Frequently Asked Questions
What is the Malua BioBank?
A partnership between the Sabah State Government and the private sector, the Malua BioBank is a first-of-its kind model for investing in tropical rainforest conservation on a commercial basis. For a quick overview download our brochure or contact us with any questions.
Why is this project innovative and important?
Nothing like this has ever been done for the biodiversity in tropical rainforests. There have been a few voluntary market initiatives – e.g. The Nature Conservancy’s Adopt-an-Acre program – but there have not been commercial biodiversity conservation deals financed by private investors. The sale of certificates will make rainforest rehabilitation and conservation a commercially competitive land use. There are tens of billions in philanthropic funds for conservation but trillions of dollars of investment capital. By figuring out a commercial model for biodiversity conservation in the tropics, you effectively increase the pool of possible funds for rainforest conservation. To date, public and philanthropic funding for conservation has not kept pace with the rate of biodiversity loss. Attaching value to conservation will harness private sector finance to help fill this funding gap.
Where is the Malua BioBank?
The Malua BioBank is a 34,000 hectare (roughly 80,000 acre) area called the Malua Forest Reserve in Sabah State, Malaysia. Sitting adjacent to one of the region’s last pristine lowland tropical rainforests (Danum Valley Conservation Area), the Malua BioBank provides a crucial buffer between virgin rainforest and oil palm plantations. The area is home to one of the world’s highest concentrations of orangutans, as well as clouded leopards and pygmy elephants. As an attractive location for biodiversity conservation, Sabah is well positioned to become a “Silicon Valley” for new conservation finance models like the Malua BioBank.
How does the Malua BioBank work?
The Sabah State Government has licensed conservation rights for a period of 50 years to the Malua BioBank and a private investor has committed up to US$10 million for the rehabilitation of the Malua Forest Reserve over the next six years. The Malua BioBank sells Biodiversity Conservation Certificates, with each certificate representing 100-square meters of rainforest restoration and protection. Revenues generated from the sale of Biodiversity Conservation Certificates will be used to recover costs incurred and to endow a trust fund (“Malua Trust”) set up to manage the long-term conservation management of the Malua BioBank over the remaining 44-year period of the license. Any profit will be shared between the forest management license holder (Yayasan Sabah, a foundation established by the Sabah Government to improve the livelihoods of local citizens) and the Malua BioBank investor.
Progress toward key management goals and priority actions outlined in the Conservation Management Plan will be reviewed annually by a Steering Committee (composed of members of the Sabah Government and the Malua BioBank) and by an Advisory Committee (composed of local and international NGOs and scientists). In addition, the management of Malua as part of the Ulu Segama-Malua Forest Reserve will be regularly assessed against the FSC (Forest Stewardship Council) standard with the aim of achieving and retaining certification. FSC is an independent, non-governmental and not-for-profit organization established to promote the responsible management of forests. The FSC standard covers environmental, social and technical issues.
The Sabah Government has committed to halting logging in the Malua Forest Reserve for at least the next 50 years. This contractual agreement commits the Sabah Government to implementing the Conservation Management Plan under the monitoring of the Malua Trust, which will be funded through a portion of the revenues from Biodiversity Conservation Certificates sales. Any breach of the Malua BioBank agreement entails significant financial penalties that include the repayment of all funds invested in conservation management as well as the refund of all the Biodiversity Conservation Certificates sold.
Who is the investor and why have they decided to invest in this project?
The Eco Products Fund, LP (EPF) is a private equity investment vehicle jointly managed by New Forests Inc. and Equator Environmental, LLC. Given growing interest in other environmental markets, such as carbon trading and renewable energy, the Fund is looking to take an early position in markets for biodiversity. Financial models suggest the Malua BioBank could sell Biodiversity Conservation Certificates for a price that would add roughly 1% to the market price of a metric ton of crude palm oil while funding rehabilitation works, endowing the Malua Trust, and still earning competitive returns for the investor and the Sabah State Government.
Who will buy Biodiversity Conservation Certificates?
As commodity and oil prices rise, South East Asia is becoming a hotspot for agricultural expansion. Energy, food and cosmetics companies relying on agribusiness products, particularly palm oil, are increasingly scrutinized for perceived impacts on rainforests. By purchasing Biodiversity Conservation Certificates, buyers can transparently support an effective long-term investment in forest conservation that is cost efficient for downstream consumers. Additionally, local companies have purchased Biodiversity Conservation Certificates in order to align themselves with Sabah’s leadership on environmental issues. Conservation-oriented non-governmental organizations also may support the project through purchases as a means of advancing the important goal of making rainforest conservation a viable economic option for communities and governments around the world.
Will the purchase of Biodiversity Conservation Certificates constitute an offset for the buyer?
No, the purchase of Biodiversity Conservation Certificates represents a contribution to rainforest conservation in Malua, rather than an offset for rainforest impacts that a company may have elsewhere. Buyers purchasing Biodiversity Conservation Certificates understand and contractually agree that they do not represent an offset against clearing or degradation of other forests. Should they express interest, the Malua BioBank will work with buyers to incorporate Biodiversity Conservation Certificates as part of a larger plan to identify and address supply chain impacts. The project also will be well positioned to help environmental groups seeking to develop biodiversity standards in the future.
What will the Malua BioBank do to restore and protect rainforest habitat?
Restoring the forest canopy is the most important thing any management plan can do to reduce the risk of catastrophic wildfire. Accordingly, the Malua BioBank will significantly reduce the risk of fire in the Malua Forest Reserve. A Conservation Management Plan was written for the Malua BioBank and reviewed by a team of respected scientists from local and international non-governmental organizations and research institutions. The rehabilitation process will include planting seedlings to reestablish key rainforest species and enhancing natural food resources for wildlife until the area regenerates into healthy tropical rainforest. Regular monitoring of forest regeneration, water quality and wildlife are just a part of the comprehensive conservation strategy. The Malua BioBank will also work with local communities and landowners to uphold the prohibition against hunting within the reserve and to prevent illegal logging.
What will happen to the Malua BioBank at the end of 50 years?
The current conservation rights to the Malua Forest Reserve will last for 50 years. At the end of this time, the objective is for the non-wasting endowment to be fully capitalized. All endowment funding can be used either to renew the conservation rights to the Malua Forest Reserve or to establish a conservation bank on another property with high biodiversity value.
It is important to note that the Malua BioBank involves private investors and one of the primary objectives of the project is to make it commercially successful through the sales of Biodiversity Conservation Certificates. The level of investment in the project will be commensurate with actual and likely Certificate sales. If the level of investment is less than $10 million, the area protected on a long-term basis may be less than the full area of the Malua Forest Reserve. The Steering Committee of the Malua BioBank will determine what this smaller Protected Area is. In the event a Protected Area is created, the Malua Trust will use its income on the Protected Area and the obligations of the Sabah Government will apply only to the Protected Area.
In the event that the Conservation Management Plan is breached, the Malua Trust may take any steps necessary to seek damages from RBJ, to withhold distributions or to undertake remediation efforts. Damages owing in the case of irreparable breach of the conservation management plan could include repayment of all investment monies and the sum of all revenue from sales of Biodiversity Conservation Certificates to the Malua Trust.
The ultimate aim of the Malua BioBank is to shift land use towards rainforest restoration and preservation, catalyzing a new economy of conservation in the process. Once an area has established an economic framework to support long-term sustainable use, money can be moved to other critical conservation areas to initiate the process again. In this way, the Malua BioBank model can act as a stepping stone toward the long-term preservation of high biodiversity areas throughout a region or country.