Volume 24 | Number 4
From California to South Africa, the entrepreneurial spirit is flourishing. Enviropreneurs are applying their talents and the tools of the marketplace to converting agricultural land into recreational property, grassbanking, and conserving biodiversity. On these pages, meet a few enviropreneurs in action.
Beartooth Capital Partners:
Mixing Business & Conservation
By Robert Keith & Carl Palmer
A few years ago, before starting his MBA at Stanford Graduate School of Business, Carl Palmer spent a summer at PERC working with board member and venture capitalist John Tomlin. The pair looked into opportunities to make profitable investments that also realized positive results for the environment. "We were looking for ways to do good things and make money too," Palmer said.
With this concept in mind throughout graduate school, Palmer started his own business venture after graduation that would allow him to combine business with conservation. Palmer and business school classmate, Robert Keith, formed Beartooth Capital Partners to make investments in ecologically important ranches that generate both strong financial returns and conservation benefits. The company channels private investment capital (typically directed to investment in the stock market, venture capital, or buyout funds) into conservation on western lands.
Operating in Montana, California, Idaho, and Wyoming, Beartooth Capital currently is working on a number of land deals while raising additional capital from investors. Its investment properties often are degraded but have the potential for a significant increase in value with enhancements through restoration, land protection and, where appropriate, limited development.
Beartooth also captures financial value through the sale of land to government agencies, land swaps, conservation easements, or tax-deductible donations. Furthermore, they develop conservation enterprises such as ecologically sound agriculture and timber operations, carbon credit sales, and mitigation banks.
Beartooth works closely with environmental organizations such as Trout Unlimited, state chapters of the Nature Conservancy, and the Montana Land Reliance to identify investment opportunities and execute transactions. These partnerships are mutually beneficial. Beartooth gets restoration assistance, easement allies, and conservation science expertise; and the organizations accomplish more conservation than they otherwise could.
"We find unpolished property, restore and protect it, creating ecological and real estate value," according to Palmer. "We take advantage of opportunities to sell ecosystem services and undertake other conservation transactions when possible, but fundamentally we create value by converting agricultural land into recreational property via habitat restoration and protection, entitlement, and ecologically appropriate limited development."
After the Beartooth Capital partners told the story of their entrepreneurial endeavors at PERC’s Enviropreneur Camp in June, one participant called it "inspiring and important work"—what all enviropreneurs strive to do.
Prior to co-founding Beartooth Capital, ROBERT KEITH was an investment partner at Greenbridges, a real estate investment firm, and worked at Morgan Stanley in New York City. He received his B.A. from Yale University and earned his MBA from the Graduate School of Business at Stanford University. Robert can be reached at: [email protected].
Prior to co-founding Beartooth Capital, CARL PALMER was President and CEO of Greenbridges, a real estate investment firm, and worked at the Teton Science School in Grand Teton National Park. He graduated from Brown University and earned an MBA from the Graduate School of Business at Stanford University. Carl can be reached at: [email protected]
Visit www.beartoothcap.com for more information
Biodiversity Stewardship in South Africa
KwaZulu-Natal Wildlife, South Africa
By Steve McKean
The outlook for private and communal land conservation in the biologically diverse KwaZulu-Natal (KZN) in South Africa is looking more positive than ever before as KZN Wildlife, the local conservation authority, opens the door to a program that uses market-based mechanisms to conserve biodiversity.
KwaZulu-Natal, a province situated on the eastern seaboard of South Africa, is one of the most biologically diverse and important areas in the world. Th e province, which makes up 7.6 percent of South Africa—approximately the size of Oregon—has two World Heritage Sites and more than a hundred formally protected areas. However, less than half of the more than 4,000 species found here, not to mention the diverse landscapes and vegetation, are conserved in these nature reserves.
KZN Wildlife has been a leader in working with landowners to support biodiversity management outside protected areas. While the efforts of these people have had a positive impact, conservation arrangements have never been legally binding, with the landowner being able to "pull out" of an arrangement at any time. In addition, KwaZulu-Natal has a system of communal land as well as privately owned land. Communal land occupants have a very different set of economic and social circumstances governing their land use, requiring innovative approaches to achieve conservation ends. Any conservation agreement on communal land would have to, at least partly, address issues of extreme poverty (daily income less than U.S. $2), such as the need to use land to house poor people and to expand agriculture. Given the economic and political pressures placed on farmers in South Africa, no longer is it adequate to other a private landowner a "feel good" certificate for conservation effort.
Until recently, there have been limited mechanisms for partnerships and no dedicated unit in KZN Wildlife to formally bring landowners on board as effective partners in a coordinated effort to secure biodiversity. However, over the past year, a new "KZN Biodiversity Stewardship Programme" has set aside funding and employed three additional staff whose responsibilities are to coordinate and implement the program for private and communal land conservation.
A comprehensive business plan has been developed and "pilot" sites for negotiations for conservation agreements have been identified. The pilot sites are important biodiversity areas whose owners are willing to establish formal conservation agreements. Successful agreements for these sites will form the basis for arrangements in other areas and will provide much needed credibility for the program.
Numerous market- and incentive-based mechanisms for conservation are in the program’s plan of action. For example, land owners who enter into legal and binding agreements to conserve biodiversity on their land are eligible for property tax rebates. The possibility of private and communal landholders being paid to enhance ecosystem services such as water production is also being explored and moving closer toward realization. Furthermore, agreements similar to conservation easements in the United States are likely to be a key tool in successfully implementing a program for conservation outside formal protected areas.
The KZN Biodiversity Stewardship Programme is a new concept in South Africa and, though in its infancy, is already receiving numerous inquiries from willing private landowners and some communal landholders who want to establish formal conservation agreements. Now that the business plan is complete, KZN hopes to establish three formal conservation agreements by March 2007. Negotiations for these are underway, however, the challenges are significant, and the perverse incentives for environmentally destructive land use considerable.
Given this complex set of scenarios, it became increasingly clear that a more focused program with a more complete "tool-kit" was required to successfully address conservation on private and communal land. These tools need to offer various types of incentives to offset any potential costs incurred by landowners which are associated with conservation commitments. In the case of communal land holders, these tools need to be more effective in improving livelihoods.
STEVE MCKEAN is a resource ecologist with KZN Wildlife and was part of the team that developed the KZN Biodiversity Stewardship Programme. He is a 2005 graduate of PERC’s environmental entrepreneurship course, a member of IUCN’s Southern African Sustainable Use Specialist Group, and has published widely on natural resource use issues. He can be reached at [email protected]
To Graze or Not to Graze
Protecting native prairie habitat
By Stephanie Gripne
Cattle ranchers have something that conservationists want. And conservationists have something that cattle ranchers need. Putting the two together, enviropreneurs have created grassbanks a mutually beneficial solution to protect native habitat.
More than a decade ago, the Nature Conservancy (TNC) purchased the Vina Plains Preserve in California with the goal of conserving the endemic plant species associated with the springlike pools found on the preserve. Having determined that the grazing practices on the land were a threat to the biological diversity, TNC promptly removed cattle from the preserve. Surprisingly, though, the cattle removal did not have the positive effect that was expected. Instead, the lack of grazing allowed invasive plants like yellow star thistle and medusa head to crowd out the indigenous plant species that TNC was trying to preserve.
Ten years later, TNC has reintroduced prescribed fire and cattle grazing back into the preserve, realizing that both are beneficial to biodiversity. TNC also realized, after several conversations with local ranchers, that there was only one deterrent to ranchers using prescribed fire in addition to grazing on their own lands—alternative pasture for their cattle while their grassland recovered from the prescribed fire.
From this observation, an idea was born—to offer grass on the TNC preserve at reduced rates to local ranchers as incentive for them to use prescribed burning, in addition to grazing, on their private lands. This practice—the exchange of forage for a conservation benefit—is referred to as a grassbank.For the past five years, I have been researching and assisting grassbank efforts across the West, from the Vina Plains Lassen Foothills Grassbank in California and the Valle Grande Grassbank in New Mexico, to Heart Mountain Grassbank in Wyoming and the Rocky Mountain Front and Matador Grassbanks in Montana.
The conservation gains from a grassbank can come in many forms, such as restoring a landscape with fire, controlling invasive weed species, protecting endangered species like sage grouse, or providing permanent protection against fragmentation using conservation easements. The gains to ranchers, such as alternative sources of forage, are also evident.
Despite these beneï¬ts, there are a number of hurdles to overcome before grassbanks become prolific. Developing markets for goods and services where there are “free-riders”—individuals who can enjoy the resource without paying for it—is difficult, as is the case with grassbanks.
Even though many people value benefits such as open space, healthy forests, and prairies there, are not markets for these goods and services. In many instances, ranchers provide some of these benefits without receiving compensation. Hence, a grassbank is an attempt to create a market by asking the public whether these conservation beneï¬ ts are important to them. If so, are they willing to pay for them? In almost every instance, grassbanks have struggled financially and have had to be subsidized either by government grants, foundation funding, or individual donor support.
Another challenge is defining and expanding the conservation benefits that grassbanks deliver. For example, how do you measure a “fair trade” of forage for conservation? Or what is improvement to sage grouse habitat worth to society? As with any new market approach in the environment, grass-banking is being honed to address these challenges with hopes that native prairie habitat will continue to be restored well into the future.
STEPHANIE GRIPNE is the Land Conservation Program Manager for the Nature Conservancy Colorado field office. She also is president of Compatible Ventures, LLC, and a 2006 fellow in PERC’s Enviropreneur Camp. She can be reached at [email protected].
Visit www.compatibleventures.com for more information.