Environmental, Natural Resources, & Energy Law Blog

Incorporating Indigenous Law into Conservation Trust Fund Frameworks in Bolivia

Debra Sohm

23 April 2023

 

Introduction

The World Economic Forum states that greater than 50% of global GDP relies on nature[1] and its services and since 1970, land-use changes have had the “largest relative negative impact on nature.”[2] This world-wide loss of habitats and biodiversity will have significant economic consequences which is why designating new protected areas is critically important. Sufficient funding for managing and monitoring these protected lands and waters is necessary to avoid the creation of “paper parks”[3] where the park is legally designated but there are little to no staff dedicated to protecting it from harmful activities like mining, logging, or farming. A consistent funding source is required to pay for staffing, equipment, and research. Reliable funding streams, such as those provided by trust funds, are prerequisites to implementing robust management measures in protected areas.

 

A Conservation Trust Fund (CTF) is an important financial tool that ensures long-term financing is available for conservation in and around protected areas because it enables private money to leverage public funding. For a CTF to be diverse, equitable, and inclusive, the governance structure and financial management system must incorporate local Indigenous law and include the participation of Indigenous leaders living in or near the protected area the CTF supports. Co-designing and co-implementing the CTF in partnership with Indigenous leaders can result in more durable outcomes. At the outset, local Indigenous leaders should co-determine the overall objectives, legal and governance structure; financial management system; and monitoring and evaluation metrics for CTFs. This is particularly important if the protected area receiving funds is within or adjacent to Indigenous Peoples’ traditional territory, such as the Charagua area of Bolivia.

 

Background

CTFs originated in the early 1990s[4] as a financial mechanism to combine private capital and public funds to pay for management of protected areas, and World Wildlife Fund[5] was an early adopter of this tool. Private capital can come from foundations, individual donors, and non-governmental organizations. Public sources of funds include development banks,[6] the Global Environment Facility,[7] and the home-country’s treasury. As countries create new protected areas, the demand for financial resources to protect these areas increases. Funding gaps arise when the country does not have enough income, so CTFs are gaining traction as a mechanism to fill the gap.

 

There are two main types of CTFs, a sinking fund and an endowment. A sinking fund draws down private capital over a given timeframe until the balance is zero.[8] In certain cases, in-country public sector dollars replace private capital to pay recurring conservation costs.[9] An endowment has a set amount of money at the outset and a percentage of the earnings are spent annually. An endowment can take longer to establish than a sinking fund, but the base funding (the principal) remains intact over time.

 

Regardless of whether a CTF uses a sinking fund or endowment model, it is best practice to have a governance structure and financial management system that guides the programmatic use of funds and long-term fiscal management strategy.[10] Establishing a new legally independent CTF requires an understanding of that country’s legal system, i.e., whether it is common law or civil law. Additionally, relevant Indigenous law should influence the drafting of the governing documents and operating manual. The operating manual provides financial management instructions, including an overview of the financial model, disbursement rules, implementation guidelines, and other international standards that may be required to receive money from bilateral or multilateral institutions.[11]

 

Indigenous management is another vital component for specific CTFs. The Coast Funds serve as a great example of an Indigenous-led and managed CTF that directly benefits 27 First Nations[12] on the west coast of Canada. The Coast Funds, used for conservation of the Great Bear Rainforest and Haida Gwaii, share a board of directors consisting of members from Indigenous Nations, the provincial government, and foundations. Additionally each First Nation’s chief and council review and approve relevant project funding proposals.[13] The Coast Funds consist of two types of funds, a Coast Conservation Endowment Fund (CCEF) and a Coast Economic Development Fund (CEDF). Managed collectively, they began in 2007 with CA$118 million in contributions from private donors, the Province of British Columbia, and the Government of Canada.[14] This amount has been leveraged, and by 2023, a total of CA$404 million[15] is being invested in projects. This amount will continue to grow over time through additional investments and earnings.

 

The Coast Funds model is innovative and could be an applicable financing solution for conservation and sustainable development in and around Indigenous protected areas in southern Bolivia. In 2009 Bolivia declared itself a “plurinational” state and released a new Constitution awarding rights to Indigenous Peoples. This led to the Indigenous Guaraní majority in the Charagua region establishing the first Indigenous autonomous self-government, Charagua lyambae, in 2015.[16] This groundbreaking legal framework incorporates Indigenous norms and practices[17] by creating a decentralized government with six main zones holding power. These zones send representatives to the Ñemboati Guasu, the highest decision making body of the Charagua lyambae. While the Charagua lyambae is a self-government, it is financially dependent upon the state and funding principally comes from Bolivia’s Direct Hydrocarbons Tax, general treasury, and resource extraction royalties[18] (e.g., mining companies that pay mining royalties[19]). Three-quarters of this revenue is dispersed to the six zones, so there is insufficient funding for managing the protected areas. A Charagua CTF could be a solution to fixing the funding gap.

 

Analysis

CTFs are exceptional conservation tools, but issues may arise as they gain in popularity. If a country adds a CTF each time it declares a new protected area, then the expectation for that country to increase its spending on conservation conversely grows. If earnings from resource extraction form the basis of a country’s revenue stream, then at what point do we reach diminishing returns for conservation work, especially if resource extraction is occurring in legally protected areas? It is delicate balancing resource extraction and the need for revenue while ensuring protected areas are effectively managed. As an example, natural gas and fossil fuel subsidies in Bolivia significantly contribute to deforestation. The artificially low fuel prices facilitate expansion of mining and agricultural operations in forested areas which negatively alter ecosystems and biodiversity.[20] Importantly, domestic funds spent on subsidies mean there is less money available for investing in conservation.[21] If CTFs are to be an effective conservation tool, Bolivia needs substitutions for its harmful subsidies.

 

Furthermore, Bolivia needs to fix its property rights and land use issues. Deforestation is a significant issue in the country because the government offers incentives to clear land. Settlers who move onto a piece of land and clear it are able to claim the property right, even in protected areas.[22] To address this issue, property law revisions and legal enforcement will be necessary because even the U.S. Department of State asserts that “squatting is a problem” in Bolivia.[23]

 

Another concern is the Bolivian government’s delay in officially recognizing Indigenous protected areas. As the Charagua lyambae adds to their system of protected areas, the Bolivian government should have a short timeline for officially recognizing these places and ought to deny new settlements in these areas. For instance, the Charagua lyambae established the Ñembi Guasu Area of Conservation and Ecological Importance in 2014, but the Bolivian government took five years to officially recognize it. [24] Even after acknowledging it as protected, the Bolivian government proceeded to authorize over 80 new settlements within the newly protected area over a three year period thus leading to additional habitat loss. [25] To be effective, Indigenous protected areas will need immediate recognition from the Bolivian government and new regulations prohibiting any type of land alterations in protected areas with enforcement policies and penalties for violators.

 

The purpose of a CTF is to enable active conservation of protected areas, so an integrated approach to conservation is necessary. Negative external influences that work against the purpose of CTFs, such as subsidies and land use policies, need correcting in order to maximize the CTF’s overall efficacy. Additionally, the CTF requires a strong governing structure to be effective.

 

Co-defining the CTF governance structure with Local Indigenous Leaders

Local Indigenous leaders ought to play a central role in defining the CTF governing body and bylaws when the CTF’s purpose is to fund conservation and management in and around Indigenous protected areas. Specifically, an Indigenous-led program committee must make decisions regarding which projects receive funding. Co-defining governance and operating procedures will create more durable outcomes because the decision-making process will be based upon a holistic legal framework incorporating both civil or common law and local Indigenous law. If there are multiple Indigenous groups whose traditional territory is within or near the protected area(s) then it is important to invite every Indigenous group to meetings and allow them to determine who will represent their interests.

 

For example, the creation of a Charagua CTF could blend Bolivia’s civil law system[26] with the Guaraní legal system, and together the Bolivian government and Guaraní Autonomous Government Charagua lyambae would establish the CTF governance structure. In this process the Charagua lyambae would provide free, prior, and informed consent under the guidelines set forth in the United Nations Declaration on the Rights of Indigenous Peoples.[27] The governing committee members would determine the overall objectives and legal structure of the Charagua CTF, develop the legal founding documents, and prepare the operational documents which also describe procedures for monitoring and evaluating approved projects. A Charagua CTF could use funding from public and private sources to conserve and manage protected areas in Bolivia that are created by the Charagua lyambae. The benefit of a Charagua CTF is it provides long-term structure and economic stability for managing Indigenous protected areas.

 

Co- developing the CTF financial management system

A Charagua CTF could replicate relevant aspects of the Indigenous-led Coast Funds’ financial management system including an endowment supported by private donors[28] and an economic development fund that receives money from public sources. This hybrid financing system will include guidelines for “planning, organizing, controlling, and monitoring the financial resources of the CTF, and the transactions related to the CTF’s administration and operations (e.g. accounting, budgeting, grant-making, etc.).”[29] Since the endowment is a permanent trust fund, it could support long-term research, education, an Indigenous on-the-ground monitoring and enforcement program, and conservation management.[30] The development fund could help diversify the local economy and invest in local and sustainable business models, and if appropriate, a revolving loan fund could also foster sustainable development opportunities in the area. A monitoring and evaluation protocol would establish indicators for measuring progress over time, and annual reports will present details on project progress and financial health for each fund of the Charagua CTF.

 

Conclusion

For a CTF to be diverse, equitable, and inclusive, its governance structure and financial management system must incorporate local Indigenous law and include the participation of Indigenous leaders living in or near the protected area the CTF supports. Developing a Charagua CTF that incorporates both the Guaraní legal system and Bolivian civil law will be more resilient as political regimes change. Lastly, while CTFs can provide long-lasting conservation benefits, they do not work in isolation. It is necessary to take a holistic approach to land-use management. There are multiple economic incentives currently working against conservation in Bolivia, including, harmful subsidies and societal and economic pressure to clear forestlands on public lands and in protected areas. Long-term conservation will be most effective and resilient if Bolivian laws and regulations regarding land-use, property rights, and subsidies are also addressed.