To improve the income and environmental sustainability of 4,000 Asháninkas indigenous people living in 22 peruvian communities, Instiglio provided technical assistance in the prototyping of a DIB. As part of the assistance, we defined design principles, payment metrics, and indicators. Moreover, we also provided recommendations on payment weights, pricing methodology, target setting, and adjustment mechanisms to external factors (e.g. climate, pests, diseases) in order to improve the potential of the Development Impact Bond.
Country
Peru
Timeline
2018
Type of Project
RBF Design or Implementation
Sector
Agriculture
Project
Partners
project description
To improve the income and environmental sustainability of 4,000 Asháninkas indigenous people living in 22 peruvian communities, Instiglio provided technical assistance in the prototyping of a DIB. As part of the assistance, we defined design principles, payment metrics, and indicators. Moreover, we also provided recommendations on payment weights, pricing methodology, target setting, and adjustment mechanisms to external factors (e.g. climate, pests, diseases) in order to improve the potential of the Development Impact Bond.
The Asháninkas depend on forest resources for their subsistence and rely on agriculture – particularly cocoa and coffee – as their main source of income which they use to support their livelihoods and cover basic needs like health and education.
They are the weakest actor of the value chain given their isolation and the corruption of middle-men who usually scam producers due to limited numeracy skills and low bargain power.
- Productivity is low and their territory is extremely vulnerable to diseases.
- Their lands are threatened by illegal logging and invasions from coca growers.
- This generates poverty, deforestation and forest degradation for the community.
The Climate-Smart Agriculture DIB seeks to improve income and environmental sustainability of the aforementioned community through:
- The increase in productivity and quality of the cocoa and coffee produced.
- Consolidation of their commercialization strategy into niche international markets that recognize the value of quality vis-à-vis the conservation efforts and history of the native communities.
- Upgrade Kemito Ene (currently an association) into a cooperative with a clear path for sustainability.
- Strengthen community governance over land use and conservation efforts.
- Learn from the DIB structure, looking into the ability of the funding mechanism to increase efficiency and to bring new players into the development of high-value chains with low-income populations.Instiglio provided technical assistance in the prototyping of the DIB. We defined design principles, payment metrics and indicators and provided recommendations on payment weights, pricing methodology, target setting, and adjustment mechanisms to external factors (e.g. climate, pests, diseases). As a key work component, we developed a financial model for the DIB, in which we established design elements such as payment schedule, payment function, and payment formula. Finally, we provided a high-level guidance on the cost-effectiveness analysis of the DIB.This is the second iteration and first scaling attempt of the first Development Impact Bond in the Western Hemisphere.
