The David and Lucile Packard Foundation is supporting an innovative model of sustainable forest management through a $1 million equity investment in Ecotrust Forests.
Throughout the Pacific Northwest and beyond, forest ecosystems and habitat are being degraded. Traditional large-scale timber operations are reducing diverse, intact forests and affecting the economic health of rural communities as small milling operations are relocated from rural locations to factories.
“Long-lived forests are increasingly being managed as plantations,” observes Bettina von Hagen, CEO of Ecotrust Forest Management, a sustainable forest management firm formed in 2005. “We believe there is another way of managing forests that is more in line with their natural history and ecology—a way that will lead to both greater resilience of the forest and higher long-term value for investors. By managing forests for diversity and complexity, the interests of the forest ecosystems and investors are aligned,” von Hagen explains.
Ecotrust Forests currently owns and manages over 12,000 acres of timberland properties in the Pacific Northwest and has diverse revenue streams—including the sale of carbon offsets in the emerging carbon credit markets, conservation easements, recreation leases, and new market tax credits. Having a diversified approach enabled Ecotrust Forests to forgo timber harvesting in 2009 and 2010, during a time when prices were bottoming out due to the economic crisis. “A lot of timber companies were selling at a price that barely covered the cost of logging and hauling to the mill. Our business model allowed us to be more flexible in this uncertain market pricing,” said von Hagen.
With a $1 million equity investment from the Packard Foundation, Ecotrust Forests was able to bring more land under sustainable management, which over a course of several years will produce a greater cumulative timber harvest while maintaining valuable wildlife habitat. These long-term effects are in alignment with the Foundation’s conservation goals and provide further credibility in the business model, helping to generate interest and commitments from other foundations and impact investors.
In addition, the investment pushed the company to clarify its goals around the social and environmental impacts of its work, according to von Hagen. “As part of their investment, the Packard Foundation asked for a more quantitative set of outcome metrics around the kind of conservation impacts and habitat restoration we were offering. It was a very rigorous process that we found quite helpful.”
By using program-related investments, the Packard Foundation is able to provide growth capital for creative opportunities that would otherwise languish. The investment came at a critical time, providing incremental capital needed to take advantage of federal New Markets Tax Credits, and to complete the acquisition of the Garibaldi forest in coastal Oregon, located in a critical watershed for coho, chum, and other Pacific salmon species.
In addition to the direct environmental and community benefits, the Packard Foundation views Ecotrust Forests as a model that could be replicated to promote greater sustainability in the timber and ecosystems services industries throughout the Pacific Northwest and beyond.