An unlikely partnership | Pownal author Bill Ginn advocates for business and conservation to work together to preserve open space

Bill Ginn likes to say that he's spent half his life in business and half working for nonprofits ˆ— but 100% of his life working on conservation issues. These days, the Pownal resident serves as director of the Nature Conservancy's Forest Conservation Program. The job requires frequent travel across the country and the world, where Ginn helps set up forest conservation projects using a range of financing techniques from simple conservation easements to complex, Wall Street-style investment banking deals.

Along the way, Ginn, the former executive director of Maine Audubon, found the time to write a new book, Investing in Nature: Case Studies of Land Conservation in Collaboration with Business (Island Press, 2005). As the title suggests, Ginn's book advocates for not only cooperation but active collaboration between conservation and business groups when it comes to protecting specific natural areas. No starry-eyed idealist, Ginn believes firmly that business is not the adversary that many activists think it is. (A preview chapter, as well as a field guide to market-based tools for conservation, is available at www.investing-in-nature.com.)

In a recent phone conversation with Mainebiz, Ginn outlined the origins of this philosophy, as well as what he thinks are some of the most innovative financing tools being used in conservation today. An edited transcript of the conversation follows.

Mainebiz: You cite the example of Resource Conservation Services ˆ— your company that brought useful waste products, such as ash from paper mills, to farmers for use as fertilizer ˆ— as being much more effective at changing the waste stream than the bottle bill was. Why was the company more effective than this big piece of legislation?

Ginn: One of the great things that businesses have access to is capital to invest. And when you compare the amount of capital on Wall Street or in business to what, say, nonprofit organizations have available to them, you quickly realize that where the money is is an important part of how you get things done in this society. So my company, because of its access to private capital, and the ability to invest in ways that nonprofits find difficult, was able to accomplish a lot more in the solid waste area.

I think the other thing is that we need entrepreneurs out there to solve these problems ˆ— people who are incentivized by the profit motive, if you will, to work on solutions, whether it's solar energy, whether it's recycling, whether it's new ways to invest in forests that are more sustainable than in the past. All that takes entrepreneurs. Business brings both capital and entrepreneurial skill to those problems.

Not that long ago in the environmental movement, that would have seemed pretty radical ˆ— to think that you have to involve business in order to get more innovative solutions.

I think that the reality is that capitalism has become the dominant organizing theme in the globe; even in places like China where we never would have thought capitalism would take hold, it has become incredibly powerful. No solution to the problems facing the globe can possibly be achieved if we don't deal with business. To me, it's inevitable that the conservation movement has got to recognize that's the case and to begin to find ways to work with business to help them do the right thing, and to incentivize them to invest in the right kinds of areas that will build a better economy and a better environment.

I don't think you can separate the environment from the economy ˆ— a healthy environment is essential for a good business climate. You need to have places for people to live to have a high quality of life; you need the protection of the environment in a way that will allow us to be sustaining our future and not burdening our children with tremendous environmental debts that they will have to pay for the luxuries that we consumed.

I was going to ask you about the concept of natural capital, which you mention as something we should consider as akin to financial capital. Can you give some examples of natural capital?

One of the things that has come home directly to us in the last 30 days has been Hurricane Katrina. That has exposed some really serious problems that are going to cost the United States hundreds of billions of dollars. It's become clear that our poor management of the Mississippi River and of sediment flows has resulted in the virtual loss of the barrier islands that would have protected New Orleans over the last 100 years. It's becoming increasingly clear that the reason Hurricane Katrina became a category five hurricane was that the Gulf [of Mexico] is at all time high temperatures ˆ— it was at over 92 degrees at the time Hurricane Katrina came through there. And what that means is that the things we're doing to mess with our climate are causing impacts on our way of life and on our economy. So we ignore the things nature is doing for us as natural capital, and, if we do, we end up with tremendous economic consequences in other areas.

When you put the situation that starkly, that the devastation of Katrina is directly linked to human actions, the problem seems almost insurmountable. How do you reverse those kinds of decisions, which were not made as a group ˆ— they're incremental decisions over decades?

We do face some very, very severe problems, but one thing I believe is that if we can incentivize business and turn loose the entrepreneurial energy of our economy, we can accomplish an enormous amount. So I guess the main focus of my book is to get the conservation community and the business community thinking about how we can use the tools of business to do a lot more together than we can apart.

Is this message hard to hear for some in the conservation community?

I think that there are some in the conservation community who have a lot of concern about business practices, and I'm certainly no apologist for bad business practices. But I think that we can't ignore the importance of working with business, and so for me it's a more positive message about what potential there is. Let me give you a very specific example drawn from Maine: When the Nature Conservancy purchased the note of the Great Northern Paper Co. ˆ— an enormous gamble for a conservation organization to invest in a failing, virtually bankrupt company ˆ— there were a lot of people in Millinocket who said, "This is just a secret plan of the Nature Conservancy to put everyone in Millinocket out of a job."

We said at the time, "We understand your concern, but watch our actions." And what our actions were was to continue to support Great Northern through the bankruptcy, help with the refinancing of that note, and [the company's] restarting [as Katahdin Paper Co.], rather than trying to, as some feared, put the company out of business. The reason for that fundamentally was, we need an economic reason for forests to stay as forests. If there are no markets for trees, if there's no reason for anyone to grow trees, then that means the development and loss of those forests is much closer to reality. And conservation doesn't have enough money to just go buy and protect all those forests; if there's no economic reasons, we're going to lose tremendous amounts of forests. We're going to lose a tremendous number of our farms. Many of the natural resource-based industries that we care about are struggling, and fundamentally the answer's got to be found in making those industries more viable, not just in trying to put them in a museum someplace.

That transaction with Great Northern was a really complex one. You mention a few times in the book that these are not necessarily deals you can put together over the kitchen table. It seems like there's an element of financial sophistication that you're advocating should be adopted by conservation groups.

Conservation groups need new skills. Many people come to conservation because of their naturalist backgrounds, or their ecology or biology backgrounds. We need more people to come to the conservation field with business skills. It's why I've talked about this as something I call conservation investment banking, to make people think about how we can apply the tools of business, of banks, of capital, to conservation problems in a new way.

I'm advocating that conservation groups for their next hire bring somebody with financial skills and business background onto their boards [or] onto their staffs so they can begin to work on these problems not just with the tools of science, which are very important, and not just the tools of education, which are absolutely important, but with these additional skills in their toolkit as well.

How do you talk the private investors into participating in these kinds of deals?

I start with a premise, and I think this is true, that very few business people have any desire to mess up the environment in which they live. They care about their communities. But they also have practical problems; they have mortgages and investments to make work. Where we have been successful is in showing people that a conservation deal can be a good deal for them as a business person as well as a good deal for their community and for their environment.

It does require investment on the part of conservation ˆ— there's no free lunch here. When ordinarily the only way someone could get the value out of their property is through development, we [can] buy a conservation easement or buy the property from an investor. We're able to allow the land to stay as it is, but also give a fair return for the investor.

One of the best examples was the [International Paper] Connecticut [River] headwaters project in New Hampshire. When that land came up for sale, it was four percent of the entire state of New Hampshire; that's a lot of land. The economy in the north country was suffering because the two mills [in Berlin and Gorham] had just gone through bankruptcy and were trying to restart, but there were questions about the supply of timber. That land had tremendous development value, and would have been lost to the economy and would have not been available to provide fiber to those 800 people who had worked at those mills if we simply stood back and let it be subdivided by some developer.

So what we set out to do was to identify an investor who didn't want to invest in that property for the purposes of development, but wanted to invest in that property to grow fiber, to grow trees, for a natural resource-based economy. In that case, we found a group of investors called Lyme Timber Co. [of Lyme, N.H.] whose main business is to invest for the long term in growing trees. So we sat down with them and said, "What will it take for conservation and Lyme Timber to invest together on that property and find a way to both meet the public's interest in preserving their recreational rights and the quality of water at the headwaters of the Connecticut and the fishing and snowmobile trails, and at the same time preserve the ability to grow trees?"

Out of that came a [$33 million] deal where Lyme Timber put up the money to purchase the underlying land on the property, and the conservation community and the state of New Hampshire put up the money to buy a conservation easement that would preserve these other values that the state was interested in conserving ˆ— recreational access and the like. It was a win-win situation. Instead of an investor who wanted to build houses, we found an investor who wanted to grow trees. We coinvested with them to make a project happen. That's a model that has been repeated in Maine and elsewhere across the country.

Do you have a Maine example?

When the Leavitt Plantation, which is a tree-growing asset of about 10,000 acres, came up for sale [in 2001], it was a very significant part of the town of Parsonsfield. If that property was left to be developed, it would have changed the face of Parsonsfield, Maine, because 10,000 acres is a lot of the town. We were concerned about that, and we did the same thing we did in New Hampshire ˆ— we went out and tried to find a group of investors who were interested in that property because it would grow great trees, and not interested in that it could be carved up into subdivisions.

In that case, we found another group of investors, [Boston-based] GMO Renewable Resources. They purchased the property, and they gave us an option to purchase a conservation easement on the property as soon as we could raise the money. Through the hard work of the town, individual donors [and] the Nature Conservancy in Maine, we were able to purchase a conservation easement on that property a few years later, thereby preserving this great asset for the town as a working forest, protecting the character of that community from being changed and destroyed, and achieving conservation.

In some of the deals that you describe, the Nature Conservancy ends up with forest lands to manage itself, which seems like a fairly big change in the organization's role. How has that gone?

It's been great. In Maine, we own a major timber property in the St. John River valley ˆ— 185,000 acres of timberland. We're one of the major landowners now in the state of Maine. And we have set aside very significant parts of that property as protected areas for wilderness to protect the St. John River corridor, but we've also maintained a significant portion of it in working forest.

That does two things for us. One is that it serves as a green endowment for the Nature Conservancy ˆ— the money we earn from sustainably harvesting those trees we're able to put back to work on other conservation projects throughout the state of Maine. And, secondly, it's given us a real seat at the table with the forest industry. We work with them on recreational management issues, we work with them on sustainable forestry certification issues, and we come at the problem not from the perspective of some do-gooders who don't know anything about what it takes to manage trees, but from the perspective of an organization that's actually got its hands dirty trying to understand what it's like to manage forests.

One of the things you mention that's shaping Maine right now is the trend for timber investment management companies and real estate investment trusts to turn over timberlands more quickly than they have in the past. How do you think that trend is going to continue to affect Maine?

It's a good news, bad news story. The bad news is that we don't have a particularly stable land ownership. You could have looked at a map of Maine for 100 years and seen virtually no change in its ownership in terms of these big land tracts. Then all of a sudden in these last 10 years the map has been completely redrawn. So the bad news is we're in this period of tremendous change in land ownership, [and] there are lots of properties at risk because the new landowners don't necessarily share the same desires and needs as the old landowners.

The good news is that most of the new landowners are financially oriented. They have an open door to talk to conservation; they realize that we're a potential economic partner with them, that buying easements, buying high-value conservation land, is a way that they can capture some of the value of their investment. So there's a new openness about talking about conservation among landowners, particularly the new investors, which is a very positive thing for Maine ˆ— it gives us new opportunities.

That has been translated into millions of acres of conservation. There is a conservation easement on the West Branch, the Katahdin forest easement that we negotiated with Great Northern ˆ— all of those things are positive examples of the new opportunity that conservation has to do business.

One of the other techniques you talk about in the book is carbon offset programs, which seem to have lots of obstacles to implementation. What do you think the chances are over time that that technique is going to pan out?

I'm 100% confident that we're going to have carbon markets in the United States, because climate change is too important an issue to ignore, and the efficiencies of a market-based solution for carbon are just too great to ignore. The Northeast is taking a real leadership goal; there's a consortium of northeast governors that is working hard to set up our own market system, because they are so frustrated with the federal government's failure to enact the Kyoto Protocol and to do something really substantive in the climate area. So we're going to see markets growing here in the eastern United States because of our state-level action, and I think ultimately the federal government is going to realize that it's got to respond with a nationwide system or really participate in the global system that's being developed. Virtually every other nation in the world has embraced carbon markets as the appropriate way to go, and we are going to see it in the United States. But it may take political efforts on all of our parts to get there.

Some of the companies you highlighted that have been involved in significant conservation deals, like Time Inc. or FleetBoston, did so at least in part due to pressure from activist groups like Greenpeace. How do the activist groups mesh with the folks like you who are advocating for capitalism-based conservation policies?

I think that advocacy groups and policy-oriented groups have a critical role to play in society, because many of the things that we do are shaped by what public policy amounts to. I think the critical thing that they are doing ˆ— the power is less from the advocacy groups and more from the consumers that they are helping inform. I don't think most companies are afraid of Greenpeace, but they are concerned about the attitudes of their customers. So when a Home Depot hears from its customers that they want sustainably harvested wood in their store, then that sends a ripple through the entire industry, because for Home Depot to have sustainably harvested wood, they need to have suppliers who can provide it with those products.

Toward the end of the book, you advocate for flexibility in implementation of these methods, which would seem to be really difficult to write into law. Are there any good examples of an incentive-based regulation that is working well?

Things like the work we've done with New Market Tax Credits [and] state tax credits are examples of flexibility. You're not saying to an industry, "You must do this"; what you're saying to them is that we've made it financially worthwhile for you to invest in this direction. We don't care so much about how you actually do that, as long as you accomplish the goal.

Carbon is a good example of these new markets that give people flexibility. The whole certification movement is not regulatory driven, it's driven by market forces ˆ— so that gives many people the opportunity to design their own programs and find new solutions, and that's at the heart of entrepreneurship. It's at the heart of the kind of innovation that we need.