A group of investors traded their suits for boots to survey an area in southern Ontario where they listened closely to Indigenous communities and researchers about ways to repair the land.
They were gathered in Ontario’s Carolinian Zone, a highly populated stretch of land between Toronto and Windsor, where the ecosystem has been seriously damaged by high levels of development.
The money-holders were interested in setting up a so-called “conservation impact bond” in partnership with Chippewas of the Thames First Nation, whose members would be paid to repair the habitat. Beneficiaries of the improved lands — which could include local governments or insurance companies — would repay investors and ensure a fair profit.
As a crucial first step, Diane-Laure Arjalies, who leads the Sustainable Finance Lab at Ivey Business School and co-developed this conservation impact bond initiative, insisted that “everyone had to go and visit the lands” and meet face to face with the Indigenous communities.
“When everyone goes there to meet, it also changes the power relationship,” Arjalies said.
Other academic funders had deemed Arjalies’ work on adapting conservation impact bonds for use in Canada too experimental. But Smart Prosperity Institute, a research network and policy think tank at the University of Ottawa, was intrigued and awarded her $60,000 for her research on conservation finance tools.
“Currently, there isn't necessarily a financial incentive to conserve or restore certain natural spaces, even though we know that these benefits exist,” said Paige Olmsted, conservation finance specialist at the Smart Prosperity Institute and Nature Investment Hub. “All of the benefits that nature derives — when we think about mitigating carbon, purifying water, improving air quality — those are all benefits that have actual economic value and economic impact.”
Arjalies supported an innovative five-year pilot project to create the Deshkan Ziibi conservation impact bond, named for the river that runs through the region. The project integrates Indigenous stewardship principles with conservation finance to restore habitats and foster reconciliation within the nation’s territory.
"So it really came out of a collaboration between a lot of groups on the land and First Nations who were looking at traditional territories, realizing we don’t have enough habitat for healthy landscapes. How do we increase that on a settled but private landscape?" said Michelle Kanter, executive director of Carolinian Canada, a network focused on environmental conservation in the Carolinian Zone, which facilitated the project.
The original goal was to improve 60 hectares of land, but the project surpassed expectations, restoring 169 hectares of habitat last year. At the same time, it delivered a five per cent return on the investors’ $130,000 investment.
Conservation Funding Model
The region in the Carolinian Zone is a little smaller than Vancouver Island, yet it’s home to a quarter of Canada's population. Since colonization, the forest cover has been reduced from 80 per cent to 11.3 per cent, mostly through farming. Wetlands, which once covered more than a quarter of the area, now make up only five per cent.
The loss of wetlands has reduced the land’s ability to absorb water. Last year, southern Ontario experienced devastating flooding that resulted in significant financial losses. The impact of these floods was so severe that damage to insured assets alone reached nearly $950 million.
Restored and protected natural areas, like wetlands and forests, can help absorb excess water and prevent floods, which could save millions in damages.
"This is a clear financial need for keeping nature in place and caring for it, so it can mitigate things like floods and extreme weather that we're increasingly facing," said Jo Reynolds, impact investment manager at Carolinian Canada.
The Deshkan Ziibi conservation bond worked in four steps to help restore habitats and support biodiversity. First, an Ontario-based investment network, Verge Capital, provided $300,000 to start the project. The money was used by groups, like Thames Talbot Land Trust and Deshkan Ziibing, to plant native plants, restore wetlands, and improve the land.
They planted over 39,000 native plants, and about 450 people have joined in learning and activities on the land.
Two-eyed seeing
3M Canada, a tech company, agreed to repay the investment if the project achieved its goals. The bond project provided a return for investors, but Arjalies cautions against measuring success by dollars and cents alone.
“You cannot just focus on the numbers. You cannot focus just on the transactional part … you have to understand the people, you have to understand what’s happening with the land,” said Arjalies. “It’s all about land.”
Arjalies and the Carolinian Canada team adopted what’s called "two-eyed seeing," a way of integrating Indigenous and Western perspectives, particularly in land management and conservation. This concept was developed by a Mi’kmaq Elder, Albert Marshall, in 2004, and has become a key principle in designing conservation impact bonds. Decisions about the use of funds, governance, and impact measurement involve both Indigenous and Western knowledge systems.
“One of the key recruitment criteria for the project was that you have to commit to relationships, and you have to commit to go to the land," said Arjalies.
The meetings for the pilot project were held on reserve land, a practice that remains important and has continued into the newer phases, reflecting their commitment to working with First Nations, Indigenous groups, and their leaders.
"Everything is about relationships," Arjalies added. "Because if you don't experience what it is, it's difficult for you to realize what you're doing."
The Deshkan Ziibi initiative has expanded, with the second phase focused on the Long Point area, one of Canada's 11 priority places for species at risk, and known for its biodiversity and endangered species.
The third phase of the project — a $2-million conservation impact bond that aims to expand across the Carolinian zone — will launch this year. Some of the investors have already been involved in previous phases, while others are new to the project.
"The long-term goal is to create a network of stewards who understand the land’s needs and can lead conservation efforts in their communities," said Kanter.
Sonal Gupta / Local Journalism Initiative / Canada’s National Observer
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