An innovative frog-exporting business is a new departure for the private-lending arm of the World Bank, writes Demetri Sevastopulo, Financial Times (London, May 3, 2003, Saturday USA Edition 1)
They may not have studied at Harvard Business School but the International Finance Corporation’s latest recruits are doing more than their fair share to promote sustainable development. Decked out in vivid colours, the tiny amphibians at the private-lending arm of the World Bank are poison-dart frogs. Known as Epipedobates and Dendrobates, they are part of a business model to protect Peruvian rainforests.
The IFC and a local partner are establishing a frog ranching and export business. “We are promoting sustainable cultivation of poison-dart frogs for export so local people can earn a better living from conserving the forest than cutting it down,” said Sam Keller, the IFC officer responsible for the project. The move reflects a new trend in the way the IFC does business. Other projects in the pipeline include a catch-and-release eco-tourism fly-fishing venture in Mongolia.
“The IFC used to fulfil its mission largely by providing financing for private-sector projects in developing countries when few other institutions would do so,” said Mr. Keller. “But now we are trying to identify activities that provide environmental and social benefits while enhancing the bottom line.”
Using a technique developed by German biologist Rainer Schulte, fanners, or campesinos, attach half-cut plastic bottles to trees, filling them with water to create breeding pools in which frogs deposit tadpoles hatched from the females’ eggs.
Subsistence farmers can earn more selling frogs to pet markets than selling trees to loggers. Campesinos generally earn $50 a month but the IFC hopes to boost their income to $115. In the process, it estimates it can save 3,000 hectares of forest.
The genesis for the project came from Dutch biologist Jan Post, who stumbled on the potential of frogs. After buying his daughter five less exotic frogs, she bred them into 100 that she sold at an amphibian day in Baltimore, Maryland. “By 4pm she had sold the whole lot for $750.” Mr. Post noted that poison-dart frogs, more difficult to breed, fetched higher prices. He then developed the project, working with Mr. Schulte, before bringing it to the IFC to obtain finance. The project won the World Bank’s Innovation in the Marketplace award.
Sabrina Bimer, a biodiversity business consultant who did research for the IFC, said: “They (poison-dart frogs) range in price from $40 to $120.” Rarer species can fetch as much as $200. The largest market outside the US is Germany, where there are an estimated 10,000 frog enthusiasts.
Frogs & Forests, as the IFC-backed business is called, is steering clear of the seamier side of the trade in rare animals. Less highly principled entrepreneurs supply pet lovers in the developed world with protected species and have links with criminal networks.
Under the Convention on International Trade in Endangered Species, trading the frogs is only permitted as long as the population is sustained. The IFC estimates the trade in smuggled poison-dart frogs is as much as $2m a year. Mr. Keller said a benefit of the IFC project is that it would help reverse a declining population.
“We should be able to capture a fair amount of the legal market share and displace a considerable amount of the illegal trade because we are a low-cost producer and consumers prefer to buy legally imported frogs if they are available,” said Mr. Keller.
Poison-dart frogs are so named because of the tribal practice, which still exists in parts of Colombia, of extracting their toxin for darts that are shot from blowpipes to kill animals. The frogs can easily adapt to urban life. When removed from their natural habitat they lose their toxicity and pose no threat to their owners.