By Ellie Winninghoff

The sale-leaseback of fishing quotas and trawlers in central California's Morro Bay doesn't seem to have much in common with helping ranches in eastern Colorado buy more ranch land. But both transactions were negotiated by The Nature Conservancy (TNC), the $6 billion nonprofit hybrid social enterprise/private investment company whose work is evolving beyond its core competency of conserving "forever wild" land to forging a nature-based economy where it believes both the environment and people can win.

"[TNC is] viewing conservation as a solution for peoples' challenges rather than as an end in itself," says Deborah Froeb, director of land conservation and finance at TNC's Colorado field office.

TNC has started offering  "conservation notes" to unaccredited retail and other impact investors. The notes--which will yield between 0% and 2% for one to five years--will not trade, and there is a penalty for early redemption. Moody's rates them AA, and minimum investment is $25,000.

The Packard Foundation, an early investor in these notes, will invest $5 million in the three-year notes and $5 million in the five-year notes at 1%--less than the maximum offered.

Forever Wild
TNC owns 2 million acres of land in the U.S. and has preserved millions of acres in both the U.S. and overseas. But according to Charlotte Kaiser, who is managing TNC's conservation notes, its focus is on deals that smaller nonprofits and land trusts cannot do.

One example is the Montana Legacy Project, where TNC bought 310,000 acres of private forest land from the Plum Creek timber company in the heart of the Crown of the Continent, an 18-million-acre mosaic of land encompassing Glacier National Park and extending into Canada.

One of the few places left without species extinction and still untouched by industry, the project stitches together land originally parceled out in a checkerboard fashion to public and private landowners--something detrimental to habitat and migration. TNC bought the land in partnership with The Trust for Public Land over three years for $490 million with financing that included $250 million in federal Qualified Forest Conservation Bonds.

Conserving--And Working--The Land
TNC's strategy has traditionally involved conservation easements. Easements are the legal removal of a right of use, and conservation easements generally protect wildlife habitat, recreational land and the like by eliminating development rights. Until the l990s, most conservation easements were "forever wild," meaning all economic use of the land was strictly prohibited. They usually were bequests donated by families for tax relief, and were fairly small scale.

But according to Peter Stein, managing director of the Lyme Timber Co. in Hanover, N.H., there has been a sea change in the use of conservation easements.

Today, they are used to preserve entire watersheds--often tens of thousands of acres. The newer, more complex "working forest conservation easements" (WCFEs), which often include comprehensive stewardship requirements, are usually certified by a third party such as the Forest Stewardship Council. Buyers usually include land trusts, local or state governments, or federal agencies. But they allow private landowners to keep the land working.

In eastern Colorado, for example, TNC had an interest in making sure that the ecologically significant 37,000-acre Winship Ranch was not developed for housing. After buying the ranch at appraised value, it placed a working agricultural conservation easement on the property, which reduced its value by 20%. It also bought agricultural conservation easements from four ranching families on their own properties, which removed development rights they did not need but provided them with the capital to buy the Winship Ranch from TNC.  

"The conservation easements allowed these ranchers to monetize these development rights now," says Froeb from TNC. "They acquired land at a reduced price without having to put up the capital to purchase the development component of it, which they are never going to use."

Environmental Financial Engineering
But while this is the type of conservation that TNC's controversial chief scientist Peter Kareiva calls "people friendly," Kaiser from TNC says there is simply not enough public money available to do all that is necessary from a conservation perspective.

"We are trying to push the envelope around how we structure and pay for conservation transactions," she says.

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