The Natural Capital Financing Facility (NCFF) is a financial instrument blending EIB funding with European Commission (EC) financing funded by the Programme for the Environment and Climate Action (LIFE programme). The NCFF aims at contributing to meeting the LIFE objectives, in particular for the priority areas “nature and biodiversity” under LIFE Environment and “climate change adaptation” under LIFE Climate Action. The NCFF does so through the use of innovative financial instruments for bankable projects which are either revenue-generating or cost-saving, and have as objective protection, restoration, management and enhancement of biodiversity and ecosystems as well as the promotion of climate adaptation benefits. This includes ecosystem and nature-based solutions to address issues related to land, soil, forestry, agriculture, water and waste.
The majority of projects investing into biodiversity and ecosystems underpinning natural capital have traditionally been financed through public funds and grants. The overall objective of the Natural Capital Finance Facility is to provide a proof of concept demonstrating to the market, financiers and investors, the attractiveness of such projects and thereby developing a sustainable flow of capital from the private sector towards the financing of natural capital and achieving scale.
The instrument has been set up by the European Commission and the EIB with a total amount of EUR 100-125m made available for investments in 9-12 operations. The pilot phase of the NCFF will last from 2015-2021. Given the innovative nature of the NCFF’s objectives, the NCFF is a flexible mechanism, allowing for the provision of direct and/or intermediated debt financing and equity investment funds depending on project types and conditions. Given the limited experience in financing natural capital projects through market-based mechanisms, a Support Facility in the amount of EUR 10m is available to eligible final recipients and/or financial intermediaries for project preparation, implementation, monitoring and evaluation
By natural capital, we understand the stock of renewable and non-renewable resources (e.g. plants, animals, air, water, soils, and minerals) that combine to yield a flow of benefits to people. Successfully investing in projects promoting natural capital has two principle objectives, on the one hand side it shall increase investors’ confidence investing in such projects in the future by demonstrating that they can repay an investment, and on the other hand achieve a direct positive impact on Croatia’s natural capital.