Over the last several weeks a couple of loggers have been ravaging the hillside nearby a neighbor’s roadway as they clear cut the forest there. The ability of three men with a caterpillar, chained skidder and some saws to decimate a glorious forest into a pile of mud, slash and debris is incredible. Each falling tree grabbed at my soul and I was angry. So I walked off my wooden porch attached to my wooden house, strode over my wooden bridge and hiked up wooden steps here to my all hardwood office. Suddenly I thought “Jeeze”, those guys are working for people just like me who create the demand. The loss of that forest is not their fault, its mine and all the others who use ever increasing amounts of wood. This reminded me of the urgent need for forest mitigation and sustainable forestry. There needs to be a balance between our need to use wood and our need to have forests. Fortunately there are ways we can work towards better wood equilibrium in a profitable way.
One reason I bought heavily forested land in North Carolina and Ecuador is that I believe the value of uncut forests for recreation, oxygen production and wildlife habitat will soar. I am betting a lot of money on this and the wonderful thing is, even if I am wrong the process is such a joy (this is a true inspired investing tactic – see inspired investing at. But I don’t think I am wrong. One reason I am in Ecuador right now is to tromp through woods and look at forest mitigation programs that allow you, when you buy five acres of primary forest to put into reserve, you gain the right to log two trees off one additional acre. This does not seem like much but each tree brings in about $1,100 The profit numbers I have seen are phenomenal. So the story goes. Here is what a business associate down there wrote to me.
“We have found an excellent opportunity in sustainable logging. My research has found good markets for the lumber. We finished the “plan de manejo” of the land and we will be the first company in Ecuador to obtain a permission to do a sustainable harvesting according to the new legislation.
My initial idea is to buy 24.500 acres for total protection at about $120 per acre. This we put in total reserve, This allows us to log 5000 additional acres of forest in an area where we believe a sustainable harvesting is possible. and use the income to pay back our cost of reserving the other land.
We are close to negotiating a deal with Ecuadorian exporters and European importers of lumber and the prices on lumber are the same, or even higher than what we estimated earlier. So we still believe it is an excellent investment. “
The logs are harvested by horse or oxen, so that the forests are not ruined. So the story goes. There is an abundant market for the wood. So the story goes. But I have seen too many stories wrapped around natural resources (wood, gold, oil etc.) to not take any such story without a grain of salt. I trust this associate very much and know he is digging deeply for this, so I’ll be reviewing all this with him and will report my findings here.
What I know for sure is that the time for sustainable forestry is here. Home Depot (bless their souls)) I am told have announced they will no longer sell wood that comes from clear cut forests. We are in an era where values will become more important than value. Consumers will grow more willing to pay more for wood that has been forested in a sustainable way and the recreational value of the land left will rise as well. This is an idea whose time has come and I look forward to helping you find ways to cash in on this harvest as we help restore balance in our environment. Next message will be about investing in water! Until then good global investing!
You can share what Gary learns about sustainable forests in Ecuador at Gary’s next Ecuador course.