Earlier this year, a new financial instrument designed to monetize the ecological value of natural resources sparked fierce opposition across the United States. So-called “Natural Asset Companies” (NACs) were proposed to transform publicly-held forests, wetlands, and farmlands into financial assets that can be traded on public markets.
The idea is driven by the Intrinsic Exchange Group (IEG), a private company that developed the model in partnership with the New York Stock Exchange (NYSE). Under the IEG framework, “natural assets” can be monetized to attract investment, while promoting sustainable management and conservation.
The NAC structure also allows NACs to represent the “ecosystem services” of the land, which may include pollination, carbon sequestration by plants and trees, and other natural processes. According to NYSE filings with the Securities and Exchange Commission, the idea is to align financial incentives with environmental conservation by allowing natural resources to generate revenue for private investors, similar to other assets like real estate or commodities.
A proposed rule by the SEC to accommodate the IEG operation was withdrawn in January after public outcry, including by members of Congress and various state officials. They argued that the rule would have allowed corporations to control vast tracts of land, potentially including national parks and forests, and dictate how those lands are used.
The rule would also have allowed foreign interests to own U.S. natural resources, including sovereign wealth funds, a particular concern of those who opposed the idea. They point to the fact that IEG was co-founded by Eduardo Cisneros of the Cisneros Corporation, a prominent Venezuelan business. He also co-founded a private equity firm focused on acquiring assets in Venezuela during its economic recovery.
Opposition to NACs has been particularly strong in western states where the federal government owns a significant portion of the land that could be placed into NACs.
Wyoming Senator Cynthia Lummis has been a vocal critic, arguing that NACs would empower “environmental activists” and jeopardize western industries and lifestyles. Similarly, Montana Attorney General Austin Knudsen has expressed concern about the lack of transparency surrounding the organizations advocating for NACs, comparing their response to public scrutiny to how “cockroaches scurry.”
In Utah, a bill was signed into law prohibiting NACs from purchasing or leasing the state’s public lands, and from owning or managing conservation leases or ecosystem services on public land. In Nebraska, a bill has been introduced that would prohibit the state and its subdivisions from conducting any business with NACs, including the sale or lease of state-owned land.
The SEC's decision to withdraw the proposed rule is seen as a victory by opponents of NACs. Randall Brink, a contributing author for RVtravel, hailed the decision as a win for outdoor enthusiasts, suggesting that NACs would have restricted access to public lands for activities such as hiking, camping, and RVing.
However, many believe the fight against NACs is not over. Utah State Treasurer Marlo Oaks has warned there is a "global push to use the land to address climate change and ultimately to change our economic system,” and that NACs are just one tool being used to achieve the goal.
Critics of NACs raise several additional concerns. The possibility of foreign entities, including China, acquiring control of American land through NACs has been a leading point of contention. Concerns have also been raised that NACs could restrict traditional economic activities such as farming, ranching, mining, and logging on the lands they manage.
In addition, opponents argue that the organizations behind NACs have not been transparent about their motives, and that there is a lack of accountability for how the companies would operate. The opponents claim that the complex systems used to value natural assets acquired by NACs may lead to undervaluation of resources, benefiting investors at the expense of local communities.
Under any scenario, critics of NACs say the concept conflicts with existing laws like the Federal Land Policy and Management Act, which mandate multiple-use and sustained economic yield of public lands.
