Beyond ‘Localization’: Trust the ship captains of nature-based solutions

At CrossBoundary, we trust ship captains over physicists (though we do hire physicists from time to time!). It’s an idea borrowed from James C. Scott’s Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed, in which we are posed the question:

If your life depended on your ship making it through rough seas, would you rather be guided by a brilliant physicist who knows all there is to know about fluid dynamics, meteorology, and oceanography…or the ship captain who may lack a PhD but has made the trip a thousand times? I’ve yet to meet anyone who has chosen to brave rough seas with the physicist.

For us, the takeaway from this thought experiment is the value of practical knowledge, or mētis, in positively transforming societies. In Greek, mētis is contextual knowledge often expressed as rules of thumb, standing in contrast to teche, or knowledge comprised of universal rules derived from first principles. While both are important, we know that the most successful operators in emerging markets must be hyper-aware of the contours of their local environment and highly adaptive to change.

It’s why we trust those who have the most context and who are closest to the action. It’s why 80% of our team is based in – and typically from – the emerging and frontier markets we serve. And it’s why we are so committed to supporting local teams to raise the capital they need to scale their businesses.

This same philosophy guides our Natural Capital team’s perspective on what is needed for nature-based solutions to be successful. Unlike climate solutions more broadly, nature-based solutions are inherently local. Biodiversity is local. Fresh water is local. Agriculture is local. And the people whose livelihoods depend on nature are local.

Nature-based solutions are also long-term. Success requires changing how people interact with the natural environment over the decades and centuries ahead. This can only be done through local action, by those with long-term interests in the community.

Finally, nature-based solutions are context-dependent. Project design cannot simply be copied and pasted from one location to the next. The unique features of the local environment matter – climate, topography, water and energy sources, local species, land rights, and more all influence project design. While external expertise is absolutely needed, local expertise and local implementation of improved land management is what ultimately makes or breaks projects in the long run.

So, who are the “ship captains” of nature-based solutions?

First and foremost, they are Indigenous Peoples and Local Communities. Indigenous Peoples make up about 6% of the global population, yet they manage or hold tenure rights to nearly half of all protected areas, and at least a quarter of all tropical and sub-tropical above-ground carbon is stewarded by Indigenous Peoples and Local Communities. These groups have some of the strongest track records of managing land for the mutual benefit of people and nature.

However, nature’s ship captains face challenges in accessing finance. For those seeking funding to implement new projects, there are often several degrees of connection to investors and a lack of experience in putting together an investable project. Partnership is often required to address capabilities such as carbon measurement and monitoring, marketing of carbon credits to buyers who are typically large corporations in the US and Europe, and project documentation and reporting to the standard required by investors with fiduciary responsibilities.

Across African drylands, climate change has arrived, with temperatures rising at twice the global average. Communities in Burkina Faso are particularly vulnerable due to the combined effects of climate change and deforestation on rural populations who rely on the land to survive. Tree Aid, an NGO, is working with communities that hold customary land rights to restore 13,000 hectares of degraded land and generate new sources of income – all funded by the sale of carbon credits to a global investor.

Tree Aid employs community members to operate the project; offers capacity development in sustainable land management practices that address soil fertility and water harvesting, value chain development, and marketing; and provides direct financial compensation including exposure to potential upside via communities’ direct participation in future carbon credit sales. For the portion of carbon credits retained by the community, members will be able to decide how, when, and to whom to sell these credits based on needs and opportunities at that time.

In total, more than 6 million trees will be planted, sequestering more than 3 million tons of CO2 over 40 years. Over that time, the project will deliver approximately US$70M in benefits to households from 115 villages in rural Burkina Faso, the vast majority of whom are living below the poverty line. It provides a unique opportunity for these communities who are otherwise excluded to participate in climate finance flows, and to make a globally significant contribution to the climate crisis.

The good news is that for nature-based solutions with revenue from carbon credits, carbon markets themselves offer the added discipline of results-based finance. Projects that lose sight of their ship captains, or fail to properly incorporate local context, will fail over the long run. You can find those stories in the news.

The other good news is that investors and project developers understand this. We find that most often, the challenges lie in the “how” and “how much” – building projects of sufficient scale with credible operators, and landing on the price that buyers of carbon credits are willing to pay. Quality has a cost, and underpaying the ship captain is short-sighted.

CrossBoundary’s Natural Capital team focuses on addressing the barriers for indigenous peoples and local communities and their partners to raise up-front capital for new projects. We support projects that place communities at the center – as partners rather than solely beneficiaries of projects – that prioritize transparency and Free, Prior, and Informed Consent processes. Moreover, we ensure that communities are appropriately compensated for the risk they are taking in the project, just like every other stakeholder.

We know that communities are not always invited to the table during negotiations with investors, and that getting a fair deal is both a moral and a commercial issue. Helping our clients understand best practices globally, elevating the role of communities, and communicating the real costs of high-quality projects during negotiations helps move the market in the right direction.

We are deeply committed to supporting nature’s ship captains, and we hope this analogy helps shed light on the exceptional value of local context and stewardship, which is too often undervalued in the market today.

Explore the CrossBoundary Quarterly