Where some see individual forests, roads, rivers, buildings, fields, hills, and lakes, systems thinkers see landscapes—entities that enmesh the human with the natural, places where people find community, sustenance, purpose, and identity amidst the floral and faunal treasures of the Earth.
Landscapes Under Pressure
Healthy, productive, biodiverse, and inclusive landscapes are vital to human prosperity. They provide food, water, construction materials, and a range of ecosystem services that nurture thriving communities.
Yet growing populations and economies are putting pressure on landscapes around the world, driving a range of environmental harms including deforestation, watershed pollution, desertification, biodiversity loss, and the overexploitation and erosion of soils. These ecological issues are often exacerbated by social tensions and conflicts over land and its resources that emerge from unclear land tenure rights, unsustainable land management practices, and uncoordinated and competing sectoral policies.
“A landscape is a socio-ecological system that consists of natural and/or human-modified ecosystems, and which is influenced by distinct ecological, historical, economic and socio-cultural processes and activities.” – The Little Sustainable Landscapes Book
The typical response to these issues is a fragmented approach in which different parts of a landscape are managed separately and in pursuit of sectoral goals such as increasing crop yields, protecting watersheds, or promoting timber production. Fragmented sectoral approaches might lead to short-term gains for some but tend to produce long-term losses for the landscape at large and for many of the people living in it. A case in point are oil palm plantations, which have lifted some producers out of poverty but also led to deforestation, CO2 emissions, biodiversity loss, human health impacts, and forced migration.
Towards a New Landscape Management Paradigm
Over the past two decades, a more powerful strategy for protecting and enhancing landscapes for both people and nature has started to emerge: Integrated Landscape Management (ILM).
ILM advocates for seeing landscapes as entities—cohesive collections of natural assets and human artefacts that are inextricably interwoven and mutually dependent—and therefore frames the challenge from a more systemic perspective than sectoral land management approaches do. And indeed, the landscape approach is gaining traction fast, with hundreds of initiatives emerging around the world.
ILM argues that sustainable landscapes—those that can meet the needs of the present without compromising the ability of future generations to meet their own needs—require a conception of sustainability that encompasses social and environmental goals, and that it must be defined and pursued by local stakeholders who come together in collaborative landscape partnerships.
Such partnerships are operationalised through a systematic process of stakeholder engagement, landscape assessment, and collaborative visioning and action planning. This enables them to access finance, coordinate action, and assess outcomes, and it provides a forum for collective learning so that landscape strategies can be adapted over time. The main challenge, then, is to reconcile competing social, economic, and environmental interests of local stakeholders while being sensitive to the national and international contexts in which landscapes are embedded.
The Role of Finance in Nurturing Healthy and Thriving Landscapes
The way financial capital flows through and accumulates in landscapes greatly impacts the health and prosperity of both communities and nature.
In recent decades, financial innovation focused on sustainable land management has proliferated, but these efforts tend to be fragmented, poorly evaluated, and of limited scale. More importantly, their focus continues to be on funding individual businesses and projects and thus lead to isolated, sector-specific, and short-term investments.
At the same time, the partnerships that drive ILM approaches around the world have struggled to develop and implement comprehensive financing strategies to support their collaborative and integrated landscape approach.
There is now an acute need to develop an approach to systemic investing that supports integrated ILM initiatives around the world. Such an approach must enable investments in strategic portfolios consisting of multiple businesses and projects that are selected for their collective ability to create combinatorial effects amongst themselves in order to amplify the impact at the aggregate level of the landscape. Importantly, these investments should not be made in isolation but in synergistic alignment with other interventions happening in the landscape around levers of change such as policy, education, narratives, and social norms and values.
What is likely to emerge from such an approach are investment portfolios that span multiple forms of finance, asset classes, financial instruments, investee types, and risk profiles. They will not fit neatly into the highly categorial investment strategies of most institutional investors. This is why the challenge is not solely of a technical nature. Tackling it requires that people recognise that investing for systems-level impact will not be possible with a reductionist, atomistic mindset but instead calls for collaborative, integrated approaches that move away from the single-asset paradigm toward a strategic blending approach.
The Contribution of the TransCap Initiative
Led jointly by Climate-KIC, EcoAgriculture Partners, and the Landscape Finance Lab, and with the support of other leading organisations in the ILM community, our objectives are twofold: to develop, demonstrate, and mainstream innovative approaches, tools, and mechanisms to finance integrated landscape investment; and to support systemic transformation in the finance system to better support inclusive, multi-asset, integrated landscape approaches.
We are going to pursue this mission with the hypothesis that scaling finance flows for landscape investment requires four key elements:
- The creation of economic value, and its equitable capture and distribution through cash flows
- Effective risk management, through holistic de-risking and distributed risk-sharing involving multiple landscape stakeholders, including critical but often marginalized groups such as women, religious minorities, and indigenous people
- Pro-active generation of trust among actors through multi-stakeholder landscape partnerships; and
- design of financial mechanisms targeted to meet those needs.