Iwokrama is like ‘a giant utility’ - Director Canopy Capital

With the countdown on the global environment under way, one venture capitalist is hoping that people will see value in the ecosystem services which the Iwokrama rainforest offers and which can be used to raise capital for its upkeep as a “giant utility.”

This is according to Hylton Murray-Philipson, Canopy Capital’s director, who was explaining to Mongabay.com why he was investing in Guyana.

Iwokrama stands to receive funding for the next five years through its deal with Canopy Capital, and should in the long term get 90 per cent of the investment returns that will go towards sustainably managing this area of rainforest.

“I feel we are at a crossroads. I think that this is the last moment we have as a species to take remedial action because we are very soon on a path that is committed to significant climate change,” Murray-Philipson told Mongabay.com.

Brazil's government is to pay residents of the Amazon money and credits for their "eco-services" in helping to preserve the vast forested area sometimes called the "lungs of the Earth" for its role its converting carbon dioxide.

Environment Minister Marina Silva has presented the measure as a priority and said "keeping the forest going is an important environmental service" for the entire planet.

A private equity firm has purchased the rights to environmental services generated by a 371,000-hectare rainforest reserve in Guyana. Terms of the deal were not disclosed, but the agreement is precedent-setting in that a financial firm is betting that the services generated by a living rainforest — including rainfall generation, climate regulation, biodiversity maintenance and water storage — will eventually see compensation in international markets.

In exchange for funding a "significant" part of the costs of maintaining Iwokrama rainforest reserve in Guyana, the agreement grants UK-based Canopy Capital the right to 16 percent profit from proceeds generated from environmental services payments. 80 percent of the income generated would go to local communities while the Global Canopy Programme, an alliance of 29 scientific institutions in 19 countries, would receive four percent.

While the environmental services market is presently limited to voluntary markets, investor interest is growing. Last December, Merrill Lynch invested $9 million in rainforest conservation in Sumatra, expecting to eventually profit from the sales of carbon credits. Meanwhile in November, New Forests, a Sydney-based investment outfit, established a wildlife conservation banking scheme in Malaysia. The firm expects annual returns for selling "biodiversity credits" to developers to be in the 15-25 percent range. Canopy Capital hopes to do the same, while at the same time developing a market for the utility value of living rainforests.