Achieving Vast Restoration: Incentivizing Grassland Regeneration in Eastern Montana

Abstract

This thesis examines the potential for federal, state and local government environmental incentives to be leveraged by for-profit impact investors pursuing grassland restoration. Nearly 20% of the continental United States historically consists of grasslands (roughly 1.5 million square kilometers). Today, some 96% of this ecosystem has been destroyed due to agriculture and land management practices (Claassen et al., 2011). Restoring the ecosystem services of grasslands, which are benefits received by humans from the Earth’s natural processes, has the potential to address many important challenges facing modern societies, including erosion of topsoil, climate change, and even food security, while also providing an attractive opportunity for private investment (MEA, 2005). By mimicking the herd and grazing behaviors of native species, strategically managed livestock can play a regenerative role in the health of this ecosystem. This approach to land management, called Holistic Planned Grazing (HPG), has resulted in positive environmental returns in grassland ecosystem types the world over (Howell, 2008). My primary research objective is to identify and understand the current direct and indirect financial incentives available to for-profit grassland restoration investments from U.S. government entities based on ecosystem services considerations, such as water purification or the carbon sequestration capacity provided by a landscape. Subsequently, I demonstrate how these opportunities can be implemented on a specific property, the Antelope Springs Ranch near Cohagen, Montana, which is being managed under HPG by the for-profit company, Grasslands LLC. My research questions involve assessing the potential for specific environmental incentives to generate profits, and also identifying how new government incentive programs can be created to achieve greater ecological benefits. The result of these efforts is a thesis and a report to Grasslands LLC and their investors with determinations as to the optimal utilization of existing government incentives, as well as recommendations to policy-makers interested to provide incentives to private investment for the restoration of the nation’s natural capital. I hypothesize that by leveraging government incentives, impact investments intended to restore grasslands can enhance financial returns while achieving the desired environmental benefits in the United States. In this study I conduct a financial cost-benefit analysis of all government incentive programs that are intended to achieve ecological conservation and restoration that can be applied to the Antelope Springs Ranch in Garfield County, Montana. Additionally, I conducted interviews with representatives from relevant government offices and other experts in the field to understand how these opportunities can be actualized. I use a financial cost-benefit analysis to assess the net present value (NPV) of government environmental incentive programs to determine if pursuing these incentives is financially prudent. I then use the results of this cost-benefit analysis to assess how existing governmental programs can be use by impact investors, and to identify where government incentives can be improved or created to support private investment into ecosystem regeneration.