Milestone payments, blockchain & forest restoration: lessons learned so far

Back in May 2021, we published our first blog on the FLRchain, a new tool built on Algorand designed to maximize incentives and lower costs to Forest Landscape Restoration. Since then, thanks to additional support from the Algorand Foundation, we have built a new version of the FLRchain and have carried out preliminary field testing and additional consultations with target beneficiaries in rural Uganda.

We are on a journey to explore how blockchain technologies can (and can’t) support forest landscape restoration and conservation. Here is what what we’ve built, learned so far and what’s next.

The FLRchain is a joint project between Gaiachain Lab, a non profit based in the UK and the International Union for the Conservation of Nature (IUCN), the largest environmental network in the world. For more details about why we are building the FLRchain, please check out our first blog:

Introducing the FLRchain

Before moving on, it’s important to note the three beneficiary groups of the FLRchain.

1. Investors — any person or entity that provides funds for forest landscape restoration.
2. Facilitators — organisations that coordinate implementation of FLR, such as an NGO and/or government.
3. Stewards — people that do the actual FLR work, such as rural farmers that plant trees or help conserve a forest.

What we have built: FLRchain 1.0

The FLRchain (FLR — forest landscape restoration) is a web and mobile based application that uses blockchain technology to make FLR reward distribution and monitoring more efficient and transparent. It also helps attract FLR investors by making it easier for them to invest, trace funds and access proof of impact data linked to their investment.

Let’s look at this in a more concrete practical manner. Below is a picture of a big fat notebook. Boring! I know, but stay with me. This notebook is one of many used by IUCN staff in Uganda to document financial transactions with roughly 1,000 beneficiaries in rural areas spanning hundreds of kilometers. Another stack of notebooks is used for impact monitoring! Ouch. The process is slow, tedious, and very costly. The end result is limited time for IUCN staff to focus on conservation work and sub-optimal incentives for local communities.

The administrative burden of forest landscape restoration makes it difficult for conservationists to focus on conservation resulting in sub-optimal impact.

One of many folders at the IUCN office in Lira Uganda to document financial transactions

The FLRchain is designed to solve pain points like this. Not only does the FLRchain replace those big fat notebooks with digital records, it also creates incentives for both stewards and facilitators to provide accurate data regularly. As all transactions are recorded on the blockchain, all participants are operating with the same information. This is key to avoiding conflicts and building trust among all participants. Since avoiding conflicts is easier than solving conflicts, this is another way the FLRchain makes FLR more efficient.

Demo video of FLRchain

Key features that make the FLRchain unique

There are already quite a few blockchain based apps designed to support environmental restoration and conservation, so what makes the FLRchain unique?

1. Ease in tailoring smart contracts = scalability. Facilitators can easily tailor smart contract logic for reward distribution. Put simply this allows facilitators to define “if a steward does X, then the reward is Y.” This means that the FLRchain can be applied to a wide variety of site-specific contexts. In fact, while the initial focus is on forests, it can be applied to restoration and management of any ecosystem — grasslands, marine, tundra, etc. — nearly anywhere in the world.
2. Incentives for collective action. Forests are big and require people to work together. The FLRchain includes batch payments. Once a milestone is completed, the contributing stewards share a batch or bonus reward. This create incentives to work together towards a common goal.
3. Transparency and near real-time monitoring. Every data point on action, progress and impact is linked to a payment fully traceable on the FLRchain web app and on Algorand Explorer. This allows investors to monitor their impact in near real time. No more wondering where funds are going and if they have an impact.
4. Simplified budgets. Rewards, batch payments, and admin costs are all automatically calculated and monitored so facilitators can focus less on admin and more on restoration and conservation.

In summary, FLRchain is not a standard ‘plant a tree, get paid’ app. It is designed to support more complex long-term approaches to ecosystem restoration and governance in almost any context.

What we’ve learned (or confirmed) so far

The lack of regulations is a main obstacle

With the recent depeg of UST, most target beneficiaries are understandably weary of stable coins, even those that are asset backed. The FLRchain uses USDC, which is widely considered the lowest risk stable coin. As a positive impact tool, we need to take every step possible to minimize risks to users.

More emphasis is needed on monitoring

In May of this year, Gaiachain Lab travelled to a field site in norther Uganda where IUCN is implementing FLR programs. We conducted consultations with stewards, including a Journey Map (photos below) to pinpoint more specific pain points and understand solutions from the steward point of view. The biggest cluster of red post-its was under the monitoring part of the journey.

Journey map with a group of 25 Stewards in rural Uganda (May 2022)

This confirms that a key pain point for stewards is the lengthy process to verify information, such as claims on FLR activity was carried out. The FLRchain 1.0 has a good foundation to streamline monitoring, but more work is needed to find the right balance between robust monitoring and rapid delivery of rewards.

Being inclusive is more important that being feature-rich

It’s easy to get excited about revolutionary fancy apps. But if the app design is based on how users should be rather than how they are, it is destined to fail. In May we conducted preliminary field tests in Uganda to help identify ways to make the mobile app more accessible for stewards, particularly those with low digital literacy. Not surprisingly, the mobile app will need to be redesigned and offline functions improved. We already working on new prototypes.

User consultations in a village in Northern Uganda, May 2022

Long-term incentives for collective action need to be prioritized

The FLRchain 1.0 is a powerful tool to incentivize completion of FLR tasks. And while the batch payment feature is designed to encourage collective action, more is needed to incentivize long term forest governance.

Planting trees is a good start, but managing intact ecosystems is where the real impact lies.

Based on consultations, we are exploring new ideas of how the FLRchain can establish long-term incentives for stewards to conserve forest ecosystems.

What’s next?

A pilot with a forest restoration/conservation project to quantify the value (and costs) over time at each phase of the process. Interested? Get in touch! We are always looking for new partners.

Why Algorand?

Algorand’s values and actions align with ours

There is no shortage of blockchains to choose from, but Algorand stands out as the clear choice for many reasons, including:

1. Low emissions: Algorand’s unique consensus mechanism is among the most efficient in the world. Check out other ways Algorand is a green blockchain here.
2. Speed: Algorand is secure and fast operating at over 1,000 TPS. Mobile internet is slow in most FLR areas so this is key to adoption.
3. Reliability: Algorand is one of the few layer 1 blockchains that has never stopped running.
4. Low cost: miniscule transaction fees of 0.001 algos, or $0.00035, at the time of this writing.
5. Ecosystem: interoperability with other applications compatible with Algorand, such as on and off ramps like Circle and Monerium.