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  • Increased opportunities drive investment growth

    2017 - 07.05

    Investments into alternative assets including timberland, forestry and agriculture have continue to grow as opportunities become more widely available.

    In the past, such investments were the remit of wealthy institutional investors, however times are changing as private investors from all backgrounds seek income-producing assets with less volatility than common stocks.

    Recently, timberland has been singled out as a particularly valuable commodity. Such high-profile investors as the Church of England and the Yale Endowment Fund have invested heavily in forestry over the past decade, many of whom saw value increases of around 24 per cent in 2016.

    As trees are a renewable resource, woodland provides a yearly stream of income, and should the price of timber fall, management can decide to postpone a harvest that year until prices return to previous levels.

    Although it is still a common belief that timber investment is particularly risky due to infestations and potential forest fires, the truth is that only 0.5 per cent of the return is lost annually due to these causes. This risk can also be reduced by diversification.

    Overall, the timber market is strong and the growing investments within this sector reflect this.

    PhD student uncovers hope for future of Amazon

    2017 - 07.04

    The University of Bristol have released a report suggesting the Amazon rainforest may be more resilient to the threat of deforestation than previously thought.

    The region, which spans eight countries accounts for about a quarter of carbon absorption from the atmosphere by global forests each year. Consequently, deforestation and the loss of valuable forest cover could have a detrimental effect on climate change.

    Previous data from the University appeared to reveal that a large part of the Amazon forest was susceptible to a 'tipping point'. However, a fourth year PhD student in the Bristol Centre for Complexity Sciences, Bert Wuyts, uncovered a new perspective when he decided to revisit the data for a project.

    “I decided to take a fresh look at the data and a very different picture emerged when I controlled for seasonality and took out all the data points from satellite images that represented locations that had been subjected to human influence.”

    After making this discovery in the first year of his PhD, Wuyts teamed up with Professor Alan Champneys, a theorist in the Department of Engineering Mathematics, and Dr Jo House, an expert on land use change from the School of Geographical Sciences, and for the past two years they have been examining these findings rigorously.

    The positive outcome of their theory is as there is some forest left, deforestation will not lock currently forested areas into a savannah state. This means that recovery of the forest in deforested areas should happen as soon as these areas are released from human pressures.

    The new research casts a hopeful glow over the future of the Amazon rainforest, although there is much more analysis that needs to be done to gain a fuller understanding of this region and the best actions that can be taken to protect it.

    Study links sustainable forestry and food security

    2017 - 07.03

    A new report has outlined the crucial links between forestry and food security and nutrition.

    'Sustainable Forestry and Food Security and Nutrition', a study commissioned by the Committee on World Food Security, found that forest conservation is not only important for safeguarding biodiversity and the environment, but also for maintaining the diversity of diets and aiding the nutrition of communities worldwide.

    A team of experts took two years to complete the report which provides comprehensive global analysis on sustainable forestry and nutrition as well as the trade-offs between this interplay and pressures from market demands.

    Terry Sunderland, who led the research, said: “What our research found is that people living in proximity to forests and tree-based landscapes have better diets than their compatriots, regardless of poverty,” says Sunderland. “If we’re serious about global food security, we can’t ignore the role of forests and trees in direct provisioning for both foodstuffs as well as ecosystem services.”

    The report will be unveiled at various global conferences and summits this year, and it's hoped the findings will lead to efforts to promote forests as food sources and expose communities to the importance of naturally diverse diets. In recent years, there's been a shift to packaged and processed food products, as well as a trend of addressing food security issues by growing more simple carbohydrates.

    “By 2050, there will be an estimated nine billion people in the world,” says Sunderland. “In response to the growth in global population and incomes and to the evolution of diets, a continuation of recent trends would imply that global agricultural production in 2050 to be significantly higher than present. However, with the findings of this report we would hope such expansion would take into account the critical role of forests and trees for food security and nutrition.”

    The goal of this study will be to increase collaboration across sectors to address this issue and improve governance by encouraging communities to work together.

    New palm oil seeds 'could end deforestation'

    2017 - 06.29

    The cultivation of new high-yielding palm oil seeds could allow an increase of oil yields that may eventually end deforestation.

    Smark Tbk, a subsidiary of Golden-Agri Resources, has registered two clones of high-yielding oil palm plant material in Indonesia’s Catalogue of Seeds after receiving approval for use from the Ministry of Agriculture, promising they will yield to the highest levels in the industry.

    Named Eka 1 and Eka 2, the new seedlings are set to allow the firm to increase their yields dramatically without increasing their land use. Specifically, while current optimal conditions allow for palm oil yields of around 8 tonnes per hectare each year, the new seeds could increase yields to 10 tonnes per hectare each year.

    Commenting on the news, President Director PT SMART Tbk, Daud Dharsono said: "This kind of breakthough is at the heart of our intensification efforts, which we see as essential to delivering sustainable production of palm oil to meet a growing global demand. We will continue to identify new technologies and accelerate the adoption of the latest modern techniques to enhance not only our own sustainable agricultural practices, but those of the industry as a whole."

    According to Smart Tbk, the new seedlings were developed naturally using a conventional selection technique and tissue culture from elite palms, and are the result of twenty years of collaboration between SMARTRI and Smart’s Biotechnology Centre.

    When they're fully mature, Eka 1 seedlings are expected to yield 10.8 tonnes of crude palm oil (CPO), with oil extraction levels of 32 per cent. Eka 2 are expected to yield 13 tonnes with oil extraction levels of 36 per cent, making them even more promising. The seedlings are also expected to reduce harvest time from 30 months to 24 months, which could help reduce the industry's impact on forests.

    The risks of monoculture forests in China

    2017 - 06.28

    In the past decade alone, China has spent more than $100 billion on trees.

    The percentage of the country now covered in forest has gone from 19 per cent in 2000, to nearly 22 per cent, according to the Ministry of Environmental Protection, with some regions being completely transformed.

    This recent forest expansion is mostly to do with Beijing's Grain-for-Green program which has funded the reforestation of 31.8 million hectares – the biggest reforestation programme in history. In March, Premier Li Keqiang promised to expand this by turning another 800,000 hectares of marginal farmland into forest and grassland, an area larger than Delaware.

    Although the project is generally seen as a driver of positive change, recently, conservations have discovered that large swaths of newly planted forests provide few habitats for China’s many threatened species of animals and smaller plants – putting the country’s biodiversity at risk.

    Critics say the push to go green shouldn't just be about quantity, but also quality.

    The program was launched in 1999 to guard against the fear of recurring floods, and works by paying farmers to restore forests and grasslands where they had previously planted crops, helping to better protect against flooding and landslides. And in these areas, the project has succeeded – both soil retention and flood mitigation have increased by nearly 13 per cent between 2000 and 2010, according to a government survey launched in 2012.

    On the other hand, biodiverse habitats have decreased by 3.1 per cent since the spread of monoculture forests.

    The Chinese government puts the planting of monoculture forests down to a lack of experience in the program's early years, and they pledge to work on planting more mixed forests.

    President Xi Jinping is an advocate of the country's potential as a global climate leader, especially in the wake of the US withdrawal from the Paris climate accord. He has hopes that China will transform into “the ecological civilisation of the 21st century.” But first, the Grain-for-Green campaign needs to improve for the sake of biodiversity.

    30% of new houses in Russia to be built from wood

    2017 - 06.26

    In a recent boost for the timber industry, it's been announced that a third of new houses in Russia are to be built from wood.

    The corresponding decision was taken following a meeting between the Finance Minister of Russia, Anton Siluanov, and the Head of the Commerce and Industry Ministry, Denis Manturov, which was held in early May.

    Mr Manturov spoke on the importance of developing the forestry industry and outlined how the creation of new pulp, paper and board plants and wooden construction development will become the priorities of the timber processing complex development.

    Deputy Head of the Commerce and Industry Ministry, Viktor Evtukhov, said “A share of wooden housing construction might increase up to 30% of a total number of residential buildings under construction.”

    The Ministry of Construction is currently working out measures for the development of these wooden housing constructions, and norms and standards for designing several storey houses with the use of new materials meeting the “green construction” requirements are being advanced.

    Wooden housing construction is becoming an increasingly popular option globally, as people look for a strong and greener alternative to steel and concrete. The timber market is set to see a marked boost in investments response to this.

    Cees de Jager, general manager of the Binational Softwood Lumber Council, said “Wood buildings offer tremendous economic and environmental benefits.”

    According to a research by Chad Oliver, a forest ecologist at Yale University, the building industry could curb up to 31% of global carbon emissions by substituting concrete and steel with wood from sustainably managed forests.

    Growing recognition of forests leads to investment growth

    2017 - 06.26
    Growing recognition of forests leads to investment growth

    Growing recognition of forests leads to investment growth

    In recent years, investing in the natural world has grown beyond all expectations.

    Data recently published by Forest Trends shows that the amount of private capital invested into the natural world soared by 62 per cent between 2013 and 2015.

    Michael Jenkins, president and CEO of Forest Trends said: “The findings of this report speak to the growing recognition of our forests, our wetlands, our reefs, and other natural landscapes as smart investments – a notion that would have been unthinkable to most mainstream investors just five years ago.”

    “Just in the last two years covered by this report, we’ve seen a huge leap in demand for these kinds of tangible ‘real assets’ from investors. The demand is growing across the globe and from across investment instruments.”

    Forestry investments are seeing a particular surge thanks to a new understanding that investing in forests is an investment into our environment and helps to promote habitats and nature.

    More mortgage products are becoming available to assist people in buying non-commercial woodlands, and others are helping to promote investment into forest plantations intended to generate a commodity – namely logs or pulp, chipwood and fuel.

    According to the Forestry Investment Consultancy (FIC), forestry land is a relatively small investment but can yield returns of up to 7 per cent per annum. They also highlight the tax benefits of such a venture in certain locations.

    For those looking to invest in a less hands-on forestry initiative, there are a number of funds available that allow investors to access the benefits of owning forest without any of the land management responsibilities.

    Fund manager Timo Hakulinen says: “Forests are sound investment targets and offer a less risky alternative compared to, for example, equity investments. Trees keep growing even in times of economic downturn.”

    UK timber imports rise 18%

    2017 - 06.22

    Figures from Timber Trade Federation's (TTF) latest statistics bulletin have shown that UK timber import volumes increased by 18 per cent in the first two months of this year in comparison to a year ago.

    Panel products were up 23 per cent whilst solid wood imports were 16 per cent higher in January and February.

    Data revealed that hardwood imports were up 52 per cent to 100,000m3, although the bulletin urges caution as Finland and Norway are shown as having dramatic increases, with the former’s market share of UK hardwood imports increasing from 1 per cent to 9 per cent and the latter’s going from zero to 8 per cent. TTF suggest this distortion may have resulted from the likely mis-reporting of hardwood volumes.

    Germany, Latvia and Finland were the three European supplier countries who exported the largest increase of volumes to the UK.

    Here are some other key findings from the report:

    Softwood import volumes grew 13.7 per cent to 1.02 million m3.

    The value of sawn goods was around 10 per cent higher compared to a year ago, with planed goods soaring by 42 per cent.

    Plywood imports grew by 15.7 per cent to 299,000m3, with hardwood ply up 1.6 per cent to 180,000m3.

    Softwood ply import volumes rose 46.4 per cent to 119,000m3, boosted by growth from China and Brazil.

    Particleboard volumes rose 32.7 per cent to 147,000m3 aided by much higher volumes from Germany, with matching growth from Poland.

    OSB volumes were down 9.8 per cent to 46,000m3 and MDF shipments grew 48.2 per cent to 131,000m3.

    467 million hectares of 'lost' dryland forests found

    2017 - 06.21

    A new study has uncovered an incredible 467 million hectares of previously unreported forests.

    The dryland forests, equal to about 60 per cent of Australia's size, were found in all continents, but most were discovered in sub-Saharan Africa, around the Mediterranean, central India, coastal Australia, western South America, northeastern Brazil, northern Colombia and Venezuela, as well as northern parts of the Boreal forests in Canada and Russia.

    In Africa, the area known dryland forest area has doubled with the study.

    In total, these discoveries found 45 per cent more forest area than previous surveys.

    The incredible disparity in results can partly be explained by the difficulty in measuring drylands. The fact that they contain very few trees makes them challenging to quantify on a global scale.

    The findings were discovered when the researchers made use of high-resolution satellite imagery from Google Earth Engine and then used a simple visual interpretation of tree number and density.

    Andrew Lowe of the University of Adelaide, who headed the research, said "In the modern digital age we think we know everything about the Earth, but a lot of that knowledge comes from satellite imagery, like Google Earth, but when you see that type of satellite data, you have to make estimations on what type of vegetation occurs on the ground."

    Drylands have a history of being underappreciated by the timber industry, but this study has proven that they have a bigger capacity to support trees and forests that initially realised.

    World's largest engineered timber office built before 2019

    2017 - 06.21

    Next year, the tallest and largest engineered timber office building in the world is due to be built in Brisbane.

    Reaching a height of almost 45m, the ten floor tower designed by Bates Smart will become the headquarters of global engineering firm Aurecon.

    Australia Minister for Infrastructure and Planning, Jackie Trad, joined others at the launch of the project at the RNA Showgrounds redevelopment in Bowen Hills.

    The building, set for completion in late 2018, includes three bespoke ground level retail tenancies built using a revolutionary building timber technology called cross laminated timber (CLT) and glulum (glue laminated timber) which has a structural strength akin to traditional concrete and steel.

    CLT has a far lower carbon footprint than other building materials, the production process produces zero waste, and timbers are sourced from certified sustainably managed forests. Chris Lock, CEO of investment company IIG, said the new tower was a glimpse at the future of timber in construction.

    “We’re committed to helping move Australia to a low-carbon future; we look for property investments with excellent potential for environmental sustainability; where we can fund best-in-class construction, or actively manage existing properties to drive energy efficiency and very positive social outcomes,” he said.

    “We believe our approach helps drive demand for real estate that benefits the environment and the wider community, and ultimately delivers attractive returns for IIG’s investors.”

    This move comes amid an increased trend for using timber in construction.