Scaling Regenerative Agriculture: How Sustainable Farmland and Forests Deliver Greater Returns and Impact
Only 2% of the 900 million farmland acres in the US are managed regeneratively or organically.
Greater returns and greater impact is possible for sustainably managed forests and farmland at scale – that’s what Conservation Resources has proven with their model for two decades. Shea Flanagan, the Director of Sustainability and Strategy, shared why soil health and biodiversity matter to investors (and all living things on the planet).
They’ve protected 440,000 acres of land and 1,300 miles of streams across their portfolio in a sustainable and financially profitable way.
They are making sure that everybody in the supply chain benefits: from the institutional investors, the investment manager, the property manager, the farmer, the commercial forester, etc.
For those interested in learning more about the topic, Shea recommends The Conservation Finance Network and The Global Impact Investing Network.
Podcast Transcript
Jacob: [00:00:00] Welcome to Impact Stories. I’m here with Shea. Please introduce yourself.
Shea: Thanks. I’m Shea Flanagan. I’m the Director of Sustainability and Strategy at Conservation Resources.
Jacob: Tell me what you guys do. How are you making the world a better place?
Shea: Conservation Resources is an investment manager. We have a 20 year track record of investing in timberland and farmland properties throughout the U. S., specifically with a focus of a meaningful, proactive conservation impact. So, we’re looking to drive positive environmental and social outcomes in addition to our working farmland, working forest land investments that we’re making on the properties.
Jacob: How does that actually work in practice?
Shea: We physically buy properties. We buy a working farm, a working forest land. For farmland, all of our properties are managed regeneratively and/or organically. And we look to certify those practices to the most stringent third party standards. And with those practice changes, that ultimately improves soil health. With these improvements, we’re able to add a layer onto that where we can monetize the ecosystem services or environmental benefits coming from those practice changes which can take the form of a variety of [00:01:00] different conservation transactions create this value added conservation impact.
For both our agriculture as well as our forestry investments, the two core tenets of what we look to do is all underpinned by the themes of soil health and biodiversity in terms of how we Look to make our management decisions and what what that means for long term resilience for our properties and also for the broader ecosystem as a whole. And so on our timber properties as well, we’re looking to pull our learnings of doing these regenerative and organic management practices from agriculture and incorporate that in forestry.
We actually have recently become the first timberland manager to successfully achieve third party certification for regenerative forestry management on our timberland properties. We’ve certified over 73 percent of our entire timberland portfolio currently with more being in process of certification with the certification entity called Regenified. Which specifically focuses on regenerative land management certification. So for these timber properties, we look to make these regenerative practice changes as well. And that ends up playing out in ways where [00:02:00] we’re both being able to better adapt in the face of a changing climate to be more resilient to things like drought or increased flooding, hurricanes coming through, as we recently saw, only a couple months ago down south, and also looking to reduce our risk on these properties through these regenerative management practices to help better buffer in the event of environmental climatic changes, while also making sure that it’s a better long term investment for the timber itself, and being able to create strong value on the commodity side as well with generating high quality timber that can be sold into the market over time.
With these different conservation transactions that we’re looking to layer onto these properties, we really want to show that there can be a value add in terms of the ecosystem services that you can derive from these sorts of timberland and farmland investments where you can achieve higher returns from being able to manage properties in this way, where you can also in tandem achieve these strong environmental and social outcomes. It doesn’t have to be an either, or, we’re looking to try to scale that scale and demonstrate that to the market, that this is a proof of concept. Perfect [00:03:00] concept and we hope that that can continue to proliferate at scale for, for better environmental impact for everybody.
Jacob: It’s not just the polar, either you lock up a forest and never touch it, or you just level it and harvest all the timber and move on. You’re saying by keeping it then you can manage it in a regenerative way that actually creates more value with these layers than just harvesting everything.
Shea: Yeah, I would say trying to look at it holistically in terms of the approach to the management style. Of course it is a working forest and so we do, harvest the wood over time done in a systematic fashion. We’re not looking to just wipe it out, move on, anything like that. We’re really thinking about the long term sustainability of the management practices. And so we do see that taking that more mindful approach and more long term resiliency standpoint is ultimately going to drive better outcomes, both financially, as well as from an impact standpoint .
Jacob: You mentioned soil health and biodiversity. Why did those things matter so much?
Shea: Globally, when you look at the way that land has historically been managed [00:04:00] and think specifically about industrial agriculture, industrial commercial forestry. There’s been some unintended consequences where the results of traditional management have led to environmental degradation. What it boils down to is that that’s just not sustainable in the long run. If we want to be able to keep producing crops or producing wood that we can keep using from these lands over time and not run them into the ground where we no longer have productive working land to benefit from, we need to incorporate things that are keeping in mind soil health and biodiversity, because those are the core components of what makes land viable for the benefit of humans. And then also thinking about for the benefit of all the non humans, for wildlife, for all these ecosystem services for air quality. All these things, it all kind of rolls up together. And in a way it’s kind of taking a systems change approach to the sector.
Jacob: Maybe shifting gears just a little bit tells me about your career trajectory. Like, what was that moment when you decided to pivot towards making a difference in the world?
Shea: I guess I’ve always been kind of on a steady path. I [00:05:00] would say my personal motivation is that I really am passionate about wildlife. And particularly, wildlife biodiversity, that aspect of the natural world. And so going into college, I knew I wanted to major in environmental studies and biology, kind of set myself on that path of thinking about ways to benefit wildlife. I worked for the Nature Conservancy for a handful of years and really loved my time with them. I decided to go back to grad school and pursue a master’s degree in environmental management to think about more ways to scale up, achieve a faster pace for generating conservation impact and see all the great that TNC is doing, and I wanted to do even more and more of that.
And so. What really struck me in grad school was the lever of conservation finance and particularly looking at private capital as a way to be able to deploy a lot of financing towards these approaches that can make a really meaningful difference, so that set me on this most recent path.
I’ve been with Conservation Resources now for about three and a half years and my role specifically at the firm is to [00:06:00] execute the conservation transactions that we’re implementing both on the farmland and forest land properties within our portfolios.
Jacob: You have to work with a number of different audiences, the land owners, there’s the investors, there’s those that are utilizing the farm. How do you navigate all those competing interests to create more value for everybody?
Shea: We don’t necessarily see it as competing interests per se. Our approach is that in order for this sort of large scale transition to more regenerative, more, resilient management practices across the sector to work and to be implemented at a scale that will be meaningful for, climate impact conservation impact. There’s so many acres of potential, there’s so much farmland, not only in the US, but globally, there’s so much working forest land. And so for this to continue to scale, it has to be beneficial. And really, what I mean is it needs to be profitable for everybody involved and that’s the only way that it’s going to truly incentivize and motivate people to continue to make the practice changes that are needed to drive the environmental outcomes we’re looking for. And so we have set up [00:07:00] our investments in a way where we’re practically partnering in cases where we have a tenant on a farm property, we’re partnering with them in the way that we structure our lease to make sure that our incentives are aligned. We’re cost sharing so that they don’t have to put in any additional costs above and beyond what traditional farming would look like in order to make the transition to regenerative. And then over time, be able to see that you benefit from the increased yields that you achieve from regenerative practice changes. And so we’re looking to make sure that everybody in the supply chain, you know, from the institutional investors to the investment manager, to the property manager, the farmer, the commercial forester, everybody involved is going to benefit from that. And where we’re proud that that’s something that we think that, we have achieved in many ways on the properties and we want to continue to be able to demonstrate that and scale that going forward.
Jacob: What’s the biggest hurdle you face right now in terms of scaling what you’re trying to do?
Shea: I would say it’s honestly, it’s just getting more capital deployed to the space currently fundraising for our 6th timber fund. Right now, I am implementing the [00:08:00] regenerative practices that I mentioned. And so we’ve secured an anchor investor for that, and we’re looking to continue building out that fund.
And early next year we’ll be launching our second. Farmland fund as well. So we’ll be in the market for both of those shortly. And it’s really about funneling the capital into the space to be able to put it to work, to invest in more of these properties and make transitions and then ultimately, you know, generate these outcomes and measure them and continue with this adaptive management approach.
So I would say, it’s just a matter of getting the money to the right places.
Jacob: So if I were an investor, Why would I choose conservation resources over other options that are out there?
Shea: We have a really strong track record of having demonstrated results in this space. The firm was founded 20 years ago. Since our founding, we have specifically incorporated this conservation centered approach into our investments. We have the KPIs or the outcomes to show for the work that we’ve done, which I think in some ways speaks for itself, but maybe maybe to highlight a couple as a, tiny example, we’ve permanently protected over 440, 000 acres of [00:09:00] land across our portfolio since inception. We’ve permanently protected over over 1300 miles of rivers and streams. Currently on our properties that we’re owning and managing specifically. manage for supporting seven endangered and threatened species habitats on those properties. And we have a suite of over 40 outcomes that we track. So we really look to back our work quantitatively and be able to demonstrate That we can deliver the things that we speak to, which I think help set us apart in some ways from other options that could be considered
Jacob: And I’m guessing this requires a bit of patient capital. Is that accurate or not necessarily,
Shea: In some ways, our funds are longer duration, it’s usually 10 plus years in terms of the investment duration. . Duration And so inherent in that is that it is patient in some ways. In terms of the ways that the conservation transactions are executed, sometimes that is patient capital in terms of, if we’re working with a conservation partner, like, a land trust or. a state wildlife agency, who’s looking to buy a portion of our property outright, they need time [00:10:00] to be able to fundraise to secure the funding necessary to complete that transaction. And so we work with them to set up the deal and have all the plans in place. And then when they get that fundraising, we’re able to ultimately close on that deal, which could take some years in some instances, but in other instances, it can be a transaction like receiving payments for carbon removals and emissions reductions payments for making the change to regenerative practices on a farm.
And you can be paid soon after enrolling. On that front, as far as we know, we were the first U. S. Farmland manager to receive payments for these emissions removals and reductions at scale on our properties earlier this year. And so, the time can vary.
Jacob: What does an ideal investor look like for you guys?
Shea: It really depends. Ideal is a tough word for me, I guess, but I would say, you know, there are some investors who are really solely financially motivated, you know, they’re looking at the return target and that’s why they choose to invest with us. There’s others who are really motivated by the environmental and conservation outcomes, impact outcomes that we’re delivering.
One motivating [00:11:00] factor for me is to try to drive more institutional capital into the space. For timberland that has been the case for a while where there’s institutional investment in forestry. In agriculture, that’s a little bit more emerging and I think we’re kind of at a threshold point right now, where there is more meaningful interest from institutional investors stepping into that. And so I’m, I’m hoping that that continues to keep shifting in that direction and, be able to continue unlocking different pools that can help, facilitate more of this at scale,
Jacob: If you think about the soapbox things or the common misconceptions that people tend to have, about this topic specifically?
Shea: Plenty comes to mind. I think the one that stands out for me is when they’re looking to be an impact investor or, you know, just the field of impact investing is that the capital necessarily has to be concessionary or you might not be able to achieve a market rate return from your investment in order to, you know, do good through your investment.
I think there’s ways where you can invest for impact while also achieving market rate, even above market rate returns [00:12:00] from those investments. And you can do well while also doing good, I guess, is a silly sort of phrase to capture the essence of it, but it doesn’t have to be an either or in order to generate, financial as well as environmental impact. And I hope that that message starts to proliferate and that , with different case studies or getting the word out more about ways that that can be done. It’ll become more commonplace for folks to understand that. And if that’s an apprehension of why an investor isn’t stepping into the impact space to reconsider and, take another look.
Jacob: If someone was interested in learning more, what are the best places for them to go about the topic or about conservation resources in particular?
Shea: We have a website that’s probably the easiest. You can link to our website through our LinkedIn platform, but our website address is conservation resources. net. And we have contact forms. We have email addresses on there to get in touch with us.
For the space as a whole, there’s a whole wealth of resources. The conservation finance network is one that I’m a big fan of and puts out a lot of great articles and platforms with various different approaches to this [00:13:00] space and different ways to invest in the space.
The Global Impact Investing Network is another platform that is able to showcase a lot of great work being done. And I’m personally always always happy to dive more deeply into these sorts of topics. This is what I’m passionate about. So if anyone specifically would like to talk more with me about any of these subjects as well, I’m very open to that and, very easy to access probably through the website is the best platform for that too,
Jacob: Any last words before I let you go?
Shea: I really appreciate the opportunity to chat with you and it’s always great to see you and look forward to trying to get more folks eyeballs on farmland and timberland and what can be done for impact on that front.
Jacob: Thank you for the good that you’re doing and keep up the good work.
Shea: Thanks Jacob.
Jacob: Thank you.
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