Bankable Nature Solutions: A Case Study

By Thomas Gomersall, Jean-Marc Champagne 20 January, 2021

WWF's Gomersall & Champagne share how the integrated rice & shrimp model helps farmers & the environment

The article was first published by WWF HK in Medium in Sep 2020. Click here to view.

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).

BNS initiative mobilises private sector investment into sustainable development projects…

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.

Mekong Delta accounts for half of the Viet Nam’s rice production…

…yet, it is extremely vulnerable to climate change-induced droughts…

…agri practices also threatens freshwater supplies

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.

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.

The ponds produces rice & freshwater shrimps in rainy seasons & raises brackish-water shrimps in dry seasons…

…creating a climate-resilient landscape

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.”

The project will contribute to restoring freshwater that’s vital during drought…

…plus compensate locally for subsidence

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.

“This has the potential to be the best scalable project in Asia”

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.

The project is expected to raise individual farmer income by 3.5x…

…& a shorter supply chain can ensure less $ goes to middlemen

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.

WWF is seeking private sector Vietnamese banks to fund & provide loans with competitive interest rates

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.

Further Reading

• Water-Energy-Food Security Nexus In Asia’s Large River Basins – The water-energy-food security nexus is complicated but as Maija Taka, Marko Keskinen & Olli Varis show, the tensions can be alleviated. Plus, they share 3 WEF cases in Asia’s largest river basins
• Feeding Ourselves Thirsty: Is the food sector managing water risks? Who is leading and who is lagging? Jacob London from Ceres expands on their report’s key findings but beware – investors are asking more questions!
• Future Of Farming: Learnings From China: With temperatures in China rising faster than the global average, droughts and floods are set to hit fertile regions hard but South Asia Fast Track’s Sourajit Aiyer thinks they are prepared – other countries take note
• Role Of Businesses In Water Conservation – With the backdrop of Singapore’s industrial water challenges, Professor Asit Biswas & Dr Cecilia Tortajada show what Unilever & Nestle are doing on water management but also the behavioural challenges they face
• Shrinking Plastics – Implications Of Tighter Regulations On The World Industry – Plastics are on the way out as governments put stricter laws in place. How should investors respond? WWF HK’s Rawle, Champagne & Hilton share from their latest report

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