Rhino Bonds


You're listening to N._P._R.. Last year the last male northern White Rhinoceros died in Kenya and his fellow rhinos had previously died it off because of a reduction in territory and a huge increase in poaching before he died though Oliver withers had a chance to visit him Oliver is the head of conservation finance and enterprise at the Zoological Society of London in Love the northern White Rhino Yeah <hes> it it happened and we all felt very sorry and it never regained. Nothing's changing. Nothing's changing because rhinos rhinos have an economics problem and the problem is wiping them out see rhino horns are worth a small fortune to poachers and protecting rhinos from poachers itself takes a small fortune. You need armed guards. You need fences so oliver and his team at the Zoological Society started to think about a different way to raise money for rhinos the solution they came up with Rhino bonds bonds like from Financial Marcus Rhino Bino a bond that people can invest in with the express purpose precip putting more rhinos in the world in this case more black rhinos. This is the indicator from planet money. I'm Stacey Vanek Smith at I'm Cardiff Garcia Today on the show. The Conservation Impact Bond Aka the Rhino. Bond Right Oh bonds. It's a new approach to conservation basically taking the financial markets into the wild so in this episode we're going to look at how the Rhino Bond actually works and whether it will work and also what's the controversy behind the bond itself support for this podcast and the following message come from fund rise the future of real estate investing access private market real estate projects from high rises in D._C. to multifamily apartments it's in L._A.. Get your first three months of fees waived at fund rise dot com slash indicator support also comes from K._p._M._g.. Revolutionize your enterprise with A._I.. K._p._M._G. can help you harness the power of A._I.. To unlock its potential and deliver growth more at read dot K._p._M._g.. Dot U._S. Slash N._P._R.. Today's indicator is five thousand five hundred that is roughly the number of black rhinos left on the planet back in nineteen seventy. I need there were around. Seventy thousand Oliver Weather says the main reason that number has gotten so low is poaching about an animal. That's around with a couple of bars of gold on it. It hit just wondering around the Bush ounce for Ounce Rhino Horn is one of the most expensive substances on the planet it sold as a cure for various ailments in Vietnam and China and it's also used to make decorative carvings Oliver says one horn is easily worth more than a hundred thousand. Seven dollars and that's just a huge incentive for poachers on the other side it takes money to protect the rhinos from poachers in need fences security systems armed guards the problem with current efforts to save and protect the Rhino says Oliver is that all this takes a lot a lot of coordination constant vigilance day and night poaching that is actually quite difficult thing to budget for right. It's criminal syndicates who are trying to maximize profits. They don't send a memo to the protected area to say we're coming the western fence at mcnutt tonight. The other problem says Oliver is that the current system does not tend to focus on long-term goals. Everyone is just scrambling to make it from day to day. The money comes in a bid at a time and then just immediately goes to whatever is needed in the moment so it makes it hard to plan and to get ahead the result fewer and fewer rhinos in the world and Oliver is a finance and economics guy and he says the plight of the rhinos just really strikes him as a very classic economic economic problem. The way to look at it is is imagine you in the the medical economics widget factory you make widgets. <hes> you know in this case we're we're making rhinos and this is where the rhino bond comes in Oliver and his colleagues got a team of conservationist together across five parks in Kenya and South Africa the conservationists then put together a plan laying out what they would need to guarantee that fewer rhinos got poached and more baby rhinos got born born altogether. It's about fifty million dollars. That's what they would need that fifty million dollars will come from investors investors who want to make a profit and who want to see more rhinos and so here's how it works investors will buy a five year bond fifty. The million dollars worth altogether at the end of five years these investors will get their money back with a little extra but that's only if the bonds succeeds and the bond succeeds if the number of rhinos in the five parks reaches a certain certain threshold cash cash on that's probably how they sold it right now. There are about seven hundred rhinos in those five parks Oliver says that in five years they expect there to be about two hundred twenty more rhinos over that two hundred and twenty additional Rhino <hes>. We believe that we can attribute probably a hundred dollars Q. divining APP on so hundred extra rhinos at the end of five years because of the coordinated team efforts efforts the infusion of cash upfront that allows for the long term planning and if focused team now if the number of rhinos does not meet the bonds promise investors lose money but if the number of black rhinos does meet the bonds promise investors can feel like they really made a difference and they'll get their money back plus a bit extra a profit for the risk they took and that money the money to pay back those investors will come from US really from governments and taxpayers all over the World Oliver and his team are looking look into governments and foundations for the money to back this bond. It does seem a little strange that like the public sector would be potentially paying investors for taking a like a risk with money. The reality is is that we've seen that money be invested into by diversity. We haven't achieved the results. We expected we if we use some of that to pay investors for taking on that risk the public's actually dictator off Oliver says that to this point governments and foundations have been donating money with no guarantee of results and the results frankly have not been great under this new model the bond model wealthy investors take all the risk they by the bonds and hope that the rhinos proliferate they put up the fifty million dollars. If the Rhino numbers do meet expectations then and only then will the governments and taxpayers pay out they will pay back the investors who bought the bonds. If the Rhino numbers fall short the investors lose money and the governments don't pay anything at all still Oliver says governments have been skeptical of this and slow to sign on investors though they've been jumping at the idea Glenn Jeffries is with conservation capital. He's the finance that's manager for the Rhino Impact Bond. He says that interest from private investors has been overwhelming and that's good news. He says because investors will want to see where their money has gone. They're going to want to track how it's used and that is going to bring rigor and accountability into conservation spending or as often. You may see that conservation donating overheads may be quite high. Oh very difficult to calculate. There's no hiding under this model is very clear what it's Costin weather cost. Is there a danger with results based models. <music> <hes> you kind of creates a an incentive to you know maybe potentially game the system in ways. That aren't the best thing for the system interesting question. I don't have an answer I think that's there's always as a danger around focusing solely on the end result rather than the Janney I think because in this context we are counting rhinos if there are more rhinos that's a very positive result. Still Ecosystems are incredibly complicated. Focusing on one animal could end up being problematic create unexpected issues put pressure on other species still Glenn has faith in this plan and ultimately he hopes to use this model to achieve more holistic listrik larger scale results the ultimate goal hair. I think he's to do this at a whole protected area level like the Great Barrier Reef or something like that you exactly exa- exactly this is exactly the sort of thing that we want to aim for that said we have to get this one right. I Oliver Weathers of the Zoological Society. He's especially glad that they've started with rhinos because he grew up in South Africa seeing them all the time. He says he's just has a soft spot for them. Somebody saves me big very nudie. They're moody like they're cranky. Yeah that just GonNa be me WanNa be kind of lip to learn to eat their food. GonNa walk very far and notice the elephants and then it's just the closest thing in my mind that we have back the dynamic. Almost you know this whole kind of modern campaign around Chubby UNICORNS Oliver and Glenn say the Chubby Unicorn.

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