Forestry Investment Paper

Investment

Investment

Introduction

Forestry investment can be said to be a very unique investment option as compared to other existing money markets. Timber investment for example is most evident in the long investment period of growth. Southern pine for example would require a length of between 45 to 60 years from the time of seed to harvest (Siegel, 1996).Eastern hard woods may take a longer period of between 60 to 80 years before it produces some quality saw timber products. However, the investment horizon can be shortened to about 25 to 35 years where planted Southern pine has intensive management. In other words, intensive management may shorten the said plantations but still remains lengthy a period to invest. Other benefits under forestry investment (apart from wood products) include wildlife that could be non-game or game species, provision of quality water, outdoor recreation , hunting leases and the natural beauty that comes with it. An investor can thus purchase a number of acres he wishes to, with the timber age classes he desires, and ranging from seedlings to fully mature trees (Siegel, 1996).

Basing on the historical background, forestry investments or rather timberland investments commenced in the early 1980’s (Binkley, 2005). This means that it has had such a long experience in the field of investment and thus can be said to have fairly developed today. The rewards associated to forestry investment more often than not include much more as opposed to just financial returns. The benefits that are not reflected on the balance sheet include the sense of pride accruing from efficiency in stewardship of the resource and ownership satisfaction. These intangible benefits enable owners to hold onto tim...

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...e diseases and insect pests whose risk is high because of the difficulty in detection.

Conclusion

In a nutshell, pro investment into forestry has many advantages compared to other money markets. These advantages are evident under plantation forestry so as to increase the likelihood of obtaining high profits from such an investment. However as discussed above, forestry investment to a smaller extent faces certain risks and challenges that are not experienced in other money markets.

References

Binkley, C. (2005). A Global Emerging Markets Forestry Investment Strategy, Washington D.C: Suit 900.

P.Harrison. (2002). World Agriculture: Towards 2015/2030 Summary Report. Food and Agriculture Organization of the United Nations, pg 66

Siegel, W. C. (1996). Forest Owners' Guide to the Federal Income Tax, United States: DIANE Publishing.