SpekTech

Due to bad farming practices and overstocking of goats and sheep, there is 1.2 million hectares of degraded and denuded spekboom thicket in the Little Karoo region of South Africa, with an estimated 100 tonnes of carbon per hectare being lost to the atmosphere, according to research findings.

Degradation of this semi-arid biome is associated with severe reductions in biodiversity and ecological functioning. It is estimated that 90% of the thicket biome has suffered moderate to severe degradation of this form. Degraded habitats do not recover after the removal of livestock, and active measures are required to restore ecosystem health. 

To this end, UNEP (United Nations Environmental Programme) has officially supported the proposal of committing 1.2 million hectares of Karoo land for spekboom planting.

The Karoo is a harsh environment, and it takes a robust labor force to work the land. The majority of the population is uneducated or semi-literate. Gender-based violence is rife and communities are plagued by alcoholism, as well as many other social ills brought on by rural poverty. While township communities in the Karoo have for generations been living on or below the poverty line, (with the Gini coefficient in this region being the highest in South Africa,) increasing levels of poverty have exacerbated a myriad of challenges including food security.

Consumers (individuals, SMEs, & corporates) emit carbon that needs to be, at best, eliminated, but, at least offset or captured.

Past emissions currently in the atmosphere need to be captured, offsetting doesn't help, there is already too much CO2 in the air.

A vast majority of carbon offsetting and the carbon credit market works around conservation and carbon avoidance. The need to have regenerative and restorative programs in place to actively reduce atmospheric carbon is imperative to alleviate climate change.

According to Dr. Anthony Mills, CEO of Africarbon (PTY), if 4,000 were employed over the next 10 years, we can reach our goal of 1.2 million hectares before the end of the UN decade of ecosystem restoration in 2030.

While this sounds doable, with a cost ranging anywhere between $2000 and $4000 per hectare, unless key stakeholders in the ecosystem are properly educated, engaged, incentivized, and activated, sustainable funding is generated and continuous optimization of the process is undertaken, the opportunity to repair this ecosystem will be lost.

Fortunately, restoration of the desertified land and the recapturing of atmospheric carbon can be achieved in a sustainable manner by planting cuttings of the common indigenous tree Portulacaria afra known as spekboom. 

Spekboom is unusually effective at sequestering carbon for a semi-arid region plant, which has obvious significance for climate change mitigation. Approximately 1.2 million ha of thicket is suitable for restoration in this manner.

To offset the extremely high costs of land restoration and planting, ReSpek has created a premier spekboom planting digital marketplace for merchants and conscious consumers from around the world who want to offset their carbon emissions and to encourage landowners to participate in the nature-based carbon market. 

Our vision is, once this is well established, to replicate the model in partnership with communities living in different parts of the world helping to establish multi-species planting programs for land restoration.

ReSpek Nature has developed what we have coined "SpekTech", a synergy of technological processes and smart financing that enables the planting of spekboom, with the ability to engage with key stakeholders in the ecosystem. 

ReSpek Nature brings the spekboom planting opportunity to any consumer shopping online, who wants to help offset carbon against their purchase. We provide a direct link between the consumer who aspires to net zero, and the spekboom plantation itself. 

As a micro act - $1 per online purchase - the consumer is incentivized at checkout, to offset their carbon footprint. In addition, anyone or any organization can offset their carbon according to their needs, via monthly subscriptions.  While one spekboom will do little to change that, millions of spekboom purchases have the potential for a triple bottom line impact in the Karoo and a deep, abiding carbon sink. 

ReSpek Nature delivers a digital certificate to our supporters, who can then follow the growth of the plants over time. The response to our early efforts has seen positive results, with the understanding that we could expand our reach considerably. As it stands, our conversion rate on Shopify is consistently increasing. With our active pilot, we are gaining about 400 new customers a month.

Satellite imagery in combination with AI algorithms is used to map carbon captured through restoration.  These carbon maps provide credibility and transparency to customers, who are able to track the progress of restoration over time. Importantly, carbon maps also assist with on-the-ground planning and monitoring of planting work.  Verified estimates of sequestered carbon can be used to generate tradable carbon credits, a possible source of further restoration funding.  

This technology helps to calculate the efficiency of our work and to identify locations suitable for planting, monitor the health and operational side of planting and managing vast plantations, and lastly be able to quantify carbon capture levels for the purposes of carbon trading.

In building this new digital marketplace we have now entered the growth stage of our business.  Given that each hectare of land on average is likely to generate more than 150 carbon credits over a 30-year period, with an estimated value of $10billion carbon credits could conceivably be generated if all spekboom-rich thickets in the Karoo region were restored. 

With more than 70% unemployment in the Karoo, the opportunity to bring a scalable and immediate income to local rural communities would be catalytic. Spekboom planting unlocks an entirely new job market throughout the Karoo wherever viable spekboom veld needs restoration.

Landowners are therefore key stakeholders in the economic value chain of ReSpek. There are very few ways for landowners to commercialize the dry and sparse Karoo land. The introduction of a carbon market can work to reinvigorate these local communities and the Karoo economy, with the added value of restoring land and increasing its carrying capacity. Restored land will increase productivity and ROI for the landowners, allow for them to benefit as stakeholders as well as regenerate biodiversity.

Merchants and retailers, both online and brick and mortar, are in a position to close the circle between the consumers, the ReSpek digital platform, and those on the ground planting spekboom. These retailers will benefit both through increasing their ESG scores, as well as the optics of how their association with ReSpek will show them to be aware of the global issues of climate change and the race to Net-Zero.

Global organizations and corporations that are mandated to address climate change will also be able to note the scale, impact, and the potential for monitoring and evaluation of the spekboom opportunity in the Karoo. In addition, the socioeconomics around the carbon capture project is being placed high on the list of criteria. If a nature-based carbon capture reforestation initiative disturbs or negatively impacts the human settlements in the area, then funding from these international NGOs will likely not be forthcoming. By addressing and including a beneficial socioeconomic strategy into the carbon project, as ReSpek does, the social and economic impacts are informed by national social upliftment and ethical development strategies.

ReSpek Nature is a hybrid of digital and on-the-ground operations. Through our pilot, located in the town of Graaff-Reinet, we have established a close connection to the community and have a thorough understanding of the challenges facing the community. 

ReSpek Nature is focusing entirely on addressing the needs of the poorest of the poor, and it is from that group that we hire our staff, whom we train in plant growth and plant care.

Our team on the ground, as well as our cohort ambassadors who support our initiative, are strategically positioned to engage with the local citizen sector. Our project manager is a member of the township community, who is herself an eco-activist, and we also work closely with local farmers and landowners, and with the local farmers association. 

Through our collaboration with SANParks, we initiate monthly spekboom planting days that have become an educational initiative for local township youth. They learn about spekboom and the ecosystem services the succulent brings to their natural environment. Often there is laughter and chatter that accompanies the hard physical work of digging the holes, planting the spekboom, and their first (and only) watering. One of our champions is the former town Mayor, Hanna Makoba, who broadcasts our monthly planting days on social media channels and encourages young people to get involved. 

Our tech team combines the expertise of local environmental scientists, regional land restoration specialists, carbon capture data aggregators, software engineers, and blockchain experts who share a vision and mission alignment for the restoration of the Karoo and ultimately the shared value of preserving our fragile and only home, Planet Earth.

1) Legal Barriers: In previous spekboom plantations overseen by a group of scientists who have planted hundreds of plots across the Karoo over two decades, they engaged the farmers to commit to caring for these plots. In fact, the farmers were paid for this service and the use of their land. When drought struck, however, the agreement was ignored when the farmers understood that their livestock could survive by eating the spekboom. This is a challenge that we need to address through a combination of direct communications, and underscored by legal contracts tied to the associated economic incentives. 

2) Access to ESG Funding: The digital carbon offset market is becoming a crowded space, and the thin verification of these programs has resulted in some fallout, including some of the airline carbon offset programs being considered fraudulent. The verification of the project itself; the work itself is done, as well as the quantification of the carbon being sunk, is a challenge to be addressed as well as the current high costs to become an accredited carbon offset project.

3) Market Access: Ultimately, ReSpek Nature would consider itself a success if we were planting millions of spekboom across the Karoo, made possible by millions of individual acts of support by online consumers. Our true target market is those who are aware of their consumption and are doing something about it. Our marketing focus is on how to most effectively engage our client base, being two primary target groups: the online merchants who would adopt our add-on to their payment processes, via a Shopify or similar platform; and the conscious consumer who will either contribute to the various points of purchase or pay for a monthly subscription. We meet both of these target markets primarily within the scope of social media, with variations according to their subsets. One specific example would be a dedicated campaign within the Shopify ecosystem, targeting merchants to install our app on their store. Given our current convergence rates on Shopify,  if we could increase our merchant base, we could generate an average of $35/merchant/month given that there are ~2 million Shopify merchants, penetrating the merchant market on the Shopify platform by 1% could generate $700 000/month. 

One of the challenges we encountered in our pilot stage was how to get buy-in from the landowners. Landowners were unsure about demarcating a portion of their land to spekboom. They argued that livestock was more profitable in the long-term, and our initial offering of off-setting their carbon footprint didn't provide sufficient incentivization. Until now, Landowners have been unaware that they could be active participants in this market, and benefit from that. 

At this time, we are aiming to create a marketplace for carbon-backed financial instruments whereby we can channel funding towards landowners and farmers in the karoo to plant spekboom to restore the thicket ecosystem, capture carbon and provide jobs to impoverished local communities. 

Landowners will be able to register their land on the platform that would show their current carrying capacity for livestock and potential revenue output per hectare or for the whole parcel of land and juxtapose this with the potential revenue of a carbon stock on their restored land. The GIS model includes:

1. Plotting out the parcel of land on a map.

2. Carrying capacity for livestock (and resulting revenue projections)

3. Show the 3 levels of thicket health: intact, degraded, and completely denuded.

4. Show a time series for how carrying capacity, vegetative indexes, and carbon levels have changed based on archived remote sensing data.

5. Project the future trajectory of how these indexes will change based on the current trends

6. Score the land in terms of its current "health index"

7. Project the trajectory of how these indexes may change with a restoration program employed.

8. Present all the above data on a dashboard with heatmaps, tables, and charts.

The above is essentially a selling tool to enroll farmers and landowners into the program.

The solution structure in the context of a marketplace at a high level:

• consumers (individuals, SMEs, corporates) emit carbon that needs to be, at best, eliminated, but, at least offset or captured.
• Past emissions currently in the atmosphere need to be captured (offsetting doesn't help, there is already too much CO2 in the air)
• goat and sheep farmers and landowners in semi-arid regions (Little Karoo is our current focus, in the future, need to test if the model can be applied to other semi-arid regions around the world) have an opportunity to participate.

ReSpek Nature is creating a pioneering selling tool to enroll consumers, farmers, and landowners into the carbon market, to restore an entire ecosystem. 

Environmental Impact Goals: improved ecosystem, improved biodiversity, more carbon sequestration, Improved water table, lowered average temperature, increased rainfall, restored spekboom thicket

Economic Impact Goals: verified carbon credits, improve carrying capacity, sustainable economic growth, secure cash flow, increase agricultural productivity, increase online engagement (popup), increase cross-pollination between online merchants and consumers, increase subscription uptake

Social Impact Goals: increased employment opportunities, poverty alleviation, environmental education, cultivating a culture of conscious consumerism. 

Narrative Statement:

By connecting the consumer and landowner to the carbon marketplace, ReSpek Nature will create jobs, restore land, and capture carbon, offering a scalable e-commerce platform model for climate mitigation.  

Activities:

• Refine online presence for improved marketing efforts

• Integrate at least 2 more e-commerce platforms

• Build and activate marketing campaigns for online merchants

• Build and activate marketing campaign to promote consumer subscriptions

• Build and activate marketing campaign to attract landowners

• Scale planting activity beyond our pilot plantation

• Generate an NFT for consumers to claim after offset contributions or monthly subscription

• Refine and integrate financial tech

 Short term outcomes:

• Scale planting activity beyond our pilot plantation

• Increase revenue

 Medium-term outcomes:

• Increase merchant and consumer engagement on the platform

• Partner with and integrate with payment gateways

• Market and sell ReSpek subscriptions

• Market and advertise to online merchants as to how they can participate in the ReSpek Programs

• Market and advertise to farmers and landowners as to how they can participate in the ReSpek Programs

Long term outcomes:

• Create a stable source of income for impoverished rural communities through planting programs

• Enroll farmers and landowners in semi-arid regions to the social and economic benefits of restoration and conservation 

• Enroll Merchants in the benefits of being environmentally conscious and offer them tools to empower their customers to take positive action to plant spekboom

• Educate consumers about the benefits of climate action and the effects of their consumerism and carbon footprint

• Land restoration through spekboom planting: Planting spekboom, as the original endemic thicket, is an ideal approach to restoring balance to the damaged soil. This has been fully substantiated by scientific evidence from planting trials during the past 50 years. The degraded land is restored by planting cuttings of the spekboom, planted by rural farmers and landowners. Ecosystem carbon storage in intact thicket in the Eastern Cape, South Africa exceeds 20 kg/m2, which is an unusually large amount for a semiarid ecosystem. Potential earnings through carbon credits are likely to rival forest-planting schemes, but costs are likely to be less due to the ease of planting cuttings, as opposed to propagating forest saplings.

• Ecommerce integration and payment integration to support micro offsets: Shopify, where ReSpek is a carbon offset nonprofit vendor, includes a growing list of online merchants that have installed our app. Utilizing various platforms the collection of micro offset payments is fully automated and is a cost-effective mechanism to channel and pool funds for further distribution. 

• Satellite imagery and machine learning: Satellite imagery in combination with AI algorithms is used to map carbon captured through restoration.  These carbon maps will provide credibility and transparency to customers, who will be able to track the progress of restoration over time. Importantly, carbon maps will also assist with on-the-ground planning and monitoring of planting work.  Verified estimates of sequestered carbon can be used to generate tradable carbon credits, a possible source of further restoration funding.  Currently, there are demonstrated methods for using satellite imagery to map carbon stored in thicket at a farm scale.   Over the next [2-3] years, these methods will be extended to work at the biome scale and be repeatable over time. Initial research towards these goals has produced encouraging results.

• Blockchain, Financial Analytics, and smart contracts, provided by InState.io have undergone significant prototyping, and are readily able to be implemented in a production-ready version:

  • Blockchain and smart contract backed governance

  • Risk priced financial instruments to fund restoration

  • Mutualised asset finance pooling to manage risk

• NFTs:  Our next iteration in addition to the pdf certificate with GPS location, users will be able to claim an NFT representing 1kg of CO2 captured by the plant over one year. This creates an opportunity for us to later simply enroll users into our smart contract-backed financing model.

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Fence-line contrast showing intact and goat-degraded Spekboomveld 

Black Economic Empowerment (BEE) and Respek Nature

Black Economic Empowerment (BEE)9 is a South African Government policy that encourages companies to assist in the de-racialization of South Africa’s economy and in fast-tracking the entry of historically disadvantaged individuals into business.  The policy seeks to encourage companies to engage in activities that benefit black people. In this context “black” is defined as black, colored, or Indian people who are South African citizens by birth or who became a citizen before 27  August 1994. 

The extent to which the project will need to satisfy the government's BEE requirements is dependent on the annual turnover that is generated by the venture. If the enterprise generates less than R5 million annual turnover, then it is an  Exempt Micro Enterprise (EME) and is automatically awarded a scorecard of 65  points (a level 4 rating) and exempt from going through the process of filling out the scorecard. If the enterprise generates an annual turnover between R5 million and R35 million, then although it may require a scorecard, it is defined as a QSE  (Qualifying Small Enterprise) and it needs to achieve any four of the seven elements of the QSE scorecard. Enterprises generating an annual turnover of more than R35 million would be required to achieve all seven elements on the generic scorecard. The generic and the QSE scorecards contain the same seven elements,  but these elements are weighted differently in each scorecard. 

These are the seven elements: 

1. Ownership – this measures the percentage of shares in the business that are  owned by black people (as per the definition above) 

2. Management – the directors and top management of the business 

3. Employment equity – the employees in the business 

4. Skills development – this measures the amount of money spent on training of  black employees 

5. Procurement – suppliers and their scores 

6. Enterprise Development – expenditure on helping other black-owned  enterprises 

7. Socio-Economic Development – expenditure on assisting charitable organizations  

With the objects of ReSpek Nature in mind, it would be very easy to comply with the elements of the scorecard and achieve a very high mark in terms of BEE  compliance. We are focused on building a racially diverse and inclusive team comprised, led by the BEE mandate. 

ReSpek Nature focuses on restoring these arid regions and the plant species that support those environs to produce a net effect, over planting trees in already forested areas. By reintroducing spekboom to an eroded tract of land, the ecology can be restored and become far more sustainable, on a far larger scale. It attracts further biodiversity and improves the quality and ability of the land itself to support more life. 

Our ability to provide automated digital tools to verify planting and paying the individuals on the ground is what allows the project to scale beyond a single top-down approach to plantation management. Our technology also provides the opportunity for landowners to be able to register their land on the platform that would show their current carrying capacity and potential revenue output per hectare or for the whole parcel of land and juxtapose this with the potential revenue of a carbon stock on their land. 

ReSpek is perfectly placed to be the bridge between the consumers who want to offset their carbon footprint, rural communities in the Karoo who are desperate for decent work and financial security, and the restoration of the greater Karoo ecosystem.  

Corporates are already being called on to lower their carbon footprint. ReSpek is not the only channel to this market, but there are some unique characteristics of our approach that have piqued the interest of some forward-thinking local corporations, like Investec Bank. Restoring and uplifting an entire ecosystem by planting spekboom, using sophisticated digital technology, and a clear, well-told story, one that can bring you close to ‘your’ plant or plantation, is a compelling combination for corporations.

The two operational avenues we are addressing work together to scale in accordance with our growth. Digital operations take care of customer acquisition, billing, and plantation monitoring and are fully automated. Monitoring, motivation, and remuneration of our ground team who are cultivating and planting is also built into our digital strategy.

With the core infrastructure for the digital platform and team on the ground in place,  our fixed costs become very low and we are able to scale the planting operations in accordance with revenue as most of the operational costs of planting are included in the cost of sales. When sales spike, the planting pace is increased with the contracting of day laborers, this is an opportunity to find and train staff to be employed permanently when sales level out.

The actual service provided is a simple unit of work: planting a spekboom truncheon in the ground on behalf of our customer. This allows for flexibility to package and sell this unit of work as individual offsets or monthly subscriptions of bulk purchases by the hectare.

Operationally a unit of work is represented in our digital platform by issuing a certificate with linked GPS coordinates to a plant. 

The financial modeling and generating a fund is the next step in the program/platform.

Given the “Health Index” of the land, a financial risk profile can be understood for the land (this should also take into consideration if the landowner agrees to share financial records to understand the financial health of the land/farm in question).

Based on the projections of revenue for the land, quantifying what restoration work is possible, can then be costed. Using AI, modeling a method to calculate the effort required to do restoration (where current spekboom stock is to harvest relative to restoration sites) accessibility by vehicle/tractor ability to use a plow vs hand planting. Access to labor/distance from the nearest settlement. These factors will indicate the cost required for restoration.

Once cost and risk are established, funding can be priced and presented to the market to raise the funds as an investment instrument.

In some cases, the model could be used to encourage current livestock farmers to move over to restoration and land conservation. As the actual restoration and planting work is a pricey capital expense, the funding model would be necessary to cover the farmer for the first few years until the carbon stock can be "harvested" and credits can be issued.

Besides the data modeling and method described above, there is the impact management and monitoring, and transparency of the operation that needs to be accounted for, the solution best primed to accomplish the governance side of the equation is the use of blockchain technology and smart contracts, this is another part of the equation that needs further discussion and development we have onboard the expertise of a company that will assist in this part of the equation.

Our financial model is based on incorporating as much of our cash flow into the cost of sales and keeping our fixed costs as low as possible. Through the success of our current pilot we foresee our revenue to grow steadily, this affords us the ability to allocate a portion of revenue directly to sales and marketing which grows our exposure and ultimately our customer base and merchants online.

Based on our marketing spend and the success of the marketing campaign, we forecast a growth in sales to be around 13% year on year.

Conversion rates of popups on our merchant sites have been consistent with our pilot, between 6%-11%. With further brand awareness, the signup rate of new merchants will increase our sales and will bring organic growth. 

Given our current convergence rates on Shopify, if we increase our merchant base, we can generate an average of $35/merchant/month given that there are ~2 million Shopify merchants, penetrating the merchant market on Shopify by 1% could generate $700 000/month.

Our current customer base is in excess of 6000 users and we will begin marketing to this base to sign up for monthly subscriptions from $10/subscription.

With satellite monitoring technology and an eventually verified methodology, we hope to attract farmers to our program where they will be able to participate in a planting program. In exchange for allocating land to restoration, they will be able to participate in the upside of carbon credits sold in the future. Ultimately, ReSpek will develop a seamless chain, from consumer engagement to a digitally delivered GPS location, from farmer and landowner to the planter in the field.

According to estimates based on our data, arid landscapes restored with spekboom cuttings can potentially capture more than 10t/CO2 per hectare per year over a 20-year period. Nonetheless, we have based our model on 5t  CO2 where we can still be sustainable.

Our initial pilot with GeeWiz proved to be successful and started generating revenue within the first month of going live. Our second phase, to integrate with Shopify has also been successful. Our consumer-facing operations are producing a modest R12 000 a month on average and our active customer base is growing by an average of 400 new customers a month. 

Investec Private Bank purchased 30,000 spekboom as part of their first commitment to offsetting their carbon through ReSpek, and ReSpek’s first corporate supporter. This is potentially the first of many more.

ReSpek Nature’s partnerships will continue to be nurtured and more partners will come on board.

We were also recently selected as a participant in the Seed Catalyzer, received a monetary prize of €1500 as a runner-up for the low carbon ward, and look forward to future opportunities to explore seed funding with the help of this network.