Natural Capital Investing: The Multi-Revenue Model

Aurora Sustainable Lands is one of the ten largest private landowners in the United States, with roughly 1.65 million acres across fifteen states. It also harvests its forests at a deliberate loss. Aurora logs at levels that would not cover its operating costs on their own. The business works because the trees left standing earn carbon revenue, which Aurora sells as improved-forest-management credits to buyers including Microsoft and TotalEnergies.

The company has flipped the usual order of a timberland investment. A conventional timber fund logs for profit and treats any carbon income as a bonus. Aurora runs it the other way around: carbon pays the bills, and timber is the backstop. That choice shapes how the land is managed, how long the investment is held, and which investors are willing to fund it. As one Aurora executive puts it, harvesting below commercial rates is what makes the carbon credits credible, because no purely timber-driven owner would leave that much wood standing.

Aurora is one example of the central finding in Gaining Ground: State of Private Investment in Nature 2026, the new ten-year benchmark from Forest Trends and The Nature Conservancy. The topline is striking on its own: private capital committed to nature grew roughly fivefold over the decade, from $2.8 billion deployed in 2016 to more than $14 billion in 2025, and at least $61.4 billion across the full period. But the more useful signal is in how those returns are now built. The report finds that 54 percent of tracked deals combine several income streams at once, pairing commodity production with some mix of carbon credits, payments for ecosystem services, conservation easements, recreational leases, or renewable energy. Combining several sources of income, once a niche tactic, is becoming the standard way to build a nature deal.

 

Why one crop stopped paying

 

Revenue stacking answers a practical problem. For most of the past four decades, US timberland investment ran on one idea: buy industrial forestland, manage it for timber, and return capital at the end of a fund's life. Early on, that produced returns in the mid-teens. As more capital crowded in and timber prices softened, those returns fell to 4 to 6 percent, the report finds.

Relying on a single commodity is also volatile, and volatility is exactly what the institutions now entering the sector want to avoid. Sustainable agriculture and forestry lead deployment mainly because they are familiar asset classes that hold up against macroeconomic swings; ecological ambition is secondary. As pensions, insurers, and sovereign funds move in at scale, they want income they can underwrite and downside they can model. Combining revenue streams gives them both: when one commodity or credit market falls, another can carry the return. For smaller managers, the report notes, a multi-stream model can be the difference between a fund that closes and one that fails.

Demand backs the timber side. FAO's Global Forest Sector Outlook 2050 projects that global consumption of primary processed wood products will rise 37 percent by 2050 under business-as-usual. A forest that can sell into a growing timber market and a carbon market at once is steadier than one exposed to either alone.

 

How much each sector stacks

 

The picture is uneven across sectors, and how much a category combines revenue tracks how easy its non-commodity income is to sell and verify. In the report's transaction data, the sectors line up on a clear gradient, from those built entirely on stacked income to those that still lean on a single crop:

• Mixed landscape portfolios: every deal stacks. These funds hold working farmland, timber, restoration, and conservation on one landscape, so combining income is the whole premise. The category is still small (28 deals, about 1.5 percent of tracked capital) but moving fast, with 71 percent of its deals announced between 2021 and 2025.
• Sustainable forestry: 69 percent. Most forestry deals now combine streams, usually carbon paired with timber (47 percent), followed by sustainability-certification premiums (43 percent). The pace is the real story: forestry deals adding carbon to timber rose from 20 percent in 2021 to more than 50 percent in 2024 and 2025.
• Nature-based climate solutions: 54 percent. Just over half earn something beyond carbon; the rest rely on carbon credits alone.
• Sustainable agriculture: 35 percent. The largest category by capital is the most concentrated. Nearly two-thirds of deals rely on crops alone, with certifications and carbon acting as premiums on the core harvest.

The logic holds across the board: where ecosystem-service revenue is easy to contract and verify, managers stack it; where it is not, the commodity still pays the bills. Some of the "natural capital" branding around forestry is marketing, but the shift in how these forests actually earn money is real.

 

Redesigning the fund to fit the land

The bigger shift underneath the numbers is that a few managers are changing how the fund and the deal are built, so the money is patient enough to match the way a forest actually grows.

Aurora shows what that looks like. It is set up as a company rather than a closed-end fund, so investors own equity in the business itself and there is no fixed date by which the land must be sold. That matters in practice. A standard fund has to exit within roughly ten years, which can force a sale while a carbon project still has decades left to run. Aurora can hold indefinitely, make forty-year management decisions, and sign long-dated carbon contracts it can actually honor. Its ten-year deal with Microsoft for 4.8 million improved-forest-management credits, announced in 2025 and among the first issued under the American Carbon Registry's updated forest-management protocol, came with permanent working-forest easements on some of the land. Those easements point to what large buyers increasingly want: proof that the forest will stay standing, not just this year's tonnes of carbon.

Kwaxala, a venture created by the Kwiakah First Nation in British Columbia, takes the idea further and shows how deal design can keep ownership local. Rather than buying land or leaning on philanthropy, the Nation took over a logging license and converted its obligation to cut timber into a right to keep the forest standing, which now earns annual carbon revenue. Kwaxala then packaged that revenue into "Living Forest Shares," units that pay investors a 5 percent yield tied to the carbon price. That move turned a US$1.8 million license into US$13 million of asset value on the Nation's balance sheet. Because investors buy a share of what the forest earns rather than the forest itself, they cannot force the trees to be cut when markets turn, and the Nation keeps ownership and control.

Neither of these is a one-off. The same approach is now being used at institutional scale. BTG Pactual's Latin American reforestation strategy, at $1.24 billion one of the largest private timberland funds ever closed, earns money from long-rotation timber, carbon credits from both planted and native forest, and other ecosystem services on the same land, with Conservation International advising on impact. RRG Capital Management's $927 million Sustainable Water Impact Fund, run with TNC, combines farmland, water, and conservation income, and ties part of the manager's carried interest to hitting conservation targets. Combined revenue is now underwriting funds worth hundreds of millions of dollars and up.

 

The payoff, and the catch

 

There is a real environmental case here. Paying a manager for timber, carbon, water, and habitat at once gives them a reason to keep all four healthy rather than to maximize one and let the rest slide. It brings the business closer to how an ecosystem actually behaves, as a set of connected functions rather than a single output.

But the same evidence points to a hard limit. The income streams that are easy to price are carbon and certified commodities. The harder ones, biodiversity above all, still have no reliable way to become revenue. Aurora's own team acknowledges that the field has not yet linked measurement of these co-benefits to financial outcomes. There is no shortage of biodiversity data or frameworks; what is missing is a way to turn that data into a price a buyer will pay or a lower cost of capital. Until that exists, biodiversity stays a co-benefit rather than a line of income, which is why agriculture and much of the Global South show so little stacking. Biodiversity credits, the report notes, appeared in none of the 93 Global South restoration deals it tracked, against nearly every comparable deal in developed markets.

Combining revenue also carries costs. Running several income streams at once takes more expertise and more day-to-day management. It stretches timelines in ways that strain a normal fund, since trees, soil, and biomass grow on their own schedule and rarely fit a ten-year fund life. The report suggests a slower, deeper J-curve may simply be a feature of the asset class, and many funds are already moving to twelve- to fifteen-year terms or open-ended structures. Market swings make it harder still: the voluntary carbon market's reported transaction value fell to about $723 million in 2023, a 56 percent drop in traded volume according to Ecosystem Marketplace, and that slump fed straight into a dip in nature-based investment even as the number of deals held steady.

 

What the market needs next

 

The next phase depends less on raising more money than on making these deals easier to do. Timber-plus-carbon works because both products can be measured, contracted, and sold. Extending the same model into agriculture, water, and biodiversity will take three things the report keeps returning to:

• Standardized outcome metrics. Agreed ways to measure and verify ecological results, so biodiversity, water, and soil outcomes can be underwritten the way carbon and certified commodities already are.
• Demand that pays. Policy signals and long-term corporate procurement that turn those outcomes into dependable revenue rather than optional co-benefits. Aggregating buyers, as efforts like the Symbiosis Coalition are starting to do, would help by creating the kind of long-term purchase commitments that so far exist mostly for carbon.
• Metrics investors already track. Tying nature outcomes to numbers allocators understand, such as yield, water security, or timber volume, so the value is legible without a new vocabulary.

None of this is exotic. It is the ordinary market plumbing (standard contracts, clear metrics, reliable buyers) that timber and carbon already have and the rest of nature does not. Building it is what will decide whether combining revenue streams stays a forestry story or becomes the way nature is financed across the board.

 

Read the full report: Gaining Ground: State of Private Investment in Nature 2026
Picture credit: The Nature Conservancy