Kilter Rural and The Nature Conservancy have secured grant funding to explore the possibility of launching an impact investment fund for the Great Barrier Reef and northern Australia.
The Great Barrier Reef Foundation, which was established in 1999 to carry out projects that benefit the reef, announced this week the award of A$500,000 ($365,830; €308,774) to the Farmland to Reef Regeneration Fund.
Kilter Rural and TNC, the managers of the fund, will use the seed funding to explore the business case for a future fundraising and deployment of capital.
The grant is one of 22 awarded by the GBRF’s A$10 million Innovation and Systems Change Program, which is funded by the Reef Trust Partnership, a six-year grant of A$443.3 million between the Australian government’s Reef Trust and the GBRF that was announced in 2018.
Should it come to fruition, the Farmland to Reef Regeneration Fund would seek to deliver protection outcomes for the Great Barrier Reef by channeling capital into farmland, water and ecosystem regeneration.
The GBRF said the fund could have an eventual market capitalization of A$1 billion, while Kilter Rural CEO Cullen Gunn told Agri Investor that to deliver the desired environmental and agricultural outcomes, any potential fund would need to be “sizeable.”
“It’s probably north of A$300 million – if you’re looking to reduce sediment and nutrient load in the Great Barrier Reef lagoons, you’ve got to influence a fair bit of landscape somehow. So, you’d need a sizeable fund,” he said.
On what activities the fund could undertake, Gunn said it would depend on the regions in which land was acquired.
“There are massive amounts of water moving through those landscapes, so responses will be different in different places. Revegetation will likely be a huge component of it, delivering environmental and biodiversity [benefits] for waterways and the Great Barrier Reef,” he said.
“The other key component will be deploying best-management practice agriculture, whatever industry you’re participating in. Whether it’s horticulture or sugar cane or something else. There are lots of things you can do with capital that you can’t do without it.”
The fund would also hope to generate supplementary income through secondary revenue streams, Gunn said.
“We’re hoping that new markets will allow us to generate additional returns through conservation outcomes. One option might be carbon sequestration, and another could be receiving payments for reducing the nutrient and sediment loads in waterways, if you can get to a point where you can demonstrate those differences in water quality entering Great Barrier Reef lagoons,” he said.
The Reef Trust Partnership will also provide A$400,000 funding to NQ NRM Alliance for its Transitioning the Reef Credit Scheme. The funding aims to move that scheme, which provides tradable units of pollution reduction that can be sold to a range of buyers, from start-up phase to a fully independent governance structure.
Kilter Rural and TNC joined forces on another impact investment fund in the past, the Murray-Daring Basin Balanced Water Fund, which invests in southern Murray-Darling Basin water entitlements and has approximately A$62 million in assets under management.