Protected Areas as an Asset Class

Protected Areas (PAs) have been at the centre of global efforts to conserve species and habitats. They are a special asset class with unique legal and social characteristics and one that is both large and growing.


The Challenge

Protected Areas (PAs) have been at the centre of global efforts to conserve species and habitats. They are a special asset class with unique legal and social characteristics and one that is both large and growing. As of 2010, terrestrial protected areas covered 12.2% of the Earth’s land area and marine protected areas covered 5.9% of the Earth’s territorial seas. The Aichi Biodiversity Targets aim for at least 17% of terrestrial and inland water, and 10% of coastal and marine areas to be designated as PAs by 2020. Expansion is occurring partly in response to these international targets.

Given the size and importance of PAs, they have attracted significant investment over the past century from governments, philanthropists, conservation organisations and the private sector. This invested capital has been used to preserve existing value and to create new value in different forms including conservation (e.g. protection of species and habitats), economy (e.g. tourism, fisheries, ecosystem services), social (e.g. communities), cultural (e.g. identity), recreational (e.g. hiking, safari), political (e.g. institutions, international reputation) and option (e.g. land development, bio-prospecting).

However, there are current and emerging risks that could erode this spectrum of value. Some of these trends, including climate change, illegal wildlife trade, land encroachment, extractive industries and infrastructure development, are already placing significant value at risk. Other risks might include changes in land designation, regulatory change, jurisdictional tensions between Ministries (e.g. mining and forestry) and conflict.

The Response

It is in the interests of investors in PAs to ensure that the value generated from their investments is resilient to these challenges. In addition to enhanced resilience, PAs should also be looking to deliver continued value growth over time and in ways that deliver better returns to invested capital.

This project will create a new framework to understand PAs as an asset class and begin some of the analytical work to extend these concepts to PA investment and management practice.

We will do the following over three phases:

  • Create an appropriate value framework for PAs exploring the value created in different domains;
  • Map out the different factors that could affect the tangible and intangible value that PAs generate;
  • Examine the extent to which these factors might affect value;
  • Define capital investment into PAs, calculate the size of cumulative capital investment in the asset class by different groups (government, philanthropic, NGO and private) and attempt to calculate its value today accounting for concepts such as opportunity cost, depreciation and cost of capital;
  • Define appropriate sub-categories within the overall PA asset class;
  • Analyse how PAs have responded to different risks in the past to see what management strategies might be appropriate for preserving value in the future;
  • Investigate the trade-offs and relationships between different types of value (e.g. economic vs cultural or conservation vs social);
  • Explore how the value proposition of PAs could be enhanced to attract more capital, particularly private capital;
  • Make recommendations for how invested capital can be protected and future value growth maximised.

The Impact

The project provides an explicit connection between protected area effectiveness and investment risk and opportunity. By reframing the debate around protected area effectiveness in return-on-investment language, the findings of this research could be used to catalyze changes in the investment climate, creating more opportunities for protected areas as an asset class. Greater investment in protected areas, by all sectors, will be required to reach generally agreed upon protected area targets, and this project will help provide the arguments to speed that influx in protected areas.

Project Partners

University of Oxford, WWF-UK, and the Luc Hoffmann Institute.

Project Leadership

Ben Caldecott at the Smith School and Paul Jepson at the School of Geography and the Environment (University of Oxford).

Chris JohnsonProtected Areas as an Asset Class