Navigating ocean investments

In the first of a new series of ‘Insights’ case studies designed to highlight links between business and sustainability, IIED looks at a business model that could be the key to bridging the marine conservation funding gap.

Article, 01 October 2019
Insights: linking business and sustainability
A series of articles helping businesses and investors address development and environment challenges
a turtle

A turtle near the island of Bonaire, Dutch Antilles (Photo: Jayne Jenkins/Blue finance)

Concerns about the health of our ocean are rising up both the public and political agendas. Television programmes and scientific studies have highlighted how human activities are damaging marine life: we need to take effective action to protect our ocean.

Marine protected areas (MPAs) – reserves in the ocean – can be a powerful tool for protecting marine eocsystems and biodiversity. With a rigorous science-based approach, effective management and the right investment, MPAs can help support ocean ecosystems, enhance resilience to climate change, and provide food and income for local communities.

But the growth of MPAs is hampered by insufficient funding for expansion and effective management, particularly in developing countries. Worldwide, 65% of MPAs are estimated to have inadequate management budgets and 91% to have inadequate staff capacity. Rapid expansion without the necessary investment could see an explosion of ‘paper parks’ that fail to meet social or ecological goals and cannot financially sustain themselves.

Insights for investors

  1. Collaboratively managed MPAs offer impact investors a strong opportunity to support the sustainable management of marine resources, improve coastal livelihoods and generate financial returns.
  2. Impact investment in MPAs can help fill the global gap in public finance: supporting conservation and sustainable development targets.
  3. Defining tailored indicators and ways to measure them is vital to delivering the desired environmental and social impacts.
  4. Governments engaged in collaborative management partnerships can improve their access to blended finance for marine conservation with no financial risk, while retaining core functions.

Challenges for investors

Impact investment aims to generate positive, measurable social and environmental gains alongside financial returns. It is a growing force for good: the Global Impact Investing Network (GIIN) estimates that at the end of 2018, the industry was managing US$502 billion in assets.

But conservation projects, particularly around marine ecosystems, are not attracting impact capital at a significant rate. Researchers have identified a number of challenges limiting progress:

  • Too few investment-ready projects and future opportunities under development
  • Poor knowledge of opportunities and success stories
  • Investment size: typically smaller than large institutional investors’ minimum, and larger than individual impact investors’ desired allocation
  • Inadequate baseline data on social and environmental benefits make positive impacts difficult to prove
  • Off-putting operational and political risks, particularly in developing countries
  • NGO hesitation to accept loans, and
  • Limited data on financial performance and expected returns; limited understanding of how marine resources can be organised to generate returns.

Collaborative management of MPAs – a way forward?

Collaborative management may offer a pathway to overcome these challenges. A number of national governments have addressed funding gaps for protected areas by establishing collaborative management arrangements with private partners. Co-managed protected areas have also been set up by entrepreneurs and community groups.

The arrangements can be structured in different ways, including:

  • Governance and management responsibilities might be shared (‘co-management’)
  • A partner might assist the state with aspects of management, without formal decision-making authority, or
  • The state might completely delegate management.


Involving non-public partners brings advantages, including:

  • A business approach: establishing revenue streams around ecosystem services, most commonly nature tourism; greater capacity and expertise to develop, market, and manage commercial operations and maximise revenues
  • More freedom to retain and reinvest profits, giving managers incentives for cost-saving, accountability and improved management, and
  • Greater ability to raise capital (including impact investments) to cover start-up costs, such as restoring the ecosystem, purchasing equipment and developing visitor facilities.

Extensive evidence shows that viable and appropriate collaborative management can both redistribute the financial burden borne by states and attract the long-term economic and technical support needed for effective management.

Many collaboratively managed MPAs are financially sustainable, generating most or all revenue through tourism and delivering positive social and ecological impacts. Examples include Indonesia’s Misool Eco-Dive Resort, Tanzania’s Chumbe Island Coral Park and Bonaire National Marine Park in the Caribbean.

Case study: Collaborative management at Bonaire National Marine Park

Bonaire in Bonaire, Sint Eustatius, and Saba Bonaire in Bonaire, Sint Eustatius, and Saba (Source:

This marine protected area in the Leeward Antilles in the southern Caribbean Sea was declared in 1979. It includes all the waters of Bonaire and Klein Bonaire islands and covers 27,000 hectares of coral reefs, sea grass and mangroves.

In 1998, the government of Bonaire signed a co-management agreement with the non-governmental, non-profit foundation Stichting Nationale Parken Bonaire (STINAPA Bonaire).

All visitors to the National Marine Park are required to pay an entrance fee, known as the ‘nature fee’; this provides 90% of STINAPA Bonaire’s funding for the park. In 2015, the park earned US$1.5 million income from foreign and local visitors.

The success of the nature fee is attributed to STINAPA Bonaire’s strong communication campaign and partnership with the tourism sector.

Attracting investors: the Blue finance model

The social enterprise Blue finance aims to design, finance and implement collaborative management partnerships for MPAs that can attract and scale up impact investment.

Each project establishes a ‘special purpose vehicle’: a coalition of NGOs, scientific institutions and local associations (such as fisher cooperatives) to manage day-to-day operations with guidance from a multi-stakeholder co-management committee. 

This approach enables relevant government ministries to maintain core functions (such as approval of work and management plans, enforcement of regulations, and fisheries management), involves local communities in management and draws in financial and scientific expertise. 

Collaborative management usually relies on public or private donations for development. But with this approach, impact investors provide most of the initial funding, with ‘user fees’ generating ultimate returns.

Fees can be collected by tour operators, at ports of entry or visitor centres, when booking activities, online and so on. All profits are reinvested into the MPA, which is expected to become financially self-sustaining. Investment takes place over a 10-year period, allowing time to establish a sustainable MPA and implement innovative approaches. Read a fuller description of the Blue finance model on its website.

Case study: Arrecifes del Sureste, Dominican Republic

Arrecifes del Sureste in Dominican Republic Arrecifes del Sureste in Dominican Republic (Source:

Arrecifes del Sureste was designated an MPA by the Dominican Republic in 2009, but it has never been active. It covers 8,000km of coastal ecosystems and could enhance the livelihoods and climate resilience of approximately 16,000 households.

In 2018 the government signed a renewable 10-year agreement with a non-profit ‘special purpose vehicle’ to co-manage the MPA.

Blue finance secured a US$2.5 million bond from impact investors with an eight-year term, for equipment and staff. This covered about 70% of initial funding; grants cover the rest. Principal repayment will start in 2020 if specified environmental and economic objectives are met.

The special purpose entity will charge visitors between $3-10. With around 260,000 visitors, this should generate revenues of $1.5M per year.

Annual operating costs are expected to total $1.3 million. These will cover maintenance, management, enforcement, ecosystem improvement, support for tourism operations, and community engagement and livelihood enhancement.

Blue finance plans to replicate this project across 20 MPAs in developing countries by 2030. Seven protected areas are nearly investment ready. 

This approach – tailored to country and investment level – can work wherever there are MPAs, tourists, political will and local capacity. Expansion should see use of grants for initial funding decrease, eventually transitioning to concessional private finance. By grouping MPA projects, Blue finance aims to attract investors with greater capital, bringing meaningful scale and transformative investments to marine conservation.

A checklist for ocean-loving impact investors 

The opportunity offered by MPAs is relatively new, but lessons are emerging about the ingredients for success: 

A viable business model is necessary for financial returns. Nature tourism is currently the most viable revenue source for MPAs but this relies on tourist volume. Grouping projects can improve risk-return profile; the special purpose vehicle helps isolate risk by separating project-related liabilities, tax and regulations from core business.

An environmental and social action plan that meets international risk management standards (such as the International Finance Corporation’s Performance Standards) is also key to delivering development goals. 

A multi-stakeholder approach is central to successful project development and management. This may include government, an engaged and experienced NGO, and partners with skills in social entrepreneurship, financial planning, and/or marine conservation. Intermediaries such as Blue finance are essential to bridge the gap between investors and conservation. Community involvement in management, monitoring and awareness campaigns can generate buy-in that supports project durability.

Appropriate performance indicators must be identified with stakeholder input. Standard metrics (such as GIIN’s Impact Reporting and Investing Standards) will not capture an MPA’s social and environmental impacts. (For example, indicators of ecological impacts in a coral reef ecosystem may include enhanced live coral cover and water quality; socioeconomic impact indicators could include local employment in tourism businesses and improved fishery productivity.)

Additional resources

Publication coverDownload the full Insights publication 'Navigating ocean investments: how collaborative management can fill the marine conservation funding gap', Laura Kelly, Annabelle Bladon (2019), IIED briefing