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Delivering Conservation Outcomes on Private Lands:

Regenerative Ranching as a Tool for Biodiversity Conservation

September 6, 2017

Executive Summary

The idea of “working landscapes” that integrate agricultural and environmental benefits on private

landsi to enhance biological connectivity and expand the influence of protected areas is relatively

well established in Europe and the United States, where it has become part of public policy.

However, it is less well-developed in Mexico despite the country’s exceptionally high biodiversity,

extensive private land-tenure and livestock production, and a strong network of protected areas.

The Mexican Fund for the Conservation of Nature and its partners seek to formalize the concept of

biocultural working landscapes in the country to protect its extraordinary natural capital through

the empowerment of cattle ranchers in Mexico to become stewards of their natural resources while

maintaining sustainable livelihoods through the implementation of regenerative ranching practices.

Working in the semi-arid rangelands in the north and in the dry and humid tropics in western and

southern Mexico, this project proposes to 1. strengthen and mobilize knowledge networks within

the ranching community, 2. provide technical support, and 3. design and facilitate access to financial

mechanisms that allow ranchers to transition to a sustainable ranching operation. The project will

also integrate ranches into the national conservation framework by including them in the National

Biodiversity Monitoring System, ecological management policies and other national networks.

Project activities address landscape-scale biological connectivity, climate change mitigation and

adaptation strategies, community resilience and the mainstreaming of biodiversity in the primary

sector. Together, participating ranches, covering over 1.5 million ha, will form a mosaic of working

landscapes of restored natural rangelands, creating biological corridors across the country that help

to ensure the provision of ecosystem services, sustainable livelihoods, food security and a

prosperous future.

Introduction

Mexico is one of the world’s most diverse countries combining a rich and ancient cultural heritage

with extraordinary natural wealth. Although it only represents 1.5% of the world’s land surface, it

harbors an estimated 12% of global biodiversity, and is ranked within the top five megadiverse

countries worldwide. With 50 to 60% of its diversity still intact and some of the highest

environmental degradation rates in the world, the need to apply conservation strategies grounded

in long-term impacts is urgent. Mexico is also the world’s 6th largest producer of beef and 8th largest

of cattle (FAOSTAT 2017). Fifty-six percent of the national territory is dedicated to the livestock

industry (INEGI 2014) which is poised to keep growing (USDA 2017). Finally, a recent analysis

demonstrated that the agricultural and livestock sector in Mexico is responsible for 12% of the

country’s greenhouse gas emissions (BUR, 2015). Livestock production and environmental

conservation have long been at odds with each other and considered mutually exclusive. However,

the rapidly growing global demand for food and the equally rapid degradation of arable soils

require us to search for solutions that reconcile these odds and provide models for the long-term

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sustainability of our planet’s limited natural resources embedded within our fragile and complex

ecosystems.

The semi-arid rangelands in northern Mexico and the dry and humid tropics in the west and south

offer an excellent opportunity to develop such solutions, because they harbor a unique degree of

biodiversity (Wilson 1988) and are threatened by intensive land-use change and desertification

(Reynolds 2007, FAO 2010, Pool et al. 2011; INEGI 2015). Northern rangelands are also ecologically

adapted to grazing (McNaughton 1984, Wilson 1988). The three regions represent the predominant

ecosystems for livestock production in the country and also provide numerous provisioning,

supporting, regulating and cultural services such as food, water and forage, biodiversity and

nutrient cycling, climate regulation and erosion control, and recreation, to name a few (Havstad et

al. 2007, Risser 1988, FAO 2010, Yahdjian et al. 2015, Ávila et al. 2014). They are also among the

most vulnerable ecosystems to climate change, but have great potential for mitigating it, as well,

due to their high carbon sequestration capacity (FAO 2010). Unfortunately, decades of overgrazing,

poor management and conversion to crop production have impoverished soils resulting in lower

water retention, loss of vegetation cover and diversity and nutrients, and erosion - a process of

desertification with cascading effects on native flora and fauna and ecosystem services (Manzano et

al. 2000, Flechet 2007, Brunson & Huntsinger 2008, Lira-Noriega et al. 2007). Coupled with the

introduction of exotic species, such as buffel grass (Cenchrus ciliaris), and shrub encroachment,

these land-use changes are resulting in the fragmentation of biological corridors and the disruption

of natural processes that ensure the environmental health of the region and the resilience of its

ecosystems and communities against the uncertainties of climate change and the rapidly growing

demand of global food markets.

While removing livestock was once thought to be the only way to restore these ecosystems and

their services (Jensen 2001, Brunson & Huntsinger 2008), the last several decades have seen

growing interest in the development of “working landscapes” as part of the conservation solution

(Alexander & Propst 2002, Banks 2004, Resnik et al.2006, Brunson and Huntsinger 2008, de Snoo

2012). Ranchers and researchers around the world – including the project’s regions – have

demonstrated that grazing and land management plans that take into account the original

ecosystems can benefit both biodiversity and ranch productivity (Stinner et al. 1997, Guevara et al.

2004, Brunson & Huntsinger 2008, Metera 2010, Schwartz 2013; Sander 2015). In this context,

conservation and ranching complement each other and together offer a solution that bridges the

economic development and environmental divide.

Regenerative livestock production as a tool for conservation and economic empowerment

Building on over 15 years of experience of innovative and forward-thinking ranchers in Mexico, our

theory of change is that regenerative livestock production can be used as a tool for conservation

and can empower ranchers to become stewards of the environment while sustaining healthy

businesses and livelihoodsii, iii.

Regenerative agriculture and ranching are food production models based on restoring the natural

nutrient, energy and water cycles of ecosystems lost after decades of mismanagement. Dating back

to the 1980s, the model combines several different methodologies including Allan Savory’s Holistic

Management (Savory 2016), André Voisin’s rational grazing (Voisin & Lecomte 1962),

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silvopastoralism, carbon farming, organic agriculture and permaculture, among others. Specifically,

it targets restoring soil structure and fertility by applying practices that increase organic matter and

water infiltration and that promote functional ecosystems (Regeneration International, 2017). In all

three of the project’s regions, cattle management is directly related to the availability of water,

making integrated watershed management a fundamental tool for economic and ecological health

of communities and their overall well-being, because what happens upland invariably affects

lowland populations. In this context, regenerative and silvopastoral systems offer a new type of

social and ecologically responsible livestock production model (Halffter, 2016).

There is also significant potential for climate change mitigation and adaptation, as evidenced by the

inclusion of the recuperation of grasslands for mitigation efforts in Mexico’s Nationally Determined

Contribution presented before the United Nations Framework Convention on Climate Change

(2015). Mitigation comes from carbon sequestration derived from increased vegetation cover and

root biomass and from lowered deforestation rates. Methane emissions from cattle are also

lowered due to improved nutrition, biological decomposition of waste (Halffter 2016) and increased

breeding efficiency (FAO 2013a). The cascading effects of restoring soil fertility on ecosystem

function and composition increase adaptation and decrease vulnerability to climate change (FAO

2010, Thornton & Herrero 2010, FAO 2013a, FAO 2013b). While climate change scenarios in the

north predict increased temperature and less rain, studies indicate that hurricane intensity is

already higher in the western and southern parts of the country (INECC 2016). Under both

circumstances higher vegetation cover, soil improvement and biological corridors are key to

reducing vulnerability.

In the semi-arid grasslands of northern Mexico, regenerative ranching (RR) uses cattle to mimic the

natural disturbance patterns of the large herbivore herds (e.g. bisons) that have long disappeared

from North America. In this model, cattle essentially provide the disturbance needed to help water

infiltrate the soil and to stimulate new plant growth, and the nutrients to increase soil fertility

(Regeneration International 2017). The key to the successful restoration of the nutrient, carbon,

energy and water cycles are long resting periods between short, intensive grazing events (Voisin &

Lecomte 1962, Pinheiro 2017). As soil health is restored, perennial grasses reappear and root

networks expand to help the soil retain water and preventing erosion. This, in turn, has positive,

cascading effects on ecosystem function and services by providing both food and habitat for native

and migratory wildlife and forage for livestock (McNaughton 1984, Watkinson & Ormerod, 2001,

Sander 2015); increasing carbon sequestration (Lange et al. 2015, FAO 2010); and preventing

desertification. Grazing also helps mitigate impacts of invasive species that can increase fuel loads

for wildfires and outcompete native species (Brunson & Huntsinger 2008). It has also been shown

to increase resistance to exotic annual grasses following wildfires (Davies et al. 2016). Native

grassland species also help control natural wildfire cycles (Frausto Leyva, J.M., personal

communication).

Similar to regenerative ranching in the north, agroforestry in southern and western Mexico aims to

optimize production by raising the level of organic matter in the soil, fixing atmospheric nitrogen,

recycling nutrients, modifying microclimate, controlling migratory agriculture, and diversifying

outputs. In these humid tropical regions, the use of silvopastoral systems that integrate livestock

production with the cultivation of forest products and forage (Allen 2011) offer a sustainable

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production model that reduces the impact of traditional methods (Mahecha 2002). These systems

apply a range of management practices including multi-species crops, crop rotation, living fences,

riparian corridors, application of manure, pastures, and rotational, multi-species grazing to help

create habitat heterogeneity (Pezo & Ibrahim 1998, Murgueitio 1999). Silvopastoralism produces

environmental goods and services (Field 2003), such as higher quality and production of milk, meat,

wood, fruits, seeds, and resins, on the one hand, and increased soil fertility, water retention,

nitrogen fixation, erosion control, biodiversity and decreased methane emissions from cattle

(Giraldo 2000, Montenegro & Abarca 2000, Pagiola et al. 2004, Miranda et al. 2008, Ibrahim et al.

2009, Pinheiro 2017).

Soil and pasture conditions in the north are such that a rancher needs, on average, 24 ha to support

one animal unit (cow and calf), whereas only 1.81 ha in Veracruz and 8.5 to 9 ha in Jalisco and

Sinaloa, respectively, because of greater water availability (SEMARNAT 2014). The national average

calf crop rate is 50-60% (FIRA, personal communication). The potential economic returns of

regenerative ranching seem almost too good to be true: ranchers in the north, where annual

rainfall is less than 300 mm, who have been practicing RR for the last five to 15 years report

progressively doubling to tripling their carrying capacity and increasing their calf crop to 80-90%

(CLO, personal communication; MRR 2017). They also report the return of permanent water

sources such as streams and ponds and year-round forage either in pastures or as silage produced

on the ranch, plus additional reserves (MRR 2017). In silvopastoral systems, producers report higher

production and better-quality of milk and other marketable goods, such as wood, fruits and resins

(Mahecha et al. 1999, Morales 2002, Cruz 1999, Dagang & Nair 2003, Casermeiro et al. 2008,

Maldonado et al. 2008, Ávila et al. 2014,).

Working landscapes and sustainable ranching (Savory’s Holistic Management, in particular) are not

without criticism, though, as some believe the results are unverifiable or overly ambitious save-all

approaches to conservation and economic well-being that may not account sufficiently for the

negative impacts of grazing (Brunson & Huntsinger 2008, Briske et al. 2014). However, increasing

personal experiences and a growing body of literature suggest that the positive economic and

environmental returns of well-managed cattle ranching are concrete and achievable (Stinner et al.

1997, Brunson & Huntsinger 2008, de Snoo 2012, Schwartz 2013). It is important to understand

that to obtain these results requires a solid understanding of the social and natural conditions of

the environment; significant investment on behalf of the ranch in time and effort and basic

infrastructure; support from an experienced community of peers; and conviction (Pinheiro 2017).

However, when brought together they demonstrate that regenerative ranching is good business.

Financing regenerative ranching

A first step in understanding the challenges of RR practices is determining the implementation cost.

FMCN, in collaboration with its partners,iv developed a preliminary cost analysis for the semi-arid

regions of northern Mexico where water availability is the most important limiting factor. The

results suggest that a conventional ranch with pastures in average condition and a moderate water

distribution network would need to invest 30-32 USD per hectare in hydraulic infrastructure and in

electric fencing to apply the basic RR grazing scheme; or about 125,000 USD for a ranch of 5,000 ha.

For silvopastoral systems, the estimated cost is 485 USD per hectare (World Bank 2014). Ranches in

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southern and western Mexico fluctuate between 2 and 15 ha per ranch, showing a much higher

population density.

FMCN also analyzed the return of an investment of 142,000 USD borrowed at a 12% compound

interest ratev over eight years under the expected performance of the RR model. The analysis

suggests that, within five to six years, a rancher will begin to see a financial return on their

investment as a result of the increase in pasture carrying capacity and calf crop supported by

improved soil productivity and cattle health. (Note: Managing cash flow will be an essential

component of the model.) While the numbers might make sense on paper and to RR ranchers,

several cultural, economic and technical barriers prevent ranchers from effectively making these

types of investments despite the potential rewards. Specifically, FMCN identified the following

three principle challenges: 1. Aversion to change, 2. Borrowing costs that are out of reach, and 3.

Lack of long-term financial planning and access to information. This project seeks to capitalize on

the existing willingness of ranchers to apply regenerative management methods that is the driving

force behind successful sustainable land use initiatives to date (Hruska 2017). It aims to address the

challenges mentioned and scale up the implementation and impacts of RR to the landscape level of

1.5 million ha by strengthening and mobilizing knowledge networks in the ranching community; by

designing financial mechanisms that make investing in the long-term, sustainable operation of a

ranch viable for ranchers; and by integrating these properties into the larger framework of

conserving the country’s land and natural resources – an important source of pride for many

producers.

Relevance and urgency for intervention

Despite the personal and cultural values placed in the land and the economic “sense” of the

regenerative ranching model, adoption is limited and slow. Conversely, biodiversity is disappearing

at unprecedented rates (Ceballos et al. 2017) and climate change threatens the ecosystems services

that are key to maintaining the current, let alone future, human population. Aggressive land-

grabbing practices, illegal conversion of grasslands for input-intensive, cash-crop production, the

illegal drilling of wellsvi, and cutting down forests for pastures and crops are imminent threats to the

country’s ecosystems and local communities. Unfortunately, for many struggling private and ejido

ranchers, the perceived short-term benefits of deforestation and of lucrative offers to purchase the

land or rights outweigh the real, long-term benefits of investing in a sustainable, regenerative

ranching business. It is therefore imperative to strengthen the competitive edge of sustainable

ranching by investing strategically in the development of regenerative economies to accelerate

their positive impact at a landscape scale.

Project Description

The goal of the project is to develop and scale up sustainable economic models for livestock

production that integrate environmental stewardship and biodiversity conservation.

The project has three objectives:

1. Build capacity within the Mexican ranching community to create a community of practice

and generative network that foster a culture of long-term economic sustainability and

environmental stewardship.

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2. Provide financial tools to achieve sustainable, positive economic returns and an

environmental impact through the regeneration of ecosystems.

3. Integrate private, productive properties into Mexico’s national conservation strategy and,

through proof-of-concept, strengthen policies that support biological connectivity in private

lands across the country.

Objective 1: Build capacity within the Mexican ranching community to foster a culture of long-term

economic sustainability and environmental stewardship

Building knowledge systems – networks linking information to action – has shown to be a significant

contributor to successful agricultural development in Mexico (McCullough & Matson 2016). The

project will focus on strengthening knowledge-generation and sharing capacity at both the

individual and community levels.

The project team will carry out a baseline socioeconomic survey. It will be developed and

distributed with the support of professional associations and networks, such as the Regenerative

Ranch Management network (MRR) and the National Association of Diversified Ranchers (ANGADI),

to understand the financial challenges ranchers face, borrowing culture and capacity,

environmental literacy, and general concerns about their operations and livelihoods. The results will

help design a training program and also be used to inform the design of the financial tools the

project seeks to implement to facilitate the transition to a sustainable ranching operation

(discussed in the next section).

Following a separate basic needs assessment among both extensionists, who are the primary

agents of information and technical support, and ranchers, a training program will be designed to

promote the implementation of sustainable ranching practices, awareness of ecosystem services

and conservation measures. The program will be divided into training for extensionists, and for

ranchers who will be applying new knowledge directly on their land. Additionally, based on the

results of the 2014 National Agriculture Survey (INEGI 2014), which suggest an underdeveloped

culture of financial planning and investment among producersvii, the project will include financial

planning and management in its training program, and ranchers will also receive tailored financial

planning assistance throughout to reinforce financial expertise.

To implement the training program, the project will draw from a variety of successful education and

outreach models such as the Nevada Range Management School, rancher-to-rancher mentoring

and voluntary training farmers, among others, to effectively reach ranchers and ensure the

sustained application of new knowledge (UNR 2008, Gregson 2013, Kiptot & Franzel 2013). It will

also develop technologies that leverage the country’s significant smartphone penetration and

cellphone usage among agricultural producers (INEGI 2014, ECLAC 2016) to help unify and enrich

knowledge on regenerative ranching and conservation, optimize its dissemination, strengthen and

integrate the community of technical experts, and expand its geographic reach.

In western Mexico, in the state of Jalisco, specifically, the project will leverage existing initiatives

through the state’s Rural Development Agency (SEDER), which recently launched a program to

accelerate the adoption of a landscape-level restoration approach to agricultural production. The

initiative seeks to improve ecosystem resilience and connectivity, integrate rural landscapes with

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long-term planning, contribute to human well-being, and recover ecosystem functions. This

program matches funds from SEDER and SAGARPA to establish productive pastures alternating with

forage forest species in areas already dedicated to grazing within a property that has CONAFOR´s

Payment for Ecosystem Services. The purpose is to incentivize that areas outside the conservation

scheme start with a productive reconversion that could reduce pressure on surrounding forest

resources. The existing Intermunicipal Associations are the technical agents that operate this

program.

Extensionists and ranchers will work together to apply their knowledge to the land beginning with

evaluations of each participating ranch’s environmental and productive conditions, its financial and

human resources and what its goals are. Based on the evaluation, they will draft a regenerative

ranch management plan that includes the new grazing model, the infrastructure and financing

needed, and the training that ranch staff will require to carry-out the plan. They will also define a

manageable timeline that will phase in the investments that need to be made to reduce the upfront

costs of their transition.

Strengthening information-sharing platforms within the ranching community will be essential to

ensuring the long-term existence and accessibility of knowledge, its effective use, and to achieving

the landscape-level impacts the project seeks. In fact, several studies demonstrate that producers

involved in regenerative and community-based resource management build stronger networks and

are more likely to share information (Kaboré & Reij 2004, Ouedraogo & Sawadogo 2005, Gregson

2013, Kiptot & Franzel 2013, De Villiers et al. 2014). The project will use the concept of generative

networks that are “designed to be a platform for generating multiple, ongoing kinds of social

impact, not just accomplishing a single outcome” (Cleveland et al. 2015) to frame the development

of a cohesive community of practice within the sector. Currently, several self-organized networks of

ranchers exist, such as the Pasticultores del Desierto Foundation and MRR, but they lack the

experience and the human and financial resources necessary to reach that scale. The project will

look to make strategic investments in these and similar grassroots initiatives to accelerate their

potential for impact. Investing in technology platforms that bring together practitioners, scientific

knowledge, and technical support will also be a key focus of this objective. Finally, the project will

organize an annual or biennial conference, modeled after the Land Trust Alliance Rally in the United

States, to further strengthen the professional development of ranch and rangeland management

practitioners.

Objective 2: Provide financial tools to achieve sustainable, positive economic returns and an

environmental impact through the regeneration of ecosystems.

Investment in infrastructure on behalf of a ranch will often be required in order to implement

better practices and apply RR methods. The project seeks to help ranchers access the financial

resources they need to make these investments in an economically responsible way. Parallel to the

baseline socioeconomic survey of ranchers mentioned earlier, the project team will conduct a

systematic review of existing agricultural credits, guarantees and subsidies offered by Mexico’s

agricultural development bank FIRA and other agencies and institutions to improve livestock

production on both private and ejido landsviii. It will also review the requirements producers must

meet in order to access these. Based on these results and the survey, the project team will

determine whether the existing tools are effective for advancing regenerative ranching among

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small to medium scale livestock producers, and adapt them or design and implement new financial

mechanisms that take into account the production and environmental goals of the regenerative

ranching model and the needs of the producers.

Based on the results of FMCN’s preliminary financial analysis of the transitioning to sustainable

ranching – which suggests that traditional agricultural lending schemes are too expensive for

ranchers – FMCN is exploring mechanisms to incentivize producers to transition away from their

business-as-usual production to a sustainable ranching operation. The project team will identify and

partner with financial institutions with experience in financing for rural development and impact

investing to design blended finance mechanisms (combining subsidies, grants and loans) that will

help ranchers investment in the sustainability of their operations and conserve their lands. The

team will work to reduce a ranch’s debt burden if loans are necessary for financing, and negotiate

alternative incentives for producers to borrow, as needed. Examples of alternatives include

streamlining application procedures and minimizing their costs; subsidized guarantees; alternative

guarantees (i.e. personal property such as cattle instead of real property or land); and flexible

payment plans, among others. The team will make identifying alternative revenue streams that

leverage the added biodiversity value of RR a priority to ensure positive cash flow for ranches

(Brunson and Huntsinger, 2008). Examples include payments for ecosystem services (PES) like water

provisioning and carbon sequestration, and other activities like ecotourism, hunting, and apiculture.

PES and carbon credits, in particular, will be included in financial packages following the successful

implementation of programs such as the Monarch Butterfly Fund in the state of Michoacán and

Ambio with Plan Vivo in Chiapas. Once the project team is ready with the financial packages, it will

work with extensionists to include them in the ranch management plans they develop with each

participating rancher.

FMCN has extensive experience designing financial mechanism to promote sustainable business

practices that are aligned with biodiversity conservation and watershed management. For example,

with financing from the Inter-American Development Bank, it launched the Forestry Investment

Program (FIP). In partnership with the rural development bank FINDECA, FMCN designed a capacity-

building and loan program and has successfully placed over 2 million dollars in loans to 16

community forestry companies to improve their operations. Another example is the multi-sectorial

partnership FMCN helped negotiate to finance the Monarch Butterfly Fund, which provides

matching funds from a private endowment worth 7.5 million USD and federal and state PES

programs to communities that help conserve the monarch butterfly’s habitat. To-date, the Fund has

disbursed 3 million USD. These payments for ecosystem services are matched by the National

Forestry Commission (CONAFOR).

Objective 3: Integrate private, productive properties into Mexico’s national conservation strategy

and strengthen policies that support biological connectivity in private lands across the country.

Monitoring the biological response to implementing RR practices will be essential to determining

their success and that of the model, and will be done at two levels that will be grounded in common

methodologies: short-term monitoring for ranch management and grazing plans, and long-term

ecosystem monitoring. Biological monitoring for management will be carried out annually by the

ranchers themselves as part of their grazing management plans. The project will draw from

methodologies of the US Forest Service, the US Bureau of Land Management and current local

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practices to design locally adapted monitoring plans that take into account ranchers capacity and

needs and that allow them to make impactful management decisions year-to-year. Many ranches

already monitor biodiversity on their properties to varying degrees; the project will help

systematize these efforts to include them in the larger monitoring framework.

As part of the long-term biological monitoring effort, FMCN will collaborate with government

agencies and academic institutions to coordinate surveys on each property twice a year, before and

after the rainy season. Long-term monitoring will be carried out by trained monitoring teams to

ensure quality and standardization of the data collected. Ranchers interested in participating in this

effort will be trained accordingly. FMCN will coordinate these monitoring efforts with existing ones,

in order to include all the data into the National Biodiversity Monitoring System (SNMB)ix. This RR

proposal will complement the SNMB well by contributing data from agricultural and ranching sites

in Mexico, and it will also benefit from the long-term data management and storage offered by the

SNMB.

The SNMB methodology will be used to monitor biodiversity, while the Global Water Watch model

will be applied to monitor water quality in streams and rivers. The project will use the Ex-Ante

Carbon-balance Tool (EX-ACT), which is an appraisal system developed by the FAO to provide

estimates of the impact of agriculture and forestry development projects, programs and policies on

the carbon-balance. The carbon-balance is defined as the net balance from all greenhouse gases

(GHGs) expressed in CO2equivalent that were emitted or sequestered due to project

implementation, as compared to a business-as-usual scenario. Remote sensing will be used to

assess land use change. The project will also apply social and economic metrics to measure well-

being among ranchers participating in the program, gender issues, and the net profit in every ranch.

Together, the results will contribute to landscape-scale, watershed management and help meet the

commitments laid out in the National Strategy for Biodiversity, the National Strategy on Climate

Change and the Sustainable Development Goals.

Finally, several land use planning instruments exist that promote conservation and responsible

natural resource management, such as Voluntarily Declared Natural Protected Areas and Wildlife

Management Units (UMA), among others. The project will facilitate the process to register

properties under these programs if their owners are interested. It will also work with relevant

agencies and organizations to lobby for stronger public policies that benefit biocultural working

landscapes using the results from the project. Developing a national policy will significantly advance

the country’s conservation and development goals (Llano & Fernández 2017).

Budget

The budget considers funding for design, implementation, and monitoring and evaluation of the

project over a period of 10 years, and combines sinking funds with a line of credit. We expect to

start with 15 ranches in Year 1 and to phase in 25-30 new ranches per year over 10 years.

1. 4 million euros for FMCN for start-up and project implementation to coordinate the

project, perform baseline surveys, design and implement capacity-building programs and

provide technical assistance throughout the projects, seek additional funding to scale-up

the initiative, design a communications strategy, promote partnerships with financial

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institutions (banks), and ensure flow of resources between financial institutions and

producers. This contribution will release an equivalent deposit from the Global

Environment Facility, through the World Bank, for the integrated management of coastal

watersheds in western and southern Mexico.

2. 5.5 million euros for biological monitoring training and surveys over the 10-year period.

This contribution will release a matching contribution of up to 4.6 million euros from the

Global Environment Facility, through the World Bank, for the integrated management of

coastal watersheds in western and southern Mexico.

3. 2 million euros to develop innovative financial instruments for ranchers and to administer

the credit line.

4. 40-million-euro credit line to the government of Mexico to offer financial tools to ranchers

through its agencies in order to invest in transitioning to sustainable ranching.

The project will seek cost-sharing opportunities by combining its activities with existing programs

and events (e.g. biological surveys, the SNMB and trainings), and co-funding for others (e.g.

knowledge-sharing platforms, Regenerative Ranching Conference).

Risk analysis and sustainability

Loan contracts will be legally binding and ranchers will be expected to provide collateral to back

them. FMCN recognizes that the greatest risk to this project is that ranchers default on their loans,

hence the importance of 1. understanding their debt capacity, 2. diversifying the kind of financing

they receive to minimize the debt burden, and 3. providing them with the resources they need to

make informed decisions. The FMCN will partner with financial institutions, such as FINDECA, which

are legally authorized to provide loans and have extensive experience with lending to agricultural

producers.

A second risk is that ranchers will not apply RR practices after receiving financial support or beyond

the project’s end. To mitigate this risk, the project team will, first, design all financial support (loans

and subsidies) to be conditioned on the implementation of RR, and ranchers may incur penalties for

not following the terms of agreement. Second, ranchers will be expected to contribute matching

resources, in-kind or financial, in order to access certain financing, technical support or other

services offered by the project. This personal investment will help incentivize them to apply RR and

conservation practices. This model has been successful in several earlier initiatives (CLO, personal

communication). Finally, regular follow-up with ranchers and site visits throughout the project will

help mitigate this risk; this will also help identify issues or difficulties before they become problems.

The most import risk-mitigating activity, however, will be building a cohesive community of

practitioners that leverages the strong cultural identity of the ranching community and its sense of

integrity and pride. This also will be key to ensuring the long-term implementation and impacts of

regenerative ranching in the region.

Project Management and Partners

FMCN will oversee the design of the overall framework of the project; coordinate the

implementation of each component; and monitor and report progress and results to donors. It will

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also oversee and implement project evaluations, and work with multi-stakeholder groups to

advance public policies that promote working landscapes and biological connectivity.

Current project partners in each region include the following:

➢ Sonora, Chihuahua and Coahuila: Cuenca Los Ojos, Fundación Pasticultores del Desierto,

Rainmaker Trust Fund, IMC Vida Silvestre, and the National Autonomous University of

Mexico.

➢ Veracruz: Fundación Pedro y Elena Hernández, Espacios Naturales y Desarrollo Sustentable

and Senderos y Encuentros para un Desarrollo Sustentable Autónomo, and the Institute of

Ecology.

➢ Jalisco: University of Guadalajara, Espacios Naturales y Desarrollo Sustentable and the eight

existing intermunicipal associations.

➢ Sinaloa: Conselva, Costas y Comunidades.

Additional partners include Aliança da Terra, a Brazilian non-profit specialized in sustainable

agriculture value chains, which will support baseline ranch evaluations. FMCN will collaborate with

several financial institutions to design financial aid packages, such as the French Development

Agency, the Interamerican Development Bank, Financiera Nacional de Desarrollo (FND), FIRA,

FINDECA, and others with expertise in blended finance and impact investing like SVX.MX.

Practitioner networks such as Pasticultores del Desierto, MRR, ANGADI, and the International Land

Conservation Network will help the project team reach ranchers throughout the region, first, and

then throughout the country in a second phase. ILCN will connect the initiative to the larger

international effort to promote conservation on private lands. MRR will also help to connect the

project with extensionists and to design and coordinate the training programs. Finally, FMCN will

work closely with government institutions in all aspects of the project. Partner agencies include

CONAFOR, the National Commission for Protected Areas (CONANP), and the National Commission

for the Knowledge and Use of Biodiversity (CONABIO), along with the governments of the states of

Chihuahua, Sonora, Coahuila, Veracruz, Jalisco and Sinaloa.

i In this proposal, “agriculture” refers to both crop and livestock production; “producer” refers to an individual or company involved in agricultural production; and “rancher” and “ranch” refer to the individual, company and/or property that produces livestock. In the context of the project’s activities, “producer” and “rancher” may be used interchangeably. “Private property” in this proposal refers to non-public land; specifically, land owned by private individuals and by ejido or indigenous communities. ii Livestock, henceforth, refers to cattle. However, the management methods described in the proposal are not limited to cattle and can be applied to other herbivorous livestock species (e.g. sheep and goats) depending on the geographic and environmental conditions of a ranch. iii In this proposal, regenerative ranching refers to ranching that focuses on restoring soil fertility and ecosystem services as practiced by ranchers in Mexico, whereas “sustainable”, “well-managed” and “responsible” ranching are umbrella terms that include a variety of ranching practices and schools of thought that integrate long-term economic and environmental sustainability (e.g. regenerative, holistic, rational, silvopastoral). iv The projection was adapted from Jorge Ramirez Kolher in close collaboration with the environmental and ranching organizations Cuenca Los Ojos (CLO), Pasticultores del Desierto Foundation, and the Rainmaker Trust

12

Fund (RTF), and with feedback from FIRA and members of the Regenerative Ranch Management network (MRR). The projection uses herd and cost data provided by CLO. v Based on conversations with FIRA, this is the minimum interest rate a rancher can expect to receive through its lending programs. vi According to local ranchers familiar with the issue, it is common practice to pay the fine for illegally drilling a well rather than to obtain the appropriate permits to do so, because it is cheaper and faster. As a result, water usage is poorly regulated, if at all. vii Results show very low borrowing rates, on account of high interest rates and too many requirements, with the vast majority of loans and credits used to satisfy immediate needs such as supplies and wages, instead of long-term investments. viii Communally-owned lands ix The SNMB, which is led by CONABIO, CONAFOR, CONANP, and FMCN received start-up funding from the Gordon and Betty Moore Foundation and secured long-term federal funding from the Mexican government. A second proposal, currently under review by various donors, seeks additional funding to consolidate the existing system and expand sampling to agricultural lands.

Appendix 1

Maps: Ecosystem Integrity, Protected Areas, and Land Tenure

Map 1. Ecosystem Integrity and Protected Areas. The map illustrates high indices of ecosystemic

integrity both within and outside of PAs, but also that PAs do not necessarily ensure maintenance of

ecosystem integrity (e.g. Janos Biosphere Reserve in Chihuahua), hence the importance of working with

the owners of the land and natural resources.

Map 2. Land Tenure. The map illustrates the extensive private and ejido land tenure of the Mexican

territory and demonstrates the potential for biological corridors and the landscape-level impact of

working with private and communal landowners.

Appendix 2

Financial Analysis – Regenerative Ranching

Appendix 2

Activities and Timeline

The project will be carried out in three phases: 1. Design and planning, 2. Implementation and 3.

Evaluation.

Cross-cutting 1 2 3 4 5 6 7 8 9 10

Produce map of stakeholders, roles and contributions.

Design and perform baseline socioeconomic survey.

Design technical assistance packages (financial, ranch and conservation).

Design project monitoring and evaluation plan.

Design communications plan

Perform assessments of individual ranch resources.

Extensionists and ranchers develop management and training plans.

Monitor progress of management plans.

Perform baseline evaluation of project.

Perform mid-term evaluation.

Perform final evaluation and report.

Objective 1

Design capacity-building programs for extensionists

Design capacity-building programs for ranchers.

Implement basic training and continued education programs (an. conf., spec. wrkshps)

Strengthen online and in-person peer-to-peer knowledge hubs and networks.

Objective 2

Review existing financial instruments.

Design financial instruments.

Perform value-chain analysis for "green" livestock production.

Promote financing program and identify prospective ranches.

Ranchers apply for and obtain financing

Ranchers install infrastructure according to management plan

Objective 3

Design biological monitoring plan.

Install biological monitoring equipment on properties.

Carry-out baseline biological monitoring survey on properties.

Carry-out biological monitoring surveys in dry and rainy seasons.

Phase I

Phase II

Phase III

Year

Appendix 3

Outputs

▪ Map of stakeholders and activities

▪ Baseline socioeconomic survey of ranchers in Mexico

▪ Inventory of available financing for livestock production

▪ Inventory of existing training resources for regenerative ranching

▪ New courses to meet knowledge gaps

▪ Training program for extension service providers in regenerative ranching and conservation

▪ Training program for livestock producers in regenerative ranching and conservation

▪ Digital “knowledge hub” and social network with user-generated content, library, training and

financing resources

▪ Smartphone application that connects natural resource databases and extension services

▪ Annual professional development conference for regenerative ranching practitioners

▪ Financial mechanisms to support transition to sustainable ranching

▪ Biodiversity surveys before and during implementation of regenerative ranching model for each

property/community

▪ Financial, ranch and conservation management plans for each property/community

▪ New agricultural monitoring sites for the SNMB

▪ New Voluntary Natural Protected Areas and Wildlife Management Units

Outcomes/Impacts

▪ Professionalization of regenerative ranching

▪ Ranchers view their businesses as long-term enterprises

▪ Ranchers understand conservation as a business investment

▪ Biological corridors are created or strengthened

▪ More land is under government-recognized land-use plans that favor conservation

▪ Conservationists understand that livestock is a tool for conservation

▪ Individual business owners and communities are empowered to make long-term investments and

have the capacity to do so

▪ Increase in the availability of financial resources for conservation

▪ Increased access to financial capital that recognizes ecosystem goods and services

▪ Increase in the ecosystem integrity index in the project sites as determined by the National

System for Monitoring Biodiversity

▪ Decrease in carbon and methane emissions

▪ Improved water quality in project sites

▪ Ecosystems and communities are more resilient to the effects of climate change

▪ Biodiversity is mainstreamed into agricultural production enterprises

▪ Stronger social capital (knowledgeable community of practitioners)

Indicators

The project will measure the following indicators which are aligned with FMCN’s institutional performance

indicators and specific to the project.

FMCN Indicators Objective attended

Number of individuals who adopt better practices in transitioning

towards sustainability.Obj. 1 - Capacity building

Proportion of the target audience that knows about and positively

values biodiversity and the environmental services it provides as a

result of the activities of the project.

Obj. 1 - Capacity building

Number of individuals who received training. Obj. 1 - Capacity building

Number of endangered species attended (as defined in NOM

059).Obj. 3 - Biodiversity Conservation

Number of hectares under specific zoning instrument (NPA,

VNPA, UMA etc.).Obj. 3 - Biodiversity Conservation

Number of hectares protected and supported by the project that

favor or increase connectivity.Obj. 3 - Biodiversity Conservation

Number of hectares restored or in process of restoration funded

by the project.Obj. 3 - Biodiversity Conservation

Number of hectares under sustainable management funded by

the project.Obj. 3 - Biodiversity Conservation

Amount of public funding channeled to activities complementary

to the project or as a result of the project.Cross-cutting

Amount of private funding  channeled to activities complementary

to the project or as a result of the project.Cross-cutting

Project Specific Indicators

Change in livestock productivity Obj. 2 - Economic empowerment

Change in pasture carrying capacity Obj. 2 - Economic empowerment

Change in soil productivity Cross-cutting

Number of hectares under regenerative grazing plans. Obj. 3 - Biodiversity Conservation

Proportion of participants who view their participation in the

project favorablyCross-cutting

Proportion of participants who feel their ranch operations are

stableCross-cutting

Average level of satisfaction with ranch operations Cross-cutting

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