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We create market opportunities through
sustainable forestry and conservation

Welcome to our blog. Here we discuss pertinent issues and post updates about
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April 24th, 2010 at 8:37 pm

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.

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223
April 20th, 2010 at 10:31 pm
Planting Empowerment is at a crossroads in its organizational development. Currently, our structure consists of 1) Holding companies in Panama for the investment funds, 2) A registered Sociedad Anonomia (for profit) in Panama, 3) A for-profit registered in DC, and 4) A US non-profit arm. 
 
Confusing, yes. But while this hybrid structure challenges us to maintain consistent messaging to fans or investors, it also gives us flexibility to pursue different financing options for Planting Empowerment. We don't fit the traditional venture capital model of maximizing ROI within a short time. "Patient" capital makes more sense not only to finance future plantations, but also to jump start our growth.
 
Before launching another plantation offering in late 2010, we will decide whether to maintain the "mother ship" as for-profit, or transition to a non-profit model. For the initial growth stage of Planting Empowerment we are more optimistic about grant money than obtaining funding organically. This initial stage is necessary to scale operations, expand our marketing efforts, and bring on full time personnel. To do this, Planting Empowerment's non-profit arm will take ownership of the for-profit. The product offered will not change from its current nature - it will continue to create value for shareholders and our local partners through profitable sustainable forestry projects. The difference is that any profits earned from the for-profit would be reinvested into Planting Empowerment's local programs and mission. 
 
Long term, we want Planting Empowerment to be self sustaining. A business that generates its own revenues and attracts private capital - rather than relying on grant funding - can more effectively address the issues of poverty and deforestation that we are committed to. The route taken to reach this goal of self-sustainability may involve more twists and turns than we would prefer. But we still believe private capital is the most powerful way to generate enough momentum to stop unsustainable deforestation and improve opportunities for locals. 
 
At Planting Empowerment's core, whether operating as a non-profit or for-profit, are the social and environmental benefits that we strive to create through our offerings. This kind of inclusive capitalism is what we must embrace if we want a healthy and peaceful planet for our children. 
 
The Huffington Post blog on touches on some of these issues here.
Views:
311
April 12th, 2010 at 3:26 pm

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.

Views:
233
April 7th, 2010 at 10:52 am
In my last month as a Peace Corps Volunteer Aspirante (candidate) I attended a workshop to meet my community counterpart. Eliecer Cruz wasn't what I expected. He was 18, not a leader of the community, and wasn't sure why he had been sent across the country to meet me. We got along well though, and he became my closest friend during my two years living and working in Nuevo Paraiso. He increased my repertoire of dirty words, pointed out important key relationships in the community, and showed me how to catch river shrimp. 
 
Near the end of my service, Eliecer left the country life to work in the city. He found jobs in woodworking and in paper mills. He eventually married a city girl - a true city girl because she refuses to visit Eleicer's family in the frontier - and now they are raising a couple of kids. He indicated that they won't be having any more, and that they are comfortable in the city.
 
Eliecer's father Egberto migrated from Panama's Los Santos province, like the other elders in Nuevo Paraiso. He came to the Darien province in the early 1980s seeking free land to raise crops and breed cattle. Egberto squatted a parcel by logging the good trees and burning the remaining vegetation. 30 years later he still plants rice in the rainy season to support his eight children living at home. View photos of our parnter communities.
 
This story must be similar to countless others in Latin America, because it demonstrates an important shift: as more people move into cities, industry has overtaken slash and burn agriculture as the main driver of deforestation. Ruth DeFries and colleagues of Columbia University recently published a study showing that as urban centers grow, pressure to feed and satisfy consumer demand spurs industrial deforestation. In other words, we should be more concerned about Eliecer's generation than his father's.
 
From our perspective, this brings up an effect highly correlated with urban migration: regeneration of secondary forests on abandoned farm and pasture land. In the next post we'll share our thoughts on this "new rainforest" and how we are working to maximize its value to those who can benefit most from it. 
 
In the meantime, we welcome your comments.
Views:
264

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