Our Snapshot 2015 series provides a rough sketch of Planting Empowerment five years down the road - from operations to products to impacts. In this part, we describe how the Planting Empowerment business structure looks.

Planting Empowerment in 2015 will be a self sustaining, fast-growing business with approximately 1000 hectares under cultivation, and approaching $6,000,000 of investment raised for the plantations. The business will restructure to become either an L3C or a B-corporation.

An L3C is a new type of corporation whose principal activity is social or environmental improvement, is limited-profitability, and is more "tax-attractive" to institutional investors such as endowments and trusts. With an eye on attaining scale, we are considering this option in order to tap into the social/environmental carve-outs of some of these investors.

B-corporations are businesses certified as meeting standards of environmental stewardship, corporate governance, and employee rights, among many others. We feel this kind of corporation makes sense if there is stronger demand for PE's products from the smaller retail market. Becoming a B-corp would place Planting Empowerment into a group of forward thinking businesses that share a "triple bottom line" philosophy.

The financial vehicle to carry the business forward is still under construction, but there are two possible scenarios of how to reach sustainability:

1. Non-profit ownership of for-profit. Between 2009-2010, Planting Empowerment went through some growing pains. Namely, facing a lack of operating capital, PE decides to go under the wing of its non-profit arm. The non-profit "mother" buys Planting Empowerment in order to secure venture financing for the for profit, and in 2011 is successful in raising $200,000 in operating capital. With the knowledge that the for profit arm would eventually leave the nest, we focus the financing on building a sustainable, scalable operation.

2. Planting Empowerment remains an independent for-profit. In this scenario, PE either scales organically through its consulting activities and sale of its products, or attains venture funding from an angel investor or venture capitalist. We currently see this option as more unlikely, given the long term nature of growing trees, and lack of an exit event for funders.

In either scenario, Planting Empowerment in 2015 is a thriving, self-financed operation.

With our roots in development, Washington DC seems the city of choice from which to run the business. Depending on the type of corporation pursued, the business may be incorporated in a more tax-friendly state, but the main office will remain in our nation's capitol. The office will be staffed by two of Planting Empowerment's founders, along with three fulltime employees. The US entity will issue future offerings, and own the Panamanian operations arm responsible for the planting and maintenance of the plantations. A full time Operations Director will live and work in Panama.

In our next post, we will discuss the specific programs that Planting Empowerment creates to promote sustainable development through forestry.

How should REDD work in Panama? The basics are that it should:

• Be a national system (potentially nested with a definite end for projects);
• Ensure the majority of the benefits reach those living in the forests;
• Not count enhanced forest carbon sequestration that comes from plantations (monoculture Teak, Oil Palm).

Why a national system? Independent projects are great, but they will just push the deforestation around the country - leakage, in other words. If these projects are to be included, it should be within a "nested" approach. This means that projects have a set amount of time (between 5-7 years) to merge their project into the national system, or "nest" it.

It still isn't clear who owns the carbon in the trees in Panama, and that will hopefully be determined in the coming years. To be effective, REDD projects will need to foment other income generating activities to replace the income gained from traditional practices. If the government and/or project promoters capture more than 30% of the cash generated from REDD, there won't be sufficient incentive at the local level to stop deforestation.

Now that REDD is REDD+, (the "+" means the countries/projects can get credit for carbon enhancement), we need to make sure that it is not used to support unsustainable forestry practices such as monoculture plantations. There is also the problem of "additionality" because the majority of the plantations are cultivated for the timber, not carbon capture. Sustainable environmental and social practices should be rewarded, not those that eventually leave land worse off and people not participating in an economically positive manner.

Panama just signed onto the Norwegian/French REDD partnership. This is good for Panama because it will help the country move forward in developing the national level systems and laws necessary to financing and knowledge exchange opportunities. It has the opportunity now with the UNREDD funds already approved to move forward and once again be at the forefront of national level REDD.

Guest post from Chris Meyer, writing from Ecuador

Fellow co-founder Andrew Wulf and I visited a Guarani indigenous village outside of Tena while on vacation/work. While there were numerous similarities between Panama and Ecuador in relation to conservation, economic opportunities, problems with land, and resource management, there were also many differences.

I arranged to stay with the brother of the President of the regional Guarani organization. He lives in his own little "compound" consisting of a couple of houses where his various children now live with their children. In total, about 15 people lived in the compound (10 under the age of 13). Along the river they had cleared about three hectares (7.5 acres) to plant corn (mostly for animals), papaya, cacao, yucca, plantains, bananas, and other fruiting trees indigenous to the area.

He probably controlled (with title) at least 250 hectares of prime jungle and supplemented his family's diet with wild game (we ate peccary and monkey) and fishing. As with many of the indigenous Panamanians I know, he may have been "cash poor", but no one was going hungry and there seemed to be a strong social safety net within the family.

This gentlemen's land was next to the oil production facilities operated by the Ecuadorian government. He informed us and showed us a map of where one of the oil companies wants to drill on his land, but he won't let them. Ecuador is similar to Panama in the sense that under ground minerals belong to the general public (i.e. government) and not the individual landowner. In this case, even though he doesn't own the oil rights (sold in concession by the government), he has to give permission to the company to access his land to exploit.

We discussed the potential oil drilling with his son (23-year old w/ a tourism background). Interestingly, not once did the son mention potentially becoming very wealthy in a monetary sense from drilling royalties. To him and his father, the oil drilling would only bring them problems by poisoning the virgin forest surrounding them. They had given the same response to the loggers, too. For being in the middle of nowhere, I would've thought we were a rarity for them - a couple of gringos visiting. But it turns out that we were only one of many small groups of tourists/students that had passed through in the last couple months. Having studied tourism the son was very focused on developing tourism in the region as a way to bring in needed cash.

I didn't delve into REDD with them, but understood their stance on conservation and thought about how it could benefit them economically. For them, REDD might work by providing supplementary income and capital to expand a small tourism business. It could easily work within a national system that would pay the larger indigenous organization 10-20% to support basic local services (schooling and health) and meet additionality questions (oil located on his land and near colonizers). The tourism component - which I see in this case providing a significant portion of their potential income - could be done in Panama. However, it would be much trickier and probably need to focus on birding because the Panamanian jungle doesn't have the same allure as the Amazon jungle. 

Although Ecuador didn't sign the Copenhagen Accord, it is still very much involved in REDD. It is probably more advanced than Panama because the government is pushing it along for political reasons (trying to become a country of UNREDD and Yasuni-ITT project). However, Ecuador has the moral challenge of having a ridiculous amount of oil left under their forests. Their choice is whether to exploit it or bet on REDD, conservation, and eco-tourism.

We'll be watching closely.

Operations Director Damion Croston visited Panama in early May. Here he presents a couple of the more important items from the trip.

Small Fire in Plantation

In April we experienced a small fire in one of our plantations in Nuevo Paraiso. A local partner from whom we lease land was clearing an adjacent parcel to plant crops when the fire made its way past the fire break onto our plantation. Thanks to the vigilance and quick actions of worker Jose Rodriguez damage was kept to a minimum. An investigation is currently being conducted to assess total loss and to find ways to prevent another such incident. Sponsors can rest assured that the fire will not affect the value of their holdings, and PE assumes ownership of total losses associated with the incident.

UNDP Project

Last Fall we helped our local partners in Arimae obtain funding from the UNDP-GEF Small Grants Programme to conduct an economically and environmentally beneficial forestry project. We have continued to facilitate the project by providing technical assistance. The community has made significant progress since last year and will plant some of the products from the nursery they built as part of the project next month. In the future the nursery will be used to plant native species saplings which will be sold to Planting Empowerment for use in our own plantations. We will continue to provide our local community partners with assistance and economic opportunities whenever possible.

Guest post from Chris Meyer, writing from Bonn

I was in Bonn last week for the first of two weeks of post-Copenhagen climate change negotiations. As I wrote in a blog post for the Environmental Defense Fund, indigenous rights language in the negotiating text - specifically the REDD+ section - is significant.

I wrote in that post:

Most promising in this is that the two-year-old brackets around the text – text is [bracketed] when it is controversial and does not have unanimous support from countries – have been removed.  This is a big victory for indigenous leaders, as it indicates strong support for indigenous peoples' rights.

For example, this excerpt was bracketed:

(c) Respect for the knowledge and rights of indigenous peoples and members of local communities, by taking into account relevant international obligations, national circumstances and laws, and noting that the General Assembly has adopted the United Nations Declaration on the Rights of Indigenous Peoples;

(d) Full and effective participation of relevant stakeholders, including, in particular, indigenous peoples and local communities in actions referred to in paragraphs 3 and 5 below;

Is the text perfect? No. There are still sections where indigenous leaders want better language about rights and safeguards. The major issue in Bonn was whether the brackets around the remaining social safeguards text would be removed, i.e. be accepted by country negotiators. The latest draft released did not remove the brackets, so this issue will be debated in future negotiations.

As I noted before, the international language is only good as its implementation on the ground, which is often poor. In Panama for example, the community of Arimae (where Planting Empowerment located some of its plantations) still doesn't have secure title to all of its lands. Nor is there consensus on who owns the carbon in the forest, which has been conserved at great expense by the indigenous peoples.

At a global level the negotiating text for REDD is looking much better for indigenous peoples. However, there is still work to be done to strengthen the implementation language in the text, and actually see that translate to positive action on the ground. Things are moving in a good direction in Panama, but the country needs to move quicker to protect its remaining forest and increase benefits to the local peoples.

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We started Planting Empowerment because we recognized an opportunity for rainforest communities to profit sustainably from their natural resources. The business model was formed around some basic tenets:

• To slow deforestation, forest dwellers need an incentive not to deforest
• Land tenure is paramount in addressing deforestation
• Rainforest dwellers can earn more from their undervalued parcels of land through sustainable forestry
• Forestry projects would be funded by environmentally and socially-minded investors

Since Planting Empowerment formed in late 2006, we have signed four land-lease partnerships with local Panamanians, planted 22,000 trees over 50 acres, and raised $140,000 from over 100 sponsors to finance these operations. We're pretty happy with the progress thus far, and have received positive feedback from our sponsors, local partners, and government agencies. However, there are still thousands of acres of deforested land available - owned by thousands of rainforest dwellers who want better lives.

As Planting Empowerment enters a growth phase, we are dealing with the growing pains of funding and organizational structure, among others. Sometimes we get so wrapped up in details that we lose sight of the big picture, er, don't see the forest for the trees.

So, in the next few posts we will describe our vision for the upcoming five years. Think of them as snapshots of different areas of the business - operations, environmental and social benefits, business structure, number of trees planted, capital raised, and so on.

Stay tuned.

A few months ago we updated the language on our website in order to eliminate any reference to our products as "investments".

Securities regulations require that public offerings be registered with the SEC - a costly and time consuming process. Thus, Planting Empowerment does not markets investments, but Sponsorships with the expectation of periodic repayments.

From a messaging perspective this gets confusing. Chances are you already understand something about responsible investments, and it is clearer to describe our products as such. However, we are obligated to avoid "investment" language in explaining our products, and that tends to cloud the message.

For example, in comparing website traffic over the last three months with the previous three months, we saw a significant decline in information requests and transactions. We attribute this to lack of clarity about our offerings.

In short, the characteristics of our offerings have not changed:

• You still support sustainable forestry projects in Panama
• You still help to reforest degraded land, create jobs, and promote sustainable development
• We project a "full repayment, plus a bonus"
• We update you on the social and environmental impacts you are creating

You should view sponsorship as a long term comittment. While we are investigating short term revenue-generating activities from the plantations, growing and harvesting trees takes time, and there is a chance that you will not receive repayments. However, through the support of our 100+ customers, 22,000 trees are in the ground, and locals are benefiting from lease payments and increased employment.

Selling securities is expensive. For now this is a cost that Planting Empowerment, as a small organization, can not afford. We are in the process of raising capital to fully register our sponsorships with the SEC, at which point they will become investments. When these steps are completed the investments may be sold through brokerages or as part of a mutual fund - in addition to being available through our website.

The SEC takes measures to ensure that individual investors are protected, and we are fully compliant with their regulations.

Sponsoring sustainable forestry projects is a smart way to look after your own financial interests while doing something good for the planet. The plantation inventory of our Adelante project is 70% sold. If you would like to get involved, please visit our Sponsor page.

A recent article on the BBC website decried the treatment of local populations in the development of REDD (Reducing Emissions from Deforestation and Degradation) projects.

Although the author gets some facts incorrect - claiming, for example the "+" in REDD+ represents what are more widely known as co-benefits rather than enhanced forest carbon stocks as noted in the LCA text (i.e. sequestering carbon, or afforestation) - he does do a service in pointing out potential problems with REDD.

The gist of the author's argument is that REDD will centralize decision-making over forest resources within government and prevent community managment. Panama is a good example of the decentralization process because it has been slowly recognizing indigenous peoples' rights over their land.

There is still much to be done and it is unclear how the Panamanian government will proceed with REDD. Nonetheless, we would argue that now there are actually more indigenous leaders in Panama with an understanding of REDD than counterparts at the ministry of environment (ANAM). Panama actually had its UN-REDD proposal delayed because it lacked a required signature from the IP (Indigenous Peoples) representative and concerns expressed to United Nations REDD staff.

At the international level (FIP, FCPF, UNREDD) there is an understanding that indigenous peoples and communities will need to "own" REDD if it is to work. Without their buy in and receipt of the majority of the benefits, there won't be a reduction in deforestation and payments will not flow to anyone - government included. Policy makers at the national level should use community forestry management programs in Nepal and Mexico as examples when designing their REDD programs.

Planting Empowerment advocates more community management of forests. The successful examples of community management in Mexico were supported for 10+ years by outside technical assistance and capital. This enabled skills development at the local level and development of institutions and businesses. We are training local stakeholders to effectively manage their resources in order to profit sustainably and achieve conservation and carbon goals. 

We sat down with the Forest Carbon Portal to discuss Planting Empowerment's innovative approach to forestry and carbon offsetting. This interview provides details about our tree plantations and the local communities' involvement in forest-carbon projects. The Forest Carbon Portal is an excellent resource for learning about terrestrial carbon capture projects around the world.

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