DRAFT SOW_PEA.pdf

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SECTION C: STATEMENT OF WORK

C.1 Title

Productive Ecosystems Activity - PEA

C.2 Introduction

The purpose of the Productive Ecosystems Activity (PEA) is to improve human well-being and biodiversity conservation by engaging key stakeholders, particularly the private sector, in the implementation of nature-based solutions that preserve ecosystems and ecosystem services.

Nature-based solutions (NbS) are actions that protect, sustainably manage, and restore ecosystems, while simultaneously improving biodiversity and human well-being.1 Healthy and productive ecosystems and ecosystem services, like water filtration, food production and the use of natural areas for recreation, are essential to human well-being. Without healthy ecosystems and the services that they provide, humans do not have access to clean air and water, secure and adequate livelihoods, or security from natural and human-made disasters. Nature-based solutions are a win-win strategy for all stakeholders. NbS allow for a continuous provision of necessary goods and services for communities to strive, governments to secure healthy and secure livelihoods, and the private sector to maintain its operations.

PEA seeks to positively influence private sector participation in NbS implementation through the design of on demand, cost-effective and market driven NbS. Concomitantly, the capacity of local communities is built under the program to independently design, manage and maintain NbS negotiated for private sector support, while the Government of Colombia is strengthened and provided with necessary tools to foster these ventures and benefits from the program’s results for regulation improvement, reporting progress in national conservation targets and replication.

C.3 Background

The role of NbS in biodiversity protection and climate change mitigation has been recognized by the Intergovernmental Panel on Climate Change (IPCC) and the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). In 2021, the IPCC and IPBES worked jointly to explore ecosystem resilience to climate change in the context of ongoing habitat loss, and the risks to biodiversity and ecosystem services. In addition, they studied the role of NbS and sustainable development in human society, and how these tools positively benefit biodiversity and livelihoods. Part of the conclusions or findings of this work that included supporting NbS were:1) most ecosystems will not be able to adapt to unabated and human-caused climate change, even if greenhouse gas (GHG) emissions are reduced; 2) NbS can be used to increase ecosystems’ resilience to climate change and improve human well-being; and 3) sustainable agricultural and

1 https://www.iucn.org/theme/nature-based-solutions forestry practices improve ecosystems’ ability to adapt to climate change, enhance biodiversity, reduce GHG emissions, and increase carbon storage in soil and vegetation.2

According to the International Union for the Conservation of Nature (IUCN), NbS can be used to mitigate and adapt to climate change34. The adoption of NbS aligns with the U.S. Government’s (USG) Climate Change Strategy.5 As stated by Presidential Climate Envoy, John Kerry, “we cannot reach our climate goals without harnessing the power of nature.”6. The G7 2030 Nature Compact commits to increasing financial contributions to NbS through 2025 by promoting funding that has co-benefits for climate and nature.7 President Duque’s approach to economic recovery from the pandemic and to counter the effect of climate change is based on ‘greening’ the economy.

In an article from the World Economic Forum, the President emphasizes NbS as the way to an environmentally sustainable economic recovery, stating the country has 365 projects for NbS of which 47% are in the agriculture and forestry sector, 13% in tourism, 12% in the food sector, along others focused on circular economy, energy generation and hand crafts.8 Other policies such as socio-economic policies on green growth (CONPES 3934), economic reactivation (CONPES 4023), consolidation of the National Protected Area System (CONPES 4050), disaster risk reduction and resilience to climate variability (CONPES 4058) as well as decree 690 of 2021 from the Ministry of Environment and Sustainable Development on non-timber forest products, and bill 336 of 2021 passed to Congress on Climate Change, support the President’s commitment to the country’s successful economic and environmental recovery through implementation of NbS.

The standardization of NbS as an approach that benefits biodiversity conservation, human wellbeing and climate change is required to avoid over generalizing what can be considered a legitimate NbS. The IUCN has a global standard for NbS to serve as a guide for design, selection and implementation of NbS9. The Alexander von Humboldt Institute’s Bio report of 2019, states twelve NbS were preliminarily identified as having a high potential of implementation in Colombia with benefits for ecosystem service provision. Humboldt Institute’s statement is framed under the logic that NbS consist of management by social actors to enhance biodiversity, counter undesirable changes in socio-ecological systems, and maximize human well-being10.

The Government of Colombia has pledged a target of conserving 30% of its terrestrial and marine ecosystems by 203011 as part of the initial negotiations in the conference of parties fifteen of the

2Pörtner, H.O., et. al. 2021. IPBES-IPCC co-sponsored workshop report on biodiversity and climate change; IPBES and IPCC.

DOI:10.5281/zenodo.4782538.

3 https://www.iucn.org/sites/dev/files/info_brief_eba_effectiveness_unsg_climate_summit.pdf 4 https://www.iucn.org/theme/climate-change/resources/key-publications/strengthening-nature-based-solutions-national-climate-commitments#:~:text=Research%20suggests%20that%20NbS%20could,term%20hazards%20of%20climate%20change.

5 https://www.state.gov/remarks-on-the-urgency-of-global-climate-action/ 6 https://twitter.com/climateenvoy/status/1409889453649321985?lang=en 7 https://www.g7uk.org/wp-content/uploads/2021/06/G7-2030-Nature-Compact-PDF-120KB-4-pages.pdf 8 https://es.weforum.org/agenda/2020/09/por-que-el-mundo-natural-es-clave-para-una-recuperacion-verde/ 9https://www.iucn.org/theme/nature-based-solutions/resources/iucn-global-standard-nbs 10 http://reporte.humboldt.org.co/biodiversidad/2019/cap4/407/#seccion3 11https://www.minambiente.gov.co/uncategorized/asi-cumplira-colombia-la-meta-de-proteger-el-30-de-sus-oceanos-a-2022/

Convention on Biological Diversity(CBD) and included in CONPES 405012. Given the strategies defined in CONPES 4050 to consolidate the National Protected Area System, NbS can play a key role in this achievement. Research from Humboldt Institute and professors at the University Javeriana, identified biodiversity conservation and restoration priorities (see map 1 & 2). Both institutions also developed an updated Red List of Ecosystems in the country (see map 3)13. This information is key to the Productive Ecosystems Activity focusing on NbS to conserve biodiversity and ecosystem service provision to improve livelihoods and adapt to climate change.

Map 1. Conservation Priorities for Colombia. source: Alexander von Humboldt Institute.

USAID/Colombia’s experience has demonstrated the benefits of NbS and the private sector’s investment, organizational capacity, and willingness to contribute to biodiversity conservation, as well as climate change adaptation and mitigation. For example, USAID/Colombia’s Natural Wealth Activity demonstrated the proof of concept and achieved important and sustainable private sector engagement through market-based partnerships with companies like Nestle, LATAM, Colanta, Nutresa, Crepes and Waffles, and more. To date, Natural Wealth has leveraged over USD $2 million from the private sector, improved natural resource management of more than 130,000 hectares (Ha) of land, and generated USD $44,000 in sales from natural resource management and biodiversity conservation initiatives.

12 https://colaboracion.dnp.gov.co/CDT/Conpes/Econ%C3%B3micos/4050.pdf 13 http://reporte.humboldt.org.co/biodiversidad/2017/cap2/204/#seccion2

Map 2. Restoration priorities. Derived from Etter et.

al. Ecosistemas Colombianos (Amenazas y Riesgos). 2021.

http://doi.org/10.11144/Javeriana.9789587816013

Map 3. Terrestrial Ecosystem Red List Update. Bio Report.

Alexander von Humboldt Institute.

http://reporte.humboldt.org.co/biodiversidad/2017/cap2/

The private sector plays a key role in NbS implementation, success and sustainability. Jaime Arteaga and Associates’ Private Social Investment Index14 demonstrates the private sector’s interest to invest in environment protection, showing that the 138 companies surveyed on this index have been increasing their investments in forest protection and biodiversity conservation over the past several years. Jaime Arteaga and Associates also reported that total social and environmental investments by these 138 companies was approximately USD $740 million in

2020.15 This amount is four times greater than the Colombian Ministry of Environment’s 2020 budget, and 2.7 times greater than the Colombian Ministry of Agriculture and Rural Development’s 2020 budget.16 Based on this information, the private sector is willing to invest in NbS for biodiversity conservation, ecosystem services preservation, improved human well-being, and for the sustainability of their own business models. According to the Inter-American Development bank (IADB)17 there are three reasons why the private sector should invest in NbS:

1)NbS use existent renewable resources, consuming less energy and are less affected by energy

14 https://iisp.com.co/wp-content/uploads/2021/07/INFORME-RESULTADOS-IISP-2021-.pdf 15 Ibid.

16 Ibid.

17 https://blogs.iadb.org/sostenibilidad/es/3-razones-por-las-que-el-sector-privado-deberia-invertir-en-soluciones-basadas-en-la-naturaleza-para-ser-mas-resilientes-al-clima-2/ http://doi.org/10.11144/Javeriana.9789587816013 loss; 2)Most NbS are self-sufficient, no external inputs are required, and their performance does not diminish over time; and, 3)NbS can contribute to a company’s reputation as they have collateral benefits such as biodiversity conservation and climate change adaptation. Taking this into consideration, the PEA will promote public private partnerships with companies that integrate their environmental financing to their core businesses under shared value perspectives, and with those that value Environmental, Social and Governance (ESG) investing approaches.

C.4 Work Requirements

The Productive Ecosystems Activity (PEA) will engage public, private, and community stakeholders in the implementation of NbS to improve biodiversity conservation and protect ecosystem services. To accomplish its Components and Intermediate Results (IRs), the contractor will establish partnerships with the private sector, and improve local stakeholders’ ability to identify, implement, manage and negotiate specific NbS with the private sector.

GOC participation in this activity will enable government actors to learn more about, and scale-up successful NbS work in other regions of the country, as well as develop incentives to promote the private sector’s environmental investment. The contractor must align with the National Planning Department's efforts to promote the Corridor for Climate Change Financing, specifically with the conservation cluster, the CONPES under development on Climate Change Adaptation, and other actions such as the Red Nacional de Soluciones Basadas en la Naturaleza (RNSBN), and projects under the National Adaptation to Climate Change Plan (PNACC)(Section J). The contractor must align with Government regulations and policies, such as CONPES 4050, 4023, 3934 and 4058 as well as decree 690/21 amongst others.

The contractor will prioritize the engagement of marginalized groups including youth, women, indigenous and Afro-Colombian populations. The contractor will also engage GOC entities, financial institutions, environmental defenders, private sector actors, and civil society organizations. All of these actors will be involved in decision-making, and will be engaged throughout the life of the activity. Other actors that will be engaged in the activity through consultations, information sharing, and monitoring efforts include, but are not limited to:

academia, investment funds, international donors, and other USAID activities.

Efforts to engage the private sector will need the PEA to act as a catalyzing agent, as well as facilitator of networks between different stakeholders related to private sector operations. These stakeholders include, but are not limited to, companies, private guilds, private sector associations, chambers of commerce (including regional ones), superintendencies, and national agencies of each economic sector. For NbS to be effective and sustainable in biodiversity conservation and ecosystem service resilience, the demand from the private sector must meet the NbS supply from local communities. The use of private sector logic and language increases companies’ trust and understanding to invest in NbS. Consequently,it is important to work along with the private sector in the generation of the necessary metrics and measurements to report out a baseline and subsequent progress on NbS work for reporting purposes.

Considering several companies manifest their engagement and commitment to climate equity, climate netzero strategies, climate policies and the like, the contractor will include the design and implementation of NbS to conserve biodiversity and enhance ecosystem services for climate change adaptation with an additional lens focused on the benefits they can produce in decarbonization or mitigation when private sector highlights this as a preference. On the other hand, private sector companies value the option of building upon what has already been built in regards to NbS; the contractor must take in consideration activities already in place, with preliminary results associated to the purpose of this Activity, that can be scaled up or replicated to gain commitment from the private sector when possible.

Table 1 presents the activity’s results framework. The theory of change behind this framework assumes that if: private sector actors are incentivized to invest in NbS, stakeholders have the capacity to implement NbS, and NbS are cost-effective and market-driven, then more actors in Colombia will use NbS to protect key ecosystems and their services, consequently improving human wellbeing as well as environmental protection.

Table 1. Productive Ecosystems Activity results framework.

Component 1:

Policies and mechanisms enable private sector funding for nature based solution implementation.

Component 2:

Public, private, and community actors implement nature-based solutions.

Component 3:

Nature-based solutions are cost-effective and market-driven.

IR 1.1 Regulations are developed and/or improved to foster private sector adoption of nature-based solutions.

IR 2.1 Stakeholders have the tools and knowledge needed to develop and negotiate sustainable nature-based solutions.

IR 3.1 Private Sector actors demand the inclusion of nature-based solutions in existing business models.

IR 1.2 Mechanisms are developed to facilitate the private sector’s implementation of nature-based solutions.

IR 2.2 Nature-based solution agreements are established between communities and the private sector.

IR 3.2 Nature-based solutions are made profitable through cost reduction and market differentiation strategies.

C.4.1 Component 1: Policies and mechanisms enable private sector funding for nature based solution implementation.

The GOC requires private sector actors to offset their carbon emissions, mitigate biodiversity loss, and use ecosystem services when developing new projects and activities. For example, Resolution No.1428 from 2018 outlines the procedures that public entities need to follow to approve environmental damage offset projects.18 However, many GOC-mandated environmental regulations are overly complicated or need to be better structured, and private sector actors have trouble understanding and implementing the regulations as a result. In the case of Resolution No.

1428, private sector actors do not understand the kinds of environmental damage offset projects they can invest in because there is no clear guidance about the allowable size, location, and types

18https://www.minambiente.gov.co/images/normativa/app/resoluciones/3d-RES%201428%20DE%202018%20(2).pdf of ecosystems these projects should protect. Even when the private sector understands and follows existing regulations, like Law 1530 of 2012 which requires extractive industries to contribute funds to the General System of Royalties (SGR),19 the GOC does not have the capacity to use or to monitor the investments generated.20

For Component 1, the contractor will increase the private sector’s understanding of, and engagement in, conservation and natural resource management through improved implementation of regulation, financial mechanisms, and other incentives. Under this Component, the contractor’s actions must enable the private sector to support biodiversity conservation and ecosystem resilience through NbS, and as part of their legal commitments to protect the environment. To do this, PEA must work with the GOC to effectively channel private funding into NbS initiatives that support Colombia’s proposed environmental targets.21

Enabling the conditions for the private sector to invest in NbS in compliance with regulation or the companies’ business plans or environmental programs, will allow PEA to leverage more than USD $10 million from the private sector for implementation of NbS with local communities. The composition of this leverage must be approximately 60% in kind and 40% in cash. The contractor must also consider blended leverage opportunities with more than one company in order to reach the leverage target and its desirable composition. During the life of the activity, the contractor must establish public-private partnerships to achieve the leveraged resources Component. From these partnerships, at least 50% must be different from the ones already developed through the Natural Wealth Activity (Table 2).

Table 2. Private Sector companies that participated in Natural Wealth

Intermediate result 1.1 Regulations are developed and/or improved to foster private sector adoption of nature-based solutions.

The contractor, under this IR will review current and proposed environmental regulations, and will define actions to trigger fast and efficient use of private sector funds in NbS. The achievement of

19 SGR is the national account from which municipal and departmental governments can request funds to finance public works projects. Its funds are generated through taxes on exploitation industries in Colombia (e.g., oil and mining).

20 https://www.funcionpublica.gov.co/eva/gestornormativo/norma.php?i=47474 21 http://sdg.iisd.org/events/2020-un-biodiversity-conference/ this IR will require the contractor to analyze the current regulation and its effectiveness to mobilize funds to the field to improve environmental management and conservation. This analysis will set the baseline for the current regulation under implementation, regulation under scrutiny by the GOC for future application, differentiating between regulation working appropriately and regulation operating inefficiently to allow the flow of funds for environmental investment. The contractor must support Strategic thinking that will define the regulations requiring improvement to positively and significantly impact private sector investment on-the-ground will be derived from the same analysis. As a result, the contractor will use this information to set specific indicators and corresponding targets that measure performance in improving regulation implementation;

enhanced regulation implementation must be considered as the ability to change the pace of funds received and used by local communities or organizations to develop NbS and other environment projects.

Improved understanding, adoption and implementation of environmental laws will encourage private sector actors to fulfill their environmental obligations and voluntary investments through projects that enhance conservation and ecosystem resilience to climate change. Under this IR, the contractor’s support to the government will focus on the process of reviewing and passing new regulations to enable and increase private sector engagement benefiting the country and the Government’s environment targets. It is important to consider how effectively government institutions, at all levels, are strengthened and processes are simplified to expedite mobilizing and monitoring private sector funds to the field for environmental projects.

Intermediate result 1.2 Mechanisms are developed to facilitate the private sector’s implementation of nature-based solutions.

Under this IR, the contractor will create financial, technical, and partnership mechanisms that incentivize and enable private sector investment in biodiversity conservation through NbS. The contractor must be innovative and strategic in selecting and developing these mechanisms in order to effectively attract private sector investment and provide a flow of funds to continue NbS implementation for biodiversity conservation and ecosystem service sustainably in the future.

To a certain extent, the achievement of this IR requires contact with the financial sector to promote mechanisms that can incentivize the private sector and increase their investment on biodiversity conservation and ecosystem service provision. In parallel, the financial sector will be strengthened in the knowledge and incorporation of environment, social and governance (ESG) non-financial factors for the sector’s risk and growth opportunities analysis. Therefore, the contractor’s work with the financial sector under this IR must result in the development of financial mechanisms to improve private sector investments for NbS implementation delivering positive outcomes in biodiversity conservation.

Partnership mechanisms facilitated by the contractor must seek to reduce a tailored approach and focus on making this a more efficient and effective process to attract other private sector companies. The contractor must also promote public private partnerships where companies strengthen their internal procedures and processes to align their providers and micro,small and medium enterprises (MSME) in their value chains with NbS. Specific mechanisms that attend particular private sector needs, must be considered if there are strategic, innovative opportunities to increase investments in NbS by the private sector.

At a minimum, the Contractor will implement the following activities

● Increase the number of mechanisms available to invest in NbS that enhance biodiversity conservation, ecosystem provision and climate change resilience.

● Streamline and improve the efficiency in the allocation of resources in compliance with regulation.

● Establish and support new regulation to increase private sector investment in NbS, biodiversity conservation, and climate change adaptation.

● Strengthen the capacity of national, regional, and local government institutions to monitor and develop adaptive management of NbS implementation.

● Reduce bottlenecks in processes and procedures of the implementation of regulations that allocate private sector resources.

● Strengthen the capacity of national, regional, and local governments to problem-solve and adaptively-manage the implementation of environmental regulation to reduce the risk of stagnation in the use of private sector funds for conservation purposes.

● Incentivize active and sustained financial sector participation in the establishment of financial mechanisms for the development of NbS.

● Develop private sector partnerships in order to scale up the impact of NbS in biodiversity conservation, wellbeing of local communities, and climate change resilience.

C.4.2 Component 2: Public, private, and community actors implement nature-based solutions.

In August 2021, President Duque convened a meeting with Latin American decision makers to prepare for the next Conference of the Parties under the CBD. The purpose of the meeting was to identify critical elements to include in the new global biodiversity framework. In the case of Colombia, critical elements identified included: promoting sustainable production and consumption; conserving at least 30 percent of marine and terrestrial ecosystems by 2030; and establishing cross-sectoral commitments to preserve biodiversity.22 To achieve these Components, public, private, and community stakeholders will need to work together to leverage investments in biodiversity initiatives, and NbS will serve as an essential tool.

The contractor under Component 2 will improve the understanding of stakeholders such as local communities, government actors and the private sector of the social, economic, and environmental benefits of NbS. The contractor will develop a Capacity Building Strategy that considers the main components and plan for improving the capacities of Community-Based Organizations (CBO) and Local Businesses (LB) to provide high-quality nature based solutions that sustain conservation of biodiversity and ecosystem services. The Strategy will offer training in various fields of knowledge including but not limited to: marketing, communications, business and financial management, compliance with national and local regulations, and land governance approaches.Through

22https://www.minambiente.gov.co/asuntos-ambientales-sectorial-y-urbana/la-precop-gran-evento-sobre-biodiversidad-en-leticia/ innovation, technology, technical assistance, gender equity and inclusion, as well as capacity building, community members and government entities will become important allies in the implementation of NbS. The contractor must identify and address linkages between natural resource management, gender equality, and women’s economic empowerment, taking into account the gender analysis provided in section J, and that: 1) men and women have a differential use of and access to natural resources; 2) the roles that men and women have in conservation of biodiversity, including management of water and forest resources; 3) payment for, and access to environmental services; 4) income-generating opportunities for men and women in agroforestry;

and 5) renewable energy. The contractor will include efforts to strengthen communities’ cultural, agricultural, and land conservation practices, as well as recognition of local knowledge for the implementation of NbS. Capacity building on reporting biodiversity and ecosystem services benefits of the NbS implemented must be developed in conjunction with local government officials and guidelines. With the knowledge of NbS, private and community actors will be able to align their investment priorities that result in sustainable private sector investment and engagement.

It is expected that the achievement of Component 2 presents at least 30 NbS agreements between communities and small to large-sized companies established to protect at-risk ecosystems. The contractor under this activity must actively manage the unequal power dynamics that can occur between the private sector and civil society. The Contractor must work to elevate civil societies’ participation and power in decision-making, particularly with respect to NbS agreements. This is important when considering relationships between the private sector and ethnic communities, as well as other marginalized groups such as women, youth and persons with disabilities.

Intermediate result 2.1 Stakeholders have the tools and knowledge needed to develop sustainable nature-based solutions.

The contractor under this IR will work with local stakeholders, including community members, civil society actors, and government actors, to understand and identify viable NbS in their communities. NbS will be chosen through this analysis considering local land use practices, socioeconomic conditions, and conservation regulations. The use of this analysis will help guarantee that the selected NbS respond to opportunities, private sector interests, and regional needs from the perspective of biophysical conditions and the sociocultural and economic considerations of local communities.. The contractor’s interventions under this IR must focus on building communities’ capacity to develop, negotiate, finance, and manage NbS. The contractor will also include interventions that strengthen civil society organizations and government officials’ capacities to communicate and monitor NbS implementation. The contractor under this IR will scale-up lessons learned from USAID’s previous experience engaging stakeholders in environmental initiatives. The contractor will also encourage technology investments to better monitor NbS, such as technology for NbS product traceability and biodiversity conservation monitoring, and digital technology innovations to incorporate NbS into the core business of the private sector Technology used for NbS must be cost effective for local communities and the private sector. The use of technology has to take into account the stakeholder’s digital literacy, the gender digital divide, and cybersecurity risks (e.g. digital hygiene).

Intermediate result 2.2 Nature-based solution agreements are established between communities and the private sector.

The contractor under this IR will promote collaboration between public, private, and community actors to ensure that NbS interventions are sustainable, inclusive, and demand-driven. With NbS embedded in the private sector’s core business, the activity will create and facilitate opportunities for public, private, and community actors to formally establish NbS agreements through different platforms, networks, and in-person events. A diverse and inclusive profile participation of community actors must be incorporated into these interventions. The PEA will monitor the agreements established during the life of the activity, and along with the involved private sector companies and local communities, will practice adaptive management in their implementation with the intention of making it an iterative process so that both stakeholders can develop their own when the activity ends. Best practices regarding NbS agreements will be communicated and scaled-up from previous activities, such as Natural Wealth’s experience establishing a carbon credit sale agreement between the airline LATAM and cattle ranchers in Orinoquia. Under this agreement, cattle ranchers developed silvopastoral systems and improved land use planning to conserve biodiversity and generate carbon credits which were then used to offset LATAM’s carbon footprint.

At a minimum, the Contractor will implement the following activities

● Increase the number of women-led organizations with private sector agreements in place for NbS implementation.

● Strengthen youth leadership in local communities to promote NbS for income generation, climate change resilience, and overall well being.

● Increase local communities' understanding to adequately adopt technology tools to implement and monitor NbS implementation

● Work with local organizations to adopt NbS that incorporate cultural practices, traditional knowledge and other social elements within the regional context

● Improve the negotiation skills of local organizations and enhance their active participation in the definition, negotiation and implementation of NbS with the private sector.

● Establish networks to increase the impact and sustainability of private sector investment in

NbS.

● Reduce the communication breach between private sector companies and local communities.

● Improve the private sector’s understanding of the local context and local stakeholders.

● Strengthen public sector skills to monitor agreements between the private sector and local stakeholders in NbS implementation on-the-ground.

● Facilitate agreements for NbS implementation between local communities and the private sector.

● Promote inclusiveness, fairness and equal distribution of benefits in local communities through agreements for NbS implementation.

● Develop NbS that effectively address ESG needs by the private sector.

C.4.3 Component 3: Nature-based solutions are cost-effective and market-driven.

When aligned with the United Nations’ (UN) 2030 Agenda for Sustainable Development,23 private sector investment can increase profits, and result in positive environmental impact and social benefits for communities. The Organization for Economic Co-Operation and Development (OECD) encourages private finance for sustainable development, and has highlighted the need for companies to invest in sustainable development initiatives to reduce their vulnerability to climate change.24 As stated by the UN Conference on Trade and Development, private sector participation is key to achieve Sustainable Development Goal (SDG) 17 for strong global partnerships and cooperation.25 Private sector actors can contribute to SDG 17 through innovation, good governance, sustainable business practices, and smart investments in initiatives like NbS.26

Under Component 3, the contractor will work with private sector actors to invest in, and adopt, NbS as a way to strengthen their businesses and, at the same time, channel social and environmental investments. Companies will recognize the benefit of investing in NbS that reduce business costs, support sustainable supply chain development, and produce premium goods and services that result in added value for their consumers along with higher profits for their companies. In other words, the contractor will work on costs, revenues, opportunities and risks related to NbS implementation for the benefit of companies’ business models. The contractor will also promote innovation and technology solutions for the private sector in relation to NbS.

Moreover, it will increase consumer awareness of socially and environmentally sustainable goods and services produced through NbS. Support to the private sector in the incorporation of NbS in their business model will also include educating the private sector to measure and report on the impact in their investments regularly. In turn, companies that are associated with NbS goods and services will have stronger reputations, and will experience greater consumer trust and loyalty.

Taking in consideration the meaning of a value chain as described by the Harvard Business School27 the achievement of Component 3 must have NbS be a determinant in the development of at least 15 value chains of different economic sectors.

Intermediate result 3.1 Private Sector actors demand the inclusion of nature-based solutions in existing business models.

Under this IR, the contractor will work with the private sector to demonstrate the social, economic, and environmental benefits of NbS, and identify NbS business models that respond to corporate needs and support the long-term sustainability of this activity. The contractor will ensure that NbS supply and demand correlate by working on cost structures, business models, and cost benefit analysis of NbS under a shared value perspective for the private sector. As part of this exercise, 23https://www.undp.org/sustainable-development-goals?utm_source=EN&utm_medium=GSR&utm_content=US_UNDP_PaidSearch_Brand_English&utm_campaign=CENTRAL&c_src=CENT RAL&c_src2=GSR&gclid=CjwKCAjwkvWKBhB4EiwA-GHjFqGANHIy-IMbSyAqbEpDfUcC5IwzOuNj6WLtErERk__n2Zxgl- GLKxoCp3sQAvD_BwE 24https://www.oecd.org/about/secretary-general/private-finance-for-sustainable-development-conference-paris-january-2020.htm 25https://unctad.org/press-material/developing-countries-face-25-trillion-annual-investment-gap-key-sustainable 26 https://sdgs.un.org/goals 27 https://online.hbs.edu/blog/post/what-is-value-chain-analysis the contractor will work along with companies on the analysis of the value chain to define if adjustments are needed to effectively develop NbS that deliver biodiversity conservation and ecosystem provision. This will help private sector actors to better understand how they can leverage NbS in existing business models and value chains. NbS implementation must align to the core business model instead of a corporate social responsibility activity, in order to generate cost reductions, contribute to ESG performance, create new revenue streams, amongst others, to guarantee the sustainability of the efforts. In addition, the contractor will also help companies to include this work on their ESG reporting in correspondence to the Sustainable Development Goals that the companies’ contribute to. The contractor will engage community and public sector stakeholders in interventions supported under this IR so that they better understand and communicate how NbS can be used to strengthen existing value chains. This will reinforce IR 2.2 by strengthening communities’ capacity to negotiate NbS portfolios with private sector companies.

Intermediate result 3.2 Nature-based solutions are made profitable through cost reduction, return to investment, market differentiation amongst other strategies.

This IR will enhance the profitability of NbS through a variety of strategies. The contractor will minimize the number of intermediaries along the value chain, and will help employ tools and knowledge that increase ecosystem resilience, therefore sustaining NbS’ productivity in the long-term. The contractor will work with companies in advertising their investment in NbS to consumers as part of their sustainable sourcing, supply chain management and environmental sustainability plans. The contractor will increase consumer awareness of NbS benefits by helping stakeholders market NbS products as socially and environmentally sustainable. Improved consumer awareness and marketing efforts will enable stakeholders to sell NbS products on premium markets and for higher prices. Greater profits will also encourage stakeholder engagement in NbS, and will facilitate private sector investment. The contractor will work with the private sector in quantifying and obtaining data on return investments, cost reduction and the like for private sector information and reporting.

At a minimum, the Contractor will implement the following activities:

● Improve the private sector’s ESG performance through NbS

● Develop standardized reporting of ESG performance through NbS

● Develop tools to promote traceability and transparency and contribute to their adoption to support NbS agreement implementation.

● Improve consumer understanding of the work of the private sector on NbS

● Increase the availability of goods and services derived from NbS implementation in specialty markets

● Develop methodologies to meet NbS demand and supply

● Institute the adoption of NbS throughout value chains

● Increase the impact of NbS through collaboration among private sector companies

C.5. Special considerations

C.5.1. Biodiversity Funds

This Activity will be implemented with congressionally mandated Biodiversity Conservation funds. All Biodiversity Earmark-funded activities must align with the U.S. Agency for International Development’s (USAID) Biodiversity Policy28 and Biodiversity Code. The Code comprises four criteria, all of which must be met to be considered eligible for a Biodiversity activity:

a) The Activity must have an explicit biodiversity Goal; it isn’t enough to have biodiversity conservation results as a positive externality from another program.

b) Activities must be identified based on an analysis of drivers and threats to biodiversity and a corresponding theory of change;

c) Site-based activities must have the intent to positively impact biodiversity in biologically significant areas; and

d) The Activity must monitor indicators associated with each stated theory of change for biodiversity conservation results.

The Statement of Work (SOW) must be based on a clearly articulated Theory of Change (TOC) for Biodiversity Conservation as specified in the USAID Biodiversity Code as per the USAID Biodiversity Policy of 2014.

C.5.2 Adaptation Funds

This activity will be implemented with congressionally mandated Climate Change Adaptation Funds. Through NbS, the activity seeks to improve local communities' resilience to climate change by improving ecosystem service provision and quality. The 2014 the Climate-Resilient Development Framework is a good reference for climate change adaptation options in development29. The climate links webpage offers different examples of climate change adaptation work to improve local community resilience to climate change30.The PEA will contribute to the President’s Emergency Plan for Adaptation and Resilience (PREPARE) by 203031; the Activity will support USAID’s contribution to PREPARE in the leverage of resources from the private sector for sustainable conservation of forests and the well being, prosperity and resilience of local communities.

C.5.3 Geography and targeted population

The criteria used to define the activity's target geography in map 4 is based on Humboldt Institute’s work and includes: 1) municipalities with areas prioritized for biodiversity conservation; and 2) municipalities with medium to very high ecosystem service vulnerability.

28 http://www.usaid.gov/biodiversity/policy 29 https://pdf.usaid.gov/pdf_docs/PBAAA245.pdf 30 https://www.climatelinks.org/sector/adaptation 31 https://www.usaid.gov/news-information/press-releases/nov-1-2021-usaid-announces-robust-targets-advance-president-biden-prepare-climate-initiative

The Productive Ecosystems Activity will prioritize municipalities with key terrestrial, marine and/or freshwater ecosystems by working in multiple municipalities in the areas defined in Map 432 in red (Orinoquia region), yellow (Caribbean region) and green (Andean region). Through the logic of ecological connectivity, the geography selected also needs to be defined through the feasibility of developing conservation corridors and that these contribute to the Government’s implementation plans of CONPES 4050. In order to generate the highest results in biodiversity conservation, ecosystem service provision and resilience to climate change, other criteria to define the geography are high rates and potential for private sector investment. In order to allow aggregation of multiple NbS initiatives and an important private sector participation, the contractor will work on a landscape approach to enable sizable investment opportunities by multiple companies. The contractor may work in municipalities outside the 2020-2025 CDCS to generate a continuum in its interventions, and to achieve more impactful biodiversity conservation results through ecological connectivity.

The contractor will prioritize the engagement of marginalized groups, like youth, women, people with disabilities, indigenous and Afro-Colombian populations, and sexual and gender minorities.

The final geography selected will define the level of engagement that this Activity will have with ethnic populations and consequently, the inclusion of ethnic governing bodies to consolidate a positive relationship between the activity and local communities. Youth and women will have an especially significant role in NbS definition, implementation, and negotiation. The contractor will include a Positive Youth Development approach that includes youth as active participants in the development and leadership of initiatives on the ground. The economic empowerment of women and ethnic communities will also highlight these communities’ cultural assets and heritage.

Approaches and interventions will need to specifically engage and empower marginalized populations throughout all stages of activity design and implementation, and ensure the equitable distribution of benefits from NbS development.

The contractor will also engage GOC entities, financial institutions, environmental defenders, private sector actors, and civil society organizations. All of these actors will be involved in decision making, and will be engaged throughout the life of the activity. Other actors that will be engaged in the activity through consultations, information sharing, and monitoring efforts include:

academia; investment funds; international donors; and other USAID activities.

32 A version of this map to zoom in municipalities for the definition of the geography of work can be accessed at:

https://usaid.maps.arcgis.com/apps/instant/basic/index.html?appid=f7f3d07efc734311b23bf3e6687da70a.

https://usaid.maps.arcgis.com/apps/instant/basic/index.html?appid=f7f3d07efc734311b23bf3e6687da70a

Map 4. Geography priorities

C.5.4 Cross-cutting Technical Issues

a. Environmental governance Adequate environmental governance positively impacts public and ecosystem health. and supports sustainable societies. The Inter-American Development Bank (IDB) developed 11 indicators that assessed countries like Colombia in how environmental governance is working in practice33.

Results of these indicators must guide the PEA in order to support and improve environmental governance in the areas of work. This is key to support the country’s need to reduce threats and killings of land and environmental defenders34and contribute to the implementation of the 2016

33 https://publications.iadb.org/publications/english/document/Environmental-Governance-Indicators-for-Latin-America--the-Caribbean.pdf 34 https://www.globalwitness.org/en/campaigns/environmental-activists/last-line-defence/ peace accord, specifically with respect to environment sustainability, throughout the upcomingAdministration. Environmental governance is key to addressing the climate crisis, enhancing food security, economic growth, women’s equality and empowerment, as well as the protection of indigenous people and local communities.

b. Illicit crops (coca) Illegal crop production is one of the key drivers of biodiversity loss through deforestation, forest degradation, and pollution. As part of the implementation of PEA, the Contractor must include the risks and actions to undertake in regards to coca crops in the areas of work through their work plans presented. Furthermore, the Contractor must remain neutral in its understanding of coca cultivation and avoid additional coca-related activity or conflict.

c. Land tenure and related issues The Contractor must ensure local community members participating in the Activity have a security over the land where NbS will be developed. Private sector companies participating in the Activity cannot be linked to processes related to unclear land issues. The country’s progress in updating and completing the cadaster has had its setbacks, limiting the achievement of important advances in land tenure rights and improved land use management; a reference of this is the fact that 30% of the country does not have a cadaster collected so far. On the other hand, implementation of land and rural development policies in isolation from environmental considerations has already had a series of costly environmental and social consequences, such as conflicting land uses between agriculture, mining, conservation, among others. Modification of Decree 058 to Decree 118, and other regulations set in the future by the GOC, can offer the possibility to responsibly manage land owned by the state for specific productive activities that can improve livelihoods while conserving ecosystems.

d. Climate Change Strategy

The Activity must align to USAID’s Climate Change strategy principles35, contribute to its intermediate results and targets when appropriate. During implementation, the contractor must respond to this requirement by developing innovative methods, utilizing technological solutions, thinking locally and regionally, and engaging the private sector and local organizations in implementing.

e. Science, Technology, Innovation and Partnership (STIP)

USAID has a strong commitment to inclusive, STIP-based approaches and solutions.

Environmental issues inherently require a STIP based approach. STIP solutions resolve bottlenecks in biodiversity conservation and adapting to climate change in a cost effective and sustainable way. The Contractor will make clear the role STIP plays in its overall approach throughout implementation. The use of STIP under the PEA must seek to support the needs of the different stakeholders involved in NbS and promote equitable access to, and adoption of, science

35 https://www.usaid.gov/sites/default/files/documents/USAID-Climate-Strategy-2022-2030.pdf and technology. Amongst others, the contractor will use STIP for traceability, monitoring and reporting purposes in the implementation of NbS. When implementing or introducing new digital technology to beneficiaries, the contractor will apply the Principles for Digital Development to ensure technology is effective and best meets user needs.

f. Gender and Disenfranchised Populations

Gender and disenfranchised populations must be integrated into the design and implementation of the Activity. Integration of these themes must take into account gender and disenfranchised groups such as, but not limited to, indigenous persons, Afro-Colombians, persons with disabilities, youth, the elderly and the LGBTQI+ community as appropriate. At a bare minimum, the contractor must address major existing inequalities, not reproduce rigid gender norms, and plan to guard against exacerbating these. Women in rural settings are often highly dependent on natural resources for their and their families livelihoods; they are particularly susceptible to the availability and quality of these resources. The contractor will ensure that agreements with the private sector for NbS implementation do not have a negative, differential impact on women (and other marginalized communities).The contractor will include the recommendations of the CDCS gender analysis.