Forests are on the decline around the world. From a global perspective, there are many benefits that forests provide the environment. Looking closer, surrounding communities, especially in poorer countries, rely on forests for food and their wellbeing. Investors often see better returns in sustainable forestry than timber-wood investment schemes. Sustainable forestry schemes are part of the larger perspective when it comes to agribusiness, and they focus on returns while also reducing greenhouses gasses, helping local communities and providing jobs, or improving ecosystems, such as water, air or soil quality.
1. Sustainable forestry – good for the planet
Forestry investments, especially sustainable forestry assets, are good for the environment and they can provide ethical and socially responsible opportunities to communities. Those employed to cultivate the forestry plantations often enjoy good pay, and community support can be provided in poorer countries. Schools and housing can be supported by the responsible company providing the forestry scheme, so it’s always good to research what the company provides to the surrounding areas of cultivation. Some companies even donate to great causes and run their own charities. Find out more about How Sustainable Forestry Provides Social Support by reading our feature.
Some environmental benefits that forestry investment schemes can provide include:
- Reducing carbon emissions
- Increasing the conservation of forests and ecosystems
- Increasing the production of sustainable wood and non-wood products
- Increasing the sustainability of local communities and surrounding areas
By investing in responsible sustainable forestry schemes, investors are helping to preserve the green environment. Forests help reduce carbon emissions, which in return helps overcome climate change problems. Diverse ecosystems are also found in forests, which host about 50% of the global plant and animal species. Sustainable forestry schemes can help with maintaining biodiversity, and this is appealing to investors. It’s important to do your research when investing in a company and try to find out if the company actually cares, or if it’s just ‘greenwashing’ (pretending to be sustainable and only using it for marketing means).
2. Favourable global demand for raw materials
The demand for timber is high, especially in China and India, where the demand is parallel to population growth. China and India import timber to help meet the high demand, with China consuming around 150 million and India consuming over 64 million cubic meters of timber every year. It is likely that the demand for wood chips will also increase the demand for timber, since it is increasingly being used as a renewable fuel source. This continuous strong demand makes timber an appealing product to invest in since it is highly likely that an investment in forestry will have a successful return. Always do your research to choose a reputable, trustworthy forestry investment scheme.
3. Great diversification tool
It’s always a good idea to spread your money around. If you invest most of your money in just one area, and it fails, you’ll lose a lot. Forestry can be termed as ‘counter-cyclical’ because what happens in the economy doesn’t always affect forestry investment schemes. The trees and products continue to grow, even if the economy isn’t doing so well. Sustainable forestry schemes can be viewed as inflation-proof. Investing in different types of investments decreases your risk of losing all of your money in one sector. If you are used to investing in the stock market, you can view sustainable forestry as an alternative investment to diversify your portfolio. Always be sure of other risks to consider when choosing a responsible forestry company to invest in.
4. Community support
Sustainable forestry investment schemes can offer community support on certain locations where the forests are cultivated. New jobs can be created in poorer areas, and wages are often higher than the local average, depending on the project of course. This is a good area to consider and research when looking into the different types of schemes available. Some forestry investment schemes can offer funds to local schools, or programs that encourage development in future generations. Not only will you be investing your money, but you can also feel great about helping a local community!
5. Tax benefits
Sustainable forestry schemes often promise great tax benefits, but be sure to take it with a grain of salt. There should also be a return promised, not just great tax benefits. There can be a number of different taxes benefits that is a great plus when it comes to investing in an agribusiness scheme. Depending on your financial goals, this could be an important factor in choosing one agribusiness scheme over another. Always check with your location whether certain tax benefits apply. For example, there may be different governmental rules in the UK rather than the US. You can also consult with a professional financial advisor to have an expert’s opinion in your next investment.
Appealing benefits should always be studied in-depth. Be sure to research all the risks before investing in your next agribusiness scheme. Want more tips? See our blog post on our Top Tips to Consider When Investing in Agribusiness for more information as a great starting point.
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