How natural resource management investment works

Current NRM investment approaches have high transaction costs

The NRM sector has traditionally been driven through public good investment by government.

The investment process is dominated by significant funding announcements prior to elections, followed by a 3-4 year process of contracting and delivering that investment. It can be a fickle process that is sensitive to the political proclivity of the day, which can lead to a whole new adventure every political cycle.

Those who have been around for a while, get to see regular rounds of investment prioritisation, new project design templates and a continuous reinvention of project reporting. The end result is that most NRM investment never reaches the ground, but is instead consumed in transaction costs to get investment planned and reported.

This picture of government led NRM funding is now changing rapidly thanks to a corporate led appetite for environmental investment. For instance:

• Shareholders are demanding responsible corporate behaviour.
• Superannuation funds are providing funding tranches for responsible investment.
• Domestic and export markets demand environmentally sound agricultural practices.
• The carbon market has become a cap-and-trade system (no longer a voluntary market).
• Biodiversity and water quality are entering the cap-and-trade system through the requirement for offsets for industrial development.

The result is an appetite for corporate investment in environmental projects that are scientifically robust, defensible and enduring.

The main problem though, is that the existing process for NRM investment has very high transaction costs (>50% of the project cost), is slow and difficult to navigate, and lacks the ability to demonstrate outcomes in such a way that gives investors confidence.

How to streamline NRM investment?

Truii’s Natural Capital Suite is designed to reduce transaction costs, make investing in the environment more accessible, and report the outcomes of investments using science data and modelling.

After working in the NRM sector supporting investment programs with innovative, data-driven tools, we realised that there is not one solution. Rather, there are different solutions for the different components of the funding and delivery cycle of the NRM sector.

Truii’s collection of applications to help reduce transactions costs is called the Natural Capital Suite and there are three initial products (more to come) addressing what we see are key problems.

• Natural Capital Region – helps to strategically plan, prioritise and report investment programs.
• Natural Capital Project – helps to capture, quantify and report the outcomes of individual projects.
• Natural Capital Credit – helps to quantify credits from environmental crediting schemes and make them more accessible.