Al Gore's investment firm bets that rainforest conservation will be profitable
Rhett Butler,
May 14, 2008

Al Gore's investment firm has signaled an interest in the emerging market for ecosystem services by taking an equity position in an innovative Australian financial company.

Tuesday London-based Generation Investment Management announced a minority stake in Sydney-based New Forests Pty Limited, a firm that specializes in business models that deliver returns from environmental markets such as carbon, biodiversity and water. Al Gore is the chairman of Generation Investment Management.

"We see great opportunities for both ourselves and New Forests in this investment," David Blood, Managing Partner of Generation Investment Management, said. "New Forests is creating substantial new IP and know-how in this high growth area, and we are interested in supporting the success of this business model."

"We're excited to welcome Generation Investment Management and continue to build on New Forests growth," David Brand, Managing Director of New Forests, said. "We see tremendous opportunities for growth. This new partnership will allow us to maintain our position in these emerging markets and continue to build out a global business."

New Forests has distinguished itself in recent months with investments in a wildlife conservation banking scheme on the island of Borneo and a rainforest conservation carbon deal in New Guinea. Both investments are based on the idea that ecosystem services will be increasingly valued by financial markets.

Over the past year several financial firms have announced similar deals.

In February, Merrill Lynch said it would invest $9 million over four years to protect endangered rainforest in the Indonesian province of Aceh. The financial giant expects to earn returns by selling carbon credits generated by preserving the forest. While such credits are presently not recognized under the Kyoto Protocol, delegates meeting at climate talks in Bali last December signaled that forestry would play a role in future emissions mitigation schemes. In the meantime the credits could be sold in voluntary markets. The deal, brokered by Australia-based Carbon Conservation, could generate up to $432 million in carbon financing over the next 30 years.

In a similar move, London-based Canopy Capital announced in March that it had purchased the rights to environmental services generated by a 371,000-hectare rainforest reserve in Guyana. The precedent-setting deal effectively enables Canopy Capital to profit from the services generated by a living rainforest — including rainfall generation, climate regulation, biodiversity maintenance and water storage — when and if the services are compensated by markets.

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Rhett Butler, (May 14, 2008).

Al Gore's investment firm bets that rainforest conservation will be profitable.