Rain Forests for Profit, Businesses Sell Nuts, Tourism and Carbon Storage
8/20/98
*******************************
RELAYED TEXT STARTS HERE:
Title: Rain Forests for Profit, Businesses Sell Nuts, Tourism and Carbon Storage
Source: Reuters
Status: Copyrighted, contact source to reprint
Date: 8/20/98
Byline: Laura Tangley
GOLFITO, COSTA RICA--Lazaro Villareal Villareal is in a jam. In 1992, the Costa
Rican
government decided to purchase his 140 acres of tropical rain forest and make
them part
of a new national park. At first he was happy. Villareal, who lives with his
wife and
children in jungle so remote it is accessible only by boat, planned to use the
money to
buy land closer to roads, schools, and markets. But six years later, the
government still
has not come up with any cash to pay him--or dozens of other farmers who live in
Piedras
Blancas National Park. "Most of us want to get out," says Villareal. "We're just
waiting
for the money so we can move on."
Help for farmers like Villareal--and for the rain forests--is on the way from an
unexpected source: a U.S. power company. To comply with a requirement to
compensate for
carbon dioxide that will be emitted by a new plant in the state of Washington,
Nebraska-based Tenaska Inc. agreed to give Costa Rica's government $500,000 and
help
raise another $500,000 to buy 5,000 acres of private land in Piedras Blancas. By
protecting this distant forest, Tenaska reasons, it will prevent the release of
carbon
dioxide that would take place if the forest were burned to make way for farms or
pasture.
Dubbed "Ecoland," the project is a cheaper way for Tenaska to reduce carbon
dioxide
buildup than installing expensive pollution-control equipment back home.
Long viewed as irreconcilable enemies, conservationists and businesses like
Tenaska are
increasingly joining forces. Many of these innovative entrepreneurs now view the
world's
dwindling tropical forests as more valuable standing than chopped down. From
large
international corporations to tiny family-run enterprises, they are investing in
forest
conservation, either to avoid more costly ways of complying with regulations--as
in the
case of Ecoland--or to market nontraditional forest products. Some businesses
have
discovered they can profit from exotic fruits, nuts, oils, and ornamental
plants. Others
see the value of tourism and "ecosystem services" such as "carbon storage" and
water
purification. Unlike logging, ranching, mining, and other destructive forest
uses, these
new businesses can operate in concert, multiplying returns from a single piece
of land.
Among the most promising are:
Carbon storage. At December's climate-change summit in Kyoto, Japan, some
negotiators
advocated carbon-offset projects like Ecoland as one way to control the buildup
of carbon
dioxide and other climate-altering gases in the atmosphere. Such projects allow
polluters
to offset their CO2 emissions by guaranteeing that an equal amount of the gas is
absorbed
from the atmosphere by young, growing trees or stored as carbon in mature
forests. Even
before binding carbon dioxide limits take effect, some 25 offset projects have
generated
about $45 million for conservation and reforestation projects around the world.
Anticipating mandatory global carbon dioxide caps in the future, Costa Rica
already has
sold 1,000 emission permits--each costing $3 and standing for a ton of CO2--to a
Chicago-
based financial company. The deal is the first step in what may become an
international
market in tradable emission permits.
Some conservationists and developing nations oppose carbon offsets as a way of
combating
global warming. "The feeling is that industrialized countries should first get
their own
houses in order," says Mark Trexler of Trexler & Associates Inc., a climate-
change
consulting firm in Portland, Ore. But Trexler, who negotiated the Ecoland deal,
says few
question the benefits such projects bring to forests. He estimates that once
binding
carbon dioxide limits take effect, offset projects could generate $5 billion to
$10
billion a year for conservation and reforestation.
Ecotourism. Across the bay from Ecoland, another Costa Rican rain forest owes
its life to
private investment. Fifteen years ago, U.S. businessman Phil Spier purchased 225
acres of
cattle pasture and forest from a rancher who was gradually clearing the land.
Spier
turned the mostly virgin forest into a tourism destination called Bosque del
Cabo
("Forest of the Cape"). Averaging a dozen visitors at $85 each per night, Bosque
del Cabo
already is turning a profiit. Spier has since bought 10 additional acres and
vigorously
guards the habitat amid reports of illegal logging and hunting in nearby
Corcovado
National Park. "I blow the whistle the minute I see something wrong," he says.
Travel to remote destinations like Bosque del Cabo to enjoy nature, dubbed
"ecotourism,"
is a fast-growing segment of one of the world's largest industries. In Costa
Rica, it is
the No. 1 earner of foreign exchange, generating roughly $700 million annually--
a
powerful incentive to keep ecosystems intact.
Nontimber forest products. In Guatemala's Pet,n region, Juan Francisco Trujillo
Mendez
sets off into the dense rain forest to do what he has done for most of his life:
collect
chicle, a tree sap that is made into chewing gum. About 6,000 families earn a
living in
the Pet,n by harvesting nontimber forest products. In addition to chicle, the
most
important are xate (an ornamental palm exported for floral arrangements) and
allspice (a
dried fruit used in cooking). These products alone generate $4 million to $6
million and
provide families more income than they would receive from clearing the forest to
plant
crops or raise cattle. Overall, the forest's value "is so huge we can't even put
a
dollar figure on it," says Carlos Soza Manzanero, director of ProPet,n, the
Guatemalan
arm of Conservation International, a nonprofit environmental group.
For generations, such economic incentives helped protect the Pet,n's forests. In
recent
years, however, annual population growth between 7 percent and 10 percent (two
thirds
from immigration) has threatened both the forests and the livelihoods of
longtime
residents. To combat the problem, the Guatemalan government has decided to carve
up part
of the region's 5.2 million-acre Maya Biosphere Reserve into concessions
controlled by
local communities. In return for wisely managing the forest and protecting it
from
illegal invaders, communities will have exclusive rights to pursue forest
industries
within their concessions for 25 years.
Last year, the government gave its first concession to the 330 residents of
Trujillo
Mendez's town of Carmelita. The community has drafted a business plan for the
131,382-
acre tract that it hopes will generate $90,000 the first year. "This plan is
supposed to
give us control of our prices, without corruption, and provide us with the
income to get
. .. a full-time schoolteacher and reliable electricity," says Trujillo Mendez.
Genetic diversity. Even the genes and chemicals inside forest organisms have
been turned
into commodities. Forest owners, usually national governments, have begun
selling
companies the right to "bioprospect" for potential drugs or other products. In
the
largest and best-known deal, the pharmaceutical firm Merck & Co. paid Costa
Rica's
National Biodiversity Institute (INBio) $1.35 million in return for chemical
extracts
from plants, animals, and microbes in protected areas. In addition to research,
part
of the fee was earmarked for conservation, and the company promised a percentage
of
royalties. Since the Merck contract, INBio has signed seven more bioprospecting
agreements with companies looking for products such as antibiotics, flavors,
fragrances,
and natural alternatives to pesticides.
But of all the investment opportunities forests provide, bioprospecting's
returns are the
least predictable and slowest to materialize. On average, at least 10 years pass
between
finding a promising chemical compound and developing a new drug. Investors may
also be
deterred by the low market value of what Columbia University economist Geoffrey
Heal
calls "unprocessed biodiversity"--lots of plants and animals with no known uses.
Seeking
to add value to its specimens, INBio biologists break down samples and prepare
concentrated extracts, each accompanied by detailed, computerized information on
where
the compounds came from. Otherwise, says INBio Director Rodrigo G mez, "we'd be
no more
than suppliers of cheap raw materials."
A new biotechnology company, Andes Pharmaceuticals, is taking the approach one
step
further: In a joint venture with a Colombian partner, called BioAndes de
Colombia, the
firm will screen biodiversity extracts for effectiveness against eight cancers,
four infectious diseases, and a variety of agricultural maladies. To do this
research in
Colombia, says Andes Pharmaceuticals President Edgar Asebey, the company will
spend $5
million building a biotechnology infrastructure, an investment that should help
Colombians reap more profits from forests in the future.
Drinking water. The latest and, by some accounts, most promising investment is
in the
clean water that forests help provide. Some planners have found that the most
economical
way to ensure clean water supplies is to invest in forest conservation. Two
years ago,
for example, New York City's water quality fell below federal standards. Rather
than
spend $4 billion to $6 billion on a new treatment plant, the city borrowed $660
million
to beef up natural purification services provided by forests in the Catskill
Mountains.
If New York had turned over watershed management to a private company that could
sell
water, the city's costs would have been zero, and private investors would be
paying for
conservation at the same time they made a profit, Heal says.
Privatizing water supplies has even greater conservation potential in developing
countries. Throughout these nations, forests that affect the flow and quality of
drinking
water for billions of people are threatened by development. Unlike New York,
however, the
cities these watersheds supply cannot afford either to build new treatment
plants or to
fiinance forest conservation. In Brazil, Heal is working with the national
government and
the World Bank on a proposal to freeze development in rain forests that supply
water to
18 million inhabitants of Rio de Janeiro. Part of the plan is to persuade
private
business to invest in the forests, which provide "watershed services" he
estimates are
worth more than $10 billion.
Of course, economists like Heal admit that forests are also worth preserving for
aesthetic, cultural, and ethical reasons that cannot be assigned a dollar value.
But by
"giving the invisible hand of free market economics a green thumb," in the words
of
Harvard University biologist Edward O. Wilson, creative entrepreneurs boost the
odds that
forests will endure to generate both profits and pleasures that remain
priceless.
With Doug Fine in Guatemala