Project Report:
Negotiating a National-Scale Agreement for Palau
OneReef ranger on a patrol shift in Palau
OneReef ranger on a patrol shift in Palau

Purpose
- Investigates the causes of economic imbalances.
- Explores and develops market-based solutions.

Summary

OneReef is creating a portfolio of marine conservation agreements across Micronesia that provide services and co-financing needed by local stewards. As a next step toward scaling our model under an efficient finance plan, we will negotiate a national-scale agreement with the Republic of Palau. The agreement will allow us to consolidate our work under the Office of the President, and explicitly align our funding with public funds generated through tourism user fees. Politically, the agreement will allow us to institute greater financial leverage through explicit arrangements not only with local communities, but also with Palau's national government. In effect, it allows us to better utilize support from President Remengesau to raise private funds and capitalize working capital funds that can be used to create financial incentives for greater and more secure investment of public resources to maintain Palau's unique environment.

Description

The National-Scale Agreement for Palau is significant because it builds on a series of long-term grants by the Walker Foundation. Originally partnering with the Nature Conservancy, the Foundation supported the development of ecotourism user-fees, later named green fees. Palau previously depended on income from foreign fishing contracts, but overfishing was depleting Palau's waters. The green fees funded improvements to resource management. Using willingness-to-pay surveys, the green fees were gradually increased as the tourism experience improved. As income from green fees increased, Palau reduced the sale of fishing contracts and the country's reefs and fisheries rebounded, creating a virtuous cycle of environmental improvement. Based on it's success, Palau issued the Micronesian Challenge, encouraging other island nations to follow it's example and sustainably manage their resources. One Reef is working to generate matching funds. The National-scale funding agreement will enable Palau to protect remote reefs that are too distant to generate ecotourism income sufficient to protect against illegal fishing by foreign fleets.

Progress funded by grant:

In 2018, we discovered significant interest in a National-scale umbrella agreement with the Republic of Palau, underpinned by a Public-Private Partnership - but only if there is a credible private revenue stream. A private stream would effectively match the public stream of funding provided through Palau’s tourism user fee system.

The existing public stream finances formation and base operating expenses for many of Palau’s community-based coral reef management efforts. However, additional resources are needed to fully capitalize projects, and enable them to operate with all the resources, leadership, technology, and training needed to achieve effective coral reef management.

In response, OneReef worked in late 2018 and early 2019 with collaborators at the University of Chicago’s Booth Business School, and Fuller & Thaler Asset Managers ($9 billion under management) to explore options for building a private revenue stream.

We are now in process of developing a concept for a highly leveraged ecosystem investment mechanism - an international collaboration tool, to finance partnerships with communities who protect treasured coral reefs. We have laid plans to employ this model at three companies, as a demonstration, then explore means of designing financial instruments that incorporate philanthropic giving. If successful, the model will confer the powerful financial leverage necessary to create significant private revenue streams.

Purpose

Coral reefs are among the biologically richest ecosystems on the planet; moreover, they are instrumental in attracting more than 125,000 tourists to Palau annually.

Yet, none of the economic proceeds from the tourism sector in Palau are re-invested in management of coral reef ecosystems to ensure their capacity to continue attracting (and feeding) tourists, and provide economic benefits to the people of Palau.

Palau has started to correct this imbalance by instituting a tourism user fee that by law must be re-invested in ways that support environmental management. However, communities who manage reefs still need greater access to technical support, and greater financial predictability and security.

This is an important step toward building on this success by attracting and combining additional private funds under a master agreement that can be expanded over time to incorporate more communities and the growing global community who value healthy reefs.

Scope

We continue to take our site-based work to a national scale in Palau - the proposed work is the next phase in that process. President Remengesau has told us that Palau needs to grow its international partnership - which he identifies as the key to successful implementation of Palau's ambitious ocean policies. Palau is a nation of 23,000 citizens, a spatial area nearly the size of California, situated in proximity to China and other populous nations, many of whom have large fleets of commercial fishing vessels.

It is no surprise that Palau needs to combine their resources with international partners who share their vision for sustainable fisheries, and a low-volume, high-value tourism sector that delivers strong economic growth without liquidating environmental assets like coral reefs that fuel it.

Our national-level agreement will create a model mechanism that will allow Palau's growing set of partners to directly and efficiently invest toward these shared goals.

Amount Approved
$20,000.00 on 8/1/2018 (Check sent: 8/27/2018)




Reef Photographer
A Pacific Islander using novel 3D coral reef imagining and monitoring technology during the first OneReef/Scripps Oceanography training course.

Pacific Islanders gathering crucial data on reef health.

Traditional clothing worn by dancers in our Partner Community of Yap Island.
Traditional clothing worn by dancers in our Partner Community of Yap Island.

 
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