Forestry investors might not be aware of it, but they are boosting sustainability. Forest research experts around the world are of the opinion that the rising interest in alternative investments like ethical forestry are helping in shining the spotlight on sustainability across the world. Most investors, even seasoned ones, are completely disillusioned with the state that the economy is in.
This is not an isolated situation in a particular country, but more of a global one. Investors everywhere are seeking means of engaging their wealth in more meaningful ways that will also bring in more profits. The stock market used to be a gravitation point for investors and they would be driven by the occasional windfall that was showered on them, but then the downfall came and many investors ended up losing large amounts of money.
This is what drove them to look for investments that would be rooted on firm ground- and what better investment than one that actually stands on the ground and flourishes and grows on it. Ethical forestry investments are becoming a chosen avenue for numerous investors as it is a very low-risk proposition. As long as investors zero-in on the right forestry company, their investment will be safe. This is a long-term proposition and is an excellent opportunity for investors large and small. Institutional investors have always shown interest in land and forestry and now, individuals are too.
Timber investments are less-risky because investors do not have to harvest and sell their timber until the price is right. The trees can continue to grow and increase in value and be harvested when the demand and prices are high. Today, there is an immense demand for timber across the world, in developed and developing economies. Emerging markets like Brazil, China and India have shown a spurt in demand over the last few years and there is no indication that this trend is going to change anytime soon.
The Reliability Factor
Timber investments through reliable companies are an ethical and profitable choice. On an average, there has been a 5% rise in the price of timber, annually over the last century and timber tends to perform better even when the economic climate is not conducive for growth in other investments. The only thing that investors should be aware of is that forestry is an illiquid investment. Interim returns come in whenever the plantations are thinned, but investors make real profits when the fully-mature trees get harvested.
It takes around 10-15 years for the trees to mature fully. This makes forestry a perfect investment for those who are seeking diversification of their portfolio. It helps in preserving wealth in the long term. Investors should research ownership of the land and the owners of the projects should be able to show very clearly defined, long-term, un-contested land tenure leasing rights. As long as investors are patient and are looking for long-term profitability, forestry investments can be a very good option for complementing their existing portfolio.
Today, the face of investments and investment vehicles has changed a great deal and so has the psyche of investors. The demand is for sustainable businesses that will offer investors steady returns. The economy and its ups and downs are totally unpredictable and this also means that any investment is also not immune to its impacts. Stocks and bonds are the first to get impacted negatively whenever the economy takes a dive.
The Best Shield
This sends investor capital into dive mode as well. Alternative investments act as an effective shield for these kinds of shake-ups and lend some sense of stability in income to investors, large and small. Today, governments of most countries are also encouraging sustainable businesses like ethical forestry and give them special certifications and tax waivers.
A large number of corporations have also committed to using products that are made from sustainable sources. This increases the demand for wood that has been grown by ethical means. The focus today is on sustainability in sourcing. In a way this has also helped in giving a boost to wood that has been obtained from ethical forestry.
Melina investments can be offered as a bespoke investment plan to suit the individual. A typical investment of £21,000 purchases 450 Melina trees. As the trees grow, their value increases.
Reaching an average height of 38.58ft/11.76m in year 4, these trees are worth approximately £20 each. With the investor’s consent, half of the trees are harvested during this period, generating their first return. The second harvest takes place in year 8, the third in year 10 and finally in year 12, creating the plantations final return.
Projections made by timber investment companies such as Ethical Forestry are based on timber prices increasing by 7% annually. Melina timber prices have improved on average by +12.57% each year between 2006–2012. An average Melina timber investment starts at £7,000 and buys 150 trees. Extra trees costaround £46.67 per tree.
Ethical Forestry is a reputed sustainable forestry investment company offering high-return timber investments.The company owns plantations, employs expert forestry engineers and protects acres of rainforest in Costa Rica under their Forestry Easement Trust.
Investing in forestry clients to develop a sustainable timber plantation in their name.This plantation provides ecologically-friendly wood source for industry- predominantly for supplying the fruit packaging sector with material for pallets.
During the investment phase, the trees within the plantation are nurtured and taken care of by professional forestry engineers in Costa Rica throughout every stage of growth.The engineers- known as Regents- begin the process by selecting only the finest graded seeds. Selecting the right seeds aims to ensure the growth of tall, strong trees with high volumes of premium timber, in order to attain the best sale price possible.
The demand for timber is rising rapidly in China, India and South Korea.
China’s population is expected to rise from 575 million to a staggering 1 billion and is predicted to consume all the timber currently available per year. To accommodate this ‘housing shift’, China is projected to construct around 50,000 skyscrapers and 20 mega cities, all of which are to be funded by The World Bank.
The government in China estimatesthat the total wood fibre demand on a round wood equivalent basis (RWE) will reach 350 million m3 by 2015. With domestic output expected to be just 200 million m3, there is a possible void in supply of 150 million m3 RWE that will have to be fulfilled by imports. This clearly adds pressure to the existing supply sources. Therefore, unfortunately, illegal felling operations continue to operate on a large scale.
By investing in sustainable ethical forestry, investors are purchasing a secure investment with stable growth. In addition, this helps to create an alternative timber supply source and aims to reduce the pressures on existing rainforests.
Investing in sustainable forestry helps to protect rainforests in Costa Rica by decreasing greenhouse gases and protecting local wildlife.
Investing in forestry is a vital step towards helping to ensure a better environment for future generations. In addition to generating substantial financial returns, forestry investments help to develop new ecosystems, which will serve an important role in securing the future of our planet.
By creating new forests for harvests, you are relieving the burdenon existing forests by providing an alternative timber source.
The new plantations you help create absorb vast amounts of CO2 through photosynthesis. This will be converted into breathable air, helping to minimize carbon dioxide within the atmosphere.
After investments have ceased and all the trees have been harvested, the area is replanted with sustainable forests and encompassed within Ethical Forestry Easement Trust.