Forests have a vital role to play in countering global warming, a fact no longer in dispute. Trees help offset climate change because trees absorb carbon dioxide, one of the main greenhouse gases, better than anything else and store it in their trunks and roots for generations. Many products are reputed to be environmentally friendly. But Investing into Forestry is an opportunity for people to be involved in an ethical and socially responsible business that is genuinely green - and good for the planet - as well as returning healthy financial returns.
While an investment in forestry is perhaps a little out of the norm compared with traditional stocks, shares and bonds, the prospects for steady- long-term growth are excellent. Investing in forestry can be a very good investment as long as you appreciate a couple of things: it is a long-term investment as you are reliant on the time it takes for trees to grow and be ready to be used for timber. And you must not underestimate the management that is needed - a forest needs to be maintained, public access kept in order and the timber marketed.
Forestry as an asset class offers the following benefits to investors:
Forestry investments are considered to be low risk, as the growth is in part biological, to perform counter cyclically to equities and to be less volatile than bonds. These characteristics gives the forestry asset class an important diversifying and risk-hedging quality that can be exploited in multi-asset portfolios.
Timber supplies & thus price are a major driver of forestry returns. Domestic and international demand for timber remains strong from traditional uses and more recently timber is being used to supply the energy market. Due to these buoyant markets, forestry owners are able to achieve competitive prices for their timber. With recent Resource hungry emerging adding to the global demand of commodities, globalization has only added to societies need for more resources in general.
Against a background of increasing concern over environmental issues, forestry investors, having made a socially responsible investment, produce broad environmental benefits such as biodiversity, in addition to sequestering carbon dioxide, the main source of global warming.
Sources: OxigenPlanet, Fountains Forestry