An Overview Of Our Solution
Communities dependent on natural resources often lack incentives and tools needed to manage their resources sustainably. In response, we provide tools to communities dependent on natural resources to establish “eco-credit funds”. “Eco-credit”, pioneered by GreenFi, is credit which includes requirements for sustainable natural resource-use within credit terms. Adoption of required sustainable practices results in an “eco-credit score”, which qualifies borrowers for higher levels of credit and lower rates of interest. “Eco-credit funds” are community-managed credit facilities, and access is conditional on borrowers adopting sustainable farming, fishing and forest-management practices - a successful incentive for behaviour change.
- Population Impacted: 1,000,000
- Continent: Africa
Last name
Organization type
Context Analysis
GreenFi's prize-winning tools are designed for communities which are dependent on natural resources for their livelihoods. Target users of our tools are male and female non-commercial small-scale farmers, fisherfolk and forests-users, who need but lack access to credit. Their production activities are largely for subsistence. Targeted users live in areas of (i) high environmental importance, (ii) where degraded environmental resources increase poverty, or (iii) farmers are susceptible to productivity shocks or long-term productivity decline associated with climate change. The GreenFi tools are scalable tech-based behaviour-change tools, and the required behaviour change can be modified according to agro-ecological context. We specifically designed our tool in this way to enhance scalability. For example, our tools can be configured to support pro-environmental behaviours which variously support behaviour change for restoration of farm soils, fishing reefs and rangelands.
Describe the technical solution you wanted the target audience to adopt
The GreenFi tools are scalable behaviour-change tools, and the required behaviour change can be modified according to agro-ecological context. We specifically designed our tool in this way to enhance scalability. However, these are two examples where our tools have been or are being piloted:
• Farming: loan terms included requirements for contour grass strips and tree-planting, which studies show increase farm yield by 12% in year 2 of implementation
• Fishing: loan terms include requirements for creation of no-catch zones on coral reefs (areas which fishers are not allowed to access for defined periods of time). Studies show that use of no-catch zones increase octopus catch by 80% per unit effort
Specifically, the tools we provide to third party NGOs for use are:
• An IT system which controls loan issue and monitoring of environmental compliance (the incentive provision and behavioural outcome!)
• Training materials for setting up eco-credit funds and systems
Type of intervention
Describe your behavioral intervention
GreenFi’s founding hypotheses are (1) environmental degradation results from an underlying system of incentives which favours resource overuse, and (2) these incentives are economic in nature and emerge from a financial system which excludes environmental values from economic decisions. We must address these issues to reverse global systemic incentives for environmental degradation. We therefore root our intervention as an economic incentive in loan terms that require small-scale producers to engage in sustainable resource use, to gain access to credit in larger amounts and at lower rates of interest. Our second behavioural intervention is a social incentive. Borrowers and their groups are awarded eco-credit scores, which reflect their credit-worthiness in both financial and environmental terms. This is partly gamification, but also results in users being able to access formal credit systems as “bankable” clients. We don’t have “scientific evidence” in the conventional sense of published academic papers, because (1) the GreenFi team are practitioners and business people not academics, (2) our team has pioneered this approach using a lean-start up business approach, and (3) we are at a relatively early stage of progress, having completed pilots and now moving to a scale-up phase. During our pilot, we were able to secure 100% rates of participation in a farm-level soil and water conservation programme, where typical rates of adoption of smallholder farmers are 1%/annum.
As needed, please explain the type of intervention in more detail
Our system creates economic incentives (we presume accidentally excluded from your list of choices above). In short and very practical terms, the way our system works is this:
1. Communities agree to set up an eco-credit fund
2. This eco-credit fund is capitalised, usually at a rate of USD 50/member (but which increases over time due to interest repayments and capital inputs)
3. Community members apply for loans which are given if community members agree to carry out a defined environmental restoration activity, such as creating no-catch zones on reefs, tree-planting or putting in place soil-protection measures
4. If community members comply with these loan terms, they can access higher credit levels at lower rates of interest.
GreenFi provides the loan management, environmental compliance and general set-up tools to allow set-up of eco-credit funds at low cost.
Describe your implementation
Specific activities to address the identified problems above in the Context Analysis section
As stated above, communities dependent on natural resources frequently lack the incentives and tools needed to manage their resources sustainably. In response, GreenFi provides such communities with the credit-management tools and training necessary to establish “eco-credit funds”. We do not provide these tools directly ourselves, but instead license them to third parties, such as conservation organisations and companies with large on-the-ground networks. This is the route to scale.
How you ensured your solution was adopted and promoted change in behaviour
Our information technology platform allows for third-party monitoring of loan repayment and implementation of environmental activities. This is achieved in two ways, through upload of geotagged smartphone photos evidencing implementation, or (ii) community verification with third party endorsement (typically the implementing NGO or company). Ultimately, we aim to achieve monitoring with remote-sensing and AI approaches, but this is or further down the road!
Enabling conditions & key success factors
We rely on third parties to implement our system. These third parties to understand the efficacy of the system and the power of incentives in conservation.
Any obstacles
Our chief obstacle has been access to capital necessary to build out our system and scale system adoption. We are overcoming this by scaling as a limited company, in which we will ultimately charge for system use, and raising funds step-by-step by demonstration of results. We initially self-funded pilots with 75 farmers, on the basis of which we have raised funds to develop a beta version of our system. We now need to raise funds for a more robust and ISO-compliant system.
External connections
GreenFi has the support of F3 Life (our award-winning sister company), IUCN, Mwambao and FFI in scaling its approach. Our approach is specifically finance-related. Indeed, our underlying hypothesis is that perverse incentives for environmental degradation are hard-wired into the design of the international financial and specifically, credit architecture. To elaborate, most environmental degradation results from economic activity. In turn, most economic activity is underpinned by a system of credit (because 97% of money is debt) which is blind to natural-resource overuse. Without addressing this fundamental and systemic perverse incentive, we will run down the value of our global natural resources with consequential crisis for the ecosystems which support humanity – and humanity itself. In addressing this problem, by including requirements for environmental restoration in credit terms (as well as payment of financial interest) we can radically reverse the status quo, creating a massive systemic incentive for planetary environmental restoration. On the policy-side, we strongly believe that financial regulation follows innovation – not the other way around. We aim, ultimately, that global financial regulation requires that terms of credit include requirements for environmental restoration – but first we need to demonstrate the innovation and power of our approach.
Who adopted the desired behaviors and to what degree?
We conducted pilots with 75 farmers in Nyandarua County in Kenya. The rate of adoption of more sustainable farming practices (planting grass contour strips and tree seedlings to enhance soil and water conservation) was nearly 100% of enrolled farmers.
How did you impact natural resource use and greenhouse gas emissions?
Our system is early-stage and highly-resource constrained. We have self-funded our initial pilots adopting a lean-start up methodology. This has meant that whilst we have been able to validate the power of our system in terms of behaviour change, we have not had the resources to measure environmental impact (eg impact on greenhouse gas emissions). Instead our targeted behavioural change was measures which are scientifically validated to result in certain environmental benefits. So in terms of our pilot, we know that all pilot participants implemented natural resource management measures in accordance with their loan terms – planting grass strips and building out these measures in accordance with loan terms (as per the illustration included with our email submission).
What were some of the resulting co-benefits?
Our system is cleverly designed to allow users of the system to include requirements for targeted behaviours which best benefit the agro-ecological context. In the above example, the product was designed to improve provision of watershed services from farmland, thereby improving the quality of catchment rivers and lakes. We are further piloting a project in a coastal area where a targeted behaviour is creation of no-catch zones on reefs, leading to increased production of octopus in an area where catch today is estimated to be 75% lower than in the 1980s. However, we believe that any observable behaviour change can be included as targeted behaviour within our system.
Sustainability
We licence our system to NGOs and companies which work with rural, unbanked populations. This way, we are financially sustainable and can continue to improve our system through our earnings. We have already acquired IUCN, FFI and Mwambao as users of our system with payments to be made at the end of the year. Right now, we are raising funds to improve the quality of our IT platform and our training materials.
Our system does rely on grant funding to capitalise community eco-credit funds – and we look to the NGOs who use our system to do this. Whilst not sustainable in the truest sense of the word, this system is substantially cheaper than traditional conservation approaches, and more effective.
Return on investment
To implement pilots, it cost us approximately USD 20,000. To build our IT platform cost us approximately USD 7,000. We have hired a full-time general manager, at a cost of USD 1,500 per month (plus share options), who has overseen the build-out of our IT platform beta and pilots of our system in a marine environment, at a cost of USD 6,000. Because we have made these investments ourselves, the environmental and social return is potentially huge. We aim that our system is used to restore 800,000 hectares of land and 200,000 hectares of reef within 10 years.
How could we successfully replicate this solution elsewhere?
Our system is built and designed to be massively replicable and scalable. We aim to have established pilots in farming, marine and pastoralist African environments by the end of Q1 next year, and for our IT platform and manuals to be available for use from the end of this year.