The business model

The Business mechanism behind the initiative

The business model put forward by the Floresta initiative is based on the initial POC business model, validated by KPMG, with a widened vision and further incorporation of the reforestation scope. The ABC of the initiative is rather simple; create a high yield plantation that will serve as the financial engine, able to provide the required return for the investors, all the while financing the adjacent reforestation initiatives.

With Floresta, investors meet both significant financial and environmental returns. To ensure success in all aspects, the project utilizes a comprehensive economic, ecological and social approach. Employing innovative agro-tech practices along with best management of the natural regeneration of the forest will contribute to the profitability over large scales of operations.

Floresta takes a large piece of land and within it creates a mix of high-end rapid growing Teak wood (approx. 3,5%) and assisted natural regeneration of the existing degraded forest (approx. 90%). Alongside the commercial forest and the reforestation, a portion of the budget will be allocated towards creating a community forest. Local communities will be allocated lands for agro-development that is in line with the project’s concept, growing fast growing forestry species such a eucalyptus or acacia. The returns from the community forest will go back to the community allowing for repeating cycles, further development, and eventually the mitigation of illegal logging.

The modus operandi

How is it all done

In order to achieve the ambitious goal of setting up the world’s first large scale viable reforestation business model, it is essential to bring together both private and public sector. A tight collaboration with the Cambodian royal government has been put in place in the past years and is at the heart of our initiative. The steps to follow are defined as such:

  • The project will work with Ministry of Environment to locate and secure a large piece of land.
  • A master plan will divide the land between agro-forestry and reforestation.
  • The funds raised for the project will be used to develop both portions of the project.
  • The investors will see solid returns from the rapid growth of Teak after an extremely short cycle of 7-8 years.
  • The investment budget will contain all the funds needed for the reforestation, which will be a combination of both active replanting of endemic species and natural regeneration of the forest through monitoring and conservation activities.

Value Proposition

The initiative in figures

  • Total Area of the project:
    17,000 ha
  • Project's revolving cycle
    8 years
  • Teak Wood plantation:
    700 ha
  • Reforested area:
    15,000 ha
  • Community forest:
    1,300 ha
  • Projected return (IRR)
Upon success, the initiative can be almost indefinitely reconducted, guarantying its sustainability.