Rhino Bonds : Planet Money Investors will soon be able to bet on black rhinos. A conservation group is rolling out a 5 year, 50 million dollar rhino bond to help save the species.
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Rhino Bonds

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Rhino Bonds

Rhino Bonds

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Last year, the last male northern white rhinoceros died in Kenya, and his fellow rhinos had previously died off because of a reduction in territory and a huge increase in poaching.


Before he died, though, Oliver Withers had a chance to visit him. Oliver is the head of conservation finance and enterprise at the Zoological Society of London.

OLIVER WITHERS: And that's the end of the northern white rhino.


WITHERS: It happened, and we all felt very sorry and said, never again, but nothing's changing.

VANEK SMITH: Nothing's changing because rhinos have an economics problem, and the problem is wiping them out.

GARCIA: See; rhino horns are worth a small fortune to poachers, and protecting rhinos from poachers itself takes a small fortune. You need armed guards. You need fences.

VANEK SMITH: So Oliver and his team at the Zoological Society started to think about a different way to raise money for rhinos. The solution they came up with - rhino bonds.

GARCIA: Bonds, like, from financial markets.

VANEK SMITH: (Laughter) Yeah, rhino bonds.

GARCIA: You know, a bond that people can invest in with the express purpose of putting more rhinos in the world; in this case, more black rhinos.



GARCIA: And I'm Cardiff Garcia. Today on the show - the conservation impact bond aka the rhino bond.

VANEK SMITH: Rhino bonds - it's a new approach to conservation basically taking the financial markets into the wild.

GARCIA: So in this episode, we're going to look at how the rhino bond actually works and whether it will work and also what's the controversy behind the bond itself.


VANEK SMITH: Today's indicator is 5,500. That is roughly the number of black rhinos left on the planet. Back in 1970, there were around 70,000.

GARCIA: Oliver Withers says the main reason that number has gotten so low is poaching.

WITHERS: You know, we're talking about an animal that's walking around with a couple of horns of gold on its head just wandering around the bush.

VANEK SMITH: Ounce for ounce, rhino horn is one of the most expensive substances on the planet. It's sold as a cure for various ailments in Vietnam and China, and it's also used to make decorative carvings.

GARCIA: Oliver says one horn is easily worth more than $100,000. And that's just a huge incentive for poachers. On the other side, it takes money to protect the rhinos from poachers. You need fences, security systems, armed guards.

VANEK SMITH: The problem with current efforts to save and protect the rhinos, says Oliver, is that all this takes a lot of coordination, constant vigilance day and night.

WITHERS: Poaching - that is actually quite a difficult thing to budget for, right? It's criminal syndicates who are trying to maximize profits. They don't send a memo to the protected area to say we're coming over the western fence at midnight tonight.

GARCIA: The other problem, says Oliver, is that the current system does not tend to focus on long-term goals. Everyone is just kind of scrambling to make it from day to day. The money comes in a bit at a time and then just immediately goes to whatever is needed in the moment, so it makes it hard to plan and to get ahead.

VANEK SMITH: The result - fewer and fewer rhinos in the world. And Oliver is a finance and economics guy, and he says the plight of the rhinos just really strikes him as a very classic economic problem.

WITHERS: The way to look at it is imagine you're in the mythical economics 101 widget factory. You make widgets. You know, in this case, we're making rhinos.

VANEK SMITH: And this is where the rhino bond comes in.

GARCIA: Oliver and his colleagues got a team of conservationists together across five parks in Kenya and South Africa. The conservationists then put together a plan laying out what they would need to guarantee that fewer rhinos got poached and more baby rhinos got born. Altogether, it's about $50 million. That's what they would need.

VANEK SMITH: That $50 million will come from investors, investors who want to make a profit and who want to see more rhinos. And so here's how it works. Investors will buy a five-year bond - $50 million worth altogether. At the end of five years, these investors will get their money back with a little extra.

GARCIA: But that's only if the bond succeeds, and the bond succeeds if the number of rhinos in the five parks reaches a certain threshold.

VANEK SMITH: Cash on the rhino.

GARCIA: Cash on the rhino.

VANEK SMITH: Cash on the rhino.

GARCIA: That's probably how they sold it. Right now, there are about 700 rhinos in those five parks. Oliver says that in five years, they expect there to be about 220 more rhinos.

WITHERS: Of that 220 additional rhinos, we believe that we can attribute probably a hundred of those to the rhino impact fund.

VANEK SMITH: So a hundred extra rhinos at the end of five years because of the coordinated team efforts, the infusion of cash up front that allows for the long-term planning and a focused team. Now, if the number of rhinos does not meet the bond's promise, investors lose money. But if the number of black rhinos does meet the bond's promise, investors can feel like they really made a difference. And they'll get their money back, plus a bit extra - a profit for the risk they took.

GARCIA: And that money, the money to pay back those investors, will come from us, really, from governments and taxpayers all over the world. Oliver and his team are looking to governments and foundations for the money to back this bond.

VANEK SMITH: It does seem a little strange that, like, the public sector would be potentially paying investors for taking, like, a risk with money.

WITHERS: The reality is is that we've seen that money be invested into biodiversity. We haven't achieved the results we expected. If we use some of that to pay investors for taking on that risk, the public is actually better off.

GARCIA: Oliver says it to this point, governments and foundations have been donating money with no guarantee of results, and the results, frankly, have not been great. Under this new model, the bond model, wealthy investors take all the risk. They buy the bonds and hope that the rhinos proliferate. They put up the $50 million.

VANEK SMITH: If the rhino numbers do meet expectations, then and only then will the governments and taxpayers pay out. They will pay back the investors who bought the bonds. If the rhino numbers fall short, the investors lose money, and the governments don't pay anything at all. Still, Oliver says, governments have been skeptical of this and slow to sign on.

GARCIA: Investors, though, they've been jumping at the idea. Glen Jeffries is with Conservation Capital. He's the finance manager for the rhino impact bond. He says that interest from private investors has been overwhelming. And that's good news, he says, because investors will want to see where their money has gone. They're going to want to track how it's used, and that is going to bring rigor and accountability to conservation spending.

GLEN JEFFRIES: As often, you may see that conservation donating overheads may be quite high or very difficult to calculate. There's no hiding under this model. It's very clear what things cost and what they cost.

VANEK SMITH: Is there a danger with results-based models? It kind of creates an incentive to, you know, maybe potentially game the system in ways that aren't the best thing for the system.

JEFFRIES: Interesting question. I don't have an answer. I think that there's always a danger around focusing solely on the end result rather than the journey. I think because in this context we are counting rhinos, if there are more rhinos, that's a very positive result.

VANEK SMITH: Still, ecosystems are incredibly complicated. Focusing on one animal could end up being problematic, create unexpected issues, put pressure on other species. Still, Glen has faith in this plan, and ultimately, he hopes to use this model to achieve more holistic, larger scale results.

JEFFRIES: The ultimate goal here, I think, is to do this at a whole protected area level.

VANEK SMITH: Like the Great Barrier Reef or something like that.

JEFFRIES: You've got - exactly, exactly. This is exactly the sort of thing that we want to aim for. That said, we have to get this one right first.

GARCIA: Oliver Withers of the Zoological Society, he's especially glad that they've started with rhinos because he grew up in South Africa seeing them all the time. He says he just has a soft spot for them.

WITHERS: As somebody said to me, they're very moody.

VANEK SMITH: They're moody? Like, they're cranky?

WITHERS: Yeah. They're just, you know, grumpy old men.


WITHERS: Just want to be kind of left alone to eat their food. They're not going to walk very far. They're not as large as the elephants. And they're not fast, et cetera. But they're just the, you know, closest thing in my mind that we have back to dinosaurs almost. You know, there's this whole kind of modern campaign around chubby unicorns, which is also what they are.

VANEK SMITH: Oliver and Glen say the chubby unicorn bond will hopefully hit the market early next year. This episode was produced by Darius Rafieyan, edited by Paddy Hirsch and fact-checked by Emily Lang. THE INDICATOR is a production of NPR.


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