Financial analysis

To make (parts of) projects financially viable, they need to generate tangible revenue streams that can be captured by a stakeholder. However, aside from revenues from ecotourism, there are no tangible revenue streams resulting from the projects. Ecotourism may contribute to funding the project at some of the wetlands linked to flood-based agriculture projects, though it is unlikely that it could fund a substantial part of the project. Revenues from ecotourism will go directly to the households and private sector companies as they sell their services, and only for instance an entrance fee or license fee paid by households and private sector companies could provide funding for the projects.

Biodiversity credits and carbon credits are a form of Payment for Ecosystem Services (PES). PES might provide a viable avenue for funding flood-based agriculture, though there are many challenges in setting up such schemes.^[1] One of the challenges is financial viability: financial viability requires sufficient, stable, and sustained payments for project investment and operational costs and acceptable rates of return for project investors (including public financers seeking societal benefits). While biodiversity credits could contribute to the overall funding of the projects, this is still a largely undeveloped market. Other ecosystem services, including the most important one – an increase in fisheries – are difficult to capture under a (privately funded) PES scheme. Certification of some form of rice and other products from flood-based agriculture may provide a more viable way to increase revenues and convince farmers to adopt it.

Hence, public funding would need to cover the majority of the expenses.

[1] See Canning, A. D., Jarvis, D., Costanza, R., Hasan, S., Smart, J. C., Finisdore, J., ... & Waltham, N. J. (2021). Financial incentives for large-scale wetland restoration: Beyond markets to common asset trusts. One Earth, 4(7), 937-950.