Those who have always wanted to own a forest can now have their very own part of the Amazon rainforest, albeit in the form of an NFT, thanks to an initiative by Moss, a Brazilian climatech that offers environmental solutions and the trade of carbon credits in blockchain.
Whoever buys Moss’ Amazon NFT becomes the owner of one hectare - about the size of a soccer field - of rainforest, and in this way Moss hopes to help conserve the world’s largest rainforest, as the owner of the land commits to providing a 30-year conservation service of the area.
The cost of that conservation is factored into the sale price of the NFT.
But why sell a piece of the Amazon for conservation? According to Luis Felipe Adaime, CEO and founder of Moss, the main reason for the illegal deforestation of the Amazon is the use of land for agriculture. “They cut down the deforest because there is no money. In the Amazon forested land is very cheap, and a perverse incentive for people to buy the area with forest is created,” Adaime says.
According to Adaime, a hectare (2.47 acres) in the Amazon can cost from $100 to $1,000, depending on the area. “If you bought it for $1,000, you chop or burn down the trees and usually resell it for about $1,500 per hectare. They pay more for the deforested area because you can start planting straight away. As long as the standing forest is cheaper than the deforested area, they’re going to burn the whole Amazon”.
To make the standing forest worth more than the deforested area, Moss works with the development of conservation projects that generate carbon. He says that an area worth $1,000 per hectare generates about 10 carbon credits per year. If the credit is worth $15, the profit from the standing forest isS$150: “If the person buys this area and conserves it, he or she will earn a 15% return in dollars each year for 30 years. This return is higher than they would get if they destroyed the forest”, he explains.
With good returns for investors, Moss is betting that more people will buy land in the Amazon to conserve it, and this will raise its price, which will cause the remuneration of 15% a year to fall, since it will be divided by a larger denominator. So land will become more expensive.
“If the return is around 7%, for example, the value of the land will double. If the value of forested land doubles from $1,000 to $2,000, nobody will buy land at $2,000 to destroy the forest and resell. So we will stop deforestation.”
But it’s not as if before Moss came along it wasn’t possible to buy land in the Amazon for conservation. But Moss’ idea is to make it easier for anyone to buy the land online.
A QuintoAndar for a Plot of the Amazon Rainforest
Just as Brazilian proptech QuintoAndar does with apartments, Moss wants to make it easier for buyers to buy land in the rainforest, so that they don’t have to worry about verifying documentation or illegal occupation.
Using an algorithm that has consolidated all the databases of the 25 million rural properties in Brazil, Moss runs a program that reveals whether the land has its documents in order, and with the proper environmental and land deeds.
But how does buying an Amazon rainforest property work? The company intermediates the investor’s purchase. At the notary’s office, the startup buys the land and puts the forest in Moss’ name as a subsidiary. Then it digitizes the registration data and environmental certificates in blockchain. Then, anyone can buy a piece of the Amazon rainforest to “call their own. On one condition: the commitment not to destroy the forest and to conserve the area”.
So, in fact, before the Brazilian authorities, the owner of the land in the Amazon is Moss. The business model functions as a real estate fund that does not charge a commission. But if the land is invaded by a holder in the NFT, it is up to Moss to take legal action since, legally, the land belongs to the company.
Through Moss’ website it is possible to buy a piece of the Amazon rainforest with a credit card. Or even with a Bitcoin wallet. According to Adaime, the value of the land sold locally on the secondary market is already $8,000 per hectare, which shows that the strategy of valuing the land with the standing forest has worked out well, with the land’s value appreciating four-fold.
“We took the economic rationale away from those who cause the deforestation,” he explains.
Moss has entered into a partnership with a U.S.-based satellite image monitoring company that provides updated images of those tracts of forest every six days. In comparison, Google updates its satellite images every six months.
“We are able to predict or measure the risk of deforestation and mitigate it, check for risks of trespassers approaching, and take action before the land is invaded and deforested. This involves fencing and accessing authorities,” Adaime says.
For the 30-year conservation scheme, Moss charges 20% of the NFT price to a blockchain fund for land protection. The idea is that the land owner leaves the conservation to Moss while they hold the asset.
“The data is public and transparent for everyone to see this fund that we are setting up,” Adaime says.
Moss has already sold two series of NFTs - totaling 100 hectares - to retail investors. Together, these areas are worth $225,000 (1.1 million reais). The company will launch another series and still has 350 hectares available for sale, with a future purchase and sale commitment for another 10,000 hectares.
“Our idea is to sell the 10,000 hectares, which would give a sales value of more or less $30 million,” Adaime says.
Even though it is possible to use the land as a savings fund or an investment with the added value of forest conservation, according to Adaime, for companies, having a piece of the Amazon is a more playful way of explaining environmental social governance measures.
“For a lot of companies that have had difficulty in explaining their carbon offset measures, carbon footprint, inventory, it’s much easier to say that sustainability actions are made through the purchases of Amazonian hectares. It’s a much more tangible business.”
Translated from the Portuguese by Adam Critchley