CONCEPT NOTE
Marine Aquarium Market Transformation Initiative (MAMTI)
Globally-Significant Biodiversity
Southeast Asia is the global center of marine diversity. It contains more than one third of all
the world’s coral reefs, and houses over 600 of the 800 reef-building coral species in the
world. A greater variety of species exist on a single island in this region than on all the coral
reefs in the Caribbean. Indonesia and the Philippines together hold 77% of the region’s coral
reefs, including the majority of South East Asia’s best-preserved reefs. These reefs of the
Wallacea Bio-Region have been identified by the major conservation NGOs (TNC, WWF,
WRI and CI) as a global priority conservation area.
The 37,000+ islands in Indonesia and the Philippines make up the world’s largest archipelago,
home to about 17% of the total number of species in the world, including 25% of the world’s
fish species. These countries contain over 100,000 square km of coral reefs or about 25% of
the world’s total. Indonesia has nearly 81,000 km of coastline and its vast oceans extend over
nearly 6 million square kilometers. All of the world’s 15 families of reef-building corals are
represented here, with a total of 80 genera and 452 species. These high diversity reefs serve as
a reproductive reservoir for seeding other areas throughout the region due to circulating and
seasonally changing currents. Because of upwelling of relatively cool waters from the south,
the area is also relatively protected from bleaching events, which have damaged so many reefs
around the world.
Baseline Threats - Destructive Fishing and Overfishing
The coastal areas of the Philippines and Indonesia are some of the most heavily populated in
the world. With rapid population growth rates, the pressure on coastal resources is
exceedingly high, with every member of each family often involved in resource extraction of
some type. Until recently, the pressures had not reached unsustainable levels.
The principal threats to the region's coral reefs are destructive fishing and overfishing. The
recent Reef Check report, “The Global Coral Reef Crisis”, documents how destructive fishing
and over fishing have led to ecological destabilization and is even pushing some high value
reef organisms to the brink of extinction.
The most destructive techniques include:

Blast fishing – the use of primitive bombs for food fishing, largely for subsistence
consumption and domestic markets
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Poison fishing – the use of sodium cyanide to capture marine ornamental (aquarium) fish
as well as live food fish (primarily for Chinese restaurants)
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The results of destructive coastal fishing have been devastating. Almost 90 percent of the
coral reefs in the Philippines and Indonesia (as well as Cambodia, Singapore, Taiwan,
Vietnam, Malaysia and China) are degraded or threatened. Fish larger than a few centimeters
in length have become rare on most reefs. Indonesia and the Philippines together hold nearly
80 percent of all the threatened reefs in the region.
When coral reefs are protected, the recovery of reef fish and shellfish populations can be
dramatic and rapid. But when the living coral reef itself has been destroyed, siltation often
becomes a problem, preventing the settlement and growth of young corals. In this case, the
recovery of reefs is a decades-long process at best. The great majority of the reefs still
considered in restorable condition are located in the comparatively less populated/fished
Flores/Banda and Sulu/Sulawesi Seas.
Barriers to Aquarium Fishing Industry Reform
The aquarium fishing industry currently is at best a neutral, and at worst a destructive force, in
relation to the coral reefs of Indonesia and the Philippines. This is unfortunate. As a highly
valued resource and income provider for coastal communities, a responsible industry could
provide a powerful incentive to conserve coral reefs so that they could continue to serve as a
sustainable source of community livelihoods in perpetuity. However, a couple of main factors
have conspired to prevent this.
First, the “open access” fisheries of the Philippines and Indonesia have made it profitable for
“roaming” aquarium fishing crews to collect on reefs outside their own communities. For
these collectors, often far from home, using cyanide to stun fish is an efficient method to
collect the most highly priced species, regardless of the deadly consequences for nearby
corals, fish, and other reef organisms. With “their” coral reefs thus under siege, the local
collectors perceive little value in doing anything else but to follow suit.
Second, the structure of the marine ornamental industry is highly decentralized – with the
major importers and customers located in the US, Europe and Japan. While awareness among
customers and the industry about the potential destructive impacts of the fishery has been
growing, most feel they have little influence on how the fish are collected. Although
importers, retailers and consumers are unified in their opposition to the use of cyanide
(mortality of poison-caught fish is high, fish quality is often very low), most importers simply
do not have the financial resources or overseas capacity and experience to build the fully
integrated operations they would need to ensure that the fish are collected using nondestructive methods.1
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Blacklisting Indonesian and Philippine fish is an option being considered by the United States and European
Community; however, collectively, these two countries provide the great majority of the world’s reef fish, and a
great many species of interest to the market do not exist anywhere else. Most importantly, banning the trade
would eliminate its potential to create sustainable livelihoods based on responsible fisheries and contribute to
poverty alleviation in the rural coastal villages of these countries. If exports are formally banned, all control of
the ensuing underground economy would be lost, and a chance to use this industry as a stimulus for reef
conservation and rehabilitation will have been lost along with it.
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The Solution: Catalyze an Industry Shift Towards MAC-Certified Practices
Three non-governmental organizations (NGOs) - the Marine Aquarium Council, the
Conservation and Community Investment Forum, and Reef Check - have combined forces to
provide a strategic combination of interventions that will help to transform the aquarium
fishing industry into a vehicle of marine conservation, sustainable use and sustainable
livelihoods that contribute to poverty alleviation and food security:

A system of international standards, certification and labeling. The industry urgently
needs a mechanism to assure the sustainability and responsibility of the entire marine
ornamentals collection and handling process, from the reef to retail. The Marine
Aquarium Council (MAC) Certification provides this assurance. In cooperation with
major marine ornamental industry participants around the world, and other stakeholders,
MAC has established a comprehensive set of certification standards for the responsible
collection, transportation, husbandry and tracking of marine ornamentals (fish, corals and
other reef invertebrates) and the management of reef areas used for collecting.

An investment vehicle to promote conversion to MAC-certified practices. The
industry needs capital to integrate its collection, export and import operations to the point
where some control over the supply chain is possible. In partnership with CoreResources,
a San Francisco venture capital fund, the Conservation and Community Investment Forum
(CCIF) is able to provide the required investment. With IFC co-financing, CCIF has
developed the proposed Reef Product Alliance, a professionally managed investment fund
designed to provide the marine ornamental industry with the capital required to finance
the integration of its operations and achieve MAC Certification. In addition, through its
Denpassar, Bali, offices, CCIF is able to monitor the economic and technical performance
of Indonesian and Philippine collectors and exporters, thereby making it easier for
US/European importers to enter into local partnerships (which CCIF can then consider for
financing).

A system to train fishermen & monitor the health of coral reefs and stocks. To create
a critical mass of certified fish supply for import markets and to ensure that coastal
communities are able to sustainably manage their reef resources, Reef Check will provide
training to fishermen. It will assist them to implement Collection Area Management Plans
that include Reef Enhancement Zones whereby coastal communities designate their own
Marine Protected Areas (i.e. fish sanctuaries/"no-take" zones). Reef Check will also
provide monitoring to ensure sustainable operations and to continuously refine the science
and management of marine ornamental collection. This is especially important because
the industry needs a method, infrastructure and capacity to monitor the ecological health
of reefs and the stocks of targeted species. Reef Check is uniquely qualified to provide
these services because, as part of the Global Coral Reef Monitoring Network, the
organization trains teams of volunteers in over 50 countries to monitor the health coral
reefs using standardized scientific methods. Working with MAC, Reef Check has
developed methods of reef and stock assessment/monitoring designed specifically for the
marine aquarium trade (MAQTRAC).
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Rationale for GEF Involvement
The proposed market transformation process cannot take place without initial GEF assistance.
Although cash flow projections indicate that the MAC Certification system can become selffinancing through industry contributions once a critical mass is reached, two types of GEF
support are necessary to overcome high upfront costs and barriers in the first few years.

Grant funding is required to enable MAC, Reef Check and CCIF to coordinate, train,
facilitate certification, and monitor a comprehensive network of sustainable collection
operations throughout the Philippines and Indonesia. These operations will generate a
critical mass of certified marine ornamental exports that will enable US and European
importers and airlines to make MAC Certification a condition of purchase and
transportation.

Investment capital is required to enable CCIF and its for-profit partner, CoreResources,
to help capitalize the industry’s efforts to integrate its supply chain and comply with MAC
Standards. These funds will be invested according to a capital preservation strategy. They
are needed to purchase new equipment for collection, transportation and husbandry, to
modernize the supply chain management infrastructure, and to install the required tracking
software. It is critical that the GEF provide this capital because the risk-return profiles of
the investments – together with the lack of assured exits – prevent commercial investors
from being able to consider them. This proposal requires “green investment” or
“conservation-oriented venture philanthropy” – both of which are directly in line with the
GEF’s mandate.
The specific costs of this initiative will be determined during the project preparation process.
At this point, it appears that the total costs will be $5-8 million and the request for GEF
funding under OP#2 will be $2-4 million. Thus, this initiative will offer substantial cofinancing. Beyond that, the strategic loans and equity investments will catalyze additional
investment among industry players who are willing to convert their supply base to sustainable
practices.
Project Management
As the lead NGO, the Marine Aquarium Council will coordinate the overall project. All grant
funding will run through this organization and will be allocated to the other NGO partners as
appropriate. MAC and the other NGO partners will receive guidance from an Advisory
Committee comprised of multiple stakeholders, including the marine ornamentals industry,
major NGOs, scientists, resource management experts, and representatives of the relevant
government agencies in the Philippines and Indonesia.
The investment portion of the project will be managed by CCIF/CoreResources. CCIF/Core
Resources will coordinate with the other NGO partners and receive guidance from the
Advisory Committee. Specific investments will be reviewed and approved by an Investment
Committee consisting of the funders’ representatives and CoreResources general partners.
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Project Activities
The project would carry out a range of activities to ensure that the industry is transformed to a
principal driver of marine biodiversity conservation, sustainable use, sustainable livelihoods,
poverty alleviation and food security for coastal communities in Indonesia and the
Philippines. Specific activities include:
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Establish the infrastructure and capacity among marine ornamentals collectors and
communities in the Philippines and Indonesia to achieve MAC Certification.
Build the capacity of BFAR (Philippines), DKP (Indonesia), as well as the environment
agencies, Local Government Units (LGUs) and NGOs in both countries, to carry out the
assessment, management surveillance and enforcement of the marine aquarium trade in
the Philippines and Indonesia.
Establish a comprehensive reef harvest monitoring system throughout the region and
integrate the monitoring results into improved management of the areas monitored.
Coordinate, train and help capitalize, a comprehensive network of certified collector's
cooperatives throughout Indonesia and the Philippines (to create critical mass of certified
supply for import markets).
Coordinate, and help capitalize, the integration of these collectives into major importer
supply chains.
Develop comprehensive scientific fundamentals for managing collection areas for
sustainability in the Philippines and Indonesia.
Establish and implement Collection Area Management Plans that include Reef
Enhancement Zones whereby local fishermen and communities designate their own
Marine Protected Areas (i.e. fish sanctuaries/"no-take" zones) that increase reproduction
of threatened coral reef species.
Country Support
Project Linkage to International Priorities and Programs
The Philippines ratified the Convention on Biological Diversity (CBD) on 8 October 1993
and provided notification of participation in GEF on 16 June 1994. Indonesia ratified the CBD
on 23 August 1994 and has provided notification of participation in GEF. At the international
level, the project compliments and implements regional and international initiatives in which
Indonesia and the Philippines are participating, such as the CBD Jakarta Mandate on Marine
and Coastal Biodiversity, the International Coral Reef Initiative (ICRI), the GEF Regional
Program on the Prevention and Management of Marine Pollution in East Asian Seas, SE Asia
Regional Program of the IUCN World Commission on Parks and Protected Areas (WCPPA)
and the Code of Conduct for Responsible Fisheries of the UN Food and Agriculture
Organization (UN FAO).
Project Linkage to National Priorities, Action Plans, and Programs
The Government of Indonesia has identified coral reef ecosystems and improved coral reef
management as national priorities in the National Strategy and Action Plan for Coral Reef
Ecosystem Conservation and Management (Ministry of Environment, 1992), Sustainable
Marine Program (1992), Indonesia Biodiversity Action Plan (1993), and Indonesia Agenda 21
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(1996). The project will support conservation and management of globally important reefs
identified in Indonesia's Marine Conservation Atlas and the World Bank/IUCN/GBRMPA
Global Representative System of Marine Protected Areas. The project is also complimentary
to the goals of the Indonesia Coral Reef Rehabilitation and Management Program
(COREMAP), a major, long-term program of the Indonesia Government, GEF, World Bank,
Asian Development Bank, Australian Agency for International Development, Japan
International Cooperation Agency and other agencies.
In the Philippines, the project is consistent with the National Agenda for Sustainable
Development for the 21st Century (Philippine Agenda 21), National Biodiversity Strategy and
Action Plan (NBSAP), the Fisheries Code of the Philippines and the National Marine Policy.
The project also supports and compliments policies and programs of the national government.
This includes Department of Environment and Natural Resources (DENR) programs, such as
the Coastal Environment Program and National Integrated Protected Areas System, the
Community-Based Coastal Resources Program, and the Coastal Resources Management
Training Program. This also includes the Bureau of Fisheries and Aquaculture (BFAR)
programs, such as the Fisheries Resource Management Program (FRMP) supported by the
Japan International Cooperation Agency (JICA). The project is also consistent with other
externally supported projects addressing the sustainable development of coastal areas and
marine resources. These include: USAID projects (Coastal Resource Management Program,
Growth with Equity in Mindanao), GTZ projects (Visayan Sea Coastal Resources and Fishery
Management), AusAID projects (Provincial Support Program) and GEF projects (Biodiversity
Conservation and Management of the Bohol Islands Marine Triangle).
Country Interest in Certification and Involvement with the Project Partners

Philippines: The Marine Aquarium Council, which will be registered in the Philippines
by late 2002, has a Memorandum of Agreement with the Bureau of Fisheries and
Aquaculture (BFAR) and is in regular contact with the Department of Environment and
Natural Resources (DENR) and marine conservation NGOs operating in the Philippines.
MAC/RC/CCIF are in communication with BFAR and DENR on this proposed project
and expect an indication of support shortly.

Indonesia: The Marine Aquarium Council and CCIF interact regularly with the
Ministry of Marine Resources and Fisheries (DKP), other relevant government
agencies, and marine conservation NGOs operating in Indonesia. CCIF is currently
working with DKP on developing sustainable financing plans for marine protected
areas. MAC/RC/CCIF are in communication with the DKP Director for Small Island
Affairs, who chairs the inter-agency committee on marine resources certification, and
with Ministry of Environment, as well as the Director for Marine Conservation, on this
proposed project and expect an indication of support shortly.
Stakeholder Involvement
The proposed market transformation process will inherently require involvement of a broad
range of stakeholders:
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Collectors, Middlemen, Exporters, and Importers of Marine Ornamentals;
Fishing Communities;
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Local and National Government Agencies; and
Local NGOs and Universities.
Sustainability
This project will be sustainable because:

The project will permanently transform the marine ornamentals industry from a
destructive force into a force of rehabilitation, conservation and sustainable use. By
increasing the value of the reefs for the private sector, coastal dwellers will work to
protect them. By providing verified quality to the industry and market, buyers will begin
to prefer certified products. When this transformation has been achieved, the industry will
conduct business according to these standards for quality and reliability in ongoing
operations.

The import and retail portion of the industry is willing to pay for the assurance of quality
products and sustainability of supply that MAC Certification provides. Market forces will
be supporting reef conservation and, when certification reaches sufficient scale, industry
will be able to fully fund the MAC Certification system for quality and responsibility as
part of the functioning of a responsible and monitored marine aquarium trade.

The project leverages maximum contributions from existing NGOs as well as private
sector operators for biodiversity conservation, sustainable development and poverty
alleviation. The three partnering NGOs will commit over $1,000,000 per year to this
program. The private sector will match all investments by a significant factor.

Investments will be structured to achieve, at a minimum, capital preservation (including
an adjustment for inflation). Capital will thus be continuously reinvested as loans are paid
back and equity investments are exited, ensuring that companies maintain and improve
their commitment to responsible, sustainable fisheries.

Recent ecological and economic successes using the tourism industry in the Philippines
and Indonesia as an incentive for coral reef conservation have proven that sustainability
can be achieved within as little as two years when using the private sector as an incentive
for marine protected areas.
Replicability
This proposal is highly replicable on several levels. It will constitute a model for: (a) using
the marine ornamentals industry as an incentive for reef conservation, sustainable livelihoods
and poverty alleviation in developing countries around the world; (b) transforming a
previously destructive industry by codifying responsible fishing and best practice and
implementing this through industry and market driven certification; and (c) linking local rural
fisherman cooperatives to the international marketplace in the interest of conservation and
sustainable use. At one level, the results will be replicated in the marine aquarium industry
around the world. This project could also be replicated in conjunction with other fishingrelated industries (such as the live food fish trade or the artisinal tuna fisheries) to make them
as compatible as possible with sustainable development.
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