Financial returns from forestry

New Zealand has the best growing conditions in the world for plantation forestry, in particular  for Pinus radiata & Douglas Fir forests.Consequently New Zealand is a great location  for optimal  financial returns from forestry.

Returns from Forestry investment rely on a natural wealth creation process  which continues year after year.As the trees get taller & fatter, you get wealthier  therefore the faster the trees grow, the quicker your investment gains value.

Wood products supply & demand

Forestry is a tangible asset, it cannot be shifted or stolen , &  historically  pricing for timber has always kept pace with inflation  providing real  financial returns for investors.

Of course  the financial  returns also depend on supply & demand.According to Dr WRJ Sutton, there will be a projected shortfall  of wood growing to  2,000,000 m3  by 2050.Only plantation forests will be able to bridge the resulting gap in supply.

This shortfall  is due to several factors:

• Burgeoning demand for wood products from China & India & other countries in Asia for buildings

• Supply of  timber from indigenous forests  is running out as vast areas are  being set aside for national parks & protected  reserves

• Illegal logging is being policed more heavily

• There is an ever dimishing supply of productive land  for forestry as  this land is also needed for food production which is also increasing

• Energy prices  will increase & there is simply no energy efficient  or environmentally acceptable substitute for wood

• Consumer demand for renewable and recyclable products is growing

• Ambitious bio-energy targets set by many countries are driving demand for wood pellets and other forest-based fuel

In fact the  domestic supply gap in China alone is projected to reach approximately 150 million m3 (roundwood equivalent) by 2015 — or a volume that is more than the entire Canadian timber harvest in 2009 — a strong indication that China’s wood imports must continue to rise in the short- to medium-term period to match with projected consumption

Consequently log prices are moving up & your Enzo Carbon Forest bond is expected to increase in value accordingly.

Returns from Carbon Trading

An alternative source of revenue  for  forestry investments   can be obtained by selling carbon credits.The selling of carbon credits is a  fast growing market.A recent New York Times article described carbon trading as one of the “fastest-growing specialties in financial services”...and companies are scrambling to get “a slice of a market now worth about $30 billion and that could grow to $1 trillion within a decade.” The article, entitled, “In London's Financial World, Carbon Trading Is the New Big Thing,” continues: “Carbon will be the world's biggest commodity market, and it could become the world's biggest market over all.”₁

However you should be aware that if  the Enzo Carbon Forest Trustees decide to extract revenue from the forest via the selling of carbon credits, then if the forest is subsequently harvested for timber, those carbon credits will have to be repaid.This is a management decision that the trustees will  make as the forest grows & will be based on market conditions.

whatever befalls in accordance with nature shall be accounted good

Cicero