**2. Discussion**

#### **2.1 Social investment and its link to sustainability**

The concept of social investment has changed over the years and has been paired with many other concepts such as responsible investment, Environmental, Social, and Governance (ESG) investments, among others. Multilateral organizations and investment groups have developed their own definitions for social and responsible investment practices. However, most of them are aimed at reducing social conflicts, gaining reputation and maximizing profits in the long term. For example, the International Finance Corporation (IFC) developed the concept of community investing to "help companies gain a social license to operate, access land, reduce project and reputational risks, boost productivity, meet government requirements or global standards, and/or successfully compete for the next venture." [17].

The same approach is used when speaking of ESG funds, where asset managers seek to keep the returns similar to traditional investments and do not necessarily aim at community development and sustainability at a local level [18]. Recovering the arguments from the previous chapter, this article seeks to understand social investment as something that directly impacts positively and empowers local populations, addresses climate challenges, and contributes to a long-term sustainability vision of a country.

The focus of the current document is not to discuss the concept of social investment, and it will use the definition launched by the United Nations Global Compact, which is broad enough to encompass different nuances regarding this complex and widely discussed concept [19].

Social investment was defined in 2010 by the United Nations (UN) as "the practice of making voluntary financial and nonfinancial contributions that demonstrably help local communities and broader societies to address their development priorities." In order for an investment to be considered responsible and social, it must be purposeful, accountable, respectful, and ethical [20].

Additionally, this article focuses on the nonmonetary and nonprofit side of social investing. Private companies, foundations, and international cooperation make these investments for a wide variety of objectives. One of them is sustainability and climate action.

The urgency of actions to address the climate crisis needs creative solutions that do not necessarily give a monetary return to investors. However, there are several proxy indicators that can help to quantify the nonmonetary impact of social investments. For example, the number of hectares reforested and under community watershed management brings general benefits to air and water quality that are hard to express in monetary terms but largely contribute to the climate objectives of foundations and some private investors.

#### **2.2 Community microhydropower systems as social investment for sustainability**

In this context, social investors have looked for initiatives that align with their sustainability objectives. In the Dominican Republic, a wide network of community microhydropower systems has developed thanks to these investments. In this section, the article will dissect this model of decentralized community power generation and its links with sustainability and social investment.

Located in the Caribbean, the Dominican Republic is a Small Island Developing State (SIDS) [21], which is highly vulnerable to the impacts of climate change [22], with high inequality and significant levels of poverty [23]. It is also one of the Latin American countries with the highest economic growth considering only the Gross Domestic Product (GDP) indicator [24].

In this context, in 1998, a pilot project of a microhydropower system was implemented seeking to address the lack of access to electricity of 70 families of the rural community of El Limón, located in the Southeastern portion of the Cordillera Central, the main massif of the country. From then on, the number of community microhydropower systems have grown exponentially in the country: 60 systems of this kind were built in the Dominican Republic and another one in the border region of Haiti, with a total combined installed capacity of 1.5 MW [25]. This ample network of micro-grids gives electricity and empowers more than 5000 households and 20,000 people in climate vulnerable mountainous areas with marginalized populations (**Figure 1**). In the process, over 70 square kilometers of land were restored and/ or are being conserved in the direct and indirect area of influence of the microhydropower systems, while it is estimated that more than 25,000 tons of CO2 are absorbed and/or their emission avoided annually.

Far beyond being a mere localized project, these systems promote an alternative to the energy transition in the Dominican Republic, where local stakeholders are active subjects in the fight against climate change. Decentralizing the power grid and giving the control of electricity flows to local populations promote empowerment and organization skills among men and women.

Moreover, the process of project implementation together with local communities is an example of how a just energy and people centered transition can be carried out. In fact, the starting point of the project is a specific and expressed need of a local group to solve their access to electricity. The solution to this need comes from a participatory process, where the community and its interests are at the center of the implementation, interacting synergically with other numerous external stakeholders.

Through a learning-by-doing process, community members and organizations train their abilities and acquire new skills. This way, the project turns into a capacity building experience, where people are free to learn and test their knowledge in a protected environment.

*Sustainability and Social Investment: Community Microhydropower Systems in the Dominican… DOI: http://dx.doi.org/10.5772/intechopen.105995*

**Figure 1.** *Basins where community microhydropower systems are working [16].*

#### **2.3 Nonmonetary benefits of social investments in community hydro**

Nonmonetary benefits arising from these microhydropower systems are multiple. Most of them are hard to express in terms of monetary value, such as empowerment or capacity building. This difficulty is present even in costs internationally linked to policy, such as the social carbon price, which can range from lows as 25 to highs as 800 dollars per ton [26, 27].

Due to the complexity of interlinked environmental, political, and social systems, quantifying community and environmental benefits is probably not the best strategy to assess the positive impacts and assign a value of return to the social investments in these initiatives. For instance, community microhydropower systems are based on community capitals and the promotion of sustainable livelihoods [28–33], instead of the promotion of mere financial capital gains or profit.

Following this idea, we can analyze the benefits through quantitative data of environmental and social improvements, as well as qualitative indicators. The scope of this article is not to generate a system of qualitative and quantitative assessment of the impact of community hydropower systems. However, this section will disclose several of the social and environmental benefits that can be used to further build a robust assessment system.

One of the most general benefits from the social investment in community microhydropower is the advancing toward the accomplishment of climate goals and more specifically of working toward a just energy transition. It is also implemented under a perspective of Nature-based Solutions (NbS) that brings together efforts of numerous stakeholders, who make synergy to reach a common objective (**Figure 2**).

Community microhydro systems contribute to carry out interventions that "protect, sustainably manage, and restore natural and modified ecosystems that address societal challenges effectively and adaptively, simultaneously providing human

#### **Figure 2.**

*Sustainable model from the community microhydropower systems.*

well-being and biodiversity benefits," aligned to the definition that the International Union for Conservation of Nature (IUCN) provides for NbS [34].

The following **Table 1** summarizes the categories and proposes basic initial indicators where community microhydropower systems impact, which can be used as nonmonetary success indicators in terms of social investment:

Using merely traditional financial indicators, community microhydropower systems might not be the best financial option. However, if we use the previous indicators and, at the same time, we are able to quantify the climate and social benefits, they might as well be profitable. For example, the costs associated with a typical 20-kW system are \$300,000, of which around 75% is not refundable if you consider only economic indicators. This means that, if we want to apply a social investment framework, we must build new nonmonetary ways of quantifying returns of investment, which includes the previous indicators.
