New England Forestry Foundation’s Exemplary Forestry management practices are a fundamental tool, but how do we take them to scale across a landscape that is largely privately owned? For many large private landowners in the industrial forests of New England, financial constraints limit their ability to shift their forest management approach. Enter the Exemplary Forestry Investment Fund (EFIF), which is slated to launch in early 2022. Focused initially in the Mountains of the Dawn region of western Maine, the EFIF will be a new, privately held long-term timber investment fund that applies Exemplary Forestry standards on large tracts of forests. Initially conceived of by New England Forestry Foundation (NEFF) alongside its early work on the Exemplary Forestry standards, the EFIF is now being jointly developed by NEFF, the Maine Mountain Collaborative (MMC), and Quantified Ventures to attract investors who are interested in both long term, stable investment, and quantifiable environmental results.
The goal of the EFIF is to attract private “impact” investment funding to improve Maine’s forests and achieve conservation outcomes. “Impact investing” refers to investing that seeks positive social and environmental outcomes and also a financial return. While large public land acquisition or changing Maine’s forest practices laws are two ways to alter management practices across a landscape, the economic, cultural and political history of this landscape leans heavily toward private land ownership and away from government intervention. The EFIF is a tool that relies on private investment and private land ownership.
Trees in New England take a long time to mature—whether to become valuable saw logs, provide quality habitat for wildlife, or sequester large amounts of carbon—and patience and careful management are needed to realize the full suite of financial and environmental benefits Maine’s forests can provide. Starting from today’s average forest condition in western Maine, the timeline needed to increase forest growth rates and timber quality are simply not profitable for short-term investors. Unfortunately, some forests in northern New England are seeing the results of forest management that has prioritized short-term financial return, which has produced poor age class diversity, poor stand quality, and stocking below the regional average; the regional average is 15 cords per acre, and NEFF’s standards increase stocking to 25 cords per acre.
NEFF’s intent from the beginning has been to create a forest investment strategy that is attractive to patient investors and ensures forest management that realizes the potential of Maine’s forests for long-term benefits, including climate mitigation. The EFIF seeks to create the necessary financial incentives to allow the landowner and foresters to make long-term management decisions.
The model relies on private philanthropy supporting the goals of the Exemplary Forestry Investment Fund through purchase of conservation easements on lands acquired by the Fund. The revenue received by the Fund for the sale of the easements, along with sale of carbon credits, will provide a return to investors in the initial decade or more while the forest is restored to the point where it can produce more than usual amounts of high-quality timber on an ongoing basis.
The EFIF will be managed by investment and forestry professionals, with the on-the-ground operations handled by a highly respected forest management company. Adherence to the Exemplary Forestry standards will be assured through the oversight of a Board of Managers that will include representation from the Maine Mountain Collaborative along with forestry, conservation and investment experts.
The Exemplary Forestry Investment Fund is particularly well suited for investors with a long-term perspective for at least a component of their portfolio; who want to see their dollars bring about substantial and measurable environmental benefits in a globally significant forest and mountain region; who are interested in addressing climate change, particularly those that can use the carbon storage benefits derived from the EFIF’s forest holdings to benefit their own objectives; and who value the stability and countercyclical nature of forest investments.
The EFIF has begun seeking impact investment capital for forestland acquisition up to 100,000 acres, and raising the corresponding philanthropic funds to acquire conservation easements across this acreage. Once this proof-of-concept acquisition is in place, the fund could be expanded to a larger portion of the landscape.
In 2020, the EFIF received a boost with a two-year grant from the Innovative Finance for National Forests Program. This program—a partnership of US Forest Service National Partnership Office, National Forest Foundation, and the US Endowment for Forestry and Communities—funds innovative private investment approaches that can tackle the critical restoration work needed to keep both public and private forests healthy and productive. NEFF and MMC also partnered with Quantified Ventures—an impact investing firm that seeks innovative ways to fill capital needs for high-impact environmental, social, and health projects—to bring the fund to launch.
EFIF Goals for Building a Conservation & Climate Legacy
- Create a for-profit long-term timber investment fund
- Conserve 100,000 acres under Exemplary Forestry management in the largest intact temperate forest in eastern U.S.
- Reach the landscape’s potential for timber productivity, volume, and quality
- Sequester upwards of 30 MtCO2e per acre more than present levels, producing third-party verified carbon credits that can be sold for additional revenue
- Increase timber stocking to 25 cords per acre or almost 50 percent more than current levels
- Access new sources of capital by connecting project outcomes to a wider network of stakeholders