Wildlife Compensation Schemes; the Newest Component of ECF’s Conservation Agreements

Discovering a high level of interest and commitment for this new component of ECF's Conservation Agreements.

The second phase of the Eco-Corridors Fund for the Caucasus required the team to build off of the experience and knowledge gained from the first phase of the project, and with that adapting and adjusting to address new challenges. The interaction and damages by wildlife on livestock, bee hives etc. was acknowledged during ECF 1 through a solidarity scheme for the compensation of damages from wild predators. This was, and still is, a very innovative concept and was included in four conservation agreements in Georgia. The scheme was calculated as less costly than the commercial cattle insurance schemes on the market and the response was very positive. As a result, it was envisioned and now in practice to include wildlife compensation schemes into each of the new conservation agreements.

In 2023, long-time ECF supporter and expert on financial management of community-based organizations (CBOs) Anja Deinzer visited the Caucasus twice, traveling throughout Armenia and Georgia to carry out research and fact-finding regarding the ECF’s current and potential use of wildlife compensation schemes. During this time, she was able to review the existing solidarity and compensation schemes (as well as other measures), and develop an understanding of the main factors of success, failure and risks in these schemes. As an international financial management expert, and having worked in the Caucasus for years, she was then able to develop a set of recommendations on improving the setup and management of the existing schemes to secure their sustainability and manage the risks. The result is a comprehensive report which was presented to ECF staff, and recommendations that are now being implemented in phase 2 of the ECF programme.

The following Q & A presents the details of her findings and also provides an introduction to the concept of Wildlife Compensation Schemes. 

ECF: Wildlife Compensation Schemes are used around the world as a tool for long-term nature conservation. Can you explain what a Wildlife Compensation Scheme is? Anja Deinzer: In general terms, a wildlife compensation scheme is a financial support scheme that compensates for losses in livestock, beehives, plantations, orchards etc. that are caused by attacks from predators (“wildlife”). Many of these predators are subject to specific wildlife protection schemes and therefore must not be hunted down or killed. In order to set up a wildlife compensation scheme, a community-based organisation (this can be a farmers’ association, a cooperative, etc.) sets up a respective scheme with the overall objective to collect regular (financial) contributions from the participating members which then are used to compensate for financial damages caused by predator attacks. 

ECF: So, this means that the community is anticipating and then organizing their own form of insurance against these losses. How are Wildlife Compensation Schemes set up? AD: The setup of such a scheme is quite simple. In the beginning, the “items” to be covered by the scheme have to be determined (livestock, beehives etc.). Then the numbers have to be determined, plus a realistic market value per “item”. In the next step, a compensation level has to be set (for example: 70% of the market value). Last but not least, the scheme has to make an estimate on how many “items” will be destroyed by predators (for example: 5% per year). With this information, the annual financial damage can be calculated. Based on this, the annual contributions of the participating farmers can be calculated. 

For example, a village has 100 beehives from 10 farmers (10 each). Each beehive costs 100 EUR, so the overall financial value is 10,000 EUR. The estimate of predator loss is 5 %, meaning 5 beehives will be destroyed. The financial damage will be 500 Euro. In order to compensate for the damage, 500 EUR would be needed. Therefore, all 10 farmers need to contribute 50 EUR each to the compensation scheme. 

ECF: And how do these schemes function within the ECF programme? AD: In the framework of the ECF programme, different predators (bear, wolf, mountain lion etc.) are subject to protective measures, meaning they must not be hunted or killed. As a result their population increases which in turn increases predator attacks on livestock, beehives and other agricultural objects. And this, in turn causes financial damages to the inhabitants of the eco-corridors, sometimes forcing them out of business because they cannot afford the re-purchase of livestock, the re-planting of orchards and so on. This can lead to a negative sentiment towards nature conservation , the protection of certain predators and an overall decrease in acceptance and support of the programme. The Wildlife Compensation Solidarity Schemes within the ECF are intended to mitigate the financial/economic impact of the possible increasing number of predator attacks, so that the objectives of the ECF programme are still adhered to and supported by the locals. 

ECF: Can you provide a short summary of the findings of your fact-finding missions? AD: Five community-based organisations in Adigeni have set up individual solidarity schemes already 4 years ago during the first phase of the ECF project. These communities considered such a scheme as a very useful tool in the aforementioned set up. KfW agreed to cover a substantial part of the farmers’ contribution, given that the majority of livestock (in this specific case) was included into the scheme. In order to give the scheme a quick start, a very simple structure was implemented which meant not creating different categories and instead using a uniform amount per animal, per year. The community-based organisations agreed to that scheme, set up a self-governing structure to run the finances and started operating the scheme. 

This worked well for the initial two years, where the number of attacks was less than anticipated, but after that the number of attacks increased, so that the calculated contributions did not match the necessary payouts. Additionally, the market value of livestock rose substantially, so that the amounts that could be paid out were by far not enough to reimburse the real incurred financial damage. Which, in turn, led to a slipping acceptance of the solidarity scheme as a whole. Participation was still huge, but the members voiced clear criticism concerning the aforementioned parts of the scheme which in their opinion needed correction. 

In summary, we found that the concept of a solidarity scheme gained confidence quickly and is regarded as a very useful tool to mitigate economic risks from predator attacks. But in order to make it sustainable for the future, it has to evolve further. Firstly, there must be a differentiation in “items” included into the solidarity schemes (bull, cow, calf etc.), as they have very different re-purchase values. Secondly, the contributions per farmer has to be calculated based on the different animals included into the scheme. Last not least, the clear need was seen to have a contingency reserve (cash reserve) in the scheme, meaning that when financial payouts are higher than the collected contributions the scheme has to be able to compensate for the damage. The participation in the scheme is like a mutual promise of support, and if this promise is not met, the trust in the scheme would be shattered, and the scheme would probably fail soon after. 

ECF: Do these compensation schemes contribute to local community cohesion and mutual trust, as well as leadership? AD: The compensation schemes, more precisely the Wildlife Solidarity Compensation Schemes, are inherently a tool that can only be established when there is trust within the community. Essentially, the community decides to fill a pot of money jointly, so that members of the community can be helped in times of need. This requires self-governance – the ability to set up common rules that all members agree to stick to and respect – and trust, as the community trusts some of their members to act as trustees for the money and with it the leadership of the scheme. The setting up of the scheme itself shows that the communities in question have managed to develop or strengthen the so-called social capital necessary to create a community structure based on self-governance and the leadership that comes from that. 

ECF: In your opinion, what are the next steps for the ECF with this new information and recommendations?

AD: As a result of the fact finding, a new financial structure for the solidarity schemes was developed (categories/contributions/reserves) and discussed with the representatives of the community-based organizations to get their feedback. Responses were positive, so the suggestions were forwarded to KfW and subsequently cleared. Following this, the new set up will be implemented in the new conservation agreements effective in 2024. 

ECF: Do you have any final comments on your findings?

AD: The solidarity schemes were already a success story before the fact-finding mission, but the described next steps are needed to bring the scheme onto the next level. It proved its functionality, but because it was heavily used, topics for improvement popped up. This will continue, as the schemes are inherently a “work in progress,” but the direction and motivation observed is very positive and encouraging.

Thank you to all the locals who took time to contribute to the fact-finding mission and thank you to Anja, for her contribution to the ECF and for taking the time to speak with us.