The Field Guide to Investing in a Resilient Economy: Recasting the Story of our Financial System

Capital Institute inaugurates a new Talkback series with a story of investing in ranchland for the environment and profit.

Capital_instituteBy Susan Arterian Chang

Our global economy now operates in a precarious state of social and ecological fragility, reflected in a rising wealth gap and growing ecological “overshoot” as we use up the earth’s finite resources and stress the ecosystem beyond its power to regenerate itself.  

At Capital Institute we believe it is critical that we begin channeling financial flows into projects that go beyond doing less harm to people and the planet—instead, we need to identify, and invest in, projects that restore the earth’s and society’s resiliency.  To that end we look to identify investment models that share the remarkable adaptive and healing qualities of natural systems.

In her classic paper, “Leverage Points, Places to Intervene in a System, Donella Meadows explained that if you want to change a system one of the most important places to intervene is through the narrative within which the system operates.

Capital Institute’s goal with the Field Guide to Investing in a Resilient Economy series is to utilize the power of narrative to recast the story of our financial system, as we chronicle the progress of transformative, scalable, real-world investment models that support the creation of a more just and resilient economy.

Grasslands, LLC: A Story About Holistic Management

fieldYou could say that Grasslands LLC, the subject of our first Field Guide story, is about harnessing the power of the photosynthetic process and converting it into financial, human, and ecological capital.

Grasslands, currently with ranch properties in South Dakota and Montana, operates under the holistic management principals crafted by Allan Savory, a Zimbabwean biologist and rancher.

Through close observation of nature, Savory discovered that where wild grazing animals roamed free, the soil was remarkably porous and nutrient rich, and the plant life unusually diverse. He has dedicated his life to replicating these earth-healing habits of wild animals with domestic livestock.

A handful of ranches like Grasslands— based in North and South America, Australia, New Zealand, and Africa—are essentially pilot projects for some variant of the holistic management practices that Savory promotes through the Albuquerque-based Savory Institute and its sister organization, the Africa Centre for Holistic Management in Victoria Falls, Zimbabwe.

These projects have game-changing land reclamation and carbon sequestration potential, since nearly half of the earth’s land mass is grasslands and conventional livestock management and human population expansion has degraded much of it.

Grazing For Ecology and Profit

Grasslands purchases underperforming ranches whose owners have failed to manage the properties to their full potential using conventional grazing practices.  “The more ecologically healthy we can make these ranches using holistic practices the more livestock we can run on them,” says Grasslands CEO Jim Howell.

“We can typically double the stocking rate and as our revenue increases, the value of our property appreciates.”

The investors in Grasslands, who are in for the long haul, believe that in time they will be able to achieve highly competitive financial returns based on this model.

John Fullerton, President and Founder of the Capital Institute, and Larry Lunt, owner of the family office Armonia are currently Grasslands’ principal investors, along with the Savory Institute.  A native of Belgium where investors typically operate with a long-term perspective, Lunt was attracted to the project because he could actively manage it and because he viewed it as holding the promise of significant positive and environmental outcomes.

True Wealth Creation

Fullerton calls his investment in Grasslands a  “quintessential biomimicry play.”

cowsIt’s all about true wealth creation, he maintains, building biodiversity, soil fertility, sequestering carbon, and generating financial returns.  What’s more, he believes that if the market begins to put a value on ecosystem services as he predicts, it will further enhance Grasslands’ expected financial returns.

Lunt, Fullerton, the Savory Institute, and the Grasslands team of managers and ranchers are confident that they will soon have a compelling story to tell a larger group of investors.  Grasslands will soon close on one more ranch property that will bring the total number of acreages under management to 110,000.

The team anticipates a day when their competitive advantage erodes as more ranchers adopt holistic grazing practices.

“In a sense you might say we have an ‘unfair’ advantage because we look at the land through different financial eyes,” says Howell. “But we look forward to that day when we no longer have that advantage because it means our model will be having an impact.”

Ultimately, Grasslands—like all the projects we chronicle in The Field Guide to Investing in a Resilient Economy—is about linking human economic activity more closely with stewardship of the earth.

Enhanced human well-being tends to be the result. Says Grasslands rancher Ron Goddard:

“The Grasslands Project seems to me an excellent way to show our neighbors (and their kids) what we do and that ranching by holistic management actually can produce not only ‘a pleasant life in the country,’ as Allan Nation puts it, but can also produce the wherewithal to enjoy other things that life has to offer beside hard work outdoors.”

Download the Grasslands’ Field Guide study.

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