Ecosystem investment: Expanding the pool of conservation finance

Current funding for both conservation and restoration of natural systems is insufficient for ensuring ecosystem services needed by human communities.  Despite improved tax incentives and tremendous growth in Land Trust activity, some 2.2 million acres are developed in the U.S. each year.  In addition, some 18 million acres of private timberlands have moved from vertically integrated pulp and paper company ownership to investment groups more likely to fragment and sell parcels for development.  As science and regulation improve opportunities to gain economic benefit from specific measurable units of conservation and restoration, private investment in these activities becomes feasible to augment existing funding sources.  Significant conservation and restoration related investments have already been made by a variety of investment firms including private equity funds, family offices and timber investment management organizations.  In order for this trend to become a significant factor however, investment vehicles must prove they can deliver competitive risk-adjusted returns, and regulations must enable reasonably efficient transactions.