Ejido Verde is financing indigenous Mexicans to plant trees – and plant a stake in the middle class



ImpactAlpha, March 27 – Ejido Verde is delivering its own Green New Deal for hundreds of families in the Mexican state of Michoacán.  

The decade-old company is one part pine-resin supplier, one part mass-reforestation project and one part community lender (ejidos are Mexico’s century-old form of communal land ownership). Ejido Verde is financing the replanting of thousands of hectares of pine trees to produce the resin used in shoe glue, tape, chewing gum and hundreds of other everyday products. The trees also should produce multi-generational wealth for Purhépecha families in the Mexican state of Michoacán, restore degraded landscapes and capture a whole lot of carbon.

“The trees we plant today will create revenue and jobs for the next three generations,” Ejido Verde’s Shaun Paul told ImpactAlpha.

The symbiotic relationship between land and livelihood restoration is at the core of the long-incubated regenerative finance movement. Regeneration, a step-change beyond simple ‘sustainability,’ aims not only to preserve, but to restore and generate new value. Ejido Verde is among a roster of “regenerative” projects showing promise as ways to finance environmental restoration, climate action and improved livelihoods for communities affected by economic and environmental injustices.

San Francisco-based Farmland LP, London’s Althelia Climate Fund and dozens of other funds and funders have adopted the regenerative investment thesis to drive investments in farm and forest lands, organic food production, forestry management and conventional to organic agriculture transition.

Resin economics

Pine resin is the base ingredient for many inks and adhesives. It’s a $10 billion global market. Mexico is the world’s fifth-largest resin producer.

The lands of Michoacán’s indigenous Purhépecha community are home to some of the world’s most productive resin-producing trees. The Pinosa Industry Group, Mexico’s leading pine chemicals company, has worked with the community for almost a century to tap the trees and export the resin. Decades of deforestation have cut roughly two-thirds of Mexico’s production and threatened the livelihoods of thousands of indigenous households. Risks associated with planting on untitled land have stalled reforestation (Ejidos covers about half of Mexico).

Decades of deforestation have cut roughly two-thirds of Mexico’s resin production and threatened the livelihoods of thousands of indigenous households. l Photo credit: Kyle Hilken of Poco a Poco

To turn around the industry and safeguard their supply, Pinosa formed Ejido Verde as a new company.

Paul, an entrepreneur and investor, was approached as a possible funder. An early founder of Root Capital and other forestry and agriculture funds including EcoLogic Development Fund, Reinventure Capital and Bosques Pico Bonito, Paul has worked for decades to fund and grow businesses with indigenous communities in Latin America.

“How can we increase the supply of pine resin?” Pinosa’s team wanted to know. “By planting trees,” Paul told ImpactAlpha. Pinosa recruited Paul to scale Ejido Verde in 2016. The firm has raised about $11 million from Pinosa itself, Mexico’s National Forestry Commission and crowd-lending platform Kiva. It’s raising another $20 million and Paul expects annualized returns to be around 18%, depending on the instrument.

The model works like this: Ejido Verde makes a loan to an entire community. The community assigns land rights and responsibilities to individual families. The loans provide funding for the families to plant the trees. When the trees start producing resin at Year 10, communities repay the loan with 10% of the resin. Elido Verde buys up the other 90% at a fair market price.

“This represents wages that can propel entire families into the middle class.” says Ejido Verde’s Shaun Paul. l Photo credit: Kyle Hilken of Poco a Poco

The back-of-the-envelope math: 800 trees per hectare produce about 3200 kilos of resin per year. Paul says he recommends about five hectares per family. At today’s resin price of about $1 per kilo, that’s about $16,000 per year per family – or a typical wage for a white-collar worker in Mexico City, Lisbon or Madrid.

“This represents wages that can propel entire families into the middle class.” says Paul, who moved his family to Morelia a few years ago. “That’s what I’m offering the rural people of Michoacán.”

Ejido Verde plans to have financed about 4,000 hectares by the end of 2019 and 12,000 by 2022. Over 30 years, says Paul, Mexico’s pine resin global market share should grow from 2% to 5% and about $2 billion in wealth should be created for Michoacán’s indigenous communities. The effort, he says, has the potential to capture about 6 million tons of carbon, at least offsetting all of the carbon for the city of Morelia.

Financing regeneration

Funds and funders are adopting the “regenerative” brand. At its best, it connotes a new approach that adds back more value than it extracts. Think soil carbon, rebounding fisheries and river bed restoration.

Blackdirt Capital, for example, buys and develops undervalued agricultural land in low-income areas in Eastern U.S. Moringa Partnership, a $96 million private equity fund, backs large-scale agroforestry projects in Latin America and Sub-Saharan Africa that generate economic, as well as environmental and social, benefits. Armonia, a family office, has seeded and invested in a number of regenerative funds and projects since 2007.

The trees also should produce multi-generational wealth for Purhépecha families in the Mexican state of Michoacán, restore degraded landscapes and capture a whole lot of carbon. l Photo credit: Kyle Hilken of Poco a Poco

GatherLabs, the new venture from the team that founded the Social Capital Markets conference, rounded up 44 such funds, fund managers, family offices and foundations targeting agriculture, ranching, forestry, and related food systems (GatherLab is hosting its first conference, “Transform: Climate, Communities, and Capital conference,” in May in San Francisco).

“We need to be working toward regeneration, not just maintaining the status quo,” says Kevin Jones, who founded the annual SOCAP conference in 2008 before selling it in 2017.

“In terms of wider consciousness, regenerative agriculture and forestry investments are a relatively new category,” he says. “But for many fund managers and investors – particularly those focused on ‘impact’ and mission-driven investing – interest in regenerative approaches has been significant for years.”


About the photos. Visual storytelling firm Poco a Poco spent nearly a month working with the Ejido Verde staff and living with indigenous communities to understand the relationship between pine resin and the survival of an ecosystem and entire culture. Poco a Poco produced original photo and video content to share the stories of Michoacán’s communities, forests, and resin refineries on behalf of Ejido Verde.

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