Zone 6

Tangible Assets, Evolutionary

This zone is where we roll up our sleeves and get our hands dirty. By re-envisioning our relationship with nature and how we manage the flow of materials and energy, activities in this area are creating innovative on-the-ground (and in-the-ground) solutions and opportunities. The tangible assets we are talking about are as familiar as life itself: trees, livestock, soil, grass, the oceans, and the atmosphere. But here the goal is to return, to restore, and to regenerate; interdependency, holism, reciprocity, and diversity are actively woven into the design. Applying this strategy to tangible assets is a profound investment in the foundation of all wealth.

Key areas of Zone 6 focus

  • Regenerative investments (in physical world/nature)
  • Ecosystem services
  • Circular economy/Biomimicry
  • Habitat restoration/Conservation finance
  • Decentralized manufacturing

Permaculture Transition Manual: a new guide for smallholders

Acclaimed permaculture teacher Ross Mars has just released a new book that will be a valuable resource for the burgeoning crop of small farmers working on modest landholdings, as well as for people moving toward increased self-reliance on their property while maintaining their jobs away from home.  As Mars notes, “Today in North America, the fastest growing forms of agriculture are small peri-urban farms of less than 20 acres growing vegetables for market.”

The Permaculture Transition Manual: A Comprehensive Guide to Resilient Living is a hefty (450 page) resource that features in-depth guidance on all elements of permaculture design and personal homestead resilience—land, labor, wildlife, energy, and your own mindset—as well as case studies of four diverse projects.  We fully support Ross’s underlying respect for the value of permaculture’s insights:

Permaculture connected many streams of the world’s traditional knowledge with modern forms of science and urged ordinary people everywhere to continue that lineage of empirical investigation. The books were a prospectus for a worldwide distributed experiment in ecological subsistence agriculture for the post-industrial world.

That experiment is now over 30 years old, and I will argue that its fruits are abundant and that results have validated the original thesis well enough that we should expect it to meet the needs of a new generation of garden farmers whether they be former pastoralists settled into towns in Botswana or industrial workers made redundant by energy descent in Boston.

Check out the Table of Contents and Introduction. Then go get some dirt under your fingernails!

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Corporate giants collaborating to jump-start the circular economy

The idea  of a “circular economy” has been around since at least the 1970’s—at root, it’s a Recycle Everything vision—but it’s taken on new life in recent years as sustainability efforts have matured within governments, corporations, and academia.  Now, as the EU begins to codify the concept and corporate titans collaborate to fund a rapid ramp-up of recycling capabilities, the linear economy (manufacture-use-trash) may become a thing of the past.

Joel Makower of GreenBiz.com summarizes the concept succinctly:

The term has no official definition, but at its core, the circular economy is about “keeping the molecules in play.” In such a system, products are made primarily from benign and nontoxic ingredients — “nutrients” that can be returned safely to soil or water or, in the case of more durable components, placed back into service again and again. Toxic ingredients are not verboten; they can be used as needed in products or processes so long as they, too, are continuously cycled back into productive use and kept out of the waste stream. And, of course, as much of this as possible should be powered by renewable energy.

That all sounds like a generations-old greenie dream, but in the past couple of years, it’s gained adherents among corporate giants looking to capture some of the lost value in their products and packaging materials—one accounting found $11 billion of value in trashed U.S. packaging materials alone (see image above).  The 2015 World Economic Forum’s annual conclave in Davos, Switzerland, affirmed its commitment to a 2-year-old initiative called Toward a Circular Economy, which will work with policy makers and the financial community to spotlight and scale current circular economy efforts, especially in the developing world. Makower’s valuable overview continues:

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NZ community buys long-private beach via crowdfunding

It’s an all-too-familiar scenario: a prized corner of your local landscape is suddenly up for sale, slated for houses or a hotel.  Maybe it’s a place where generations of locals have had informal access, or perhaps it’s always been kept tantalizingly private.  Either way, the new plan is a step too far. . . . and it sure would be great if it were saved by a conservation group, or for a state park, or maybe just by a public-minded conservationist.

But nowadays, we don’t have to wish for a savior: a community effort in New Zealand recently made history by crowdfunding over $2 million to purchase an 18-acre beach and open this pristine beauty to the public!  The effort caught wider public attention, thanks both to the novelty of the initiative and its location near a popular National Park, and attracted donations from 40,000 people—along with a modest commitment from the New Zealand government—to outbid nearly a hundred other prospective buyers.

That’s what we call some inspired Zone 4/9 investing, coming together to protect an important tangible asset for the people, using the latest evolutionary finance models! Chalk one up for the power of creative thinking by two locals who organized the crowdfunding effort after a holiday conversation.  “At 10:57 last night we delivered a pristine piece of beach and bush into the hands of all New Zealanders to look after and to cherish and to treasure and enjoy forever,” announced Duane Major, one of the two, after the successful fulfillment of their ambitious dream.

 

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Investors tapping into water as new “asset class”

A key to social resilience in the coming decades will be providing fair and reliable access to water.  And now is the time for resilient investors to consider how they feel about private companies taking the lead in making it so.  A recent NYT article introduces some of the key players in one of the leading edges of this hot-button topic, parched California:

“Water has been taken for granted, but reliable access is no longer guaranteed,” said Disque D. Deane Jr., a Wall Street veteran who runs Water Asset Management. “It will be seen as an asset class that will be allocated in portfolios like health care stocks or energy or real estate.”

The article does not touch on the most contentious issue, privatization of municipal water systems.  Instead, its focus is on desalination plants and delivering underground reserves in the Mojave to coastal cities.  Social and environmental considerations are likely to be deployed by both advocates and critics of projects like these; it’s bound to be another issue that splits the establishment green community (as have GMOs, nukes, and larger ideas like ecomodernism); so if you want to make an informed choice that reflects your own best thinking and deepest feeling, we recommend that you aim to become at least somewhat informed about the debate here.

For starters,

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Corporations buying forests to create sustainable supply chains

Ikea and Apple have both recently bought up large tracts of working forest land, in order to assure that their wood and paper products are coming from sustainably managed forests.  Ikea, which supposedly uses 1% of the world’s commercial wood supply, is aiming to scale back its use of wood by half, and to become net forest-positive (growing more trees than it uses) within five years. For its part, Apple is partnering with The Conservation Fund to manage its forests for both sustainable harvesting and habitat health; it hopes to see other companies doing the same in years to come.  On the one hand, this could be seen as a corporate land-grab, but at the same time it represents an attempt to take more corporate responsibility for their supply chains; Ikea, for example, has been criticized for the un-sustainable practices of a Russian supplier.  At the very least, in owning the tangible asset of the forest themselves companies will have clear incentives to assure that they remain healthy and productive for decades to come.

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Farmland venture starts redemptions to first investors

Iroquois Valley Farms, one of the first ventures that raised investment monies to purchase and restore farmland, has successfully completed its initial phases and begun offering redemptions to its early investors.  Going forward, investors will be able to redeem their investments any time after a 7-year hold period.  The original 100 investors had bought in without knowing when, or if, they would get their money back, seeing this as a long-term investment in  Iroquois’ mission of preserving and providing access to farmland.  Having reached this point, Iroquois is gearing up to scale their project by raising $20 million in new investment (accredited investors only).

Since 2007, Iroquois has purchased 25 farms in Michigan, Maine, New York, Kentucky, Illinois and Indiana; 70% are being farmed by young farmers, most of them from second or third generation farming families.  As with the investors, the farmers leasing land from Iroquois have the right to move forward, by purchasing the farms after seven years of working them.  Likewise, they are welcome to continue leasing for as long as they’d like.

We love this model of farmland regeneration and ownership; kudos to Iroquois Valley Farms and its initial investors for showing that it can work for young farmers, for the land, and for investors. Visit their site to learn more; here are a couple of stories about farmers they’ve worked with:

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Good grief, now we’re importing/exporting FARMLAND (?!?)

With farmland and fresh water becoming increasingly scarce and valuable resources, there is an increasingly active market in buying and selling farmland across national borders.  I suppose we’ve been trading bits of earth this way for centuries (in the form of minerals, food, etc.), but it was still a shock to see this extending to encompass actual soil, hills, and watersheds.  This illustration, from an illuminating Vox “explainer,” is captioned “The color of the node shows to what extent a country is an importer (gray) or an exporter of land (red), and the size of the node represents the number of trading partners.”

Beyond the cognitive dissonance of the mere existence of “importing land” there are, of course, several deeper concerns; the most fundamental is the practice of new landowners shifting from food production for local farmers and their neighbors, shipping the fruits of the land into global supply chains instead (in particular, China is buying up lots of farmland to provide for its population’s needs).  Compounding this is local powerbrokers muscling their poorer citizens off the land so that it can be sold.  An ambiguous overlay a tendency to focus on how the new, distant owners may increase efficiency or otherwise increase the productivity of the land; again, such improvements may or may not serve local people and ecosystems, even if they appear beneficial for the global food production.

This wasn’t new to us, thanks to an article by our colleague James Frazier in the Natural Investment News last year.  As he stressed:

About half of all US farmland is expected to change hands within the next twenty years. Consider how the ability of a new generation of young farmers to acquire and finance farmland stacks up against the ability of large institutions to top any bid and pay cash for the best properties, and you can understand how big of a deal this really is, potentially for decades to come. To top it off, the new institutional owners are apparently quite savvy about what to grow, selecting the most profitable crops to meet growing demand for meat, nuts, and other gourmet foods in emerging Asian markets, presumably leaving the more risky, lower margin crops to small farmers. Fortunately, responsible investors have the means to make their own positive impact on American farming.

Click through to his article to learn more; and of course the Resilient Investing Map focuses on this problem (and opportunity!) within the “tangible assets” realm in Zones 4 and 6, and as an evolutionary approach to financial assets in Zone 9.

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Growing Power: creating urban community food centers

Community Food Centers are local places where people can learn sustainable ways to grow, process, market and distribute food. One multi-pronged example is Growing Power, which has farms and related projects in Milwaukee, Chicago, and Madison. Their website describes the Milwaukee facility as “a wonderful space for hands-on activities, large-scale demonstration projects, and for growing a myriad of plants, vegetables, and herbs. In a space no larger than a small supermarket live some 20,000 plants and vegetables, thousands of fish, and a livestock inventory of chickens, goats, and bees.” Visit the Growing Power website.

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