New Rewilding Europe Capital loans to enable transformative rewilding projects in Finland and Portugal
11 January 2019
Backed by the Natural Capital Financing Facility, a joint initiative of the European Investment Bank and the European Commission, the loans will support new forest and peatland restoration projects that enhance biodiversity, support wildlife comeback and deliver greater value to people.
New financing for Rewilding Europe Capital totalling 800,000 euros will enable and scale up groundbreaking rewilding projects over the next three years. Support for nature-friendly businesses from the the Natural Capital Financing Facility (NCFF), an initiative of the European Invesment Bank and the EU’s LIFE financing instrument to back nature-friendly businesses, will finance forest management in Portugal and wetland restoration in Finland.
The Finnish projects will be managed by Snowchange, a NGO and European Rewilding Network member that specialises in the restoration and recovery of damaged landscapes caused by commercial exploitation, with a particular focus on sites formerly used for intensive forestry and peat mining.
“By restoring degraded wetlands and boreal forests, this hugely exciting and transformative loan will lead to enhanced biodiversity and the creation of new carbon sinks across Finland,” says Snowchange director Tero Mustonen. “Our scalable model, which takes account of the expertise and culture of indigenous Sámi communities, can mitigate climate change and benefit local stakeholders through the development of new nature-based business models.”
The recipient of the Portugal-focused loan is Sociedade Agro-Florestal do Rio Maçãs, a start-up business founded in 2018 focused on securing and transitioning communal forests in northern Portugal into more natural forest habitats.
“This new loan will enable us to diversify and promote native species forest management in Portugal,” says André Rebelo, a co-owner of the start-up and a timberland management specialist. “This, in turn, will bring a financial return by allowing us to blend sustainable forest harvesting with complementary commercial enterprises such as the provision of non-timber forest products, carbon offsetting, and nature-based tourism experiences.”
Launched four years ago by the European Investment Bank (EIB) and European Commission, the NCFF has backed new investment by nature-focused businesses and is now supporting a wide range of projects and initiatives across Europe.
The ultimate objective of the facility is to demonstrate to investors the attractiveness of such businesses over the longer term, in order to develop a sustainable flow of capital and achieve scale. Stepping up the financing of projects focused on the enhancement of biodiversity and ecosystem services (BES) is considered one of the prerequisites for achieving the European Union’s 2020 biodiversity goals and beyond.
“The worthy recipients of these two new loans typify the growing portfolio of NCFF-funded projects,” says Andrew McDowell, a European Investment Bank Vice President responsible for agriculture and natural resources. “These projects have nature conservation at the heart of their business models. They exemplify how great conservation can generate real commercial opportunities.”
The EIB has already approved a 6 millon euro loan facility for Rewilding Europe Capital, with the latter agreeing a 2 million euro loan under this facility in April 2017. The new financing for projects in Finland and Portugal represents the first investment under the new initiative. The scheme will ultimately allow REC to provide loans of up to 600,000 euros to nature-based businesses which support rewilding across all 28 EU member states.
Of all the countries of Europe, Finland has the highest potential for carbon sequestration in its forests, peatlands and wetlands. With a growing need to mitigate and offset carbon emissions and counter climate change, carbon credits could become an important tool for Finnish climate change policy and rural economic development. The rewilding of drained forests and rewetting of peatlands is an attractive strategy, combining climate adaptation with sustainable land use models that support biodiversity, wildlife and nature-based economies.
There are over 5 million hectares of drained peatland in Finland, presenting an unprecedented opportunity to select high natural value locations for rewilding and restoring natural ecosystems and biodiversity. In these areas, carbon sequestration can be combined with the development of other socio-economic activities – such as wildlife watching, water storage and the sustainable harvesting of natural products – to generate revenue and create new jobs.
With the support of the NCFF, Rewilding Europe and Snowchange have already begun working to secure, restore and protect Finland’s forests and wetlands using new forms of finance. In 2017, REC provided a 75,000-euro loan to Snowchange to purchase and conserve the restored Linnunsuo wetland.
Linnunsuo, an environmentally degraded former peat production site, is currently in the process of rewilding itself, having been converted into a wetland over the past five years. Already an Important Bird Area (IBA), it is a key site in the ecological restoration of the Jukajoki basin, a flagship river project led by the North Karelian villages of Selkie and Alavi.
This new REC loan will be used to purchase, secure and restore new peatlands and forest pilot sites. These will include the 16,000-hectare Lake Kuivasjärvi catchment area in western Finland, which contains the Alkkianeva peatland. This 30-hectare site needs to be flooded and restored back into a natural wetland. The second main area of focus is the Jukajoki River in eastern Finland, where several more sites are located. The Jukajoki is connected to the far larger, 3860 square-kilometre Jänisjoki catchment area.
“Peatland restoration has huge potential for scaling up, both in Finland and other regions in Europe,” says Timon Rutten, Rewilding Europe’s Head of Enterprise. “We anticipate that the inclusion of carbon offset buyers in 2019 will further accelerate the pace of Finnish peatland restoration, and by the 2020s this initiative could see tens of thousands of hectares of restored wetlands acting as carbon sinks.”
Many forests in Portugal, which are on rural communal land, are intensively managed for the production of low-grade timber primarily in monoculture stands – mainly pine and exotic pioneer species such as eucalyptus. Their development often results in clear-cut deforestation, creating contiguous forests of low biodiversity value. They are also increasingly vulnerable to large-scale wildfires, compared to the more open, mosaic landscapes of the past.
Following disastrous wildfires in 2017, many Portuguese communities are now demanding different land-use and forest management models offering greater habitat and landscape security, while simultaneously diversifying income.
In collaboration with local partners, Rewilding Europe is working to implement a new business model, which would see private forest managers rewild monocultures of pioneer tree species, such as maritime pine (typical of Mediterranean coastal forests), into forests (and associated ecosystems) that are both more natural to the region and more ecologically evolved.
In addition to hosting far greater biodiversity, these natural habitats will offer a more diversified income model, based on sustainable timber production, carbon offsets (with fewer fires strongly increasing carbon sequestration), nature-based tourism, and non-timber products such as wild mushrooms, berries and herbs. The integration of natural grazing using large wild herbivores into such a model helps to create and maintain naturally fire-resistant mosaic landscapes.
Sociedade Agro-Florestal do Rio Maçãs plans to use the new REC loan to lease 3,893 hectares of communal forest in northern Portugal for terms of between 20 to 70 years. More than 90% of this forest is located in an area of high conservation value around the Montesinho Natural Park and is classified as a Natura 2000 site. The forest will be transformed into a more natural woodland, thereby protecting and enhancing biodiversity and boosting its value in terms of ecosystem services and wildfire resistance.
As with peatland restoration in Finland, this business model also has great scalability potential.
“Portugal has around 400,000 hectares of designated, communally-owned production forest,” says Rewilding Europe’s Rutten. “Several hundred thousand hectares of such forest could be restored, involving an investment of 40 to 50 million euros. The approach could be further exported to other parts of the Mediterranean region, such as Spain, where similar conditions and challenges also exist.”
In contrast with many other parts of the world, there is still very little awareness in Europe about the potential for developing businesses that engage with and support the conservation and rewilding of natural landscapes. In rural areas where the commercial value of wild nature is poorly understood, access to finance for enterprises working with nature is pretty much non-existent.
This is the reason REC was established 2014. As the first conservation enterprise investment vehicle in Europe, focusing on the rapidly expanding European rewilding movement, REC works to stimulate economic growth and development directly connected to the rewilding of natural landscapes. By the end of 2017 it had financed 19 businesses in six European countries, with a commitment totalling 520,000 euros and a portfolio of sectors including nature-based tourism, natural products, natural resource management and habitat restoration.
Empowered with financial resources and expertise, Rewilding Europe’s enterprise team are now looking to scale up their efforts across sectors. In terms of investment through REC, the focus is not only increasing the volume and size of loans, but the identification of new and innovative business opportunities which can have a really sizeable positive impact on wild nature and nature-based economies.
Rewilding Europe wants to collaborate with entrepreneurs, corporations, investors, governments and municipalities as we take our enterprise work forward and scale it up.
“Our door is always open,” says Rutten. “Prospective enterprises that have the envisaged impact are welcome to contact us at any time.”
The Management Committee of the European Investment Bank, chaired by President Werner Hoyer, is in Helsinki this week for discussions and high-level meetings with national and local authorities. Starting from July 1st, Finland will take over the rotating Presidency of the European Union.
The EIB has signed three new loan agreements with counterparts in Finland today. Totalling nearly EUR 400 million, the loans will support urban transport and education in the cities of Helsinki and Espoo as well as a combined-heat-and-power plant (CHP) in the City of Lahti.