 All of my colleagues at the Nature Conservancy are proud to be partners of NATCAP. We have great respect for Stanford, for University of Minnesota, for WWF, now the Chinese Academy. And we have great respect for all of you and the great work you're doing on the front lines. So thank you very much. It's great to be here. Sometimes when I give a talk like this, I get too excited and I end up talking too long. So this year I wrote my speech down, so bear with me because we're pressed for time. Anyway, this year I want to talk about one of conservation's very biggest challenges. How to pay for protecting nature at scale. And we really do face some daunting, capital-raising challenges in the period ahead. If we use the UN's Sustainable Development Goals, the SDGs for example, we know it will take something like six to seven trillion dollars of investment per year for each of the next 15 years. Meanwhile, philanthropy, foreign aid and government grants add up to less than one trillion dollars. So that means we have at that level something like a 100 trillion dollar investment gap over the next 15 years. Now let me break that down a little bit and size the problem up that the conservation community needs to address. First, we know we need to invest a huge amount of capital in clean energy development to beat climate change. So that's something like one and a half trillion dollars per year right now growing to something like two and a half trillion by 2050. This is a newer area of focus for conservationists, but of course it's one that's absolutely critical to our mission. Second, there are the huge investment needs for infrastructure necessary to achieve the SDGs. The world will double the amount of built infrastructure over the next two decades. So that's going to require trillions of dollars of investment every year. In both of these areas, clean energy and infrastructure overall, we conservationists have some very important work to do. We have to champion the large scale spatial planning and the compensatory mitigation practices to reduce the negative impacts of gray infrastructure. We also need to drive significant additional investments in nature where green infrastructure can outperform gray. But the investment opportunity I want to focus on most today is nature itself. Although it's not very easy to quantify, this could be a good assignment for NADCAP, it's most estimates of the size of our investment need for forests, oceans, watersheds and biodiversity are in the area of 300 to 400 billion dollars per year. That's the challenge I want to address specifically. How will we raise the capital to get this critical work done? And in particular, because there's no other way to do this, how will we catalyze private investment to close this big gap? I have a point of view here and I want to get your feedback, so I'll cut right to the chase and identify the five essential things I think we need to do to close this gap. First, we need to be far more effective at influencing government policy. We need policy and programs that support investments in nature. Second, we need to better harness science to produce the data and evidence that will convince key decision makers to invest in nature. Third, whenever possible, we need to organize our projects and initiatives in ways that generate cash flow. Fourth, we need to be much more active and creative in financial engineering. And finally, fifth, we need even more collaboration across sectors. In sum, we all need to become, excuse the parlance, investment bankers for nature. Let me address each of these areas one by one. First, government policy by far the most important tool we have. I know some people don't like to hear that right now. Every day it seems the news tells us our government is so dysfunctional. But if you look past the headlines, you'll find many encouraging examples of the kinds of policies we need. Take, for example, renewable portfolio standards in the U.S. More than half the states have them. These standards, together with tax incentives, have resulted in huge investments by the private sector in solar and wind. Further, China's focus on solar has helped a lot too. China's government-led industrial policy has driven down sharply the cost of solar panels. So these are two good examples of how government policy can drive private sector investment into areas that align with our goals. Even just a clear and visionary statement by government can drive private investment at scale. Take China's recent declaration that it wants 20% of domestic car sales to be low or zero emission by 2025. Thanks to this move by the Chinese government, there is suddenly a visible, huge and growing market for some 7 million of these vehicles per year in less than a decade. So it's not surprising that GM, Ford, VW, etc. followed up by committing tens of billions of dollars in investment each to design that next fleet of electric vehicles. Now, what we conservationists need to do is to emphasize and push for more policies just like this, but ones that intentionally drive investments in nature. One of the most encouraging examples here are climate policies that put a price on carbon. Take California, for example, as you know, the state has a strong cap and tit trade program. It's working. From 2000 to 2015, California's GDP has grown 37%, carbon intensity has declined 33%, and emissions are down about 7%. But the best part of this program for us, conservationists, is that it allows for forest offsets. This results in more dollars going toward restoring forests. We estimate that the program may have generated as much as $450 million for forest conservation projects in the U.S. just in the last two years. What's more, the auction of permits in California's program has raised about $5 billion in proceeds since the program launched. About 650 million of that raised those dollars have been appropriated for natural climate solutions like forests, wetland, grassland protection, urban forests and parks, and a healthy soils initiative. Here in the U.S., and you guys know this, there have been many other strong government programs to encourage investment in nature over the years. Providing tax deductions for conservation easements has led to some 40 million acres of protected land and some 1200 land trusts across the U.S. Likewise, conservation reserve programs have brought about 30 million more acres. Wetland mitigation under the Clean Water Act has driven investment in conservation banks. Outside the U.S., mechanisms that support public sector payments for ecosystem services in China, Costa Rica and Peru have also been very effective. I could go on and on. The main point I want to make here is that government policy will be critically important in achieving our goals. Sometimes, when I speak about raising capital from investors and working with corporations to scale conservation, I think I inadvertently give the impression that I somehow think the private sector can do it all. Well, sorry, that's just not true. Effective, creative and innovative government policy, in my view, will be the most important tool to promote private investment flows. So all of us at NETCAP, including TNC, that's for sure, need to work ever harder at this. Okay, the second part of my argument is what I talked about at last year's NETCAP conference. You might remember I called for better science, better evidence, more data to convince governments and businesses to invest in nature. This is an area where I think we're making very good progress and NETCAP deserves a lot of the credit. But I want to emphasize just how important data and evidence are to unlocking new sources of capital. The better and more precise we are about what nature can do, can't do, and what exactly it will cost, the more likely we are to drive significant investment flows. Take a recent deal we just announced in Cancun. Working with the global insurance company Swiss Re, we've designed the world's first parametric insurance product on a coral reef. This is a really positive breakthrough. We all know coral reefs play an important role in protecting coastlines from the impact of storms. But that's not good enough. We need to know much more if we're going to ask government officials and business leaders to invest in those reefs. We need data every bit as good as what engineers can provide on gray infrastructure. So in Cancun, our scientists got to work. The science team determined that the median cost of building a man-made breakwater is 15 times greater than restoring a coral reef. They also showed that reefs can absorb more than 90% of wave energy from tropical storms and hurricanes. They showed that reefs in Porto Morales were able to absorb more than 95% of wave energy during Hurricane Wilma in 2006. And they demonstrated that losing just the top one meter of healthy reef can double or triple the flood damages from a major storm. So armed with this data, we were able to convince the Cancun Hotel Owners Association and the state government to direct funds toward a range of protection activities for Cancun's Reef. These funds also financed the purchase of the new insurance policy. Without this level of data, we would have gotten nowhere. Now with the insurance policy in place, a triggering event of extreme wind speeds, Category 4 hurricane, will immediately result in a payout to help restore the damaged reef. This is a true first, an insurance policy for natural infrastructure. Now we need to replicate this example of creative financing to address other big environmental challenges. My main point here is that if we're going to succeed in mobilizing investment flows like this, we can't wing it, ever. We need to keep building the precise data that shows us exactly what nature can do. Now let me turn to the topic of cash flow. I opened my remarks today with a basic fact. We simply don't have enough philanthropy and government grant money to fund conservation scale. If we want the private sector to help us bridge this gap, we need to organize our projects so that they can flow capital with a return back to investors. Here's my finance 101 lesson for environmentalists. Finance is all about cash flow. When you have more cash flow and less risk, you can raise more capital and at lower cost. When you have less cash flow and more risk, you'll raise less and it will cost more. No cash flow, no investment capital. Period. That's it. That's what I learned over 24 years on Wall Street. Sounds obvious, I know, but thinking this way is a big shift for NGOs. Most nonprofits have historically funded their projects exclusively by raising donations and grants. There's been no focus on cash flow nor on returning capital to investors. The art of financing is really just about getting better at designing and organizing projects from the ground up. First, so they generate cash flow. Second, so that risks are clearly identified and well managed. In turn, you can design an appropriate capital structure for the specific situation. I'll give you an example from my hometown of Washington, D.C. This is a small deal, but I don't think it'll stay small for long. In D.C., we have a big stormwater issue. Every time it rains, polluted stormwater runoff drains right into the Potomac and then into the Chesapeake Bay. And when it rains very hard, our sewers overflow too. Now, I know everybody at NADCAP believes that green infrastructure can address this stormwater pollution threat. But believing in it, even knowing it will work, is not the same thing as raising capital to pay for it. Now, we have a special advantage in D.C., a smart regulation. Remember, I started out, we need government policy on our side. Here's how the regs work. If you're a developer in D.C., you're required to address the stormwater runoff that your project causes. But you can take care of half of these requirements through offsite green infrastructure. Think of it this way. If you're a fancy hotel developer, you probably want a pool or a restaurant on your rooftop, not plants to absorb stormwater. The regs in D.C. allow TNC to build green infrastructure projects across the city, sell them as offsets to developers. By doing so, we realize the cash flow that we need that will allow us to return capital to investors. We raised 100% of the capital for this project from impact investors, no philanthropy at all. Now we're working hard to get these regulations replicated in cities across the country. It won't always be this easy, however. One big challenge we face is that most infrastructure is the kind of public good that generally doesn't have any obvious cash flow. Think about highways. Ordinarily, they don't generate any cash flow. Indeed, we're facing a crisis in the U.S. because governments today are unwilling, it seems, to pay for this type of infrastructure. Now think of toll roads. Such a tweak, the toll booth allows for financing. The highway builder can borrow against the forecasted toll revenue and raise the capital needed for the project. So the question for us is, where are the opportunity for a toll booth-like innovations in the conservation world? Our team is on this, and we look forward to working with you on this challenge. The fourth thing we need to do to raise significant private capital is financial engineering. We need to get more creative in how we work with private investors and how we organize our capital structures to scale up our work. And here we have a large and growing toolbox, and I think we should be quite encouraged. For example, there's a lot of buzz right now about impact capital, and we view this as a major opportunity at TNC. What this means to me as CEO of an organization that's a big capital user is the following. I want to raise investor capital for conservation projects, but I want to do so on very attractive terms. That is low cost. So I can say to investors, impact investors at least, we'll provide you a very full return. Some of it will be financial, much of it will be environmental. That gives us an edge in our financial terms, and we can out-compete financial bad guys. With that investor-provided capital, in turn, we can lever up our precious donor capital. You can think of that as our equity and lower our overall cost of capital and have more capital. We've now done six deals like this, raising a little bit more than $200 million through NatureVest, which is our in-house investment bank. These deals include a debt-for-nature swap to fund marine conservation in the Seychelles, an LBO-like deal to purchase 160,000 acres of really strategic land in Montana and Washington, owning and trading water rights in the Murray-Darling Basin in Australia, and a startup livestock to market business in Kenya. Looking ahead, we have right now a pipeline of some $2 billion of additional deals. And other fine NGOs are hard at work here, too. Rare has an investor fund focused on addressing fishery challenges in the Philippines, and we're working with EDF on an impact fund aimed at improving coastal ecosystems in the Gulf. So that's impact financing. Blended finance is another area where there's a lot of buzz, and you'll hear a lot about this, and this is very encouraging, too. The idea here is to deploy government aid or risk reduction capital for multilateral development organizations like the World Bank to, quote, crowd in other types of investment. An example here would be natural climate solutions. So at TNC, we have no higher priority than this area of work. We believe as much as one-third of what the world needs to accomplish between now and 2030 per the Paris Climate Accord can be achieved at a cost-effective way by restoring nature at scale. But the question, of course, is how will we pay for this? So maybe blended finance can work. Imagine a capital structure like this, philanthropy or climate fund capital as the equity, the junior capital, impact capital at the mezzanine level, perhaps supported by first-loss coverage or a guarantee from someone like the World Bank, market-based capital as senior debt to be covered by the sale of timber or agricultural products and carbon offsets. This won't be easy, but it's really critical that we do this and it'll be a huge conservation breakthrough. Another promising area, it goes by various names, is startup financing for new innovative projects. The World Bank has something like this, they call the GIF. I don't remember what the GIF, does anybody know what the GIF stands for? Thank you. Carter, exactly. Carter told me about this. The idea here is launching these first-time innovative projects is hard. You need teams of people working hard for a while on these projects and you've got to pay for that somehow. So the upfront startup cost is what we need. Sorry, Carter, I have an OPIC example, but the World Bank does this too. OPIC, a few years back, took some $20 million of State Department money and set up the Africa Clean Energy Finance Initiative. The initiative provides startup grants for renewable energy project developers in Africa. So they start with $20 million. Five years later, that initial startup funding ends up supporting some 27 projects which catalyzed $369 million of additional OPIC funding and guarantees and levered another $443 million in additional capital. So that's something like 30 to 1 leverage on State Department money. Now OPIC is trying to do that again in India. We need to see more of this. It's an area, I'll come back to this. It's an area where philanthropists and funders should pay attention. Okay, last but not least, and I can wrap up. As is evident, I think from all the examples I mentioned or any examples I can think of, we need great collaboration. We simply can't do any of this, whoever we are, whatever org we represent on our own. I'm a realist. I know collaboration across sectors and industries and time zones can be tricky but we simply have to overcome those challenges if we're going to get anywhere. We need the creativity, the speed, the financial participation of the private sector. We need the low-cost capital or guarantees of multilateral providers. We need originators of deals. That's what TNC aspires to do, especially in the green infrastructure space. Obviously, as noted, we need the science and data that NatCap can provide. And I think in every case we need really great and effective governmental partners too. So how do we do that? Well, for environmentalists it means we need to speak in really compelling ways about the opportunity to invest in nature. Better evidence, being very precise about what we can do and can't do, where the risks lie, what we know, what we don't know. We need to realistically structure deals in ways that will work for investors. But I'm optimistic we can do this. And then here's my note for funders. If you're a grant maker, philanthropists or donor, I urge you to consider supporting the teams of people doing this work at NGOs or at academic institutions. This stuff is hard to do. We need to grow our teams. We need smart, creative, expert folks. We probably need to steal some people from the private sector. But when I put myself in the shoes of a capital provider, a philanthropic capital provider, I can't think of a higher returning investment you can make in conservation right now than in the manpower to make this financing activity happen. Okay, so let me end where I began. How can we mobilize the huge levels of private investment we'll need to put the world on the path to sustainability? We need smart government policy that drives private sector investment, better science that makes investing in nature the smart choice for leaders, conservation projects that include a plan for cash flow from the outset, financial engineering to expand our opportunities to invest, and greater collaboration across all sectors. The world is depending on us. There's no time to waste. So let's get to work. Thank you very much.