This summer PERC welcomed sixteen conservationists from around the world for its 11th annual Enviropreneur Institute. The program works with environmental entrepreneurs, or enviropreneurs, who seek a better understanding of how business and economic principles can be applied to environmental problems. For two weeks, participants have the opportunity to interact with leading experts in the field of free market environmentalism, including those who have researched and applied markets and property rights in their environmental work.
Michael Higuera of The Nature Conservancy attended this year's program. He works for TNC in Boulder, Colorado, where he protects land through conservation transactions across the state. Michael began his career practicing transactional law in Denver, but discovered that finding solutions and bringing people together resonated with him more than the process of litigation. We thank him for answering our questions. For more of PERC's Q&A series, see the Q&A archives.
Q: What types of conservation transactions are you currently facilitating?
A: I am primarily responsible for obtaining conservation easements on large ranches (over 10,000 acres) in eastern Colorado in order to preserve shortgrass prairie and protect native bird and wildlife species. These transactions are funded by private donations, landowner donations, and public funds from sources such as the lottery, the Division of Wildlife, and federal programs. In addition to that responsibility, I am working with a small group of people to determine ways to bring private capital into our conservation work and land transactions. We have been exploring ways to engage the private sector in acquiring properties with significant biodiversity value and are considering using an investment vehicle such as a real estate investment fund. The fund would manage the properties for a profit while also protecting their biodiversity by placing a conservation easement on the land. The sale of the conservation easement would help the fund acquire the property at a lower basis thereby increasing the operating return on its investment. Similarly, my project at PERC’s PEI program sought to find ways to work with oil companies to manage drilling operations in an environmentally sensitive manner. The common element between the real estate fund and the oil company ideas is finding market-based incentives that make it attractive for those ventures to promote conservation on their properties.
Q: What might some incentives be for the companies to conserve land tracts used in part for drilling?
A: We cannot use a conservation easement to address drilling for oil because mineral rights are very different than surface rights which can be protected by easements, but my idea was inspired by the success of the conservation easement as way to facilitate the acquisition of property rights that are valuable to TNC’s mission to protect biodiversity. The crux of my project at PEI was exploring ways to create incentives for oil companies to work with conservation organizations like TNC to plan their projects to avoid sensitive areas and minimize impacts. The most ambitious way to do that would be for companies to create a product that is differentiated in the marketplace from others by the way in which it was extracted. We certainly see this in the organic food market, fair trade certifications, and in the forestry markets. Unlike the conservation easement model that relies in part on public funding and tax incentives, this model would rely on the consumer to pay for the conservation benefits.
A conservation drilling plan would provide protections for biodiversity. which is a win for TNC and others who value nature. It could also be a win for the oil company by allowing them to differentiate their product, increase market share, and command a premium at the pump. Consumers who want to be part of the solution would win too.
Q. You’ve discussed the possibility of an eventual fourth pump at gas stations nationwide. What would this new “conservation gasoline” be, and how would it work?