Prince Charles loves Canopy Capital

Prince Charles has been talking on BBC radio 4 this morning about his desire to reinvigorate the drive to conserve the world’s pristine rainforests. He has said to friends that he wants to make significant progress by the time his 60th birthday arrives on Nov 14th 2008.

The Prince announced the creation of The Prince’s Rainforests Project in Oct 2007, which aims to work with the private sector, governments and environmental experts to find solutions which could be put in place.

“These solutions need to provide credible incentives to rainforest nations, down to the farmers on the ground, and must ‘out-compete’ the drivers of rainforest destruction,” he said.

In his interview this morning he mentioned Canopy Capital. The UK private equity company has recently purchased the rights to environmental services generated by a 371,000-hectare rainforest reserve in Guyana. There is an enlightening article on this by Mongabay.com which also talks about Merrill Lynch’s investment in a rainforest conservation project in the Indonesian province of Aceh, which is worth $9 million over four years (detail here).

In a follow up interview with Canopy Capital and a rainforest charity on radio 4 there was some discussion on how venture capital companies expect to make a profit from their investment. It appears that one way could be via carbon markets, which are still a new market instrument. The rainforest charity representative had his doubts as he believed factoring in the huge value of rainforests as carbon sinks (and therefore carbon credits) would devalue the price of carbon credits on the market overnight, therefore threatening pollution abatement and renewable energy projects.

Meanwhile “Merrill is betting that money it puts in to the Aceh project now will be a source of cheap credits that will become more valuable if forestry becomes part of the post-Kyoto landscape,” writes Wright of The Wall Street Journal. “The success of the deal could also influence how much more money Merrill puts in to forestry. The bank is debating internally about raising a fund of up to $3 billion to protect global forests. A war chest like that could start to make a real impact on deforestation rates.”

Canopy Capital, in exchange for funding a “significant” part of Iwokrama’s $1.2 million research and conservation program on an ongoing basis, have secured the right to develop value for environmental services provided by the reserve. Essentially the financial firm has bet that the services generated by a living rainforest — including rainfall generation, climate regulation, biodiversity maintenance and carbon storage — will eventually be valuable in international markets.

Hylton Murray-Philipson, director of Canopy Capital, says the agreement — which returns 80 percent of the proceeds to the people of Guyana — could set the stage for an era where forest conservation is driven by the pursuit of profit rather than overt altruistic concerns.

This is the new frontier in forest conservation and the Prince of Wales has just decided to put his backing to it. Lets hope he’s right. There is certainly an urgent need to ratchet up the pressure worldwide for huge conservation schemes that work and work in the longer term.

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9 Responses to Prince Charles loves Canopy Capital

  1. Dan says:

    I’m attracted to the idea of forests forests providing environmental ‘services’ to the world. Countries that the forests are located in can sell these services to everyone else, so they have less incentive to cut the forests down.

    But I’m convinced that forests are not good for generating offsets, for a range of reasons. The central one is that it’s just impossible to say how much greenhouse gas you avoided or took out the atmosphere by protecting a forest.

    So there must be some other way to value and pay for these services. Perhaps rich countries could pay into a fund, like aid, which could be distributed per unit of area of forest.

  2. Victor Emmanuel III says:

    I was listening to the today programme as they gave air time to Prince Charles. I was puzzled; does the BBC or the Royal Family think Brazilians will care about this spoilt rich kid’s opinion? Then it occurred to me, if Brazil chops down the Amazon forests Prince Charles won’t be able to heat his dozen or so palaces, and other residences, run and maintain his hundreds of cars, etc live the luxurious lifestyle he is accustomed to and still stay carbon neutral (lol) with cheap carbon offsets.

  3. matt says:

    Victor,

    It is a rather strange custom of the UK to get excited about having a royal patron attached to a cause or NGO. Not sure it works but the media seem to come along and get the story out there …. which is the whole point.

    Hi Dan,

    Looking into this topic is a bit like venturing into a jungle and getting lost! I think it is very interesting that so many different schemes are being tried at the moment; from Cool Earth to private equity schemes and of course various NGO programmes.

    I heard or read something recently regards the Amazon and Brazil. The government is trying to widen/deepen a new support programme for local people so that cutting down the forest isn’t seen as the only source of income. I think Brazil needs support here and their scheme’s success/failure will be crucial.

    Also read a piece about the new found wealth coming to crop growers, middle men in Amazon region thanks to booming commodity prices. Soya was mentioned, which is one of the key reasons forest is being mowed down. Brazil overall apparently has the hghest grow in millionaries in the world at the moment.

  4. Pete Smith says:

    Nice post Matt. Grrrr! I was going to write something about Canopy Capital, but I lost the links and the project got swept under the backburner.
    I can’t believe Prince Charles is only 2 years older than me. He obviously doesn’t have a picture in the attic.

  5. matt says:

    Thanks Pete. Desperately need to see serious leadership on the issue of deforestation. Steps are being made but we need giant leaps. Biodiversity, as you’ve said, is as important or not more so than climate change. Along with all the other goodies forests provide.

  6. earthpal says:

    Of course I’m always suspicious when the markets are involved but sure, we do need new ideas because so far we’re all failing. I’m just trying to work out the logistics of this new enterprise.

    I mean who would own the rainfall generated by the forests?
    80% of the profits are to go back to the people of Guyana but only when the company has recouped its costs. How long will that take? Can we trust these outside investors.

    I hate the idea that people can buy ecosystem services such as rainfall and natural carbon storage when in an ideal world, no-one should have exclusive ownership. I’ve heard it being called “eco-colonialism”. The forests provide a natural and essential service to the world and now those services are going to become a trading commodity of which shareholders can profit.

    Well, other natural products such as oil have been made into a commodity so I guess rain and such-like can be exploited in this way too. At least it’s not lieklyto cause wars like oil has.

    Sigh. I suppose if it saves the forests and benefits the indigenous people then there’s really no objection to be made.

    Good luck to the project.

  7. earthpal says:

    Just to clarify . . . when I say I hate the idea that people can buy ecosystem services, I mean I hate that outside investors can buy the rights to sell these services.

  8. earthpal says:

    By the way, who’s the guy shadowing Prince Charles in the picture? It looks like he’s trying to hide behind him. Lol. 🙂

  9. matt says:

    That’s Charles’ long lost brother. 🙂

    I agree with you EP that we should most definitely be cautious about this development and monitor it.

    Remember, scarcity of water can, has and will cause wars too.

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