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Nature preservation is 'smartest investment': A Q&A with Mark Tercek

tercek portrait
Mark Tercek

This Thursday noon Mark Tercek, national president of The Nature Conservancy, will give the Westminster Town Hall Forum's last talk of the winter series. His topic: "Beyond Tree-Hugging: Why Saving Nature Is the Smartest Investment We Can Make."

Tercek is a longtime investment banker who worked 24 years at Goldman Sachs before leaving in 2008 to head The Nature Conservancy (TNC). As he tells it, conservation and nature were late-blooming interests in his life but rapidly gathered influence over him.

The two threads come together in his new career and also in his new book "Nature's Fortune,"  published last week with flattering jacket blurbs from the likes of Edward O. Wilson, Alan Weisman, Stewart Brand and Bill McKibben.

In it he lays out his call for greater cooperation between conservationists and capitalists in preserving nature as green infrastructure. Following are excerpts from a conversation we had on Monday about his book and the talk he plans to give, which is free and open to the public, and also will be carried live on Minnesota Public Radio.

MinnPost: What are the main points of the book that you plan to stress in your talk on Thursday, since you can't cover them all?

Mark Tercek: I'm going to try to get people to understand this concept of investing in nature.  I'm going to argue that, if you take a careful look at opportunities to invest in nature, what you learn is that in many cases it's a very good deal. It pays enormous financial returns in addition to the environmental benefits.

Secondly, I hope to help people understand that environmentalists don't have to be tree-hugging troublemakers and folks who are always finding fault with others.

My respect for the environmental movement is enormous and very sincere. On the other hand, we're winning lots of battles but we're losing the war. All the things we monitor at TNC, notwithstanding all the good work we're doing and that other environmental organizations are doing — everything we want more of, we have less of.

We want more healthy forests and more robust fisheries and more clean water supply and more ecosystems protected from storms and more biodiversity. And all of that is in decline. Those are just facts.

And then there are some things we would like less of — for example, greenhouse gas emissions. Those are setting new records every year.

And when we look ahead, it gets even more challenging, because the world's population is growing but even more significantly the middle class is growing. That's a good thing, because it means people are rising out of poverty, but that middle class will be consuming energy and food and water and space and so the threats to nature will be even greater.

And if that's not enough, we also have to deal with climate change.

So environmentalists somehow have to do better. And I think environmentalists would be smart to be a little bit more humble about their own respective strategies, more respectful of others', because we need more ideas on how to take the movement forward.

MP: Would you agree with Hazel Henderson that a problem in our economy, our business models, is that we regard paying for infrastructure of any kind — whether "green" or built — as a cost instead of an investment?

MT: Yes, and I think it's appropriate to observe that the challenges we face in green infrastructure we also face in gray infrastructure. We have an infrastructure crisis.

I try to make this argument when I visit with the Department of Interior, or Agriculture. For example, the farm bill includes some really good conservation programs, but those programs are debated as spending programs.

A good example would be the programs in the farm bill to restore floodplains up and down the Mississippi River. It's characterized as spending, but I think that's exactly wrong.

It's true, you can save a little money in the near term by not making those investments. But then when we have our next flood event you'll spend even more money than you briefly saved to deal with the aftermath of the flood.

So, yes, you put money down, that oughta be capitalized on your balance sheet and not viewed as an expense, and it should be measured by the stream of returns it produces. If we did that in the green infrastructure arena, we would be making a lot more investments.

MP: There are long-term investments you're describing, and yet we seem to be in an era of obsession with next quarter's numbers above all.

MT: Yeah, I don't quite agree with that. I know it is conventional wisdom that all business cares about is the next quarter. Now, for sure they do care about the next quarter, and they should. Part of what makes business great is that accountability quarter to quarter.

Take a company like Amazon. It has enormous market value, right? Enormous wealth has been created. And they are continually investing in the future. The great American companies are like that. Apple would be another. Google has enormous cash flow from the search business, but are they passing it all along to shareholders? No. They're investing in breakthroughs for the future.

The great businesses, I think, still take the long view. Maybe that sounds naive on my part, but I think the facts buttress it pretty well.

MP: I studied your chapter on TNC's controversial partnership with Dow Chemical, looking for the fruits yielded since it began in 2011, without really seeing any — did I miss them?

MT: It's still slightly early. That's the thing about this work, it doesn't happen overnight. But there are some very encouraging things under way.

For example, there are plans to expand that plant at Freeport (Texas), and if they make those expansions the regs will require Dow to make additional investments for scrubbers for local pollution issues.

And so our science team observed that those issues could be dealt with by planting of new trees — huge amounts of trees — up and down the Brazos River. And because of the wind patterns some of those trees could be planted in Houston, a city with pollution issues, heat issues, and it's a city that's short of trees.

So, this is not a done deal yet, but it appears reasonably likely that Dow will have a choice ahead of them that rather than invest in scrubbers, they can invest in a reforestation project with local community benefits, watershed benefits and urban benefits — and save money. That would be a pretty cool breakthrough, right?

So this is an interesting project but a little hard for people to understand. They say to me, Mark, why would you work with a company like Dow? They're a company with a bad environmental track record, or a very big environmental footprint.

I say, I know — that's one reason they're an attractive company to work with, because if we can change the way they do business the impact will be very big.

MP: Actually, it's never been a question for me why you guys would want to work with Dow— what I wonder is, if Dow is serious, what do they need you for? Why can't they just assign their own engineers to do this?

MT: Because we know things they don't know! I mean, they could do it on their own, I think. They could go hire scientists and do it on their own and in the future I think companies will do that.

At TNC, we don't seek to be a consulting firm. We're not going to be. This is a little different, though, right?

Andrew Liveris, their CEO, deserves a lot of credit. He understood my theoretical arguments for natural capital, he appreciated that they ought to apply to Dow, so he said, let's do this together. Let's roll up our sleeves, do the work, publish everything — good and bad — in peer-reviewed journals, show the world our work, and then if we're right about any of this stuff it should spread like wildfire.

Because that's one good thing about the private sector — they steal good ideas.

MP: I've got to tell you about a passage in the book that made me sad, where you retold the story of the Interface carpet-tile company and its famous effort to do way more than was required to clean up its act. Sad because I first wrote about Interface back in the mid-1990s when the story was new. Are there really no more recent examples for you to cite, of companies notably doing more than the required minimum to be good stewards?

MT: I included that because I wanted to honestly honor the breakthroughs that occurred in the past. It would be wrong to suggest this is all new.

Yes, I think there are breakthroughs today. The beverage sector,  and I talk in the book about Coca-Cola, the soda companies—I know they're very controversial— and the beer companies, they've said oh my goodness, we depend on water supply, we do business everywhere, there are going to be water crises, we better do something about it.

And they've really done great work in understanding with real business precision how you can invest to protect watersheds, and that's really helped conservation organizations like ours to get better at our jobs.

The big ag companies — food is a complicated sector, there's a lot of vilification. But the big food companies have really made a lot of progress that I think is exciting in terms of continually boosting yields and reducing inputs while boosting food supply. Through one breakthrough after another we've been able to get more productivity out of a given footprint.

MP: How has the book been received so far?

MT: It's been pretty encouraging. TNC is sometimes criticized for these things, I'm criticized, by environmentalists who are wary of this approach. But so far so good.

The response seems to be, these are worthy ideas. If we can broaden support for conservation and broaden financial support for conservation, those are good outcomes.

I'm smart enough in the book not to say, this will always work. I'm not pounding the table saying, I'm definitely right. I'm pounding the table saying we should be open to new ideas, and we should be thinking them through in trying them, that's all.

I hope the book doesn't come across as naive. We certainly need great government regulations. We know that there will be bad actors in the business community and we need to be on  the watch for them.

So I try to be realistic about the challenges, but I think the book has an optimistic tone about it. You need, somehow, to be an optimist in this work. It's easy to become discouraged but that doesn't lead to anything. 

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Comments (1)

Land flips

It is written in Nature's Fortune on pg. 6, regarding a 2003 water transfer in San Diego:

… Other aspects of the deal, however, spark public controversy as well as lawsuits among water management agencies in Southern California. First, the farmers in the Imperial Valley buy water at federally subsidized agricultural rates, but sell their surplus to San Diego for far more. This means that this group of farmers can make a profit at taxpayer expense…

There seems to be an obvious parallel between what the above farmers are doing and the Nature Conservancy's common practice of "flipping" land. After a conservation easement is placed on a property, the property owner receives a federal tax deduction, thus a government subsidy. In many cases, the Nature Conservancy (TNC) becomes the owner of theses properties through various means, such as by gift, through grant money, or through an outright purchase. TNC then typically sells or "flips" the land to taxpayers via a government agency, such as the USDA Forest Service or a state forest service or any number of other government agencies. I have yet to find a transaction where TNC did not experience a gain, if not a considerable one, on these transactions. Unlike the farmer though, TNC doesn't incur a tax liability on its gains given its 501 (c) (3) status.

When it comes to "bad actors in the business community," TNC is maybe the one that needs more regulation?