Murray-Darling Basin Balanced Water Fund

The Murray-Darling Basin (MBD) is one of the world’s largest and most productive river basins, accounting for AUD$19 billion dollars, or more than USD$14 billion dollars, of agriculture production and providing one-third of Australia’s food supply. The basin covers a huge area, over 1 million square kilometers (386,102 square miles) spanning five states and territories. It also plays an important role in supporting biodiversity for a vast array of plants and animals and ecosystems including many threatened species.

Today, over 80 percent of the Basin’s wetland ecosystems are in poor health due to extensive water diversions through a canal and dam system that captures any excess runoff, over allocation of water entitlements and the drying effects of climate change.

Balancing competing needs

As part of a broader effort to protect the Basin’s water supplies and those that depend on it, NatureVest, launched the Murray-Darling Basin Balanced Water Fund, the first impact investment-driven solution to use water markets to balance the water needs of farmers, communities and nature. The AUD$27 million, or approximately USD$20 million, Fund provides a unique opportunity to invest in permanent water rights that will provide water security for agriculture and restore critical wetlands, while delivering financial returns to investors.

In addition to NatureVest, others involved in the creation of the Fund include the Conservancy’s Water program, its Australian division and the Conservancy’s local collaborators: the Murray Darling Wetlands Working Group and Kilter Rural, an Australian based asset management firm. The Fund will work proactively with farmers to acquire and hold a portfolio of permanent water rights. It will then sell or lease the majority of the annual temporary water allocations back into the agricultural community, while donating the remainder of the allocations to the environment each year. The Fund is structured in such a way that the majority of the environmental donations will occur in years of high rainfall when farmers need the water least.

The Fund’s environmental watering program will target wetlands rich in conservation value located on private lands that are not currently targeted by the Australian Commonwealth’s existing environmental watering plan. The Fund’s long-term conservation goals include improving waterfowl, fish and amphibian breeding and migration, as well as restoring the health of native plants. Additionally, the Fund will look to restore important Aboriginal cultural and spiritual lands, many of which include wetland areas.

Innovation for Impact

The Fund demonstrates how an impact investment-driven solution can generate environmental and social benefits at a far greater scale than what could be achieved under a traditional philanthropy-funded model. The Fund will seek to raise additional investor capital, with a goal of scaling the Fund to AUD$100 million, or approximately USD$76 million by 2020. The Fund also offers an attractive opportunity for investors to align their portfolios with their values—they can earn financial returns while generating important social and environmental outcomes.

NatureVest plans to replicate the success of this Fund in other areas of the world and is now in the process of scoping various river basins across the western United States and Latin America, where a similar model of water reallocation through investor-funded solutions can be applicable.

Murray-Darling Basin Balanced Water Fund In the News

Investment Opportunity Helps Balance Water Needs in Australia
The Nature Conservancy, Press Release

 

Wetland Revival: Using impact investment to restore nature
National Geographic

 

Climate Change is Investment Deal of the Century
Reuters

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