Conservation Forever

Client goal

Our client is Conservation Forever (CF), a conservation-focused nongovernmental organization (NGO). CF has asked McKinsey to help prioritize restoration and conservation efforts.

Situation description

The degradation of nature is a major cause of the twin global climate and biodiversity crises. That is why McKinsey commits pro bono resources to nature conservation worldwide.

Our client, CF, was formed in 2011 at the start of the United Nations Decade on Biodiversity.

CF aims to permanently conserve large areas of land and ocean over the next decade. Land-use planning in these natural areas will be conducted in such a way that it considers biodiversity outcomes as a priority. This will require restoring natural habitats and ecosystems.

Biodiversity, or the variety of life on Earth at the genetic, species, or ecosystem level, has enormous intrinsic value, but is also essential to human well-being and our economies. It provides essential ecosystem services, such as clean air, food security, and fresh water. Investments in biodiversity can therefore contribute directly to reducing poverty and safeguarding sustainable development.

However, biodiversity is in severe decline, putting its intrinsic value and its ecosystem services to indigenous peoples, local communities, and economies worldwide at risk.

Large conservation projects at the scale required to reverse this loss entail significant upfront financing, complex legal frameworks, and extensive coordination between all parties involved, such as civil society, government, NGOs, and donors.

Due to the complexity and magnitude of these projects, conservation efforts must be carefully selected early on. CF shortlisted three candidate geographies: the coastal areas of Peru, the steppe grasslands of Ukraine, and the mountain forests of Uganda.

McKinsey study

As part of a pro bono study, McKinsey has offered to help CF prioritize these geographies and the activities it should focus on.

Helpful hints

• Write down important information.
• Feel free to ask the interviewer to explain anything that is not clear to you.
• Remember that calculators are not allowed - you may want to write out your calculations on paper during the interview.

What factors could the team consider when choosing one of the three specific geographies on which to focus the conservation efforts?

Helpful hints

• Take time to organize your thoughts before answering. This will help show your interviewer that you have a logical approach and can think in an organized way, regardless of the accuracy of the outcome.
• Develop an overall approach before diving into details.

The CF and McKinsey team decided to focus their initial efforts on protecting the coastal areas of Peru. Coastal vegetation provides critical habitats for multiple species, protects shorelines, and sequesters carbon at significant levels.

The coastline is also beautiful and relatively unspoiled, making ecotourism an interesting opportunity. Ecotourism is different from other kinds of tourism in that it is designed to attract visitors who want to experience a natural environment with the assurance that their visit will not damage ecosystems or biodiversity.

There are currently five communities that have suitable tourism infrastructure, and each one welcomes 100,000 visitors each year. By protecting that area and setting up ecotourism infrastructure to welcome visitors, the team came up with the following estimates:

• annual visitor numbers to the main coastal villages will increase 20 percent over the next five years
• average length of stay in the local communities will double from two to four days
• the average amount visitors will spend in the communities is not expected to change and will remain stable at $100 per person per day

How much additional revenue will come from ecotourism in these five communities five years from now?

Helpful hints

• Do not feel rushed into performing calculations. Take your time.
• Talk your interviewer through your steps so that you can demonstrate an organized approach.

The director of CF likes these initial projections, but is not convinced that the assumptions are realistic. They tell the team, “According to your model, there are three levers we need to focus on to generate revenue from ecotourism in Peru: number of visitors, length of stay, and spending amount. What are your best ideas for how to maximize each lever? And how about some ideas outside of the constraints of this model?”

Your team is meeting in ten minutes to generate ideas in preparation for a workshop with leaders from several coastal communities, and you are jotting down some notes.

What ideas do you have to generate revenue linked to ecotourism?

Helpful hint

• Consider the issues raised in the question, and group your thoughts around them. This will ensure that you are giving the most relevant answers.

CF has decided to launch ecotourism pilots in a small number of communities in Peru to test some of the team’s revenue generation hypotheses. The team mapped out how ten of the largest coastal communities compared in terms of number of expected new visitors and therefore determined the amount of investment required in addition to the return on investments.

Looking at this information, which communities in Peru should CF prioritize for the pilots and why?

Helpful hints

• Take some time to look at the information and note down any observations you have.
• Challenge yourself to identify trends that are not immediately obvious from the data.
• If you need to, ask your interviewer some clarifying questions.