Reforestation Pays Dividends For Investment Fund

Watershed Conservation Good For Business

Leo Pröstler heads an investment fund that has set up a reforestation project in Costa Rica with tropical wood. He tells Global Ideas why the model makes good business sense as well as helps restore the environment.

German businessman Leo Pröstler set up the company BaumInvest (TreeInvest) to focus on alternative cultivation methods as well as social initiatives and innovative approaches. The local workers on his farms in Costa Rica are paid fair wages and guaranteed long-term employment.

reforestation and forest conservation

BaumInvest has also invested in mixed forestry and agroforestry on its tree farms. In other words, farmers are allowed to plant their own crops – ginger, pineapples and yuca, for example – on the land between the trees. There is even a small pig farm with some 50 animals, as well as some 500 free-range chickens. The hope is that the chickens can help free up some of the undergrowth in the forest. Each week, one pig is slaughtered and divided up among the farmers. Along with the vegetables they grow on the land, they are able to provide enough food for their families, and they can even earn extra income by selling some of the products they grow. The hope is that the wood from the tree farms can even be used to build homes for the workers some day.

Global Ideas: Mr. Pröstler, you have an impressive resumé: you studied engineering, you sold steel mills, you headed up the Institute for Applied Ecology in Freiburg and, in 1987 you founded Waschbär Umweltversand, a mail-order company specializing in eco-friendly goods. After that you created BaumInvest. How did that come about?

Leo Pröstler: I first came up with the idea in 1994, when I was still running Waschbär. With the catalogues we produced at Waschbär GmbH, we were consuming massive amounts of paper, amounting to several truck loads every year. I wanted to compensate for that ecologically. But I decided not to do so through donations – instead, I came up with an environmental project in Costa Rica based on a loan system, with the seedlings as interest. That’s how it all began. Later, I founded Querdenker GmbH, a consultancy for project development and management in sustainable investment, and with that I launched the first BaumInvest fund.

deforestation and climate change

How does BaumInvest work?

Individuals or companies invest money for a 24-year time period, and we use those funds to purchase former pastures and coconut plantations in northern Costa Rica and reforest them. We plant teak, mahagony, roble coral, cebo, almendro and other indigenous tree species. When they mature, we sell their wood and return investors’ money with yield.

But you’re talking about tree farms and native timber – how can you sell that to investors as eco-friendly?

I’ve always understood sustainability to mean that everything stays as it is. But we actually improve the situation on the land that we buy up. The soil on these plots is often depleted because it’s been over-farmed, and the creeks are in bad shape due to the use of pesticides and chemical fertilizers. What we do has little to do with what you see on typical tree plantations: We plant a mix of native species and improve the soil and groundwater. I call this principle ‘plustainability’ because it’s one step better than sustainability.

But you’re still selling native tropical timber at the end of the day. That sets off all of my ecological red flags!

Consumers always want things to be black and white, but it’s often more complicated than that. I could plant pineapples in Central America that erode the soil quality. Or I can plant a tree. Nothing can absorb and store CO2 as well as a tree, and there’s no better place to do so than in the tropics, where plants grow extremely fast. As long as the wood isn’t being burned later on, it’s permanently locked in the CO2. And that is always a better solution than carbon capture storage. Trees are a natural alternative.

So how do you explain the sustainable side of tropical wood furniture to potential customers?

We have had problems with that. For example, our Querdenker GmbH business is based in Freiburg so I wanted to present the city with a gift by replacing an old boardwalk with teak wood. But it didn’t work because of the city’s long-standing resolution not to use tropical woods. But you have to be able to rethink those attitudes these days! Reforestation is essential for our climate, everyone agrees on that. But you have to be able to pay for it somehow, and turning it into an investment is one possibility. We came up guidelines to explain how we make sure the process is implemented in an ecological, economical and socially beneficial way. Of course, you have to be ready to pay a fair price for the end product. Sure, you can buy teak wood chairs for 40 euros, but there’s no way they can be cleanly produced for that price.

What about the investors? Are they drawn in by the 6.3 percent return on their investment? Or because they believe in the cause? Isn’t there a bit of greenwashing for the soul going on here?

The investors place their money with us because they trust us. Almost all of them are driven to invest because of ecological or social motives. There are many who want to show their children that money can change things, but that it takes patience: This project will run for generations. My son Stefan is coordinating the reforestation projects in Costa Rica and has made that his goal for the next 30 years. He now has a son too who is growing up there.

You also offer your investors the chance to take a look at the project themselves?

Yes, we organize investor trips. Our investors should see the tree farms with their own eyes. That always leads to very interesting and critical discussions about our project that often go on for hours. It’s tough, but it’s part of the business. We also get a lot of ideas and suggestions from that process. On one of our very first investor trips, for example, there was thunder and lightning as we were driving out to the nursery. One of the investors complained that we were asking too much of him. My son Stefan reminded him that our workers have been doing the very same thing for five years, and that investors ask that of them. That sparked a really interesting discussion about the social aspects of the business.

One more question on the return on investment: I get two percent interest on my bank account right now. I’d be pretty skeptical if you promised me six percent.

Well, there are plenty of other forest investment projects that promise a return of nine to twelve percent. These numbers are based on the estimated increase in wood prices, among other things. We had to provide the Federal Financial Supervisory Authority, or BaFin, with a very specific calculation for the coming 24 years. Other timber funds are unrealistic with their predictions of how wood prices will climb, forecasting six percent – but we stuck to just two percent. That might be unrealistic too, and in that case we’ll have to send our wood to Vietnam where it can be processed cheaply – even if I want to avoid that scenario. But maybe it’ll be different, maybe there will be legislation at some point prohibiting people from cutting down wild teak. Then we’d be in a unique position with our plantations.

wildlife conservation and deforestation

All those uncertainties make the whole thing risky for investors but they are aware of that. All in all, though, you have to see that we have come a long, long way from when we first started out at BaumInvest planting monocultures. I’m not a specialist in forestry, and maybe that’s why it was easier for me to do things with our tree nurseries that other people called impossible. The same goes for the local farmers – in the beginning, they thought we were crazy and didn’t take us seriously. Now they say it rains more, thanks to the trees we planted.


climate change and deforestation

Sacred Seedlings is a global initiative to support forest conservation, reforestation, urban forestry, carbon capture, sustainable agriculture and wildlife conservation. Sustainable land management and land use are critical to the survival of entire ecosystems.

Sacred Seedlings is a U.S.-based program that supports the vision of local stakeholders. We have projects ready across Africa. We seek additional projects elsewhere around the world. We also seek volunteers, sponsors and donors of cash and in-kind support. Write to Gary Chandler for more information

California Creating Carbon Market

Carbon Market Funding Conservation

California kicked off its cap-and-trade program to reduce carbon dioxide emissions.
The California Air Resources Board says that carbon credits were sold at auction for slightly more than the $10 opening. That has enabled the state to raise $233 million in round one — money to be allocated to customers who are expected to pay higher electricity prices, all resulting from a shift away from fossil fuels and toward cleaner fuels. The major point, say the plan’s architects, is that the first auction has drawn lots of participants and that the process will become more vibrant.

deforestation and global warming

“By putting a price on carbon, we know we are beginning the process of breaking our dependence on fossil fuels,” says Mary Nichols, chair of the resources board, in a San Jose Mercury News story. She says that the state also expects to see new economic development.

The latest move by California is part of an earlier law passed there in 2006, called AB 32. That law now requires the state’s utilities to provide a third of their fuel offerings in the form of green energy by 2020.

About 350 companies, and around 600 facilities, are impacted by the cap-and-trade provisions. To keep business costs down, 90 percent of the tradable credits will be free for two years. By 2016, all such allowances will be sold. And by 2020, carbon emissions are supposed to be at 1990 levels.

In a cap-and-trade system, government sets pollution limits and then credits are either auctioned or allocated to industry. Those companies that are able to exceed the expectations can either bank their allowances for future use or sell them to other businesses that are unable to meet their obligations. As the ceilings come down, overall emissions then fall.

air pollution and global warming

Many California businesses have argued that forcing reductions in carbon emissions through a cap-and-trade platform will cause industry to move out-of-state. In fact, just prior to the auction, the California Chamber of Commerce filed suit to prevent subsequent auctions. It is arguing that the trading scheme is nothing more than a tax established on the state’s businesses by unelected officials.

“What was not authorized by AB 32 is the Board’s decision to withhold for itself a percentage of the annual statewide greenhouse gas (GHG) emissions allowances and to auction them off to the highest bidders, thus raising from taxpayers up to $70 billion or more of revenue for the state to use,” according to the complaint.

But the California Air Resources Board voted unanimously in October 2011 to enact such a program that is expected to cover 85 percent of the state’s emission sources, reasoning that it would be healthier for both the economy and the environment. The November 14th auction was able to sell all of the credits it offered. Each credit allows for the release of one ton of carbon.

The theory is that businesses may initially find it cheaper to purchase credits as opposed to invest in new pollution controls. But as the pollution caps become tighter and as the price of carbon rises, they would then buy more efficient equipment. New business lines would then sprout up while the environment would become cleaner.

“The auction itself was designed to be done on a confidential basis,” says Chairwoman Nichols, as reported by the San Jose Mercury News. “These are private decisions that businesses are making — whether they will reduce emissions or purchase allowances.”

The same news story goes on to quote Rob Day of Black Coral Capital in Boston, which is a venture capital firm. He says that the facts speak for themselves — that all of the credits were sold during the auction’s debut. The opening price of the carbon allowances is less important, he adds, although it will “change” over time. The bottom line: The state is pricing carbon and a market is forming around it, meaning that the relevant companies will have to focus on their carbon footprints.

The thinking varies as to what the economic impact would be of a national carbon cap-and-trade system. Gross domestic product would initially take a hit, says the Pew Center on Climate Change. But as the United States would move increasingly toward a carbon-constrained environment, the next-generation economy would take off.

Considering the stakes, California’s early attempts at establishing a cap-and-trade mechanism went off without a hitch and in the eyes of regulators, it was a success. But the state’s quest is a work-in-progress that will need to win-over apprehensive businesses if it is to be replicated around the country.


climate change and deforestation

Sacred Seedlings is a global initiative to support forest conservation, reforestation, urban forestry, sustainable agriculture and wildlife conservation. Sustainable land management and land use are critical to the survival of entire ecosystems. Sacred Seedlings is a U.S.-based program that supports the vision of local stakeholders. We have projects ready across Africa. We seek additional projects elsewhere around the world. We also seek volunteers, sponsors and donors of cash and in-kind support.

The Impact Of Tropical Deforestation

Deforestation Kills More Than Trees

Stretching out from the equator on all Earth’s land surfaces is a wide belt of forests of amazing biodiversity and productivity. Tropical forests include dense rainforests, where rainfall is abundant year-round; seasonally moist forests, where rainfall is abundant, but seasonal; and drier, more open woodlands.

endangered species conservation and forest conservation

Tropical forests of all varieties are disappearing rapidly as humans clear the natural landscape to make room for farms and pastures, to harvest timber for construction and fuel, and to build roads and urban areas.

Although deforestation meets some human needs, it also has profound, sometimes devastating, consequences, including social conflict, extinction of plants and animals, and climate change—challenges that aren’t just local, but global. NASA supports and conducts research on tropical forests from space-based and ground-based perspectives, helping provide the information that national and international leaders need to develop strategies for sustaining human populations and preserving tropical forest biodiversity.

Although tropical forests cover only about 7 percent of the Earth’s dry land, they probably harbor about half of all species on Earth. Many species are so specialized to microhabitats within the forest that they can only be found in small areas. Their specialization makes them vulnerable to extinction. In addition to the species lost when an area is totally deforested, the plants and animals in the fragments of forest that remain also become increasingly vulnerable, sometimes even committed, to extinction. The edges of the fragments dry out and are buffeted by hot winds; mature rainforest trees often die standing at the margins. Cascading changes in the types of trees, plants, and insects that can survive in the fragments rapidly reduces biodiversity in the forest that remains. People may disagree about whether the extinction of other species through human action is an ethical issue, but there is little doubt about the practical problems that extinction poses.

palm oil plantation deforestation

First, global markets consume rainforest products that depend on sustainable harvesting: latex, cork, fruit, nuts, timber, fibers, spices, natural oils and resins, and medicines. In addition, the genetic diversity of tropical forests is basically the deepest end of the planetary gene pool. Hidden in the genes of plants, animals, fungi, and bacteria that have not even been discovered yet may be cures for cancer and other diseases or the key to improving the yield and nutritional quality of foods—which the U.N. Food and Agriculture Organization says will be crucial for feeding the nearly ten billion people the Earth will likely need to support in coming decades. Finally, genetic diversity in the planetary gene pool is crucial for the resilience of all life on Earth to rare but catastrophic environmental events, such as meteor impacts or massive, sustained volcanism.

Soil Impacted By Deforestation

With all the lushness and productivity that exist in tropical forests, it can be surprising to learn that tropical soils are actually very thin and poor in nutrients. The underlying “parent” rock weathers rapidly in the tropics’ high temperatures and heavy rains, and over time, most of the minerals have washed from the soil. Nearly all the nutrient content of a tropical forest is in the living plants and the decomposing litter on the forest floor.

When an area is completely deforested for farming, the farmer typically burns the trees and vegetation to create a fertilizing layer of ash. After this slash-and-burn deforestation, the nutrient reservoir is lost, flooding and erosion rates are high, and soils often become unable to support crops in just a few years. If the area is then turned into cattle pasture, the ground may become compacted as well, slowing down or preventing forest recovery.

Social Impacts Of Deforestation

Tropical forests are home to millions of native (indigenous) people who make their livings through subsistence agriculture, hunting and gathering, or through low-impact harvesting of forest products like rubber or nuts. Deforestation in indigenous territories by loggers, colonizers, and refugees has sometimes triggered violent conflict. Forest preservation can be socially divisive, as well. National and international governments and aid agencies struggle with questions about what level of human presence, if any, is compatible with conservation goals in tropical forests, how to balance the needs of indigenous peoples with expanding rural populations and national economic development, and whether establishing large, pristine, uninhabited protected areas—even if that means removing current residents—should be the highest priority of conservation efforts in tropical forests.

Sacred Seedlings is a global initiative to support forest conservation, reforestation, sustainable agriculture and wildlife conservation. Sustainable land management and land use are critical to the survival of entire ecosystems. Sacred Seedlings is a U.S.-based program that supports the vision of local stakeholders. We have projects ready across Africa. We seek additional projects elsewhere around the world. We also seek volunteers, sponsors and donors of cash and in-kind support.

reforestation and climate change solution

Crossbow Communications specializes in issue management and public affairs. It’s also promoting forest conservation, reforestation, sustainable agriculture, and wildlife conservation through i’s subsidiary–Sacred Seedlings. Please contact Gary Chandler at to join our network.