The Solution

To ensure that Bhutan remains economically and environmentally sustainable during these changing times, WWF and the Government of Bhutan committed to create an innovative funding approach called “Bhutan For Life” . Funding generated through this initiative will be used to maintain and manage the country’s protected area system for all time.

Bhutan For Life is “ Project finance For Permanence (PFP)” mechanism to provide sustained flow of fund to effectively manage Bhutan’s protected areas and biological corridors. BFL will aim to mobilize, in a single agreement, all governmental, financial and other commitments, needed to develop Bhutan’s protected area system and maintain it forever.

Bhutan for Life – An innovative solution

Transition Fund_bfl (1)

Estimates of Funding to Fill Financial Gap for 14 years (USD, millions)

Key Components of Bhutan for Life-Asia's First Project Finance for Permanence (PFP)

  • Project Finance for permanence is a means of designing and launching protection at the landscape scale relying on rigorous project selection and management.
  • It is based on Wall street model of project finance for organizing and financing complex, expensive and well-defined projects. The aim of PFP is to help establish the conditions required to secure the ecological, financial, organizational, political and social sustainability.
  • The PFP approach begins with the development of – and agreement on – a conservation plan that has a set of targeted goals and milestones, as well as rigorous financial plan to achieve them.
  • Next, a “ multi-party, single closing” approach is employed that ensures the security of the investment. Here, a group of donors commit commit funds towards BFL but all funds are held and not distributed until 1) The total fundraising commitment goals been reached; and 2) all key legal and financial conditions that have been agreed upon in advance are met. This serves o leverage funding, by providing funders with an up- front guarantee that their support will be put to best use.
  • The when all the conditions are met, these donated funds will be placed in a transition fund that will make annual payments, starting high and declining to zero over a project period of 14 years. At the same time, the government of Bhutan will increase its funding by approximately 5-7 percent annually over this 14 year term. After that, Bhutan is fully responsible for funding its protected areas on its own.
  • The potential sources for the internal funding have been identified as 1) green tax levied on the import of vehicles 2) payment for ecosystem services for hydropower 3) revenue for eco-tourism in the protected areas.

What is PFP?

Step 1

A PFP initiative begins with the development of ambitious and charismatic conservation goals, followed by the development of a comprehensive plan to achieve the goals. For PFPs related to protected areas the plan may include creating new protected areas to fill gaps in the system, buying vehicles for forest patrol, blazing hiking trails and teaching communities how to create  eco-enterprises  in or near protected areas.

Step 2

 A rigorous financial plan for funding the conservation plan is created, so as to ensure its lasting success.

Step 3

Donors commit funds to bring the plan to life. But their funds are held back until the total fundraising goal is reached and all key legal and financial conditions that have been agreed upon in advance are met. This provide donors with an up-front guarantee that their support will be put to best use.

Step 4

Everyone involved comes together to sign one agreement. At this closing their donations are put into a fund, the governance of which is defined by them.

Step 5

 Money within the fund is distributed over a set period of time and in accordance with the agreed financial plan.

Step 6

The government is the country where the conservation areas are located and increases its spending until it fully assumes the costs of conservation. Although funding is key, the negotiation and closing pf a PFP deal presents an extraordinary opportunity to create new policies for long-term conservation and the institution needed to permanently protect natural resources.

Bhutan for Life will ensure that Bhutan achieve a range of national goals and global commitments, such as:

  • Help Bhutan achieve the Aichi targets, and the UN Sustainable Development Goals
  • Help Bhutan achieve its national biodiversity targets and its Intended nationally Determined Contributions (INDC)
  • Help maintain the Bhutan constitutional requirement of 60 percent forest cover in perpetuity
  • Contribute to Bhutan’s Gross National Happiness philosophy by conserving and sustainably managing Bhutan’s environment
  • Demonstrate Bhutan’s global leadership in balancing conservation with economic development
  • Leverage significant amounts of new funding for conservation and development
  • Safeguard the protected area network’s role as a purveyor of ecosystem goods and services. Intact forests in parks sustain the supply of clean water for drinking, hydropower, agriculture and regional downstream benefits
  • Have Bhutan be a model for the Asian region as BFL will be the first Project Finance for Permanence project in the whole Asia