A dive into a model which shed some light on the potential returns of landscape scale regeneration and how we can begin to measure and calculate themwith Jasper Bertels of Commonland, Senior Landscape Finance Specialist at Commonland.
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THIS EPISODE IS PART OF THE LANDSCAPE TECH SERIES. FIND OUT MORE ABOUT IT HERE!
Very few people would argue we shouldn’t scale up regeneration to a landscape scale, but the immediate question always is: what are the returns? Both financial and non financial. Find out more in this episode! We also talk about the difficulty in calculating returns, the importance of discount rates and investing and leveraging investment funds, among others.
Calculating Returns on A Landscape Scale
Commonland is an organization with the common interest to build resilient landscapes, restore healthy ecosystems, and create regenerative business for the generations to come. They created the Four Returns Framework as a method for landscape restoration and building a new balance between ecology, economics, and hope. The four different types of returns are: return of inspiration, natural capital, social capital and financial capital.
“It is not enough to only look at the value of the generated cash flow, but you should also take into account the value related to returns, which is not yet monetizable.” – Jasper Bertels
Difficulty in Calculating Returns
Over the next few years, Commonland aims to develop detailed long-term plans for their landscapes in South Africa, Australia, Netherlands. There is difficulty in making reliable assumptions on the possible network effects in restoration of a natural zone. In order to make an impact, private capital must flow towards landscape scale restoration.
“If you are really wanting to scale up landscape restoration initiatives around the world, you would need different types of funding, leading to blended financing.” – Jasper Bertels
Importance of Discount Rates
Commonland believes that the value of landscape restoration, including of region ag, will have a significant long-term effect. Discount rates express the preference between the current value of money and in the future. Commonland believes that social and natural return and values are fairly important for long-term landscape restoration.
“We need to apply a social discount rate instead of an economic discount rate, there is a difference. The person’s value of cash flows will be higher when you apply a lower discount rate for those returns.” – Jasper Bertels
Investing and Leveraging Investment Funds
Jasper shares that if he were given full flexibility on a €1 billion investment fund he would focus on various nature based solutions. He believes in focusing on landscape and marine ecosystem restoration, including regenerative agriculture in order to create a significant impact.
“I think this structure would also appeal to institutional investors with bigger tickets size and the donors can take more of the junior capital to further mobilize the profit capital needed. ” – Jasper Bertels
Other Important Points Discussed
Koen and Jasper discussed these points in this episode:
● What Jasper believes to be true about regenerative agriculture that others don’t. Inspired by John Kempf
● What Jasper would do if he could wave a magic wand and change one thing in the agriculture industry from a sustainability point of view
● What Jasper thinks smart investors, who want to invest in Reg ag and food, look out for
To know more about Jasper Bertels and Commonland, download and listen to this episode.
Links:
Interviews:
- Interview with Michiel de Man
- Interview with Thekla Teunis and Gijs Boers 2017
- Interview with Thekla Teunis and Gijs Boers 2021
- Interview with Marcus Link
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The above references an opinion and is for information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
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