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A ‘Greenprint’ For Ethical Investment

June 15, 2009Article by Ray Withers

Did you know that buying products made from unsustainable hardwood that doesn’t come from forestry investment management could end up costing you the earth?

The fact is illegal logging of hardwood forests is one of the main contributors to greenhouse gas emissions because deforestation is clearing huge areas of prime trees that act like a sponge to clear the atmosphere of carbon emissions.Add to that the decaying vegetation, burning trees and other logging activities that add to emissions, cutting down unsustainable hardwood forests adds to the world’s eco problems.Preventing illegal logging in the tropics is particularly important because tropical trees store on average 50% more carbon per hectare than species elsewhere.

This is where property investors looking for sound, green ethical investment can step in. by putting cash in to sustainable hardwood forests.The strategy is a simple cycle of life – the money literally grows on the trees not necessarily in the land.

* Buy a plot of land on a commercial sustainable plantation as a forestry investment

* Trees are planted, managed, thinned and harvested hen they are fully grown

* The timber is sold as sustainable hardwood

* The cycle starts again

Investors also improve their green credentials by offsetting their carbon footprint.Generally, an average UK family of four produces 18 cubic tonnes of carbon emissions a year, this could be offset by making a tropical hardwood investment in 300 teak trees plus maintenance costs.A typical investment is Sustainable Timber Hardwood, Anuradhapura, Sri Lanka, offered by UK consultants Property Frontiers, of Oxford.

This investment package offers flexibility on harvesting trees. Harvests are recommended to take place at six years growth to utilise the maintenance and management programmes in place.Crops are continually monitored for signs of pest and disease and crop thinning ensures that the best plants are selected for development.Figures have shown that even investing in only 300 trees can produce a staggering profit of at least £40,000 at when harvested.

For a minimum investment of £10,000, the investor buys 300 agar wood or teak trees and contributes £5,000-£6,000 towards maintenance costs.

* Agar wood trees are harvested after six years, producing a gross harvest value of £60,000, deduct the timber company’s profit share and the investor’s net profit is £41,000.

* Teak trees are harvested after nine or 15 years, when the gross harvest value is £246,450, leaving the investor with an anticipated net profit of £271,540.

A shorter-term option is available for teakThese projections are based on a lumber price of £0.72 per board foot for the first thinning, increasing at an annual rate of 6% for the subsequent thinning and final harvest. The 5% profit share is retained as a harvest fee.The timber company has allowed a generous 10% for harvest and processing costs, which covers the milling the trees.

Author

Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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