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Farewell to Earth Sanctuaries

September 1st, 2006

The remaining shareholders of Earth Sanctuaries Limited, among whom I’m one, have been advised that the company is to be wound up, having been delisted. ESL, which was floated with high hopes (a little too late to catch the dotcom boom, unfortunately) was Australia’s most substantial attempt at private-sector biodiversity conservation. I suspect though, that most of the investors knew that, in all probability, they were making a donation rather than an investment (at least there’s a capital loss to offset against any more succcesful investments!). Still, there were some interesting ideas that could be useful if governments ever get around to creating price incentives for biodiversity preservation (this could include allowing the sale of animals, or at least offering to purchase them).

The big selling point of ESL for me was its founder John Wamsley and his idea of fencing reserves then eradicating all the feral pests before reintroducing native species. Wamsley is definitely one of the awkward squad, but often you have to make yourself awkward to get things done.

More from Harry Clarke at Kalimna, Jason Soon at Catallaxy and Nicholas Gruen at Troppo

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  1. September 1st, 2006 at 19:49 | #1

    I was also a shareholder. Yes and we did think of it as very likely that our holding would be a donation – but none of us were in this one for the money.

    But how nice it would have been had it earned money. What signals that would have sent!

    That it couldn’t earn money despite its strong conservation successes also sends signals that the Productivity Commission and fanatics in right-wing think-tanks should take a look at.

    For the most part you cannot privatise Australia’s biodiversity without putting public reserves on a more commercial basis and providing subsidies to all conservation delivers who provide externalities and public good benefits.

  2. Andrew Taylor
    September 1st, 2006 at 22:15 | #2

    ESL’s made extraordinary business claims. You can still find online an ABC interview with John Wamsley where he claims that 100 Australian mammal species would become extinct over the following 25 years. Australia has a particularly disasterous record of mammal extinctions post-European settlement but I calculate it at ~0.1/year and probably much less in recent decades. So ESL predicted the (wild) mammal extinction rate would escalate by roughly two orders of magnitude – surely producing a major benefit to their (captive mammal) business.

    Things aren’t rosy for many species, but 8 years on I can’t think of any Australian mammal that looks to have become extinct – let alone the ~30 ESL predicted. Do successful businesses make predictions this inaccurate?

    Another of John Wamlsey’s prediction was the Yellow-footed Rock-wallaby – a particularly beautiful animal – would be shortly be extinct in NSW, presumably making ESL’s captive population more valuable. 10 years later its not extinct in NSW, fortunately National Park’s efforts have seen its numbers grow significantly.

    Harry Clarke mentions ESL were first to breed a Platypus in captivity. Platypus may have born in a dam owned by ESL but why is this significant? Aren’t plenty of platypus are born in dams & creeks on private property. Anyway breeding of a platypus under captive conditions was done by David Fleay 50 years before at Healesville.

    ESL always struck me as being primarily interested in conserving the cute&furry rather than biodiversity generally. For example, ESL seem to have little interest in frogs, the Australian vertebrate group which has really taken a hammering in recent decades with maybe 7 species extinction and plenty of declines. Mammals make up

  3. Andrew Taylor
    September 1st, 2006 at 22:18 | #3

    To finish my truncated sentence – Mammals make up less than 0.1% of Australia’s species so if you focus on them, how you can have more than a niche role in biodiversity conservation?

  4. The Lithophyte
    September 1st, 2006 at 23:37 | #4

    Andrew,

    I don’t want to debate the merits of Walmsley’s claims re extinctions but it is really very silly to calculate extinctions as a constant rate. Extinctions en masse go in waves in response to a range of pressures. We had all the ground-dwelling mammals (e.g. stick nest rats) go in response to grazing/foxes, a bunch more small mammals to rabbits/foxes then cats. Many of Gould’s portraited arid and semi-arid zone mammals were gone by 1900.

    The twentieth century, on the whole has not been too bad, but the 21st is likely to be pretty nasty to endemics if we (globally) follow Howard’s Way and burn all our coal. Steve Williams’ and co’s modelling in the montane tropics is compelling because there is both past, bioclimatic modelling of the future and some physiological evidence indicating that they will disappear with more than a couple of degrees of local warming. Similar to SE Australian endemics. The frogs likewise have not been average. Not much, then a host of extinctions in the past couple of decades.

    Habitat removal is still the number one bogey and we need as much as we can get so that species can cope with the changes to come. Many mammals have gone locally extinct. That should be of concern enough; the evidence of the past, present and future should not put one in a relaxed state, especially when smoothed into a spurious “average extinction rate”.

  5. September 2nd, 2006 at 00:33 | #5

    I would have liked to buy shares. But I thought the promotional material supporting their case was very weak commercially. The shares were so damned expensive for the cash flow they were offering to generate. I think I would have been more likely to contribute if I’d be solicited for funds as a gift. I think it’s a great pity that they’re gone.

    Also, while they no doubt said their tuppence, I didn’t really notice what Harry Clarke calls, perhaps ironically, “the Productivity Commission and fanatics in right-wing think-tanks” really getting stuck into the prohibition on the sale of animals that ESL bred. Yes, they wrote it up once or twice, but they seemed far from fanatical to me. Yet it’s hard to think of a more worthy de-regulatory cause, and a less difficult bit of deregulation to bring about if you really cared and really wanted to make an issue of it.

  6. September 2nd, 2006 at 04:34 | #6

    Andrew,

    OK ESL bred the first captive-bred platypus since 1943. Correction.

    They targetted mammals because they saw that as a weak area in terms of overall extinctions. In my view it is.

    A firm the size of ESL can’t comprehensively target everything.

    Nicholas,

    I get the impression the PC have run out of things to reform and are now looking at the environment and, for once, their obsession with privatising things does not look sensible.

  7. Terje (say tay-a)
    September 2nd, 2006 at 10:49 | #7

    I think ESL made some good points early in the piece about certain legal constraints placed on them. They could not book a value for animals they own because there was no market for these animals. And there was no market because it is illegal to trade in australian natives. A strong point I believe but not an easy one to untangle. The net effect is that a deer farm can have book value in ways that a bilby farm can not.

  8. Uncle Milton
    September 4th, 2006 at 17:21 | #8

    “their obsession with privatising things does not look sensible.”

    Harry, it is understandable to think that the PC supports privatisation because it is so supportive of free markets, but, in fact, the PC has never come out in support of privatisation of anything.

  9. September 4th, 2006 at 18:30 | #9

    Uncle Milton, On biodiversity it has done a long series of monographs presenting arguments for privatising biodiversity. Studies on ESL included.

    The problem with the PC is that before the ink has dried on their assigned research topics you can guess their conclusions. Valuable studies for the most part with lots of good analysis but an unrelenting line favouring deregulation and markets even ewhen this makes little sense.

  10. September 4th, 2006 at 18:30 | #10

    Uncle Milton, On biodiversity it has done a long series of monographs presenting arguments for privatising biodiversity. Studies on ESL included.

    The problem with the PC is that before the ink has dried on their assigned research topics you can guess their conclusions. Valuable studies for the most part with lots of good analysis but an unrelenting line favouring deregulation and markets even ewhen this makes little sense.

  11. Grace
    September 4th, 2006 at 18:41 | #11

    And what are the shareholders going to do? Accept the offer? I am inclined not to as I would hope to use my contribution to continuing the work of ESL.

  12. Guy
    September 7th, 2006 at 19:24 | #12

    It is a very sad day for Australia in particular and conservation globally when a company dedicated to sustainability goes under. Its’ only crime seems to have been being 20 years ahead of its time; here in Europe fiscal policies to reward good environmental performance are being introduced by the bucketload as awareness of global environemntal collapse as a distinct possibility reaches the ivory towers of major corporations. My cursory calculations indicate that ESL would have thrived if it had, per customer, just 2 per cent of the subsidy the governement is happy to give to the oil industry.
    My biggest area of disappointment is not the loss of one or two cuddly mammal species, terrible though that would be; its the gigantic potential of ESL’s flora-conservation and research ideas which now may not be realised which is catastrophic. Plants in the Australian subcontinent have the potential to cure many diseases and, as it happens, earn billions for the Australian exchequer – such egregious short-sightedness and economic illiteracy!

  13. SallyF
    September 12th, 2006 at 11:45 | #13

    Grace, I, too, think I may reject the offer, even though I am fairly sure that will lose me all my $5,000 worth (paid about $30,000!!). According to page 4 of the Target’s Statement, my one remaining option is “remaining as minority shareholders in a subsidiary of Prudentia, itself a private unlisted company”.

    Does anyone know the rights of minority shareholders in a subsidiary company, when it comes to managing the “holdings” or selling the subsections Prudentia are likely to develop?

    I’m not sure what is the best thing to do, given available funds and committed people, to uphold the conservation work started by John Wamsley, whether it be to just stop spending money on any of the properties, or to develop parts of it, or what. My main concern is that planned development on small subsections may alter the environment that is crucial to survival of plant and animal species in the remaining landholding.

    What I would like is for the Federal Government, or even the relevant state governments in cooperation, to make an offer to ESL Holdings Ltd shareholders (our new name), but too late. So maybe an offer (much more costly) to Prudentia after the takeover may still be possible?

    Even then, I suspect all these government representatives still haven’t learned to value conservation in Australia, and how best to manage it.

  14. Anthea Dacy
    October 8th, 2006 at 11:25 | #14

    I have just received a letter from Prudentia Investments P/L declaring their intention to compulsorily acquire my shares under the Corporations Act under Section 661B (1). For those not wishing to have their shares compulsorily acquired, the only recourse is to apply for a Court order to the contrary. Is anyone else interested in pursuing this line of action?

  15. Peter Thompson
    October 10th, 2006 at 16:03 | #15

    I’m with you Anthea, at least if court action is possible and will not send us all broke. Perhaps we could run the case ourselves or approach a public interest advocacy group. The way I feel is that us small shareholders, who parted with our money expecting little return, at least in the short term, have been unfairly disadvantaged by the series of restructures of Earth Sanctuaries. We purchased shares at high prices while I suspect that others may have acquired some shares through preferential issues linked to the various restructures. For years we have probably been given unreliable predictions of the likely performance of the company. As a result Earth Sancuaries became over-extended and forced to sell assets, then was subject to takeover. I believe we deserve the right to remain as minority shareholders so there will be some chance of future recovery of our investment.

  16. MarkK
    November 10th, 2006 at 07:03 | #16

    Hello all,
    Given this is fait accompli and I only found out about it today, does anyone know how I go about getting what little is left of my investment? ESL website has closed down.
    Rgds,
    MarkK

  17. jquiggin
    November 10th, 2006 at 10:32 | #17

    I would try to get in touch with Prudentia – they should have sent you a letter.

  18. November 10th, 2006 at 18:32 | #18

    Ah. I only just noticed this. From my MBA business law unit, there is something called “failure of substratum”. That is, if the new shareholders are far enough removed from the original purpose of the institution, while they can liquidate it they cannot deflect it to new uses that are inherently inconsistent with those it was founded for. Of course, it’s all down to what a judge will wear – and your own lawyers. But that part of the corporations act may not apply if the would-be buyers don’t have standing because they are barred by failure of substratum.

  19. November 10th, 2006 at 18:38 | #19

    Oh, and any purported past acts may be a nullity (or not, if it is considered that good faith actions cannot be voided without greater affront to justice – which judges generally interpret in purely monetary terms, so the required compensation may be all they take into account). But ask a lawyer.

  20. observa
    November 12th, 2006 at 11:36 | #20

    Walmsley’s ESL venture was always going to be a donation by investors under the current tax regime. There is absolutely no reason why that should have been the case and that private investments like Walmsleys could not be as fruitful to investors as plonking it on the stock market or in tuscan boxes nowadays. In fact a sensible taxation regime (yes, allowing speculative gearing as now) would see a plethora of Walmsleys running ALL environmental parks and indeed expanding them. There is absolutely no need for govt ownership or control of such investments. All govt need do is implement the correct constitutional taxation regime and marketplace to ensure it happens and let self interest do its best. ESL should have been as fruitful to investors as negatively gearing rental property would have been over that period.

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