Wildlife Conservation Society and Goldman Sachs work together to safeguard Chile's Karukinka nature reserve

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It is not every day that a Wall Street bank finds itself in possession of a chunk of land 50 times the size of Manhattan, covered in pristine forest, windswept grassland and snow-capped mountains. But that's the position Goldman Sachs found itself in, in 2002 when it bought a package of distressed debt and assets from a US company called Trillium.

The resulting conservation project in the very south of Chile has been hailed by the bank and its partners, a US-based NGO, as an example of how the public and private sectors can work together to safeguard the world's last remaining wildernesses. Chilean environmentalists are more skeptical but, even so, have largely applauded the project.

The story of what is now known as the Karukinka nature reserve dates back to the 1990s when Trillium bought land on Tierra del Fuego - a cluster of inhospitable islands between Chile and Argentina - clinging to the southernmost tip of South America. The company planned to use the land for logging and wanted to cut down the lenga - a type of beech tree found only in this part of the world.

Environmental groups opposed the project and it eventually failed. That was when Goldman Sachs stepped in, buying up Trillium's assets, including the land. "It's not often that you're in a position where you buy a security and learn that you have 680,000 acres of land in Tierra del Fuego," says Tracy Wolstencroft, head of Goldman Sachs' Environmental Markets group. "The more we realized what we had the more we realized how unique this property was."

The bank considered selling the land but realized it would face the same opposition as Trillium had. So it took what some environmentalists now regard as a radical and enlightened step - it gave the land away to a New York-based environmental group, the Wildlife Conservation Society (WCS).

WCS President Steve Sanderson says the donation marked a watershed in conservation policy, not only because Goldman Sachs gave the land away, but also because it pledged around $12m of its own money to ensure the land's protection for years to come. The reserve is home to around 700 plant species, including several types of moss which are thought to be unique to these islands, and is teeming with birds including condors, eagles and Patagonian woodpeckers. "On our side we believe the private sector has to help in conservation or we will fail, and Goldman Sachs believes it has to take into account environmental factors in its own business practices, or they will fail," Mr Sanderson said.

The plan now is to open Karukinka up to visitors, so that eventually it can help pay for itself. Already, intrepid hikers and fishermen have started visiting the reserve, drawn by its wild beauty and trout-rich rivers. "We want low-impact tourism and we are developing trails for hiking...and allow people to appreciate the area on a day trip," Mr Sanderson said. The WCS also wants to incorporate a visit to Karukinka into the schedules of the many cruise ships that ply the icy waterways around Tierra del Fuego en rote to Antarctica each year.

So what does Goldman Sachs get out of the project? After all, it's given away a large slice of land along with a stack of cash and doesn't appear to get anything tangible in return. The short answer is good publicity - by helping establish Karukinka, Goldman Sachs enhanced its green credentials. Tracy Wolstencroft says the project helped put environmental concerns at the heart of the bank's business. Goldman Sachs has since developed an environmental policy framework which, among other things, has led it to invest more than $2bn in renewable energy projects.

In Chile, environmentalists are under no illusions. They suspect that if the bank could have sold the land for a profit back in 2002, it would have done so. "They realized there was no one to sell it to, because the opposition was going to continue, we were going to take it through the courts," said Malu Sierra, who was heavily involved in the campaign against helped Trillium's logging project. She also complains that the bank and the WCS have not kept local activists fully informed of how the project is developing. But, despite their skepticism, environmentalists here have largely welcomed Goldman Sachs's donation.

So, what now for Karukinka and, indeed, for other philanthropic conservation projects elsewhere in the world? In the current economic environment, one wonders if Goldman Sachs and other big financial institutions might be as generous with their cash as they were a few years ago. "We are in a credit crunch and a financial market that is very different from what it was six months ago, let alone how it was when we started the transfer of this property," Tracy Wolstencroft acknowledges. "But we don't see any threat to the objectives of Karukinka and we wouldn't hesitate to do this again."

Meanwhile, in, life goes on much as it has since the 1830s, when Charles Darwin visited the islands. "A single glance at the landscape was sufficient to show me how widely different it was from anything I had ever beheld," Darwin noted in his diary as his ship, HMS Beagle, approached Tierra del Fuego. Nearly two centuries on, Karukinka remains a place of rugged, isolated beauty. The WCS, with a little help from Goldman Sachs, aims to keep it that way.

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Photos courtesy of BBC and WCS / Julie Larsen Maher

Original Source: BBC News