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.