From board member Chris Meyer

I recently had the privilege of hearing Elinor Ostrom, the 2009 Nobel Laureate in Economics. She won the Nobel for her analysis of "the commons" and communal decision making.

Her work is pertinent to Planting Empowerment because she has studied community forestry and conservation. Along with various colleagues, she has found that conservation actually increases when control of forests are decentralized. This has been proven through various community forestry programs in Nepal and Mexico that increased conservation by enabling more local control of forests.

Our partnering community Arimae is indigenous, and manages its land communally. Although their land title is now being processed, they have been without legal possession for too long because the Panamanian government didn't recognize collective land rights. This lack of recognition has emboldened loggers and cattle ranchers to encroach on Arimae's land.

Arimae's reserve is roughly 25,000 acres. The community's land management plan sets aside a significant amount of rainforest (about 10,000 acres) for conservation. The rest of the land is distributed to community members. Each receives a roughly 25 acre plot for personal activities such as homesteading, agriculture, and tree planting. Additionally, large tracts of converted land are reserved for projects like Planting Empowerment's mixed species tree plantations, or other larger projects.

Our lease payments and future profit sharing are proving that Arimae can generate significant returns from already cultivated land. This then enables them to invest in conserving the remainder of their rainforest preserve and in other revenue generating activites.

Central government control over forests diminishes the sense of ownership for local forest dwellers. This in turn reduces their incentive to sustainably manage those resources. When the Panamanian government opened up the Darien province for settling, it didn't have the means to control unsustainable colonization. This Google Earth shot tells the whole story. You can see Arimae's forest reserve surrounded by deforested cattle pasture and cropland. Arimae has been battling for its land title for decades. Now finally, the Panamanian government appears committed to granting Arimae full control over its land and resources.

Arimae demonstrates the accuracy of Dr. Ostrom's work on communal decision making - Arimae makes more sustainable choices about land management and resource allocation than the central government. The Panamanian government is waking up to this fact, but too bad the lesson has been so environmentally costly.

The Christian Science Monitor and The New England Center for Investigative Reporting recently released a six-part report entitled "Blowing Smoke". Most of the stories examine a project designed to produce voluntary carbon offsets that either has not been fulfilled (the Vatican's tree planting scheme in Hungary), or negatively affects native livelihoods (Poor farmers in India lose land to windmills).

Another of the offset projects profiled is managed by SilvaTree, based in Panama. The report claims that SilvaTree is inconsistent in its claims that its pawlonia tree plantations are certified by the Voluntary Carbon Standard (VCS). SilvaTree states that they are taking legal action against CS Monitor for defamation and misrepresentation.

I thought each of the reports was interesting, and recommend reading them. However, we are worried that the SilvaTree exposé will give all forestry projects a bad name. So, we'd like to explain a bit more about how Planting Empowerment operates.

Planting Empowerment doesn't guarantee a financial return. The only guaranteed return I know of is the 0.5% interest on my savings account, insured by the FDIC. And the guarantee is only that I won't lose my principal. Too many timber plantations lure investors by guaranteeing high returns only to disappoint them at year five when promised dividends don't appear. If it sounds too good to be true, it probably is.

We sell a hectare of mixed native species (with 30% teak) for $15,000. We plant 1100 trees per hectare, pay higher prices for land because of our lease model, and share our cut of profits with the landowners/local communities. SilvaTree charges $35,000/hectare and guarantees a higher return while only planting 660 trees. More trees planted doesn't necessarily mean more wood production, but it does provide a larger pool from which to cull and maximize timber quality. Also, PE plantations include at least seven different types of trees. This diversity lowers the risk of blight in our plantations, and reduces exposure to price fluctuations in timber markets.

On purchasing carbon offsets: the forestry carbon market is still young and you should educate yourself about forestry carbon credits at the Forest Carbon Portal website before making any purchases. They put out a good report on the market and you should compare it to SilvaTree's and other businesses' claims about their carbon credits. Planting Empowerment has sold carbon credits, but only in personal deals where both parties understood the transaction and where those credits came from. Planting Empowerment will refrain from selling carbon credits to the general public until the market solidifies and we certify the plantations.

A note about REDD (Reducing Emissions from Degradation/Deforestation) projects in Panama. Investing in any REDD scheme that purports to generate carbon credits is like playing craps. The Panamanian government has yet to decide who actually owns the carbon in the trees. Be prepared to lose all your investment when the government/local landowners get the majority of the revenue from carbon offset sales.

We encourage the ideas that new plantation companies are exploring and their potential to slow deforestation and improve economic opportunities. However, we are skeptical of "guaranteed" returns, monocultures, and promises of selling carbon credits. Most importantly, forestry projects designed to benefit the environment should also benefit locals who depend so much on their natural resources. Our position is that projects that displace or alienate the local population are not sustainable in the long run.

In my last post I described a Panamanian friend's move to the city, and how it demonstrated a larger shift from subsistence to industrial deforestation. A side effect of this is regeneration of secondary forests in the tropics. Secondary forests are those which have regrown after a major disturbance like logging or fire. For our purposes it is the regrowth of forest on agricultural land or cattle pasture. 

Among smallholders in Panama, secondary forest is usually regarded as transitional - already logged of its useful timber, but not yet suitable for cattle pasture. Recently these forests have gained more attention from biologists and conservationists for their potential role in slowing global warming. A 2009 article in the NY Times spotlighted a Panamanian woman's property that has regrown after being used for raising livestock. A CNN piece discussed the regrowth of secondary forests from more of a social perspective, relating it to the ongoing struggle between indigenous livelihoods and forest conversion. These articles bring up a few questions:

What is the true value of the rainforest?

Worldwide, regrowth of secondary forest is outpacing deforestation. In Panama for instance, forest cover was lost at 1.3% in 1990, but regeneration of degraded land increased by 4%. The renewed forest cover could substantially offset the carbon deficit from deforestation, but biologists argue that secondary forests don't compare to primary forests in terms of the amount of wildlife they contain. They suggest that secondary forest could serve as corridors between areas of primary jungle, but they should not be seen as a replacement. 

Does focusing too much on rainforest conservation prevent smallholders from making a living?

In the NY Times piece, Joe Wright, a senior scientist at the Smithsonian Tropical Research Institute suggests that trying to conserve rainforest too tightly prevents smallholders from making a living from it. Kuna tribesman Toniel Edman - interviewed for the CNN article - states that it is easy to get loans for cattle breeding, but that's about it. Some of the funding for rainforest conservation could go towards increasing access to financing for forestry and sustainable agriculture. Planting Empowerment is currently managing a small UNDP-GEF funded project with its partner community of Arimae. Part of the project includes intercropping cash crops between rows of planted trees. The goal is to subsidize the long term care of the trees with the earnings from these crops. We think this could be very effective not only in regenerating degraded land, but also in preventing deforestation of primary rainforest.

Population growth and shifts?

As we explored in the previous post, deforestation is increasingly driven by consumer demand. As more people move into cities and a gain better quality of life, businesses cater to their needs. People migrating into the city also leave behind their agricultural plots and cattle pasture. So, one would think that these businesses' need for land could be satisfied by the plots their now-consumers have left behind in the countryside. What prevents industry from utilizing this already converted land? To make their products cost effective, industry requires large swaths of contiguous land. Separating production into disjointed plots doesn't make economic sense. Also, until primary forest is valuated for more than its conversion value, it is the cheapest way for industry to gain land. Rainforest needs to be worth more standing than felled, or this will continue.

Although industry is now the main driver of deforestation, there is still the need to work with small landowners. Maximizing the return from their land and diversifying the income sources from it is very important. The problem we're seeing now is that smallholders are selling their land to industrial Teak enterprises because of reduced yields from subsistence agriculture/cattle and the need for short term income. The windfall incentivizes the smallholder to encroach and clear primary forest in the indigenous reservation. Solutions such as monthly payments and profit sharing of timber sales to small landowners provide the income they need while keeping them on their land.

Each country is different and has its own unique situation, so we only speak from Panama's perspective. The economic potential of secondary forests to smallholders and indigenous communities is constantly growing. Our work creates income streams from these secondary forests through tree planting and agroforestry. You can be part of this by owning trees planted on our partners' deforested land.

MIT Develops Biochar Study for Community Forestry Organization

Significant potential to make use of forest thinnings

Washington DC, March 9, 2010—A group of MBA students from the MIT Sloan School of Business traveled to Panama to look at the revenue potential of forest thinnings from Planting Empowerment's (PE) tree plantations. The team spent a week analyzing different uses for the smaller trees before recommending biochar as the most promising option.

A sustainably managed tree plantation can take ten years to produce commercially viable timber. Part of the maintenance of plantations is periodic culling of smaller trees, allowing healthier ones more space to grow. Traditionally these thinnings have little or no commercial value, and are left to rot on the forest floor or serve as firewood. As part of the MIT Sloan Entrepreneurs in International Development Club (SEID) students Lily Russell, Justin Butler, and Adam Rein studied commercial uses for these thinnings with the goal of producing earlier returns for Planting Empowerment's investors. They decided that biochar has the most potential because of its multiple uses and low initial production costs.

"When looking at alternative uses for PE’s wood fiber, we considered industrial fuel consumers (paper, pellets), furniture, a biomass power plant and a few other alternatives. However, we ultimately decided that producing biochar and fertilizer (using the biochar as an additive) were the best fit for: PE’s model, market opportunities and technical feasibility" said Lily Russell, one of the students leading the study. She added "It was fascinating to spend time with the PE team and community members involved in their projects; it gave us tremendous perspective into the social and environmental impact of the PE business model as well as the need for such initiatives. Truly impressive."

Biochar is charcoal that can be used for cooking fuel, heat source, carbon capture, or fertilizer additive. Indigenous tribes of the Amazon basin used biochar - known as terra preta (black earth) - as a soil additive. Biochar can improve soil quality by increasing moisture and nutrient retention rates. Most interesting for Planting Empowerment is its ability to increase the effectiveness of organic fertilizer. Fertilizer producers in Panama indicated that there is strong market potential for biochar.

"Some people are hesitant to invest because of how long it takes to produce returns" said Planting Empowerment co-founder Damion Croston, adding "Biochar could be a way to generate earlier income from the plantations, but is also interesting to us because it has a number of different end-uses. The MIT team did a great job of figuring out how to capitalize on biochar production and how we can use it in our own operations."

Planting Empowerment will begin thinning its plantations in 2011, and will set up a small, mobile biochar production unit to process the tree thinnings. Their goal is to work through each stage of the process - from felling the trees to producing finished fertilizer.

Download the full report (PDF)

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Planting Empowerment (PE) works to alleviate tropical deforestation and poverty through sustainably managed timber plantations. Founded by four former Peace Corps Volunteers in 2006, PE partners socially and environmentally minded investors with community-based forestry projects in Central America. Since its formation in 2006, Planting Empowerment has quickly grown to become a thought leader in sustainable development and a capable on-the-ground partner. PE currently has 50 acres of mixed tree species under cultivation, with plans to expand to 250 acres in 2011.