Practice Case

Conservation Forever

Client goal

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

Description of situation

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

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

CF aims to permanently conserve large areas of land and ocean over the next decade. The 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 for 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 poverty reduction and sustainable development.

But biodiversity is in severe decline, putting both its intrinsic value and its ecosystem services to Indigenous People, local communities, and economies worldwide at risk.

Large conservation projects of the scale required to reverse this loss entail significant up-front financing, complex legal frameworks, and extensive coordination among all parties involved (civil society, government, NGOs, donors).

Due to the complexity and magnitude of these projects, conservation efforts must be selected carefully early on. CF has 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 the geographies and activities where they should focus on.

Helpful hints

  • Write down important information.
  • Feel free to ask the interviewer for an explanation of any point that is not clear to you.
  • Remember that calculators are not allowed - you may write out your calculations on paper during the interviews.

Question 1:

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

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.

Question 2:

The team of CF and McKinsey has preliminarily decided to focus their efforts on protecting the coastal areas of Peru. The coastal vegetation serves as 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 the 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. With the protection of the area and the set-up of ecotourism infrastructure to welcome visitors, the team estimates the following:

  • Annual visitors to the main coastal villages will grow by 20% 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 at $100 USD / day / person

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.

Question 3:

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

Your team is meeting in 10 minutes to generate ideas in preparation for a workshop with leaders from several coastal communities and you start 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.

Question 4:

CF 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 the 10 largest coastal communities compared in terms of number of new visitors expected (and therefore the amount of investment required) and return on investment.

Conservation Forever
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Looking at this information, which communities in Peru should CF prioritize for the pilot 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 in the data.
  • If you need to, ask your interviewer some clarifying questions.