Bankable Nature Solutions: a Case Study
By: Wwf Hk
Tags: Bankable Nature Solutions, Mekong Delta, Green Investment, Aquaculture, Hong Kong

by Thomas Gomersall

WWF’s new Bankable Nature Solutions (BNS) initiative mobilises private sector investment into sustainable development projects that not only build more climate-resilient ecosystems for people, nature and economies, but are also financially viable enough to be scaled up and replicated.

One BNS programme underway is the Mekong Delta Integrated Rice and Aquaculture Bankable Project; a collaboration between WWF-Hong Kong and WWF-Viet Nam, WWF-Netherlands and the Dutch Fund for Climate and Development (DFCD).

Background:

Home to over 450 fish species and 17 million people, the Mekong Delta in southern Viet Nam is one of the world’s most biodiverse and productive ecosystems. It produces half of Viet Nam’s rice, accounting for 90 per cent of its rice exports and 25 per cent of its GDP. However, it is extremely vulnerable to climate change-induced droughts that lead to freshwater scarcities and severe land subsidence, causing saltwater intrusion — sometimes up to 130 km inland — that renders soil infertile and poisons crops.

Photo credit: Karine Aigner WWF US

Current agricultural practices also threaten food security and the environment. Decades of government-mandated intensive rice monoculture, which relies heavily on fresh water and artificial pesticides and fertilisers, have made it increasingly difficult to grow sufficient rice, particularly in areas affected by saltwater intrusion. Rising pressure to grow rice year-round has led to excessive groundwater extraction, worsening subsidence and further threatening freshwater supplies.

Photo credit: WWF Greg Funnell

Mangroves degraded from prawn farming. Photo credit: Adam Oswell WWF

For farmers facing saltwater intrusion, one alternative is to switch to aquaculture. Unfortunately, modern intensive aquaculture can lead to the destruction of mangrove forests to make way for farms that are typically based on dense fish and shrimp populations vulnerable to deadly disease outbreaks. Despite strong use of antibiotics, many aquaculture farms are only viable for a few years.

Project:

To create a climate-resilient landscape (in line with the Vietnamese government’s climate plan), from December 2020, the Mekong Delta Rice Project will begin a pilot study in Ca Mau province to convert 20 to 50 hectares of rice paddies into mixed rice-shrimp aquaculture ponds. This will allow for the production of rice and freshwater shrimps during the rainy season and for raising brackish-water shrimps during the dry season and periods of saltwater intrusion, with techniques adapted according to changes in local conditions. Rice and shrimp will be responsibly produced under internationally recognised standards, allowing the latter to receive certification from the Aquaculture Stewardship Council (ASC) that will increase its commercial viability.

Marcel Dupuis WWF-Netherlands

Environmental Benefits:

This project will adopt a ‘build with nature’ approach to address the root causes of systemic pressures on the landscape and improve its climate-resilience. According to Marcel Dupuis, WWF-Netherlands’ Senior Advisor for the DFCD, “there will be long-term benefits in food, water and climate, which will maximise the impact of the project’s potential.”

Photo credit: Jürgen Freund WWF

Limiting rice-growing to the rainy season will reduce the need to extract groundwater, which will contribute to restoring freshwater that’s vital during droughts. No pesticides, chemical fertilisers or antibiotics will be used. Instead, waste from naturally occurring shrimp species and sediments brought in by floodwaters will be used as fertilisers. The latter will also compensate locally for land subsidence. Using pre-existing rice paddies as shrimp ponds will remove the need to destroy mangrove forests and allow their regrowth, providing better protection from storms and more habitat for young fish and shrimp.

If successful, this project can be replicated beyond Ca Mau province to boost the wider and long-term climate-resilience of the whole landscape. “This has the potential, without doubt, to be the best scalable project in Asia,” says Stuart Beavis, WWF-Hong Kong’s Asia Regional Lead for the DFCD.

Bankability:

Thanks to growing international demand for sustainable shrimp, the project is expected to more than double its revenue and raise individual farmer income by 3.5 times, particularly after it receives ASC certification. Increased viability, sustainability and scalability have already boosted interest from private investors, with a major regional seafood supplier keen to sponsor it.

To ensure farmers benefit from this increased income, the project will have a shorter supply chain compared to conventional shrimp enterprises so that less money goes to middlemen and more goes to farmers. It will also work with local co-operatives to strengthen farmers’ unions to give them greater negotiating power in the project, as well as provide better education and technical assistance for implementing it.

Going forward:

Despite its potential, significant challenges to this project’s execution remain. Local farmers may be reluctant to take part due to unfamiliar techniques, technology and activities employed. The business and financial viability of the project as well as its ecological impacts will also need to be proven before scale-up.

To address these challenges, WWF will use its pilot study to measure the crop yields, income benefits and impacts on resilience and biodiversity of integrated agriculture versus those of conventional intensive rice farming and aquaculture. It has also assembled a team of academics and experts to analyse the quality of flood sediments and whether the micro-organisms living in them (which in turn influence productivity) are more diverse under an integrated agricultural model.

To incentivise farmer participation, WWF is seeking private sector Vietnamese banks to fund and provide loans with competitive interest rates to cover the costs of equipment and rice paddy conversion. Capital from a private sector bank will also help to raise the project’s scalability because in addition to predictable revenue, scalability and replicability are key to attracting private-sector capital. This will also allow WWF to apply its techniques elsewhere in the Mekong Delta and in other Asian river deltas like the Irrawaddy in Myanmar.