In episode 75 of the Investing in Impact podcast, I speak with Larry Selzer, the CEO of The Conservation Fund, on his journey and the organizations path to being the investment bank for Conservation.

• Subscribe on Apple Podcasts
• Subscribe on Spotify
• See past episodes.

Larry Selzer, the CEO of the Conservation Fund, discusses his journey in conservation and the mission of the organization.

The Conservation Fund is a nonprofit that buys land for conservation and promotes sustainable economic development. They work with public agencies to acquire land and hold it until the agencies are ready to purchase it back.

The organization focuses on protecting working forests and farms, which provide clean air, clean water, and jobs for rural communities. Selzer also discusses the importance of carbon markets and the need for regulations to ensure transparency and integrity.

Takeaways

• The Conservation Fund buys land for conservation and promotes sustainable economic development.
• Working forests and farms are important for clean air, clean water, and jobs in rural communities.
• Carbon markets and carbon credits play a crucial role in achieving climate solutions.
• Regulations and standards are needed to ensure transparency and integrity in the carbon offset market.
• The future of conservation lies in the convergence of the environmental movement and the free enterprise system.

Sound Bites

"Conservation and economic development is where we like to play."
"Land conservation is part of the solution to some of our great challenges."
"We need to build and deploy hundreds of thousands of miles of new transmission capacity."

About The Conservation Fund

The Conservation Fund is an American nonprofit organization founded in 1985, committed to the dual goals of environmental preservation and economic development.

With a mission to protect America’s most critical lands and waters, The Conservation Fund has become a leader in advancing sustainable, community-based conservation efforts.

In September 2019, The Conservation Fund successfully issued and closed $150 million in ten-year bonds, rated A3 by Moody’s. The proceeds are designated for Working Forest Fund® projects to enhance the scale and speed of their conservation impact.

Additionally, the Fund aims to boost philanthropic capital to extend the bond’s benefits across multiple projects, potentially reinvesting the proceeds more than once before maturity. This approach is intended to maximize both environmental and economic returns on investment.

Mission and Vision

The Conservation Fund aims to create solutions that make environmental and economic sense. By blending the benefits of conservation and development, they strive to address pressing environmental challenges while also supporting community prosperity.

The organization’s vision is a future where both natural and human communities thrive together, ensuring that the natural world is conserved for future generations while current communities benefit from sustainable development.

Key Initiatives

Land Conservation:

The Conservation Fund works to protect landscapes critical to the health of America’s natural environment. This includes preserving forests, rivers, and wildlife habitats. They acquire land to protect it from development and work with government agencies and private partners to ensure its long-term stewardship.

Working Forest Fund

The Working Forest Fund aims to conserve and sustainably manage America’s working forests. It focuses on acquiring threatened forestlands to prevent development, ensuring these lands remain productive for timber, recreation, and wildlife habitat.

By utilizing conservation finance tools, the Fund supports sustainable forestry practices that balance economic and environmental benefits.

Working Farms Fund:

The Working Farms Fund supports new and diverse farmers to expand food production while permanently protecting farmland.

It uses a conservation-focused investment model to build a resilient local food system, addressing food insecurity and promoting sustainable agriculture.

Waterways and Coasts:

The Conservation Fund is dedicated to protecting America’s rivers, lakes, and coastal areas. They work to preserve water quality and safeguard critical aquatic ecosystems, ensuring that water resources are managed sustainably for both people and wildlife.

Climate Solutions:

Addressing climate change is a core focus of The Conservation Fund. They implement projects that sequester carbon, restore ecosystems, and promote renewable energy.

By integrating climate resilience into their conservation strategies, they help mitigate the impacts of climate change on natural and human communities.

Impact and Achievements

Since its inception, The Conservation Fund has protected over 8 million acres of land across the United States. Their innovative approach to conservation finance has enabled them to leverage private, public, and philanthropic investments to achieve significant conservation outcomes.

Key achievements include:

• Large-scale land acquisitions: Preserving vast tracts of forestland and critical habitats.
• Urban green space creation: Transforming underutilized urban areas into community parks and recreational spaces.
• Economic benefits: Supporting local economies through eco-friendly initiatives that create jobs and boost tourism.
• Climate action: Implementing projects that have sequestered millions of tons of carbon dioxide.

Partnerships and Collaborations

The Conservation Fund collaborates with a diverse array of partners, including government agencies, private corporations, foundations, and local communities.

These partnerships are crucial in leveraging resources, expertise, and support for conservation projects. Notable partners include the U.S. Forest Service, Walmart, and the Doris Duke Charitable Foundation.

Episode Transcript

Grant (00:03.043)
Well, thank you so much Larry for joining me today. Very excited to talk about your really cool journey in life so far and everything you've achieved. And now with the conservation fund for the last 20 years, let's say a little over 20 years now, before we get into the conservation fund and all the things that it does and what it will do in sort of the future, let's talk about your journey before the fund. It looks like you were

sort of entrepreneurship, but then you also, you know, worked in, you know, marine mammal and with sea birds and, you know, at conservation centers and you have this like really nuanced like background and you've been, you know, like I said, before we started recording, you've been in sort of, you know, conservation and sustainability before it was kind of, it's kind of cool, you know, and, and you've been, you know, you've been doing it so long. I'm sure you've seen the industry

the love for it has changed over time. But I talk about your career journey and arc before the Conservation Fund and how'd you end up

Larry Selzer (01:08.216)
Well, first of all, Grant, I'm thrilled to be with you and thank you for having me. I will give you a little background on my own journey and then we can dive into the conservation fund. And I'll try and make it the Reader's Digest version not to take up too much time. But I grew up in Connecticut on the ocean on Long Island Sound. And when I was young, every waking moment was either down at the beach fishing or turning over rocks to catch bait to go fishing.

And from the time I was five years old, decided I wanted to be a Marine biologist. We didn't watch a lot of television in my house, but we did watch two things religiously. The first was mutual of Omaha's wild kingdom, which was on every Sunday night. And the second was any special by Jacques Cousteau. And that instilled in me a passion for.

Grant (01:58.135)
Wow.

Larry Selzer (02:02.188)
the natural environment and specifically the marine environment. And when I graduated from college, I was very lucky to get to be a marine biologist. And I did that for about seven years. And that was at a time when Ronald Reagan was president and he had just proposed opening the outer continental shelf off the Eastern United States for oil and gas exploration.

And the New England states hated that idea. They were worried about an oil spill significantly disrupting tourism and commercial fishing, two of the major industries for the New England states. And they filed a lawsuit based on the Marine Mammal Protection Act, which is like the Endangered Species Act for whales and dolphins. And they said, look, we have whales and dolphins and seals everywhere.

We don't know anything about them and you can't explore for oil and gas until we figure that out. And so I, and a team of people spent the next seven years offshore collecting data, analyzing that data, trying to understand the population dynamics of these important species. And we would come back to shore for important meetings that would decide the future of these natural resources and the animals that depended on them. And grant, it was like the start of a bad joke.

Grant (03:22.849)
Hmm. Yeah.

Larry Selzer (03:23.026)
the politics, the money, and the science walk into a bar. And right before they walk into a bar, the politics and the money would look at the science and say, now look, when we get inside, you sit down and be quiet and we'll tell you what the answer is. Even though publicly everybody said, well, we want to make our decisions based on the best science. The reality was they didn't care. And I watched time and time again as major decisions were maced.

were made either based on politics or on money. And I realized that I didn't like the political side of it, the regulatory side of it. But perhaps more importantly, I realized I didn't know anything about money.

how money drives our capitalist system and how money makes decisions more obvious or more effective or more efficient. And so I pivoted and instead of going to graduate school for science, I went to graduate school for business to learn about money. And when I was at business school, I met the fellow who had recently founded the conservation fund, a wonderful guy named Pat Noonan.

He hired me when I graduated and I've been here now for 34 years. And I have stayed because of the unique mission of the Conservation Fund. We're the only organization in the country grant that is chartered for both conservation and economic development. So we are duly purposed and working at that interface of business and the environment, trying to balance.

economic return and environmental protection is where we like to play. And so for 34 years, I've been able to pursue my passion for the natural environment and conserving those wonderful resources, but also my new found passion for sustainable economic development and the jobs that provide income for families and the tax base that provides income for communities.

Grant (05:27.233)
Yeah, that's the big thing that I always look at. you know, when you're trying to speak for the environment and for, you know, its profound impact in a lot of ways, there's always this underlying thing where it's weird because we don't think, like, we don't think we get much out of it because we don't get a job from it or something like that. Right. So I think the big...

Transition that I've seen sort of over years or what I like to see and this is why I wanted to kind of have our conversation was that how do we make nature or conservation or Whatever we want to call it sustainability, whatever. How do we use that to create jobs? Because at the end of the day that is what's going to get people on board in my opinion more and more is if it creates jobs that you

or let's just say the oil and gas industry has created over the last 60, 70 years. Is it possible? I guess before we get into that, but talk about the Conservation Fund. And like you said, you had that sort two -prong approach. What is sort of the overall sort of mission and vision? And I know the elevator pitch is tough, but when you talk to somebody at a dinner or something like that they ask what the Conservation Fund does, I know it does a lot, but what do you kind of tell

What's sort of your first pitch you sort of give

Larry Selzer (06:56.75)
Sure. Well, the short answer to that is the Conservation Fund is the nation's leader in buying land for conservation and using that land to promote sustainable economic development. And that's our dual purpose. But it's a very simple approach. We are the investment bank of conservation, if you will. So we use our balance sheet and we aggregate other people's money through joint ventures and partnerships.

Grant (07:18.049)
Love

Larry Selzer (07:24.578)
We buy land when we're asked to buy it on behalf of public agencies at the federal, state or local level. It could be the National Park Service. It could be the state of Montana. It could be the city of Richmond. And they have identified important lands for natural, cultural or historic or recreational reasons. And they ask us to step in and negotiate those transactions, complete those transactions using our capital.

We hold that land until the public agency is ready to buy it back from us. And then we sell it to them and recycle our money back into the next important project. And once that land is conserved, it provides a significant opportunity to think differently about economic development. Instead of the old school of simply extracting financial value from land and transferring it

urban centers like New York or Philadelphia or San Francisco, it's an opportunity to create locally driven economic ventures that provide jobs and a tax base and keep the financial return embedded locally so that communities can grow and thrive. And then they look at land conservation not as something that's being taken away from them.

but something that is in fact fueling their sustainability, their growth in the future. For 100 years, Grant, conservation in this country was about setting land aside, essentially protecting it from people, national parks.

Grant (08:58.54)
Yep. Yep.

Larry Selzer (09:01.562)
wildlife refuges. And it's because there were no laws and regulations and industry was over harvesting or abusing these natural lands. And Teddy Roosevelt really started that first era of conservation by creating the National Wildlife Refuge System, the National Forest Service and building on the National Park System. And today our landscape of protected lands is the envy of the world.

But as we go forward in the 21st century, it's not really about protecting land from people. It's about protecting land for people. Because these are the lands that provide us with clean air to breathe, clean water to drink, opportunities and jobs tied to outdoor recreation. The forest products industry alone employs more than 2 million people. And these are jobs that can't be exported overseas.

Grant (09:37.457)
Mmm. Love

Larry Selzer (09:55.19)
And so these are part of the critical infrastructure of the nation. And I think framing it that way invites more people to embrace land conservation as part of the solution to some of our great challenges rather than something that is for the elites only in this country.

Grant (10:14.317)
Yeah, yeah. Talk about the, I love learning by examples. It helps me put a lens on, you know, the work and the efforts. When we talk about, you know, making something economically viable within sort of conservation or, you know, sort of have this.

sustainable economy or a for -profit business, what does that look like when you purchase the land, it's sort of there, whether it's a government or another entity, like what is then maybe some examples of economic impact that then this land does do for the local economy?

let's say, or just the American economy sort of in general. Can you walk us through a couple of examples of how the land can work?

Larry Selzer (11:05.998)
Sure, I'll give you the prime example that we're deeply involved in and frankly just celebrated a milestone of acquiring 1 million acres of working forest around the country. The loss of large intact working forests and by working forest I mean forests that support the harvesting of trees is the greatest land conservation challenge in the country today.

we lose about a million acres a year every year to development. So that forested base that used to cover most of the country is shrinking each year. And let me tell you the history and why that came to be so. For about 100 years, the large industrial forests were owned by the vertically integrated pulp and paper companies. And they used the forest to provide wood and fiber to their

where they would make paper or corrugated boxes or solid wood products to build our houses and other products we need. That all began to change in the mid 1990s and the forest products industry restructured. And that restructuring triggered the largest private sale of land in the history of the United States. More than 90 million acres of forests changed hands.

It was like a tidal wave and the environmental movement was totally unprepared for the scale and speed of that disinvestment of land by the forest products industry. And as a result, almost none of it was permanently conserved. In fact, when that first wave of sales took place, 20 million acres of land was sold for development.

no longer growing trees, but growing shopping centers or housing developments. Interestingly, 70 million acres was purchased by a new class of buyer, not manufacturing companies, but asset managers. Because in the late 90s into the early 2000s, the investment community began to see timber as an asset class.

Grant (13:05.976)
Mm -hmm.

Larry Selzer (13:15.982)
And that influenced the buying decisions of university endowments and pension funds. They wanted to own this asset class as part of their portfolio. Now the good news is 70 million acres was purchased by these new timber investment organizations. The bad news is that they're generally held in 10 -year funds.

And at the end of 10 years, when they have to return the capital back to their investors, they would subdivide the forests, convert them into development parcels. And over the next 10 to 12 years, we lost another 20 million acres of forest. So we went from 90 million to 70 to 50 million where we are today.

Now the Forest Service, the US Forest Service analyzes that 50 million acres and they have estimated that roughly 10 % of that or 5 million acres is of high conservation value. And yet, remember what I said, we're losing a million acres a year and so we're diminishing that portfolio of high conservation value forests.

Grant (14:26.423)
What does that mean, high concentrated value? Like what's the

Larry Selzer (14:29.048)
high conservation value means it might have rivers or lakes, might have endangered species, it might have high recreation value or mountain tops or steep slopes. All of those things that support biodiversity and outdoor recreation that you in a perfect world.

Grant (14:36.452)
Got you.

Larry Selzer (14:49.43)
can still harvest, but not very heavily. You want to treat them a little differently than an industrial forest, which is really like agriculture with trees. While the environmental community was unprepared to deal with the scale and the speed at which these properties changed hands, and the conservation fund, given that we're the nation's leader in buying land conservation, we've acquired

Grant (15:00.407)
Gotcha. Gotcha.

Larry Selzer (15:15.374)
more than 9 million acres valued at more than $10 billion across all 50 states since 1985, we decided to do something about this. And we created a brand new model that would take into account the important conservation of these large forests because it's clean air to breathe, clean water to drink, habitat for wildlife, jobs for rural communities, but would also allow us to design a sustainable

management plan for each forest, which meant that we could keep the property on the tax rolls supporting the local communities. We could harvest the properties in a sustainable way so that we kept the jobs intact and we could send the wood to the mills to keep those jobs intact. And that fit perfectly with our dual purpose mission.

of conservation and economic development because a working forest, sustainably managed, can support the economic activity that rural communities need and frankly that all Americans need because we use these products every day, but also support the habitat, the water quality, the air quality, the carbon sequestration for climate change, all of those, what we call public interest values that are

driving sustainability in the future. And since we launched our working forest platform, we've acquired a million acres. That's almost a billion dollars of investment across 24 states. All of these forests are being harvested. The jobs and the tax base are intact. All of them will be permanently protected by what's called a conservation easement. That's a permanent deed restriction.

that prevents fragmentation or subdivision and prevents conversion out of forestry, but allows for sustainable harvesting. And that way we're threading that needle. We're working right at that interface of business and the environment. And that's a perfect expression of both the value proposition and the vision of the conservation fund. Now, remember I said,

Grant (17:17.091)
Gotcha.

Larry Selzer (17:33.198)
10 % of that 50 million is high conservation value. That's our target, that's our bogey. And it's a magnificent accomplishment to hit 1 million acres, but we have work to do to get to 5 million. And we're in the process now of expanding our funding partnerships, joint ventures, strategic alliances, co -investments, so that we can aggregate enough capital to get the job

Grant (18:00.795)
How's the funds relationship with developers? Is there a relationship? Is there a work relationship in some aspect? guess my reason asking this is that, can be a good thing in a lot of different ways. mean, we have like 4 million home shortage here in America. And I guess,

One can development be done differently, done right, done more sustainably? And do you have relationship with land developers where you can maybe work with them to develop a much more strategic approach to land development that works for both, you know, the conservation of American land, but also the local economy?

Larry Selzer (18:53.346)
Yeah, it's a great question. And let me say that we're a nonprofit by tax status, but we believe that we're in the business of conservation. And we operate this organization like a business. We're very efficient. We're very effective. We speak the language of business. We operate at a pace and scale and level of sophistication that makes us an easy partner for the private sector. Development is no different. We work with developers all the time.

Look, there are times when we both want the same acre of ground and we're competing with them, but we compete in a way that is fair value, that's market based. And if we win, then we get to conserve the land. And if they win, they get to develop the land. More often, it's a matter of identifying which lands should be developed and which lands should be conserved.

I think one of the problems we've had with development for so long in this country is that a lack of zoning, if you will, means that every acre is up for grabs. And first of all, people don't like that. They want to know that a park or a forest or a wildlife area isn't going to suddenly be sprouting a shopping center or an industrial park or even a housing development.

But at the same time, they need a place to live, they need a place to shop, and they want the products that industry makes. And I think the country would be well served following the lead of the Conservation Fund by working with the business community, engaging them in a way that says, look, we are underbuilt, as you said, Grant, by 4 million homes in this country. That's a tragedy. People can't afford a place to live. We need to build more places where people can live. Frankly, that requires wood.

Grant (20:24.428)
Yes.

Grant (20:39.287)
Yeah. Yep.

Larry Selzer (20:40.236)
That means that sustainably harvested forests are even more important. And so the first step is to essentially zone the country. And I use that somewhat rhetorically, but identifying which lands are so important as natural or sustainably harvested areas that we're not going to subdivide them to death or develop

Grant (20:44.449)
Yep. Yep.

Grant (20:49.731)
Gotcha.

Larry Selzer (21:03.566)
and then which areas should be developed because this country needs to grow. We're about 360 million people, Grant, and we're headed towards 600 million people. And we need to stay on task and on pace for economic growth, and that includes development and housing.

and business development for jobs. We need all of that. But I think we can do a lot smarter by engaging with the private sector early and often and identifying which lands should be protected and which lands should be developed.

Grant (21:38.187)
I want to dive a little bit into, you know, you have a lot of things going on. You have working farm fund, have working forest fund, conservation loans, green bonds, like maybe dive into maybe some of the important aspects maybe of each of these and kind of what are they and what aspect do they play in sort of the ecosystem of the overall organization.

Larry Selzer (22:03.554)
Well, our core business, as I mentioned at the outset, is buying land for conservation. And primarily we do that on behalf of the public agencies, federal, state, and local. They ask us to step into their shoes and complete a transaction. We hold the land until they can buy it back from us. And we call those...

Grant (22:20.759)
Real quick, real quick on that point. Why do they need sort of a middleman to do that? Why do they need the organization?

Larry Selzer (22:28.194)
Also a good question, a couple of reasons. Number one is government agencies are generally very poor at moving at the speed of business. And if you're a landowner and you want to see your land protected and you go to the public agency and you say, look, I'd love for this to be part of the national park system,

Grant (22:37.911)
Gotcha. Gotcha.

Thank

Larry Selzer (22:49.29)
you need to close by the end of the year because my daughter is getting married. My daughter is going to medical school. My son is starting a new business and I need the money and the land and then the government says, geez, we'd love to own this, but there's no way we can close by the end of the year. And they rarely have the money when the landowner is ready to sell. And so they rely on the conservation fund as a sophisticated

Grant (22:51.426)
Right.

Grant (22:58.637)
They need liquidity faster than...

Larry Selzer (23:18.146)
In other words, we can use our money, our balance sheet, to step in and meet the needs of the seller on their terms. And that buys time for the public agencies to get their act together. But ultimately, the land ends up in public ownership, which is where it should go in the first place. And it's a very efficient, effective way that meets the needs of the landowner and meets the needs of the American people. And that's our primary role.

Now, we decided to build a unique model around working forests because of the urgency around the loss of forests in this country and the important role that forests play in terms of clean air, clean water, and wildlife habitat. And that's our working forest fund where we've now just passed a million acres. Interestingly, the same scenario is playing out with family farms.

One could argue in this country that an endangered species is the family farm. And that's happening for two reasons. One is that corporate ownership of farms is increasing. Investors are buying more and more farms. That's not a bad thing. It just means that the family farm is disappearing. And in addition, family farms, which generally were ringing major metropolitan areas like Atlanta.

Grant (24:20.013)
Totally. Totally.

Larry Selzer (24:40.94)
or Kansas City, or Austin, Texas, or Minneapolis, St. Paul. As those cities have grown and sprawled outward, they have consumed those family farms. And we lose a million and a half acres of farmland each year in this country to that sprawl and development. And so we took our forest model where we aggregate capital, buy the forest.

manage the forest, put a conservation easement on the forest to protect it, and then sell it back into the private sector to recapture our investment and do it all over again. We recreated that model in the farm context. So we have a working farms platform where we raise money, we buy the farm, we operate the farm, allowing a next generation farmer to step in over time.

Grant (25:17.368)
Gotcha. Gotcha.

Grant (25:33.216)
Mm -hmm.

Larry Selzer (25:34.604)
We sell a conservation easement that makes sure it can't be developed into a shopping center. It'll always stay a working farm. And then the next generation farmer over time can buy that farm from us. That way we recoup our investment and it becomes a revolving fund that we can use over and over again. So we have our core business of just doing.

those transactions, call them co -ops with public agencies. We have the Working Forest Fund, we have the Farms Fund, and our latest venture is around the clean energy transition. This is the shift from oil and gas and coal to renewables. That's going to take place over a very long time, and natural gas is going to play a critical role for decades as we...

Grant (26:12.983)
Mm -hmm.

Larry Selzer (26:25.738)
undertake that transition. But the reality is to make this shift to renewables not only consumes a lot of land for wind and solar, but we need to build and deploy hundreds of thousands of miles of new transmission capacity, transmission lines, to get the renewable energy to the cities where it's needed. And that is going to consume millions of acres of land.

Now you have to get a federal permit, you have to get a state permit, but you also need to be granted a social license to operate. In other words, local landowners and local communities have to say, I will accept this transmission line on my farm or my rig. And how you navigate those community benefits.

Grant (27:09.591)
Gotcha.

Larry Selzer (27:17.73)
that go along with the injury of putting a transmission line on somebody's farm is a critical piece of moving forward. And the Conservation Fund is uniquely positioned, given our role in buying land for conservation and in sustainable economic development, of helping infrastructure project developers navigate these very complicated community benefit agreements.

And often land conservation is part of the mix. It also might include healthcare clinics, a library, a civic center, small job incubator, all the things that rural communities need. But land conservation is going to be a key piece of that. We think that matching up the scale of the infrastructure that we need in this country with the scale of conservation that we need to protect biodiversity.

is a good match and that's where we're focused.

Grant (28:19.201)
You mentioned conservation easement a few times. Can you explain a little bit about exactly sort of what that is and what role that plays in the entire ecosystem?

Larry Selzer (28:30.606)
Yeah, it's a great innovation that came into existence in 1970. Prior to that, conservation easements didn't exist, but the tax code was rewritten to include this new, flexible, landowner -friendly tool that says a piece of property is like a layer cake. So you have development rights, you may have water rights, you may have mineral rights.

You may have hunting rights. You may have timber rights. It's like a stack of rights. And every piece of property has that layer cake of rights. What an easement does is allow the landowner. It's never imposed on a landowner. It is a landowner friendly, flexible tool that the landowner can use.

Grant (29:00.801)
Mm -hmm.

Larry Selzer (29:23.064)
But the landowner can say, look, I want to maintain my farming operation. I want to harvest trees on my forests. I even want to be able to draw groundwater and sell it to Poland Springs Water Company. What I don't want is to subdivide my property or develop it. I can separate out those rights, the subdivision rights and the development rights.

and I can get an appraiser to value those rights and then I can sell them. So I don't have to give anything away. I can sell my development rights. I can sell my subdivision rights. That allows me to still maintain my farming, my forestry, my mining interests, whatever it is. And the landowner gets paid for those rights.

But those rights are now severed from that stack of rights that any piece of ground embodies, meaning they are permanently stripped away.

Grant (30:32.387)
Permanently so even though the landowner can't

Larry Selzer (30:33.23)
Permanently conservation easements are are permanent now I could sell this underlying land ten or fifty times And they never get those rights back because that landowner was paid for them So now think about that in context of the forests or the farms the easement strips off the subdivision rights of the forest

It strips off the development rights and those might be 30 cents on the dollar, 30 % of the value. What's left is the land and the trees and the ability to sustainably harvest those trees to make money. But we can sell that back into the private market because that easement has stripped away permanently the development rights. And we as the landowner have made the decision to do

And farmers and ranchers in particular make special use of conservation easements because what do they want to do? They want to farm and ranch. And yet a third to a half of the value of their property is development value. Well, if they can get paid for that development value, they can take that money and buy the next farm adjacent to them.

and expand their operation, which improves their economic viability. And it doesn't violate anything that they had not intended in the first place because they want to keep that as a working farm or a working ranch. want their sons and daughters to come into the business. So it's a magical tool. was created in 1970. It's been upheld by all the courts and it's a landowner friendly, flexible tool that accelerates conservation.

particularly of working lands, farms, forests, and ranches.

Grant (32:30.317)
I wanted to get your thoughts on green bonds. And if you'd like to add just some color to, I guess, your thoughts on it, maybe the future of it, you know, has it been a really valuable tool for not only you, but for others that have been involved with it? I guess just like the conservation easement, can you talk about green bonds a little bit and exactly what the use cases are for there? And, you know, have they been really viable for, you know, your mission?

Larry Selzer (33:02.008)
Bonds, first of all, the capital markets, but bonds in particular have been an incredibly important tool for nonprofits to expand their missions. Think about hospitals and universities that issue bonds to build a new wing or a new dormitory or athletic complex. Some organizations, nonprofits have used bonds to help pay for their staffing costs, but no one had ever issued a green bond for conservation.

until we did it in 2019. Now, why did we do this? Well, we had launched the Working Forest Fund and we had gone through a proof of concept phase where we were aggregating philanthropic capital from charitable foundations, buying forests, managing those forests in a sustainable way, placing a conservation easement that permanently protects that forest and reselling the land back into the private.

We wanted to make sure that model actually worked. After five years, we realized it worked beautifully. It was very effective, very efficient. And that gave us the courage to take the next step and go into a proof of scale phase. So we went from proof of concept to proof of scale. Now scale meant that we needed a lot more money.

And we could continue on the path we were on trying to raise the money philanthropically from foundations. The problem is that's just too slow. And so we decided to tap the capital markets and issue the very first green bonds for conservation that would allow us to steepen the curve, to accelerate our acquisition of forest so that we could get toward that 1 million and ultimately that 5 million acre mark.

And in 2019, interest rates were very favorable. They were very low. And we issued the first green bond for conservation. was $150 million, 10 year taxable note. And we used Goldman Sachs as our underwriter and we were rated by the rating agencies and got an investment grade rating. We went through all the things that any bond issuer has to go through.

Larry Selzer (35:12.206)
And we were able to place that money very quickly buying new forest. And it was a tremendous boost. was like getting rocket fuel into our proven model. And now we're into phase three, if you will, which is how do we get from 1 million to 5 million acres of forest? And to do that, we need to engage partners in co -investment joint ventures, because our balance

as healthy as it is, simply isn't big enough to keep adding debt, bonds or debt. And so we need to think about new equity -based or co -investment models. And we've had some great success recently and that's where the future is. We call it impact investing, but I think that's the future of conservation in the working forest and working farms opportunity.

Grant (36:04.483)
I'll end on a couple questions here. the first, listen, if we don't wanna go down this path and we don't wanna talk about it, that's fine. But I'm I'm sort of interested in this sector and maybe it's possibilities, but I know there's a lot of thoughts, both positive and negative behind it. And you had mentioned, a landowner has a bunch of these rights. And the one

It also kind of has is carbon credits or potential carbon credits and carbon capture, especially if you have a massive forest, let's say. What are your thoughts on carbon credits? You know, what is the, had the organization done a deep dive into it? I guess you've probably seen the maturation of that specific industry. I guess just what are your overall thoughts on it? And maybe do you see a positive future for it? Or do you

You see it as sort of this nascent thing that has a small market and won't really be that impactful? Or do you see it perhaps growing and having a huge benefit to maybe not only your organization, but in creating markets and creating other rights, let's say, for landowners.

Larry Selzer (37:21.25)
Well, let me start out by saying I'm incredibly bullish around the carbon offset market and the role of land to help achieve climate solutions. I think that is a critical part of the future and land as part of the critical infrastructure of this country, not just forest, but agricultural land, ranch land, in terms of carbon sequestration, building in climate resistance, resilience at a landscape level. I'm incredibly bullish on that.

Regarding the carbon markets, I think they were launched with great fanfare, but no rules. And like any financial innovation, without rules, chaos soon sets in. We were one of the earliest participants and largest participants in the regulated carbon offset market.

In California, we own 75 ,000 acres of redwood forests in California that all is registered in the compliance market, the regulated market. And it's been enormously beneficial in terms of helping us generate additional cash that we can use to either restore for us or buy new for us. And we think that's a great program. I think where the challenge has come is in the voluntary market, not the regulated market, where there were no rules.

And you had a lot of people jump in, some with questionable tactics and some with questionable morals. that frankly, some bad things happened. And we're now in the process, we collectively are in the process of sorting that out. There are any number of.

initiatives to establish rules that would put guardrails and specific parameters around carbon offsets. think eventually and probably not too much in the future, this market will clear and will be a very healthy market that investors can have confidence in. Look, forests in particular sequester, absorb and hold over the long term enormous amounts of carbon, up to 15 % of

Larry Selzer (39:30.914)
countries carbon emissions are held in force. simply cannot meet our national climate goals without forests. Can't happen. And so we need to figure this out. In addition, carbon capture and storage underground is an incredibly important part of our carbon strategy going forward.

All of these need rules and regulations that bring some transparency and some clarity to the markets. But I think we're well on our way. So I'm very bullish. I think each of us that's involved has to do our part to make sure that anything we do is of the highest integrity. The Conservation Fund has issued the highest integrity credits, I think, of anybody in the country. And

on the cusp of doing far more. So it's an important market. It will be a growing market and we're behind it.

Grant (40:28.781)
What are some of the, just to stay on that for one more question, what are some of the, I guess, hurdles or difficulties of getting a regulated, let's say federally regulated rules and regulations to help the market mature a bit more? guess just from conversations maybe you've had with regulators or other people within the sector, what are some of those hurdles that

this regulation faces? Is it the transparency part? Is it the science part? Is it, you know, trying to weed out sort of the bad actors and those possibilities? I guess, what are some of the hurdles that you've

Larry Selzer (41:09.294)
I think if you think about accounting, financial accounting, we have the FASB, the Financial Accounting Standards Board, and that governs the way audits are done and the way you can account for or must account for financial transactions. And there's a standard framework. You don't get to make up your own accounting standards. You have to abide by the agreed upon standard and auditors enforce against that standard.

In the carbon market, we didn't have anything like that. And where we are in the process now is that a number of standards are being proposed. I think eventually the world needs to coalesce around a common framework, a common standard. And then auditors will know what they're auditing toward. They will know if you have adhered to that standard or you have violated that standard.

when there were no standards or there are multiple standards, frankly, people can make up their own data or they can venue shop for the weakest regulatory framework they can find. And that leads to bad behavior, bad data, bad outcomes. We need to have assurance in the integrity of these claims that are being made. The science, frankly, is quite clear.

People have been studying carbon and forest for a very long time. So it's not a matter of doing new science. It's a matter of being clear and transparent about the data and the assumptions you are using so that everybody understands how your project was put together, what it's going to deliver, and they can have faith that those results are real. And we're headed in that direction. I think we'll get there fairly soon.

Grant (42:55.927)
Last question I have is just a little bit about the future. And when you look at, let's say the next three to five years, what are some of the goals and successes you would like to see the organization achieve?

Larry Selzer (43:07.726)
Well, let me start by saying this. For more than a century, the environmental movement and the free enterprise system were separate. They flowed separately across the American landscape. And in my opinion, the future of conservation has to be at a scale that can only be achieved if the environmental movement and the free enterprise system come together.

Grant (43:36.579)
Totally agree,

Larry Selzer (43:37.292)
Let's call that the era of convergence. And there are challenges. The environmental movement and the business community, we have different training. We speak different languages. We use different tools. And bringing these two powerful forces together is going to be difficult. But I don't believe we can achieve any of our greater.

Grant (43:43.651)
Sure.

Larry Selzer (44:00.608)
environmental conservation and economic development goals without bringing these two together. The reality is that economic progress without sustainability has no future and conservation without economic benefit has no engine. And so we need to bring these two together. I think that's the future of conservation in America. It's why the conservation fund exists

be that tip of the spear, that leading edge of innovation around balancing economic and environmental objectives. And it's why the things like the Forest Fund and the Farms Fund are so powerful, because they are manifest examples of what can happen when we bring the environmental movement and the free enterprise system together and achieve a common vision.

Grant (44:52.035)
Amazing. Well, thank you so much, Larry. This was a phenomenal conversation. Your insights and expertise is just awesome to hear and learn from. I appreciate you taking the time. I know you're very busy. best of luck to you and the team for the next 100 years.

Larry Selzer (45:08.824)
Well, Grant, thank you so much for having me. We love to engage in these conversations about the future. It's exciting for our country. It's exciting for the Conservation Fund. And I hope your audience will enjoy it.