Learning Question 1

Are enabling conditions in place to support a sustainable enterprise?

At any given site, a series of enabling conditions influences the likelihood that supporting a conservation enterprise will result in the desired outcomes for participants and biodiversity.   Enabling conditions are context-specific – what may be important in one context may not be in another.¹⁷ The conditions identified overlap and interact with each other, strengths in some areas may compensate for weaknesses in others, and no one condition is sufficient to enable conservation enterprise outcomes by itself.

The following section describes two broad sets of enabling conditions – one set focused on business aspects of the enterprise and a second set on broader strategic approaches – that project design teams should consider in developing a conservation enterprise approach.

Note: Superscript numbers indicate references at the bottom of each page, where links to many of these documents can be found. We are still in the process of uploading references to the documents page. Please contact us if you’d like a copy of a reference that hasn't yet been posted.

Note: Italicized text denotes findings discussed during events such as webinars and conferences.

Contents

Enabling Conditions and Lessons Focused on Enterprise Establishment and Sustainability

• Stakeholder Alignment
• Diversification
• Market demand for services and products
• Profit potential
• Access to financing
• Ownership
• Governance
• Government requirements
• Policies for enterprises
• Business alliances
• Business management capacity
• Technical capacity
• Inputs
• Equipment
• Infrastructure

Enabling Conditions that Ensure other Outcomes Along the Theory of Change

• Constituency- and awareness-building
• Benefit distribution
• Targeted participants
• Combined Strategic Approaches
• Biodiversity linkage
• Policies for and enforcement of resource use
• Planning for external disturbance

Documents Referenced

Enabling Conditions and Lessons Focused on Enterprise Establishment and Sustainability

Stakeholder Alignment

• Community agreements have helped ensure conservation outcomes.¹⁸

Diversification

• Enterprises can be affected by sudden changes like natural disasters or political unrest.^6,12,13 Diversifying livelihoods may increase community resiliency to stresses and shocks, ^2,6,14,15 and reduce vulnerability from the failure of a single enterprise.^13,14,15Additionally, it may be helpful to create opportunities that provide participants with both short- and long-term benefits.¹⁵

• Livelihoods that depend on ecosystem functions may be vulnerable to climate change. It is important to consider climate-related stresses and other threats on resources that determine the enterprise’s success over the longer term.¹⁴

Market demand for services and products

• The lack of a strong market,¹⁶ no market analysis, and superficial supply-driven approaches to creating markets are common mistakes in project design.²

• Key factors that influenced the conservation enterprise’s ability to generate income are a sound feasibility analysis that considers participants’ current livelihoods and skills; sustainable resource use relative to overall biodiversity conservation; access to markets; thorough market research (including international, national, and local trends); and an established but not-too-competitive market.^{3,9,11,12,13,14,15}
• In Mexico, a key issue with a butterfly handicraft project was failure to identify any market for the handicraft products. Participants become upset that they didn’t receive promised benefits which led to negative attitudes towards conservation and suspicion toward foreign conservation efforts.¹⁹

Profit potential

• The Biodiversity Conservation Network Project found that there was no single type of enterprise that would automatically be profitable.¹³

• Some USAID-supported enterprises struggled to meet their financial sustainability objectives within the short-term funding period provided by USAID and other donors.^4,5,12,15

• Transaction costs and opportunity costs, which are sometimes overlooked, need to be analyzed to understand the viability of the enterprise and incentives for participation.^2,9

• If an enterprise continues to receive funding (i.e., an ongoing subsidy) from an external donor, it is important that income from the enterprise cover variable and fixed costs, at a minimum. If ongoing funding is not planned, project design teams should consider the time needed for the enterprise to reach profitability, to ensure sustainability before subsidies end.^9,13

• Even if the enterprise is partially subsidized over the long-term, the strategy may still be a net gain for donors and partners if the investment in the enterprise is more cost effective than the best alternative conservation strategy. ^5,13
• The price of chilis in a Uganda enterprise is expected to rise as yields increase due to an increase of buyers in the market.²⁰

Access to financing

• The enterprises’ ability to access and manage credit is often a prerequisite for generating income and achieving financial sustainability.^5,11,14 For example, increasing women’s access to credit and capital may be important for improving enabling conditions for an enterprise.¹⁴

Ownership

Governance

• No single enterprise-ownership structure (e.g., individual versus joint ownership) seems best in all situations; instead, it is important to find the ownership structure that incentivizes participants to stay engaged in the enterprise.¹³ Additionally, strong and balanced enterprise leadership can support enterprise sustainability.¹³

• Local participant ownership and management of the enterprise can contribute to conservation outcomes,^7,13and to enterprise success, given that locals are familiar with the concerns and priorities of communities.^6,14,15

• Women and disadvantaged groups should be included in planning, decision-making, and implementation of the enterprise.¹⁴

• Many enterprises create decision-making protocols and hold regular meetings.^5,6,14 It is important that conservation enterprise development and ongoing refinement is managed by the operators, community, and government of the site.^6,14
• Enterprise success can be detrimental if it is not managed.¹⁸

Government requirements

• Complying with (often complex) government health, safety, export, land tenure, land use, and benefit sharing regulations is a necessity^4,6,9,14,16 and poses a challenge for enterprises.^2,5

• Helping enterprises understand and meet compliance requirements is important for private sector enterprises in government protected areas and for exporting goods such as timber or agricultural products.⁵

• Working to modify legal and regulatory frameworks, such as those that limit women’s role in planning and economic development,¹⁴may help enterprises succeed.^4,6,10,14,15

Policies for enterprises

Business alliances

• A key factor in an enterprise’s ability to generate income is identifying private businesses that are willing to form equitable partnerships with local enterprises. Business partners can provide critical expertise, experience, investments, and a secure market for goods and services.^{2,3,5,6,9,10,11,13,14,15}

• NGOs can help form business alliances, reduce the barriers to markets and profits, and assure equitable partnerships.^2,5,6,10

Business management capacity

• Financial management and marketing skills are key to enterprise success.^{3,4,5,6,7,13,14}
• In Uganda, financial training, provided by alliances with the private sector, was key for the operation to carry on successfully.²⁰

Enabling Conditions that Ensure other Outcomes Along the Theory of Change

This section summarizes key findings for the category of enabling conditions that support the achievement of outcomes along the theory of change towards biodiversity conservation, beyond the establishment and sustainability of the enterprise itself.

Constituency- and awareness-building

• Supporting community enterprises may lead to biodiversity conservation by giving environment project staff an entry point into the community and improving community interest in managing natural resources.^7,10,13,14 In some situations, raising awareness and building community engagement in  conservation may be as effective as community enterprises in meeting conservation objectives.¹³

Benefit distribution

• In cases where special interests support a particular group or enterprise for political reasons the process for avoiding “elite capture” can be delicate and difficult.^2,14,15

• Arrangements to avoid “free-riders” in community-based enterprises may be needed to avoid situations where some are not benefiting appropriately,^13,14 such as directing benefits to individuals who do the work the enterprise requires,^7,13 rather than community-wide.

• Resentment may result if many people are expected to change threat-inducing behavior, but only a few community members directly involved in the enterprise benefit.⁸

• It may be helpful to distribute benefits only to resource-use decision-makers – those most directly causing internal threats or who have the ability to stop external threats to biodiversity.¹³
• People talk about “communities” benefitting, but often it is just a small percent of the community members who actually benefit.¹⁸

• In Uganda, some community groups are carefully tracking who does the work and have developed benefit-sharing systems, but other groups have not. One idea is to have an exchange visit among the groups so those that are more organized can show the others their systems.²⁰

Targeted participants

• Many projects are not targeting the right stakeholders (e.g., not everyone in the community is hunting bush meat. The wrong people are engaged in the “new conservation enterprises” and poaching continues.).¹⁸

Combined Strategic Approaches

• A conservation enterprise approach is generally one strategic approach within a larger activity aimed at threat reduction and biodiversity conservation outcomes. Strategies support each other (e.g., law enforcement, awareness building).¹⁸

Biodiversity linkage

Policies for and enforcement of resource use

• Many enterprise projects support transitions from uncontrolled, open-access resource use to forms of limited entry and user rights.^6,14 When enterprises depend on in-situ resources, they may need the capacity and rights to counter threats to the resources.^7,10,13

• Clarity on ownership and access rights for enterprise-dependent resources and ecosystem services is crucial for effective management at the local level.^2,6,7,10,14

• The economic value of tenure security can provide a strong incentive for participation^2,5 and for conservation.¹⁰ In contrast, annual contracts or short-term leases may not provide sufficient security and incentive for participants to participate in enterprises.^2,5

• In some situations, the full legal control by participants of resource use may not be necessary; even limited resource rights can be sufficient to reduce some types of threats.¹³

• In cases where participant management of resources increases the resources’ value over time, issues of rights and claims may re-emerge, and external threats may increase.^2,7,13

• Some enterprise projects help participants move from reliance on government enforcement of conservation rules to community co- or self-management of resources.^7,14

• Community enforcement against both internal and external threats can help achieve enterprise success and conservation outcomes;^6,9,10,13,15 lack of enforcement capacity and regulations can be a barrier.⁶

Planning for external disturbance

• Too much rain, drought, and pests have all been issues with chili growing; leading to reduced yields in the first year of production for some communities. Business partners have assisted the growers with adjusting to these disturbances using organic methods.²⁰