting that Seychelles will legally protect 30% of its marine area by the end of 2020. With this increased management, the health of corals and fish stocks is expected to start improving as sensitive waters see less human activity. This, in turn, will help people’s livelihoods. 

As part of the recently announced Blue Bonds program, a portion of the lowered debt payments goes into a conservation trust fund to pay for marine management, protection programs and research programs, using endowments to ensure long-term funding for marine protection efforts. The conservation trust ensures that the money can only be used toward the country’s commitment to protect those waters, and nothing else.

Launched in 2018, The Audacious Project does just what its name suggests: It shines TED’s global spotlight on the boldest game-changing projects that also have a solid chance of success, says TED Director Chris Anderson. Blue Bonds for Conservation is a perfect fit. “The fact that that plan is based on already-successful work, that it addresses ocean protection at a national scale, using an ingenious model that connects all interested parties, and that it offers the prospect of long-term sustainable protection of huge parts of the ocean … well, that’s rare and exciting.” The Conservancy’s program was one of eight chosen for The Audacious Project in 2019, out of over 1,500 applications.

“Audacious” is the right word for the Blue Bonds program’s goal, Weary says: The plan is to negotiate and launch 20 debt conversions that could potentially create more than 1.5 million square miles of new marine protected areas.

“It’s a financial deal at hedge-fund levels,” Weary says. Another innovation—and challenge—is the accelerated time frame: “With forests, one every year was fast. Now we’re aiming at [starting] four a year for the next five years.”

The first step is to raise $40 million, more than half of which has already come from donors affiliated with TED Audacious. This seed money will cover the operating costs and hiring required to make the work possible. Part will go toward growing the TNC Blue Bonds team, and part toward helping the initial round of 20 countries set up their marine protected areas.

“These [first] 20 transactions will provide upward of $740 million of funding for marine conservation and capitalize endowments with ending values of $900 million—all of this over 20 years,” says Weary. In other words, the program has the potential to free up and generate $1.6 billion for marine conservation over the duration of these restructured loans. 

At the moment, discussions are underway with countries in Latin America, the Caribbean and Africa to be part of the first 20. “It does take time to build up the relationship,” Weary says. “There’s a lot of disbelief at first. Some governments see it as too good to be true, like, ‘What are we missing?’ What will help is getting more deals concluded.” Eventually, the Blue Bonds strategy could work in 85 countries around the world.

Weary expects that once the first few countries participate many more will follow suit. Coastal and island countries want strong fisheries and healthy tourism economies, and the savings created are the carrot to encourage the governments.

Amid all the talk of global finance and large-scale conservation, it’s important not to lose sight of what makes programs like Blue Bonds possible on the ground, Joanna Smith says: engaging directly with local stakeholders to understand their needs and concerns, and involving them in the decision-making process as early and often as possible. They are the ones who will ultimately benefit from the healthier marine habitat. In terms of deciding which areas need protection, “some of the best ideas come from domestic fishers,” she says. “They’re on the water all the time, many generations fishing in one place.”

The key, Smith says, is listening to people—and taking inspiration from them. “They’re doing it for their children and their children’s children.”