Last Monday, our series of meetings at the Universidad de San Martín de Porres ended with a presentation by Kurt Holle, CEO of Rainforest Expeditions, an ecotourism company. This venture was created in 1996 in the headwaters of the Amazon in Tambopata, Madre de Dios, Peru. The core of this business is to profit from the forest in such a way as to also conserve it. Holle and his partner created a partnership with the Ese’eja indigenous community of Infierno. During our meeting, this charismatic Peruvian entrepreneur explained how he started the lodge, how the contract with the native community of the area was created, and some of the future plans for Rainforest Expeditions. He emphasized frankly that his business model is not a matter of promoting social interests, but is focused more on making profit as a business. After the meeting, I wondered whether or not Rainforest Expeditions qualifies as a social enterprise.
From a classic perspective, business contributes to society by making a profit, which supports employment, wages, purchases, investments, and taxes. The theory behind this assumes that to be successful, a business must create distinctive value that meets the needs of a chosen set of customers. After listening to Holle’s presentation, I understand that he has this theory in mind. He wanted to create an atmosphere that would give visitors meaningful experiences in comfortable eco-lodges in the Amazon and also make a profit from it. Rainforest Expeditions understands that the urban populations have been increasing, in turn increasing the value of green areas. He pointed out in the meeting that, “when a valuable good is scarce, customers are willing to pay more for it.” Therefore, visitors of the conservation area are happy to pay to see macaws, monkeys, and trees. Furthermore, the more that people actually living in forest areas invest in conservation, the better the product of the company will be (as Kurt explained, their “product” is a thriving forest ecosystem).
Private companies maximize profit, and do not share value as social enterprises do. Shared value refers to expanding the total pool of economic and social values. In the particular case of Rainforest Expeditions, the company was unable to build a lodge on land owned by the Ese’eja community, and furthermore the animals (macaws and monkeys), as well as ancient trees were used by indigenous people and ribereño settlers in ways not compatible with tourism. They offered a contract to the families in The community of Infierno, in which they co-managed and received 60% of the profits from Posada Amazonas. The contract established a 20-year joint venture, changing the living standard of all these families and the area where it is located. They shared value with the community.
They also generated a commitment to the conservation of the forests, including such difficult practices as the enforcement of no-hunting zones. More importantly, the forest reserves around the eco-lodges act as shields for the state-protected areas further east, as well as nuclei from which other similar conservations efforts spread. This process involved the innovative use and combination of resources to pursue the opportunity to catalyze social change toward taking care of the environment.
Overall, I strongly believe that Holle’s business was originally designed as a private company, but also behaves as a social enterprise. Proof of this is that it has been recognized with multiple awards as a model for protecting the rainforest while providing jobs for indigenous people who would otherwise be at risk to the swelling ranks of illegal gold miners or loggers tearing up the jungle to strike it rich. The community is knowledgeable about the importance of taking care of the environment. Rainforest Expeditions is an excellent example of how social benefits can result from an “invisible hand” and not just from the original intent of the business. This type of approach should be incentivized by the government because it is helping to sustain growth. I strongly recommend you to stop by and support the eco-lodge.
– Maria Larenas