121 Jasper Bertels on how to regenerate and calculate the returns in a landscape of 1M ha

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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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. With Jasper we also talk about the difficulty in calculating returns, the importance of discount rates and investing and leveraging investment funds, among others. 

More about this episode on https://investinginregenerativeagriculture.com/jasper-bertels.

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https://investinginregenerativeagriculture.com/course/

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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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Transcript

SPEAKER_00: 0:00

Very few people, at least very few people listening to this podcast, would argue that we should not scale up regeneration to a landscape scale. But the immediate question always is, what are the returns, both financial and non-financial? Today we take a first dive into a model which sheds some light on the potential returns of landscape scale regeneration. Tempering climate change, bringing back rivers, preventing floods, and obviously lots and lots of nutrient-dense food. The promises of RegenEgg often sound straight out of a science fiction book. And for these promises to be met, we need to significantly scale regeneration to a landscape scale within this decade. Welcome to a new series where we look into the technologies needed to bring regeneration to a landscape scale. In this series, we'll look at already existing technologies, digital tech, ag tech, new financing, And we'll ask the question, what is missing? What needs to be urgently developed over the next years? We're very happy with the support for this series by the Grantham Environmental Trust, which supports strategic communications and collaboration in solving the world's most pressing environmental problems. You can find out more at grantham.org. Thank you. Welcome to another episode of this series. Today with Jasper Bertels, the landscape finance specialist at CommonLand. And we're going to talk about returns at a landscape scale. How do you even begin to measure them and how do you even begin to calculate them? I'm very, very interested to dive deep in that today with Jasper. Welcome.

SPEAKER_02: 2:10

Thanks Koen. Thanks for having me.

SPEAKER_00: 2:11

And to start, I always love, because you don't have a farming background, we already had a pre-conversation. So I'm very, very curious how you ended up going deep into returns at a landscape scale. How did you end up at Soil?

SPEAKER_01: 2:23

Yeah, that's a good question. Actually, I only started working with Soil about a year ago at Commonland. And to explain my route towards Soil, maybe it's good to give some background. I worked for about 15 years in the financial sector. I started in investment banking. Then I was a banking supervisor at the Dutch Central Bank. And the last couple of years, I worked in venture capital. And at a certain point in time, I had a bit enough of yet an Everything was about money and financial return. And I wanted to contribute something more tangible and real to the world. So I made a world trip first and take some distance from my work and to reflect. And I actually discovered what is really important to me. And that's the connection to people, nature and myself. And that was a sort of compass for me also, let's say, towards what I wanted to do. And during that trip, I also discovered that I wanted to contribute to mitigating nature laws and climate change. So when I came back, I quit my job and said that I wanted to do something totally different. And I started to read a lot about nature-based solutions. And I started to believe more and more in these type of solutions for climate change. And I also thought that it would be best to do that with a business approach. That led me to CommonLand and the For-Returns framework. So I joined CommonLand a year ago, which is active in restoring large-scale degraded landscapes around the world. And I really started to believe in the four returns method that restoring those landscapes with the four returns approach can really lead to four different types of returns. Return of inspiration, natural capital, social capital, and financial capital. And yes, everything starts with soil and restoring the soil. So that is my route towards working with soil.

SPEAKER_00: 4:35

And it's fascinating because you come from the finance space and after your trip around the world, you could have also started a farm or bought a piece of land somewhere as we see. I'm saying we in general in the space, many people do, which is extremely important, but you decided to join Commonland. Do you still remember how you found out about Commonland and what attracted you to apply in the first place or to connect with them in the first place?

SPEAKER_01: 4:59

Yes. So when I quit my job at the bank where I was working, so I read a lot about nature-based solutions and started to have conversations within my network with different kinds of people working on nature conservation and restoration. And I really believed that when you work on such long-term projects that you could do that best with a business approach, that you can become self-sustainable and not dependent on short-term funding. And I was looking for companies and organizations that were doing that And more and more I heard the name Commonland. Yeah, when you really believe in this and want to work in this field, you should talk to Commonland. So that's why I started to reach out to them. And I found out that they had a rule which very well suited with my background. And that's also related to calculating the monetary value of the different returns from landscape restoration.

SPEAKER_00: 6:03

Yeah, that's super interesting. Actually, I will definitely, it's not the first time we talked to Commonland. So very, very at the beginning, some listeners might remember, we actually interviewed Michiel de Man, a former colleague who was then working a lot on Spain. And we're actually going to talk about Spain now as well. So I will link that interview below. And we've interviewed Tekla and Gijs of Grounded, which is also is active in a landscape of Commonland or Commonland does a lot of work in Southern Africa. So I will link those below if you want to go deeper into the different landscapes. But you mentioned something extremely interesting. I already mentioned it. mentioned at the intro, obviously, this return piece. So the four returns, I think if you want to know more about the common land approach and these four returns, I will link the website below so you can really dive deep into that. But that sort of naturally brings up the question, okay, how do you calculate the returns at a landscape scale? We already have issues calculating returns of region egg on a farm scale, let alone a landscape scale. So when you saw that, I mean, you started a year ago, you've made an incredible amount of progress. Can you walk us through that process? What does a return framework look like on a landscape scale and what were the first steps in that?

SPEAKER_01: 7:08

Yeah, sure. So when I started at Commonland, Commonland already started working with KPMG to work on a certain method to calculate the monetary value of landscape restoration. And that was based on the four returns framework of Commonland. So taking an ecosystem or a landscape approach. So when you are going to restore a whole landscape with a whole approach, what kind of returns would that lead? So you have different zones or different sections in such a landscape. So you have a natural zone, a zone where you have a combination of nature and, for example, business practices, and you have a region where people live and work. So KPMG made the first steps and created an important basis for this method, of which we learned a preliminary version in October last year during a webinar. And based on the work also with KPMG, we started to work further on this with our partners. So partners in our network, people and experts from the academic world, from universities, from NGOs, from landscape partners, et cetera. So we had the different returns in the model or in the method, but it was still only based on financial returns. So I mean actually real cash flows resulting from the landscape restoration process. And we thought when you are trying to achieve a well-balanced integrated value method, so including financial, natural, and social capital it's not enough to only look at the value of generated cash flows or cash flows to be generated but you should also take into account value related to returns which is not not monetizable or not yet monetizable so for example when you do landscape restoration and you improve let's say the water that's held in the ground and also the water quality so who will benefit from that it's usually when you have clean air or clean water the returns flow to everyone so to society and in our current economic model and system those values do not have an economic value because they don't really generate cash flows

SPEAKER_00: 9:43

but they have a cost for the farmer or the landscape stewards but the benefit is for all

SPEAKER_01: 9:50

yeah exactly so there's a misalignment between the peak who invest and the people who receive the benefits. So we think that with this method, which is actually a calculation method, but also a communication method, it will help to better understand the total value for society when you restore a landscape. And when people start to believe in this total integrated long-term value, people will see what it will generate for society as a whole. And it's also becoming clear which stakeholders invest more than they receive. So based on that, it would be possible to create or to redistribute the returns and value that the right stakeholders will have the incentives to restore the landscape and let's say create total value for society in the end.

SPEAKER_00: 10:47

I would definitely link the webinar below and you're doing other webinars as well because since October, which was a kickoff one, I think, actually hosted by a friend of the show, Paul Chatterton, and obviously Charlie Kleisner was there as well, one of the co-founders of Tonic. But you've done a lot of work since then. Can you walk us on a high level one, because it's very detailed, very interesting. I encourage anyone to dive into it, but on a high level level, the Spain example, where you are now, what does that mean in practice, this 20-year vision of regeneration and let's say a few of the flows of return, or what is your most surprising thing that you found in applying this model to Spain at the moment? course in the current session in the current version it's not perfect but what was the biggest surprise that you found applying this to landscape in spain where you're working

SPEAKER_01: 11:33

yeah the biggest surprise so i don't think there are many surprises for us because we believed in the total value that this brings to society in the long term and also that there would be a good balance between the different returns and capital so there would be a good balance between financial capital, social capital, and natural capital. That's also what we find as outcomes of this method, when we also look at the non-monetizable returns from doing this. And you see that, for example, the value related to carbon, but also to the balance of nitrogen and phosphate can be very significant in the total value returns. And of course, that differs per country and per ecosystem. So for example, nitrogen will play a very important role in a densely populated country as the Netherlands, and it will be less so in Spain. And so there will be differences, but I think in general, there would be a good balance between the different capitals.

SPEAKER_00: 12:44

And what's interesting, I think there is that the carbon piece is partly monetizable or not yet, but it's sort of coming. The NP piece, in this case, it means or from what I understand is helping to transition in the landscape in Spain, mostly the almond industry, which is quite large from conventional to regenerative or regenerative organic, meaning the fertilizer use will drop dramatically to zero at some point and thus the leaching or thus the runoff basically, and the damage that we currently don't pay for, but at some point we might, like that return is in your model, you show that it's actually, it's quite large, like not just the carbon piece, but actually the NP as well. which is something that many people don't consider yet or don't really, at least we don't value it yet, but in the 20-year regeneration or restoration that might come. So it might be an edit somewhere, especially down, let's say, down the line, in this case flowing into the Mediterranean, that is, of course, doing a lot of damage to the ecosystem there.

SPEAKER_01: 13:43

Yeah, I think that will certainly come. So let's say the process that we have seen with carbon is, My belief is that we will see something like that happening with nitrogen and phosphate and biodiversity. So when it becomes clear to different parties what the total value is in the long term and for different stakeholders, then also financial instruments or credits will be created to redistribute the value and returns to the right stakeholders. So for example, farmers who might lose in the short term when they are restoring a landscape by a regenerative practices while creating a significant value for society as a whole they will be compensated by the benefits that they bring to biodiversity

SPEAKER_00: 14:32

so at the moment you see with let's say the already monetizable benefits which could be farmer profitability which could be partly carbon does it already make sense of course it makes sense but in the model what you've seen like this landscape regeneration you said it didn't surprise you at common land but what's the Not what's the return, but already there are already flows that we can see, the cash flows we can see and we can touch and we don't have to wait for. Are they already significant enough to really make this landscape case, in your opinion?

SPEAKER_01: 15:04

Yes, they're positive. In some cases, like Spain, they're positive for all stakeholders in the long term. But you will see in many situations that some of the stakeholders which play an important role in restoring the landscape have that they will lose at least in the short term. That's what we have seen by testing this model in different landscapes.

SPEAKER_00: 15:27

And can you name an example of that?

SPEAKER_01: 15:29

Yeah, we haven't really tested it as well as in Spain, but yeah, only high level. Yeah, we think that will be the case in other landscapes that we have. But yeah, we'll work on, let's say, developing more detailed long-term plans for our landscapes like South Africa, like the island in the Netherlands this year. And when we have the more detailed plans for the long term, there will be the input needed also for making a value assessment with our method. So we'll have to wait. a bit because we, yeah, as we all know, garbage in is garbage out. So first we need to have a good plan with good data to have useful outcomes.

SPEAKER_00: 16:20

Yeah, no, I understand. In this case, what I find fascinating, of course it's preliminary results, but in Spain, I think the total, let's say investment needed for this area, for this landscape is around a hundred million over 20 years. And the returns in all senses and all flows are far exceeding that which could be more economic activity obviously the farming piece is absolutely fundamental transitioning as many almond farmers as possible helping to transition but also the nature piece and it's really an integrated model but the returns that you can at least foresee now with limited data still because we're learning still a lot are exceeding those 100 million which makes a very strong case because 100 million is a lot of money but it's also nothing if you restore because this landscape in Spain how big is it what is the size we're talking about it's more than a million hectares, I think, right?

SPEAKER_01: 17:08

Yeah, that's the total size of the landscape. It's one million hectares.

SPEAKER_00: 17:12

Which means it's a hundred bucks per hectare, basically.

SPEAKER_01: 17:15

But yeah, so it's based on an intervention on only a relatively small part still. And that's because we don't have plans for restoring the whole landscape as detailed as we would need for applying this method. So I think it's about 10% of the landscape. That's where we have made assumptions for, yeah, which is the intervention scope in the method. So the size of total area, of course, will be very important for the height of the outcomes, but also speed of intervention, et cetera. So that's what we aim to do later this year to make a long-term plan for the total landscape and then apply that to the valuation method again.

SPEAKER_00: 18:01

And do you see, I mean, we'll talk about it then. I would love to have an update on that as well. But do you imagine there are the mythical network effects as well? Like if you go from 10% intervention area to 20 or to 50, would there be connections? Like would things potentially speed up, do you think? Because you are working then much more at a landscape scale or at a bigger scale, or really will it be like every 10% is more or less the same or we're expecting more or less the same? Or is that very difficult to say still?

SPEAKER_01: 18:31

Yeah, my belief is that there will be network effects for example when you are restoring more of the natural zone and that will have positive biodiversity effects and pollination effects farmers in the near area but a model is always used to simplify the reality which is already quite complex because you're dealing with nature and with people so that's always quite complex so we haven't included assumptions for network effect in the model because it's quite... difficult to make reliable assumptions on network effects, and then you would need, in my view, long-term data, which we don't have, and also to be conservative.

SPEAKER_00: 19:15

I'm very curious about that, obviously, but it's something we're going to see. And for the investors in the room, the investors listening to this, what do you foresee their role being now as the model, which is going to be open source, which is hopefully going to be applied around the world? What's their role now? What can they do? How can help because I think many are very interested in landscape approach, but it's also a very large thing that sometimes seems to be more on the institutional side or seems to be more on the government side as it is such a large and long-term approach. What's the role of investors? What do you foresee as the role of investors in this process over the next years?

SPEAKER_01: 19:56

Yes, so my view is when you really want to scale up landscape restoration initiatives around the world, you would need different types of funding, so blended financing. So that will mean that, of course, you need donors and government money to get things going and to fund the development costs for these kind of projects, which is very important, also to build pipeline, et cetera, and taking the more junior and more risky, let's say, part of also these investments and more early stage. And that will be needed, of course, for other private capital to flow in. But yeah, for other types of private investors, those are really needed. So yeah, we cannot do without them because there is a big challenge and there's so much land to restore. So we really need private capital to flow towards these kind of projects to make some impact.

SPEAKER_00: 20:55

And now in like in Spain, if I read the model and the first results, well, the key point is transitioning the farming piece, which will influence everything else dramatically. What do you see as a role? Like how can private investors get involved in that transition? Is there a way to get involved already? Or is that something that there will be transition finance vehicles or something coming potentially also based on, of course, the work you're doing now? Or is there already a key, like an open role or something for private investors to get involved now in the landscape in Spain?

SPEAKER_01: 21:31

Yeah, there was something. let's say, business cases, a hub for which we need funding now and then. But as I told before, it's still not on the scale where we want to go to. So the funding which is required for the current business cases is not that big, I would say.

SPEAKER_00: 21:52

It's not the 100 million yet.

SPEAKER_01: 21:54

Yeah, exactly. But for restoring the total landscape, the numbers will be much bigger. So by developing the long-term plan for the whole landscape with the different parties. on the ground, so government and businesses and farmers will have a much better view on what the actual requirements in terms of funding would be and which type of funder would fit best with different activities, let's say. So I do not have a very clear answer on what's needed now or let's say in the next couple of years. First, we need to do our homework a bit better on that landscape.

SPEAKER_00: 22:34

I completely understand. We're still in the very early days of this movement although many people have been working on it for a long time but figuring out how to put or how to raise a hundred or potentially a billion in all kinds of funding and to put it to work is going to be a very interesting challenge let's talk about discount rates let's just switch the gears a bit i saw it mentioning a lot in the presentations and i would love your for people that don't know what they are if you can have a very simple explanation of what discount rates are why they are so crucial and how you apply them here in terms of social and financial just to explain a bit your assumptions there and why it's so important because this is such a long-term project

SPEAKER_01: 23:12

yes so one of the things that we try to do improving or developing the method further after the work of kpmg is also to align it a bit better with the long-term focus that is needed for landscape restoration so what we did is also so the forecast period was already 20 years And now we also included an option to calculate the continuing value of 10 years after that. But the difficulty will be that also the business as usual situation will change. over time. So it's of course difficult to make accurate assumptions for such a long period.

SPEAKER_00: 23:58

Just to be clear, business as usual in this case is conventional almond farming and let's say the whole landscape is degrading relatively fast and people are moving out, desertification is a huge issue, weather changes, climate change, etc. Like in 30 years, it's very difficult to see how, I think you wrote somewhere, the business as usual case continues beyond that because it such a fragile landscape at the moment

SPEAKER_01: 24:22

yeah so for example what i believe is that yeah the current situation so yeah the soil quality and the erosion is very significant there for example so the current way of agriculture will not be sustainable forever because yeah the soil is is deteriorating every year. So that will mean that also conventional farmers will need to make a shift sometime in the near future. So it will not be realistic to assume that people will apply intensive agriculture practices for more than 20 years ahead. And maybe to come back on your question on discount rates, that's also related to, let's say, the long-term perspective so what we believe is that the value of landscape restoration including region act will have a significant effect in the long term and when you're applying discount rates that means that the large part of the value will be related to the short term because when you increase the discount rate the value of cash flows further in the future will decrease so we thought it would be logical and also That's based on actual leading science and cost-benefit analysis to make a difference between discount rates for social actors and economic actors. And we try to be or maintain conservative in our assumptions for both discount rates. But we think that it's logical to have a difference there.

SPEAKER_00: 26:06

Why is that? Because time is a different actor in social and financial? Or it's different to the stakeholders that need to fund the different parts

SPEAKER_01: 26:16

yeah the latter so when you're looking at let's say long-term projects which are funded by governments and for which cost benefit analysis are made there are social discount rates usually applied which are between two and five percent generally which are quite a bit lower than the usual discount rates used for private actors which are uh uh yeah between six and ten percent for example and we did the same in this approach because we think that the social and the natural returns and values are very important for landscape restoration in the long term so we applied because all these returns or most of these returns will flow to society which is a social actor we need to apply a social discount rate instead of a discount rate which is used for economic actors and there's a difference so the present value of cash flows will be higher when you apply a lower discount rate for those returns

SPEAKER_00: 27:28

yeah i think it's a fascinating concept that i still am trying to grasp but basically you're trying to sort of time travel or making it possible to figure out what value means in the future what cash flows means in the Maybe 30, you mentioned. And most of the returns, either for society or financial returns, will come longer or further away in the future. But still, you don't want to discount it too much in the sense that it's very nice to have a livable future or clean air and not too much CO2 in the atmosphere, etc., also 20 years down the line. But still, you have to make it concrete now, which is an incredibly interesting juggle act, I think, and one of the main benefits, I think, of this framework to make it concrete, to make it concrete to our actors that in a political realm maybe have two three four year time spans and in the financial world maybe 10 or plus if we're lucky and people are talking about longer term ones but I think the big challenge in all of this work is how do we bring the enormous benefits over 20 30 40 years to now so we can get it funded and get going because if we keep pushing it out and say yeah it's amazing if we would have planted a tree 20 years ago we never plant them now so it's that's the but that's the power of finance so that's why I think actually one of the bigger reasons reasons we're doing all the podcasts and bringing the finance world into regeneration because it has the ability to do things now that benefit later. Also the ability to do things now that don't benefit later, but that's a whole different part of finance. So very, very interested in that. If you want to know more, I definitely will link some things below to dive deeper. And this is a process, but an absolutely fundamental one for long-term regeneration. So thank you for that. And the social and they are different and I think you put them at five and seven so five for social and seven in this case for Spain obviously for the financial discount rate so for the financial people listening that that was the conclusion and it's based on defendable statistics so it's very interesting how they it wasn't just let's put it somewhere in the middle but it's based on the Spain situation specifically I want to be conscious of your time and do a number of questions we always do and to see this always takes a bit of time so we I want to take enough for it a question that's inspired by John Kempf what What do you, I mean, you've only been only, between brackets, one year in the scene, let's say, of regeneration and regen ag. But what do you believe to be true about regenerative agriculture that others don't? So where are you contrarian?

SPEAKER_01: 29:55

Yeah, so I really believe that regenerative agriculture can create sustainable long-term financial returns for public and private investors. And we talked about the integrated value and returns, which are, of course, even bigger. But I also believe this is true for financial returns and that these practices will have a more attractive long-term risk and return profile than other conventional practices. So

SPEAKER_00: 30:27

not only a positive return but better than business as usual

SPEAKER_01: 30:32

as we talked about it before. for example bushfires also and floodings and droughts etc which will lead to these practices because the other ones will not be sustainable anymore and also this will lead to the insights at governments to change policies towards these practices which will lead in my view to aligned subsidies and taxes for farmers and other stakeholders towards these practices so my belief is strong strongly that this will be in the next couple of decades it will be much more attractive risk return mileage to invest in these kind of practices than the old school practices.

SPEAKER_00: 31:39

It's fascinating that in the model in Spain, again, specifically, that it's very difficult to imagine a business as usual beyond 30 years. And it's probably many people would agree, et cetera, but just to put it there, that concretely and that dry, basically saying literally dry in this case, pun intended, but that it's very difficult to imagine this agriculture system, the business as usual to continue for another couple of decades. And just that realization, I think is very shocking. But in your answer, I also see if you're investing and there will be another question as well but you need to invest in the long run because you want these upsides or these cash flows they could take a while to come and you want to not invest a couple of years like not two years or three years maybe in some of these transitions because it's especially when dealing with farming you want to be connected to it for a long time as some of these policies will come but we just don't know when and when they actually will create meaningful cash flows etc so you have the magic power you have a magic wand Yes, good question. I would say that I would like to make government

SPEAKER_01: 32:51

subsidies aligned with targets related to addressing climate change and biodiversity loss, which unfortunately is not the case yet. And we need to do so. I believe that that will come, but it would be best when that would happen as soon as possible, because currently the farmers receive lower agricultural subsidies when they use regenerative practices, which is totally misaligned with the targets that we have to combat these big crises?

SPEAKER_00: 33:31

Yeah, I think there's an enormous, not very sexy, but enormous work to be done on policy to align those. And I think some, and I know some people are listening, but some very interesting work has been done on, especially in Europe, on renewable energy over the last decades, because the sector is much older or much more mature, I think. And we, I think, as a sector can learn a lot from it, like how to change local policies, but also definitely policies on a European level, and how to align the society benefits we all want with the current enormous streams of capital that are flowing towards non-regenerative or degenerative approaches and practices. And it's something, especially in Europe, but also in the US, it's almost against all odds that some farmers have gone through some interesting transitions in applying practices and approaches that we now applaud. We read the books, we see the documentaries, but they paid a high price and they went against an enormous stream of capital to do that. so what would happen so going a bit back to your not back but to your finance times and you said you were in venture as well and of course in banking let's say tomorrow morning you are in charge of a 1 billion dollar or let's say 1 billion euro investment fund you have a long-term view you can or you have a short-term view you can choose it is an investment fund so we're looking for investments you can have the time you'd like but what would you focus on what would be the few things if it would be a few but what would you allocate most of your your portfolio to yeah interesting question and just to be clear i'm asking it because not because i want to know okay it's it should be 125 million to that and but i'm very interested in how people if they have almost unlimited resources this obviously isn't unlimited we can also put a few more zeros behind it what's their focus process what do they decide to focus on if in this case money isn't necessarily the issue so what is your how would you put this to work and where mostly if you had to select a few things only

SPEAKER_01: 35:26

yeah so assuming i I would have a 1 billion fund and I have full flexibility. And of course I will choose for a long-term perspective and when I would need to realize a reasonable long-term return. Yeah, so as should have become clear from this podcast already, is that I really believe in the enormous value potential of different nature-based solutions. So that will be where the funds will be focused at. And that will include landscape restoration, including business cases such as regenerative agriculture, which fit in the restoration of that landscape. And also coastal or marine restoration, ecosystem restoration, which might include, for example, seaweed and kelp farming, which I really believe in as well. But when I would like to create significant impact, which I would like to do, of course, is that, so I believe that it should be a blended financing mix to leverage the impact of the 1 billion investment fund. Also to be able to finance different required activities, for example, also the development of these kind of landscapes and development costs related to that, which will require other funding types, for example, of governments. So there need to be different tranches in there. So I think I will choose for a fund-of-fund structure. Also to overcome one of the big issues related to the limited pipeline of investable projects. And I would look for a structure with a senior tranche for institutional investors. The 1 billion fund will then focus probably on the mezzanine or a bit more junior tranche. And there will be donors like development agencies, foundations and governments who would take the most junior tranche. and provide technical assistance money as well, very important to fund the development cost. I think this structure would also appeal to institutional investors with bigger ticket sizes, and the donors can take more of the junior capital to further mobilize the private capital needed. So I think this will be a high-level outline of what I would like to focus on and how I would structure that.

SPEAKER_00: 38:03

So the 1 billion is then a part of a bigger fund-to-fund structure. Just for my idea, how much is it going to be leveraged? Like how many, you're saying an institutional tranche and some donor funding. So in total, is it times three or times five or times one and a half? What would be the total ideal size of this if you had a billion dollars for like, let's say the more junior Amazonian part?

SPEAKER_01: 38:26

Yeah, I don't know. It will be at least doubled, but I don't know. know how it will really yeah how the percentages will look like

SPEAKER_00: 38:35

no but at least that is a good I mean that already unlocks a lot more finance and I think the piece you mentioned which also very interesting part of the model if you look at how little money is needed but still is absolutely crucial because it's very difficult to fund that in development costs like what to develop the pipeline to start even the work like this in Spain many years ago and to continue to do that and to put potentially unlock down the line the 100 million and in other landscapes it will be hundreds of millions that a few hundred thousand go a very very long way but obviously it's very difficult to invest in that but to get it financed is absolutely crucial.

SPEAKER_01: 39:12

Yeah it's crucial to have that development money and that's also how Commonland started in the landscape with money that is received from philanthropists and otherwise we couldn't have started seven years ago to prove that this for returns model has worked And we still see that there are many different kinds of investors and also private investors looking at investing in this area. But almost none of them want to take up the development costs, which is a problem because they look for a pipeline of investable projects.

SPEAKER_00: 39:48

But it's interesting how I think there's something we can learn there as well from the renewable energy space, where, of course, after a lot of subsidies and a lot of development costs paid for by governments, etc. There is a mature industry in many places where the development costs are also financed. And then the rest of the project is financed through many different ways and funds and institutional or non-institutional and the crowd, etc, etc, etc. So I think we are at the beginning, but it's an absolutely crucial point, potentially a lesson for investors as well. If you want more deal flow and pipeline, you have to invest in the pipeline and or maybe grant something or find something or unlock something to get the deal flow. The deal flow needs to be developed. It's not there. It's not planned. and play and so we need a more active role to get a lot of this deal flow to the table

SPEAKER_02: 40:35

yeah yeah so it's good to stress that yeah

SPEAKER_00: 40:38

yeah no i think it's we have to keep repeating because we see many people in the space okay show me the deal flow and i'm ready and the sector isn't in many cases that would be so easy

SPEAKER_01: 40:49

yeah yeah it's too easy someone needs to do the groundwork

SPEAKER_00: 40:54

literally yeah So I'm very happy to scratch the surface literally on the model. I think many, I hope many people will be interested to learn more. I will keep following this work and following the webinars you're doing and open sourcing of this very key piece of work in a landscape space. And I want to thank you so much for your time this morning and for sharing the road you've done until now, and obviously the road ahead and also your insights into how to put money to work in regeneration at landscape scale.

SPEAKER_01: 41:26

Yeah. So thanks Koen and thanks again for having me in your show.

SPEAKER_00: 41:30

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