Timber – A Renewable Resource That Demands Reforestation
CNN recently aired an eye-opening segment titled, "A Planet in Peril." Have you seen it? It's an extremely powerful piece that covers the deforestation of the Amazon rainforest and the effects that it has on our world around us. The largest rainforest in the world, covering nearly 70% of Brazil, produces 20% of the Earth's oxygen and plays a large role in climate control. About one-fifth of the Amazon has disappeared in the past three decades. The causes are many: Logging, both legal and illegal; construction of homes and roads; and agri-business clearing land to plant crops or graze cattle. A sad truth is that only 7% of all harvested forests worldwide are reforested. That's right only 7%! Tropical rainforests that are rich in biodiversity and are being cut down for timber and paper. Trees that have taken 200 years to grow can be cut down in five minutes with a chain saw. Modern machinery can move them forest to factory with incredible ease and efficiency. In what seems like mere moments our forest are turned into products that feed our world's hunger for timber – construction, furniture and paper.
The demand for timber, and its downstream products, is ever increasing. The world's appetite for timber is downright insatiable. As unbelievable as it may seem, the country of India alone will see its timber demand grow from 58 million cubic meters in 2000 to 85 million cubic meters in 2008 and to over 150 million cubic meters by 2018. That is almost a 300% increase in demand for timber products in less than 10 years. And India is not alone. China's paper pulp consumption was 21 million cubic meters in 2009 and is estimated to be on the plus side of 54 million cubic meters by 2019. In 10 years China will consume twice as much in pulp. And that's just pulp. They expect to import over 48 million cubic meters of wood per year to satisfy demand. The story is much the same around the world; demand for timber, as it has been since man first started using it to warm themselves, cook meals, and fashion tools; is constantly on the rise.
Ok, now the crazy part, supply is dwindling. As the rainforests fail to be replanted, the pine beetles terrorize the forests of North America, and forest fires run rampantly wild, alternative harvesting techniques and reforestation are mandatory. The identification of fast growing tree species, such as bamboo, the albizia and the paulownia, provides a foundation for fast growing solutions to age old problems. Governments around the world are more focused than ever on minimizing destruction and incentivizing reforestation; using both the carrot and the stick. One such program is currently in full swing in Nicaragua under the guidance of Maderas Futuro. They have worked with the Nicaraguan government on an approved reforestation project that allows them to plant, grow, harvest and sell hardwoods in Nicaragua. Their back to basics approach focuses on people, planet and profits. Located near San Juan del Sur, on the Pacifica coast of Nicaragua, Maderas Futuro has over 4,000 acres of farmable land and the ability to obtain a near endless supply of rich tree growing earth.
Help the planet by creating new ecosystems and carbon sinks that can absorb vast quantities of carbon dioxide. Planting new forests for future harvests helps relieve the strain on existing ones and creates alternative, sustainable timber sources. By investing in Maderas Futuro, you not only get to help the local farmers and the planet but you will profit from the simple law of supply and demand. As the earth’s population grows, the demand for timber increases, and worldwide supply dwindles, you can benefit through conscientious participation in private timber ownership. You will be positioning your portfolio in one of the best performing asset classes while helping to create a better world for future generations. To learn more about this project, the investment and how you can participate in reforestation by having 1000 paulownia trees and 500 local hardwood species planted on your privately owned and locally managed timber farm, contact Dave Drummond at ddrummond@georgetowntrust.com.
