Nicholas School Alums - Take Three Paths to Leadership in the Forestland/Conservation Investment Sector

May 27, 2015

Tim Lucas, 919-613-8084,

By Laura Ertel

While they each came to the forestland and conservation investment sector via decidedly different paths, three Duke University alumni have one thing in common: They have each played prominent roles in shaping how we look at land values, and finding innovative ways to balance strong investment returns with a strong commitment to environmental stewardship.

1. The Paper Industry Insider
Tom Colgan T’75, MF’76

Like many of his Duke Forestry classmates, Tom Colgan T’75, MF’76 joined the paper and pulp industry right after graduation. For 17 years, he helped manage and expand the Scott Paper Co.’s large tracts of forestland in Maine.

Then, in the early 1990s, Colgan personally lived through the forest sector’s transformation as companies like Scott decided to sell their timberland holdings to focus solely on paper production. With his professional expertise, this shift presented a huge opportunity. In 1994 he joined Wagner Forest Management, a company that acquires and manages long-term timberland investments in the northeastern United States and Canada for large and small clients committed to natural resource stewardship and the support of local communities.

Colgan is now president and CEO of Wagner, a company recognized as a pioneer in finding innovative ways to add value to forestland. “We’ve sold conservation easements that preclude development on land best kept from that pressure, and sold land to federal and state governments and individuals for conservation purposes. We’ve also been very active in promoting renewable wind energy on our properties, and have 10 wind farms operating in New Hampshire, Maine and Nova Scotia. We’re even taking some timberland in Maine and Nova Scotia and converting it to wild blueberry production.”

“So we look for niche things to do, but the timber always has been the most significant portion of the reason for buying the property as an investment,” he says.

Colgan, who earned his both his bachelor’s degree (in Trinity College) and a master’s degree in forestry at Duke through the 3+2 program, thinks the Nicholas School’s plan to start a Forest Finance Initiative is a great opportunity.

“Forests are no longer strictly a source of commodity products to be manufactured into something else, but also a source of potential wind power, conservation easements and ecosystem services like carbon sequestration and clean water. There is certainly a demand in all areas of the forest industry for people with that mindset and skillset, who understand the underlying investment motivations.”

2. The Academic
Chris Zinkhan MF/MBA’81

Chris Zinkhan’s path into forestland investment wound through academia. Zinkhan came to Duke through the 3+2 program after earning his undergraduate degree at Franklin and Marshall, then added one more year so he could complete a joint MF/MBA at the Nicholas School and Fuqua in 1981. After earning a doctoral degree in finance from Mississippi State University, he joined the faculty at University of Georgia and Campbell University, where he studied changing land ownership trends for U.S. forestland and consulted for institutional investors. He wrote a book on timberland investments and pioneered the application of option pricing to timberland valuation.

As ownership of U.S. timberland shifted away from large forest products companies to investors–due to factors such as tax policy changes and shareholder pressure, Zinkhan notes– forest finance transformed from a cottage industry into a full-blown sector. His consulting work evolved into a full-time pursuit, and in 1995 he and four partners co-founded The Forestland Group, the sixth timber investment management organization (TIMO) in the country.

Today The Forestland Group is one of the top five landholders in the U.S. While many TIMOs focus on fastgrowing timber plantations, The Forestland Group saw substantial investment value in hardwood forests, CEO Zinkhan explains. “Hardwoods grow in complex ecosystems. Ninety percent of our portfolio is natural hardwood forests, which provide a variety of species, quality and products that range from industrial products like railway ties to high-end furniture, millwork and flooring. We found these hardwood forests, which are mostly in the East, to be a bit more neglected and complex, with some mispricing opportunities that offered intriguing investment options.”

Zinkhan, a highly regarded forest finance expert who presents and teaches around the world–including in the Nicholas School’s Duke Environmental Leadership program– also sees the value in the school’s new Forest Finance Initiative in helping students gain insights into approaches for assessing forestry and related resources from an investment perspective. “Duke brings to the table a very broad array of expertise in different ecosystems, as well as more of a global perspective on the environment and forestry than other schools,” he says.

3. The Conservationist
Nick Dilks T’96

For Nick Dilks T’96, the journey into conservation finance led through the nonprofit sector. Dilks, who earned his bachelor’s degree in environmental science and policy at Duke (the major is administered through Trinity College in close collaboration with the Nicholas School), began his career at The Conservation Fund, a national nonprofit land conservation organization.

During 10 years at The Conservation Fund, most recently as vice president for real estate, Dilks earned a reputation as an innovator in land conservation strategies. In 2006 he left the organization to co-found Ecosystem Investment Partners, a private equity fund manager that acquires, restores and protects conservation properties across the United States to generate land-based environmental offsets.

“Our company is structured almost identically to a TIMO, but the returns we generate are mainly from mitigation credits rather than timber management or harvesting,” Dilks, a managing partner of the Baltimore-based firm, explains. “We do have a fair number of properties that are forested wetlands, so we’re very much into forest management, but the credits come from restoration rather than for commercial tree harvest.”

Dilks is known for his leadership in finding creative ways to monetize non-timber services of forests and other natural lands. “Each project we do it quite different, depending on the restoration needs of the property. For instance, we’re converting a pine plantation that was planted with non-native plant species. We’ll harvest that property, restore the wetlands and replant native pines. In another project, we’re restoring a coastal marsh by pumping dredge material back into areas that have eroded or reverted to open water. In each instance, it’s the same basic concept: restoring a property’s natural condition in order to provide an environmental offset that’s required under law.”

Dilks, who also earned an MBA while working at The Conservation Fund, was still at Duke when the shift of forestlands from industrial owners to investment partnerships began. “Industrial landowners could take a much longer view, while investment partnerships have a more limited timeframe to work within, so there’s a different focus in terms of managing these assets to find a good return while producing a good conservation or stewardship outcome on these sites.”

Dilks sees a need for people with the skills that the Nicholas School’s Forest Finance Initiative will provide. “I’ve always been a big advocate of the hard skills associated with business and finance. I think that skill set allows folks to sharpen their pencils and understand both good resource management and sustainable financial management. That’s a really valuable skill set that we look for in hiring people, and I think land management investment with a stewardship overlay is going to be a major growth area for the foreseeable future.”

We asked two Duke alumni in the forestry industry to share one of the most valuable lessons they learned at Duke and how it has contributed to their success. Here’s what they had to say:

Scott R. Jones, MF’81
Co-President, Forest Capital Partners in Boston

What Duke gave me was not any one class or tool, but the ability to tailor my studies to a career in forest finance. I had access to Duke Business School classes, internships and a variety of both traditional forestry and business experiences. I never felt boxed in; Duke allowed me to make my own box.

Tiffanie Joy Starr, T’97
Duke Undergrad, AB Environmental Science & Policy; University of Georgia,
MBA 2002/MFR 2003; Senior Acquisition Manager, Timberland Investment Resources in Atlanta

Marie Lynn Miranda (now an adjunct professor at the Nicholas School) was an inspiration to me during my tenure at the Nicholas School. She worked tirelessly to impress upon us an interdisciplinary and holistic approach to understanding our world, and stressed the importance of empathizing with the stakeholders and communities affected by our efforts in any field. Dr. Miranda emphasized the need for an appreciation for cultural customs, economic principles and financial drivers required for our success in developing programs and policies to positively affect the natural and human systems we were working to enhance or preserve.

“My role in developing timberland transaction opportunities requires an understanding of the guiding principles of the landowners and our clients as well as a deep understanding of the economics of owning and managing a particular asset due to the specific attributes of the ecology, markets and demographics of the region. Without the ‘big picture’ approach to my undergraduate studies at Duke, I would not have the appropriately balanced mindset to be successful in my field.

A quick primer: Under federal, state and some local environmental laws, certain natural resources like wetlands, streams and endangered species habitat are protected. Land development projects with unavoidable, permitted impacts to these resources must offset their impact so there is no net loss of ecosystem services. Rather than producing these offsets themselves, businesses and government agencies can purchase offsets generated from conservation projects in that area. Firms like EIP acquire, restore and protect properties in order to generate, and then sell, those offset credits–in a transaction that generates a return for their investors.

Laura Ertel is a freelance writer based in Durham, N.C.