Ejido Verde summary for a family office

This is a summary Shaun Paul and I wrote for a potential investor in this amazing Ejido Verde project.

Ejido Verde (EV) is a Mexican regenerative forestry enterprise aiming to restore 24,000 acres of degraded lands with resin producing pine tree plantations. It will create transformative wealth for the indigenous “Purhépecha” communities ; $49 million for just one 6 thousand-member community with more than 8o0 acres of pine over the 20 years of the project, and over $1 billion overall while reducing 6 million tons of carbon emissions and improving water, wildlife and local climate and generating market rate returns.

Ejido Verde is a partnership between the pine resin industry and indigenous and rural Mexican communities. It combines native tree reforestation, climate-change mitigation, and heritage trade promotion. Indigenous communities and collective farms (ejidos) in Mexico own thousands of hectares of idle lands that can be reforested with native pine trees. which can be tapped, as they have for millennia.

In 2009, Ejido Verde was established as a pilot project by the Mexican pine chemical industry to overcome the 60 year decline of raw materials resulting from deforestation despite increasing demand. It will create a unique industrial supply chain where the indigenous communities get 90% of the revenue from a renewable resource over 70 years. It will lift impoverished people up to the level of Portuguese white collar workers, yet produce market rate returns to investors of 13% IRR. In the 3,000 hectares already under cultivation people are seeing the return of coyote and deer and hearing more birds while the groundwater is improved.

Begun in 2009, to scale the operation, founding investors recruited a seasoned veteran of scaling social enterprises with indigenous communities to improve natural resource management. Ejido Verde is currently scaling to establish 12,000 hectares which represents tripling Mexico’s resin exports while creating community wealth and scaling reforestation.

Ejido Verde is the best of long term enlightened use of the market; yet unlike fair trade, it does not require extracting a premium and building a brand, Ejido Verde’s founding investors have been doing respectful business buying resin from these communities for 88 years. They realized that the only way to reliably scale long term supply is through a deep partnership with the communities.

Communities repay concessionary loans through long-term contracts with the resin Loans are repaid over time through 10% of the resin. Ejido Verde’s founding investors have a long-term vision; trees planted are expected to provide resin and revenue after 8–10 years, and continue producing for 70 years. Investors get revenue generated from commissions on resin produced provided Ejido Verde along with revenue from government subsidies, which should produce returns of 13% IRR from 10% of the revenue share of the Purhepecha’s resin sales.

A recent article in Sustainable Brands pointed out how unique the supply chain is.

External validation for the project came from being recognized in 2016 with the UN affiliated Global Energy award.

Other Mexican press is here and here