What would be the likely alternative use of the property?

Cattle ranching is one of the primary commercial alternatives to conservation.

Cattle grazing plots already extend to the fringes of the property on the west. The soil is not fertile enough for soy farming, which explains the comparatively low land price.

What actually happens on project site to make it a REDD+ project?

First and foremost the goal of the project is

to protect it from ownership by agricultural players

who would clear the land and use it for cattle grazing. Beyond that several active conservation measures are carried out including the building of signs and selective fencing to protect from illegal logging, fire protection through the construction of protective trenches, biodiversity monitoring through trap cameras, ecological studies with partner universities, ecotourism with a dedicated visitor center.

If you stop deforestation on that particular property would it not just go elsewhere?

This phenomenon is called "leakage" and is assessed as part of the project methodology under the project risk buffers.

Here, it is important to note that usage decisions are made at the property level to maximize value. Paraguay is not experiencing increased national demand for beef that needs to be accommodated for.

What happens after the 13-year project period?

The project manager, Walden, will make a decision toward the end of the 13-year investment period regarding whether to pursue either:

I.) a perpetual conservation agreement, in which the property will be placed in a trust and become the property of the Paraguayan state, or II.) the sale of the property with specific usage restrictions.

In both scenarios, the long-term integrity of the project will be maintained. The utilization of the property after 30 years will be contingent upon the chosen exit strategy. Under option I.), the property will be designated as a national reserve/national park and managed by the government. Under option II.), the property will remain privately owned and could be utilized for personal recreation or sustainable forestry (the annual growth is logged each year).

What is the track record of operating partners?

Walden maintains a remarkably close relationship with both the local operator and carbon partner teams.

Local operator: The local operator has reforested several hundreds of hectares with Pongamia trees and partners with international corporations including Oil Majors, who are offsetting their Pongamia nut production for biofuel. The company has been actively engaged in the Chaco region for over a decade, making it one of the earliest investors in the area. In 2023, the group will initiate a reforestation project spanning several thousand hectares for a French multinational corporation.

Carbon partner: The team behind Walden's carbon partner recently emerged from a reputable global carbon project development entity. These individuals boast a collective experience of more than two decades in the carbon market, having worked extensively on REDD+, IFM, and ARR project categories. Their expertise ranks them among the most accomplished technical consultants within the industry, having contributed to over 20 projects across more than 10 countries.

Importantly, these partners together have successfully implemented the most ambitious REDD+ project in Paraguay to date.

How long does it take to register the project with Verra?

We can anticipate registration of the project by the end of the year 2024.

On the other hand, considering the current project's presence in the region and our relationship with the VVB body, we aim to mitigate or, ideally, eliminate any unexpected delays on the Verra side.

How is the carbon assessment conducted and the amount of credits calculated?

We utilize the VM0007 methodology for REDD+ (Reducing Emissions from Deforestation and Forest Degradation) to assess avoided planned deforestation.

This methodology incorporates the VCS (Verified Carbon Standard) and CCBS (Climate, Community & Biodiversity Standards) from Verra. Our carbon calculation model is designed in accordance with the UN Clean Development Mechanism.

Why are credits generated from deforestation prevention more favorable than credits for reforestation?

Avoided deforestation holds the greatest potential for cost-effective emission reduction among nature-based solutions.

The reforestation of native forests is a costly and time-consuming endeavor. The process of carbon sequestration is gradual, particularly for native species that have slow growth rates. Ultimately, reforested areas cannot attain the same level of biodiversity as primary native forests.

Both avoiding deforestation and reforesting are important, but using the Climate Change Bathtub Analogy: In order to stop a bathtub from overflowing, you can start by pulling the plug (reforestation / emission removal), but it is more important to first turn off the tap (avoided deforestation / avoiding emissions).

What changes are anticipated in the regulation of carbon credits and verification standards, and how will these changes impact the generation of credits within Project Platonia?

Paraguay regulations: Paraguay is currently in the process of passing a 'Carbon Law'. Once the law is passed, Paraguay is poised to become one of the leaders in effectively regulating and advancing the treatment of carbon credits. This legislation aims to establish a national carbon credit registry to monitor the international transfer of carbon credits. In line with this, Paraguay will be obligated to reserve a portion of these carbon units to fulfill its own commitments under the Paris Agreement. As a result, the marketability and value of carbon credits produced in Paraguay are expected to witness a significant increase.

Verification standards: Standards globally are working to tighten their methodologies and to get rid of legacy projects and project methodologies with low claims to additionality and overestimated carbon figures. This is a favorable development for Project Platonia credits for two main reasons: firstly, it reduces the overall supply of credits available in circulation; secondly, it enhances the value of credits generated by new projects that have stricter methodologies and more accurate carbon accounting.

How is the Walden Platonia Green Bond secured?

The bond is issued in accordance with the Luxembourg Securitization Law and are supported by an independent project verification board (SUstainalytics).

The Walden Platonia Green Bond is backed by a robust security framework.

Investors hold the primary position in the waterfall payment structure until the bond reaches maturity. The security of the project is reinforced by a pledge of 100% ownership of the entity that owns Project Platonia. This entity holds complete rights over the underlying land and carbon credits associated with the project. Consequently, in a waterfall event, investors will be entitled to an equitable share relative to their invested amount of both the underlying land and the carbon credits. This allocation enables investors to utilize or trade these assets in the market without incurring any losses, particularly considering the appreciating value of the land and the upward trajectory of carbon prices.

What are the most significant risk factors?

Mitigating property-related risks: Paraguay maintains a strongly pro-business stance and has enjoyed political stability for several decades. The country welcomes foreign investment and imposes no restrictions on foreign ownership.

Mitigating risks related to carbon rights: When considering the likelihood, the most substantial risks are as follows: I) The potential for a lower-than-expected number of carbon credits, and II) Credits not holding the anticipated value outlined in the business plan. Let's address both of these concerns individually:

The most significant losses would arise in the event of property expropriation or the loss of carbon rights.

However, both of these scenarios are highly unlikely, given the current political and economic climate in Paraguay, as detailed in this FAQ.

I) The risk associated with the lower generation of credits because the standing biomass is lower than anticipated. The risk is low as on ground biomass assessments have been carried out in close proximity to the property previously and would be conducted on the property prior the lease. The operating partner also has a close relationship with the environmental consultants, and they have offered their view on the property which has gone into the existing carbon assumptions.

I) As for the concern regarding the value of credits, there are numerous regulatory changes underway that are expected to support carbon credit prices.