Restoring the Monarch Butterfly Habitat through Conservation Finance

Executive Summary

The Monarch butterfly population has plummeted by 80% since 19901 and the majority of efforts to restore the butterfly are philanthropic and regionally focused, proving to be too limited for this at risk species. Efforts to restore the Monarch butterfly urgently need the help of impact investors who care about both solving the problem at its root and scaling the solution to achieve a real difference. Moreover, the staggering shortfall in biodiversity funding worldwide creates an opportunity for environmentally driven investors to protect at-risk creatures like the Monarch. This paper argues that public-private partnerships and innovative financial structures can more dramatically accelerate the conservation of the Monarch.

The leading cause of the Monarch’s disappearance is the loss of critical habitats, such as milkweed in grasslands and agriculture lands and prairies dense with wildflowers, that support their reproduction and migration. This loss is driven mainly by intensive agriculture and residential development, and it will only intensify as the consequences of climate change are realized. Any effort to protect Monarch population must include the restoration of their habitat. The benefits of these efforts extend far beyond solely protecting Monarch populations and biodiversity. They could lead to a yield increase thanks to pollinators and to a decrease in costs because of a concurrent increase in beneficial insects that feed on plant pests.

Most of the restoration efforts to date have been small-scale programs, funded and conducted on a voluntary basis by universities, non-profits, and farming organizations and often supported by the Farm Bills. Impact investors can shift the onus of conservation from the public sector to the private sector through Public-Private Partner Partnerships (PPPs).

To identify the model most conducive to change, several impact investment models were analyzed, experts in Monarch conservation and related fields were consulted, as were experts in conservation finance. Two models emerged with the highest potential for strong conservation and financial returns: a Monarch-friendly certification and a Candidate Conservation Agreement with Assurances (CCAA).

In the United States, Monarch butterflies benefit from a high level of support and awareness. Because of this, a Monarch-friendly certification may create a competitive benefit for businesses that demonstrate efforts to restore the butterflies’ habitat. Investors would provide capital to establish the Monarch Fund, which would develop this new certification protocol. Investors would be able to charge a royalty fee to the companies using the certification, reinforcing the business models that support Monarch restoration

In the second model, companies could limit their future liability and regulatory risk by preemptively agreeing to participate in proactive conservation actions. Businesses would enter into a Candidate Conservation Agreement with Assurances (CCAA) with the U.S. Fish and Wildlife Service. If the butterfly were to be listed under the U.S. Endangered Species Act (ESA), this guarantees that the business can pursue normal activities, while its non-participating competitors are impaired by restrictions. Investors would finance the negotiation and set-up of the CCAA., then the enrollment fees from companies interested in joining the agreement would be used to repay investors.

A comprehensive roadmap for both models carefully outlines the ‘next steps’ for investors interested in driving change by protecting an iconic American species in need.

Christian Hodgson