I recently visited the community of Ixtpal de Juarez, an indigenous community in the Sierra Norte of Oaxaca, Mexico. The 19,000 hectares of forest that the community manages generates almost $2 million/year in revenue and more employment than the community can fill.

The heart of this operation is a forestry management unit that uses sustainable practices on the 3600 hectares. This timberland supplies their saw mill enough logs to produce 25,000 cubic meters of sawn lumber per year. While the lumber could be sold on the market for ~$1/ board foot, it is instead transformed into furniture that sells for the equivalent of $3/board foot.

The project started almost 25 years ago when the community took control of the timber concession previously managed by a private timber company. Supported with financial and technical assistance, it started sawing its own timber, which increased the community’s income. Their human capital also increased as the community evolved its political organization into a business organization. Leaders are given three year terms in specific oversight roles, and are shadowed by youths undertaking a kind of apprenticeship.

Key to the community’s success is their accounting transparency. All business units must report monthly to the assembly, and there is an audit committee that double checks the numbers the business chiefs submit.

Linked to good accounting is the long term planning that occurs. Usually, when leadership changes the old investments and business plans are thrown out and the new management charts a different course. Ixtpal solved this problem by having the planning decisions separated or checked by a separate committee charged with evaluating new proposals. In this way, there is better continuation and execution of plans.

Finally, there are significant requirements for the comuneros, or the shareholders of the community business. If there is a fire, they all drop what they are doing and go to fight it. If the nursery needs people to transfer seedlings, a work gang is organized. Monthly assemblies are required. A comunero’s participation in the profits, ability to get a loan from the community bank, and other benefits of being a “shareholder” are based on their participation. 100% involvement is not expected, but they mentioned participation levels of 70-80% to be considered a comunero in good standing.

How does REDD fit into this? One of the reasons for success is significant technical assistance during the first 10 years and access to cheap or free capital. Technical assistance isn’t free nor is the expensive saw in the sawmill. Cashflows from a REDD project on community land could be used to finance these requirements.

Planting Empowerment provides both of these two important pieces to the community of Arimae. We are developing other income generating activities with them such as a tree nursery, biochar operation, and cacao farm, but they will require more capital in the future to expand and take advantage of market opportunities. Currently, we use private capital from the “North” to fill the capital void, but this limits the economic benefit to the community by reducing their participation in the generated profits. If REDD cashflows become a reality, Arimae could use them to increase their profitability from their activities. Or better yest, make them 100% owners.

Of course, all of this must be executed methodically, with a focus on developing Arimae's human capital capacities and maintaining the community's social fabric.