Building the wealth and resilience of communities on nature’s frontlines
Small-scale fishers, smallholder farmers, and other residents of coastal and rural communities across the Global South live adjacent to a wealth of natural resources. However, their lack of access to formal financial services like bank accounts, formal debt, or insurance, is a major barrier to benefitting from the value of the resources. Meanwhile, financial service providers and global development organizations often lack mechanisms to effectively deliver resources to these communities.
Where traditional financial systems and strategies fail, innovative finance bridges the gap. Rare’s Innovative Finance program connects rural and remote communities on nature’s frontlines to the formal financial sector. By breaking down barriers separating communities and the formal economy, Rare helps build financial resilience and reduces pressure on nature.
Elements of innovative finance
Formalizing and building the capacity of microbusinesses
Rare trains microbusiness leaders on the benefits of the formal economy, and reduces barriers to entry. We help microbusinesses with financial management and financial inclusion, and build their resilience against household emergencies, natural disasters, and pandemics. We also use technology to empower both communities and formal institutions to track and share financial information more easily.
Example: Our pilot microbusiness program in Indonesia successfully registered 73 microbusinesses as legally recognized entities while providing capacity building and business skills to microbusiness owners and entrepreneurs.
Blended finance solutions
Blended finance is the strategic use of development finance and philanthropy to mobilize public funding and private capital for emerging and frontier markets, including small-scale fisheries and rural farming communities. Blended finance is designed to scale local solutions to achieve national or regional impact.
Example: Rare launched the world’s firsts Small Scale Fisheries Impact Bond to channel private and philanthropic capital toward the revitalization and sustainable management of coastal communities and ecosystems. The Bond’s pilot will establish five new areas of ocean to be sustainably co-managed by local communities Southeast Sulawesi, Indonesia.
Individual financial identities
Rare helps community members establish their financial identity, build savings, and track financial transactions—opening the doorway to formal financial services.
Example: Rare has designed and piloted a digital ledger app to capture and digitize every transaction in each of the 500 savings clubs we support.
Indemnity and parametric insurance
Rare designs and deploys different insurance products to help cover local communities from the financial fallout of climate change. Whether it’s traditional indemnity insurance or innovative parametric insurance, Rare works with financial institutions, insurance providers, and communities to meet the needs of fisher households.
Example: In the Philippines Rare partnered with local insurance providers to offer two policies as part of a pilot that aimed for 500 participants, but resulted in 4,000 enrolled policy holders.
Example parametric insurance: Rare designed and piloted a first of a kind parametric insurance solution for fishers in the Philippines to combat income losses from prolonged periods of adverse weather conditions which prevent safe fishing. The pilot is sized to provide protection to 50,000 registered fishers.
Natural climate solutions
Natural Climate Solutions (NCS) are conservation, restoration, and improved land management actions that store carbon or avoid greenhouse gas emissions across forests, wetlands, grasslands, and agricultural lands. Nature-based Solutions (NbS) go beyond NCS to include non-terrestrial ecosystem climate action, as well as Blue and Terrestrial Carbon. When implemented effectively, these natural climate solutions drive financial resources to local communities who sustainably manage these vital resources.
Example: In the Nampula province in Mozambique, Rare is using a community-based, behavior-centered campaign to build support for the protection of mangroves and seagrass beds as key climate change-fighting ecosystems.
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