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Taking A Rainforest Public: The Central Suriname Nature Reserve (CSNR) Project

Valuing A Rainforest Ecosystem

The IVE CSNR project is a ground-breaking endeavor to value a rainforest ecosystem and the ecosystem services that the rainforest supplies. The IVE CSNR project is a new paradigm for market-based conservation and sustainable development.

IVE has been authorized to create a trust company for the 1.6 million hectare Central Suriname Nature Reserve (CSNR). The purpose of the trust entity is to value/price the natural assets of the CSNR and convert this value to financial capital using the tools of The intrinsic Value Exchange. The CSNR Trust Company will be chartered to manage, protect and grow the natural assets of the CSNR. Further, the company will invest in such activities that support sustainable economic development in keeping with its mandate to protect and grow the natural assets under its trust.

Shares of the CSNR Trust Company will be made available in a public offering on The Intrinsic Value Exchange. The IPO will create capital for the Trust Company, its shareholders and stakeholder’s including the people and government of Suriname.

Project Overview

Suriname is a country rich in ecological resources. Thanks in part to pioneering conservation efforts, over 95% of the country remains forested, 80% represents primary rainforests, home to a rich diversity of wildlife and indigenous people. A country the size of New England, Surinames has 7% of the surface fresh water on the planet.

But the country is facing developmental pressures. The population is small (550,000) but pressure is building to create economic opportunity for a population seeking the benefits of the modern industrial economy.
Unfortunately, most of those opportunities involve traditional extractive industries — mining of gold and other minerals, petroleum, timber harvesting, wildlife trafficking, and unsustainable agriculture such as palm oil plantations. And this has put the country at an important crossroads. Is Surinam’s future the old industrial pathway or is there a new economic order brewing?
 
As we have witnessed elsewhere, a traditional industrial pathway reliant on extractives leads to rapid but uneven economic growth with high levels of income/asset concentration. Rapid growth soon peaks as non-renewable resources are exhausted and the majority of the population is saddled with the true costs of a degraded natural capital base without the benefit of a diverse and inclusive economy.

Valuing The Rainforest As Rainforest

The economic paradox facing Suriname is common to any forest or natural area in the world. The natural assets and ecosystem services that they produce are not a part of the industrial financial economy. Sadly, the potential wealth of the forest is converted most easily into financial capital by extractive means. The rainforest may be known to be valuable — providing fresh water, modulating the climate, a home to diverse wildlife, an untold store of genetic value for food, medicines, and technological advances, but these assets remain of theoretical value in a world driven by financial capital markets and monetized values.

Although we often refer to natural assets as “natural capital” they are in fact un-priced assets and thus are NOT capital. We know the price of oil, and businesses, cars, and homes the oil will fuel. So too with gold. These assets can easily be converted into financial capital on any of a number of markets in the world. Not so with rainforests and the ecosystem services they provide. Without financial tools and markets to monetize its value as a rainforest, the extractive alternatives remain the primary pathway to providing economic growth to the economy.

An Alternate Pathway — Converting Natural Assets To Natural Capital

The assets of the forest and the “goods and services” they produce are VERY similar to an industrial factory. Both produce goods and services of value from a productive underlying asset. The capital base for a factory includes: buildings, machinery and other infrastructure, so called “built capital”. The rainforest has natural assets — soil, water, as well as the geology and the biology of the rainforest ecosystem that produce essential goods and services – clean air, water, productive soils for agriculture, climate stability, and a vast genetic store of information for foods, medicines and technological innovation.

These rainforest assets produce valuable products and services just as a company’s assets produce goods and services in the industrial economy. Except in the forest case, the assets are excluded from the financial economy and thus remain “free” — or better stated, remain un-priced. Thus the industrial economy cannot value and incorporate them for price signaling, capital formation, and wealth creation.

Without a mechanism to include natural assets in the financial economy, we largely rely on conservation payments, taxes and regulations to inefficiently transfer partial value for the rainforest assets and the rainforest ecosystem services from one agent in the economy to the other.

The Intrinsic Value Exchange was designed to handle this problem by creating financial tools and an exchange infrastructure to price these valuable assets and convert natural assets into financial capital, connecting the mechanics of financial markets with the realities of the natural world.

IVE Financial Tools For Converting Natural Assets To Financial Capital

We are applying the financial tools and trading platform of IVE to make a complete connection between natural assets and the industrial economy for the CSNR. The goal is to create capital based on the value of the Suriname forest as forest and secondarily to provide valuable price information to the industrial economy.

The capital generated on the IVE exchange is fuel for preservation and sustainable development and aligns the interests of stakeholders with the health and welfare of the forest. Critically, the capital formation is based on the forest’s assets and do not rely on transfer modalities. As importantly, price information generated from trading informs the market of relative values. With this signaling, production of goods and services within the industrial economy can be informed by the priced value and productivity of Intrinsic Assets — the natural, human, and social capital of Suriname and not just the value of traditional industrial production.

The Central Suriname Nature Reserve Trust Company

The Reserve

The Central Suriname Nature Reserve was created 18 years ago and represents a landmark achievement in conservation. The CSNR spans some 1.6 million hectares of primary rain forest in the heart of The Republic of Suriname, providing an incredibly valuable resource for the people of Suriname and to the world. However, the full value of the reserve as a keystone driver of a sustainable Surinamese economy is yet to be fully realized. The CSNR and surrounding forests are in jeopardy from uncontrolled timbering, illegal mining, and road building.

 

Opportunity From Crisis

The cyclical nature of the extractive resource sector has once again put tremendous strain on the Surinamese economy.  The crisis, caused by a collapse of commodity prices, has created economic hardship but it also presents an opportunity and impetus to transition to an economy based on broad, inclusive, green growth.  The transition to this new economy requires effective policy and significant capital.

Fortunately, the government, private sector and people of Suriname desire a non-extractive alternate pathway to achieving a diverse, sustainable, green growth economy.  In November of 2015, IVE signed a letter of intent to explore the use of the IVE mechanism to provide the financial foundation for a green growth economy. In 2016, President Bouterse endorsed our proposal to create a trust company for the CSNR as the first IVE project in Suriname and we have received approval from the requisite ministerial heads to proceed with the project.

At a recent speech before the CARICOM, an organization of 15 Caribbean nations promoting economic integration, President Bouterse made the following comment: “Secondly, we have to focus on the improvement of our investment capacity ranging from REDD+ initiatives to the employment of the Intrinsic Value Exchange approach to generate the funding of sustainable sectors in our economies.”

The CSNR Trust Company

The Intrinsic Value Exchange, LLC has been authorized to create a trust company for the 1.6 million-hectare CNSR. The CSNR Trust Company will be chartered to manage, protect and grow the natural assets of the South Suriname Conservation Corridor.

The trust company will beneficially own the natural capital value of the CSNR and the company will include existing or future monetized ecosystem services. For example, income streams from carbon credits, ecotourism, fresh water extraction for use in the Caribbean Basin, and non-destructive uses of the forest will be incorporated into the trust company. This can bring significant revenue, perhaps tens to hundreds ofmillions of dollars a year, to the trust company to underpin the Intrinsic Values of the CSNR.

Taking a Rainforest Public

The proposed mechanism for capitalizing the Trust Company is a public offering of the share capital of the CSNR Trust Company on The Intrinsic Value Stock Exchange (IVE) using IVE’s novel financial instruments to free stranded value inherent in the CSNR ecosystem.

The IVE Process

  • Create the CSNR Trust Company, chartered with the responsibility of protecting and growing the natural assets of the rain forest tract.
  • Aggregate data on values for natural capital and ecosystem services in the CSNR.
  • Incorporate all existing or possible revenue streams for ecosystem services that may exist.
  • Initiate the IVE IPO process to convert natural assets into financial capital.

Proceeds from the company’s capitalization will be available to create jobs, for protection and growth of CSNR’s natural capital base, investment in sustainable development, a source of funding for the Suriname Green Growth Fund, and general expenditures for the health and welfare of the people and wildlife of Suriname.

The CSNR Trust will be owned predominantly by Surinamese stakeholders. The Trust’s share capital will be distributed to these stakeholders and national and international investors that purchase shares in the CSNR IPO. Foreign investment via the IPO is the kindling for significant capital formation and the creation of novel revenue flows.