High Impact Investment

Forests as an Attractive Asset Class 
 

  • Growing asset class worldwide with an attractive return on investment

  • Unique diversification vs traditional asset classes – more or less uncorrelated

  • Shift from semi-natural forests to high-yield plantations

  • Diversifying away from traditional pulp, sawn timber/logs to include renewable energy, woody biomass-based materials (i.e. liquid fuels, charcoal) and ecosystem markets (carbon, biodiversity)

  • New diverse regimes encompassing high-yield plantations, agriculture, and conservation management systems

  • Positive projections on global demand
     

Gold Standard Carbon Credits

Trees capture carbon dioxide through photosynthesis, and thus represent the largest storage place for carbon in the world. This storage place has a specific value in the carbon market developed over the years since the signing of the Kyoto protocol. The market value is expressed through the price of one metric ton of Co2 equivalents. These are often called “carbon offsets” or “carbon credits”.

In the voluntary market, individuals, companies, or governments purchase carbon offsets to mitigate their own greenhouse gas emissions from transportation, electricity use, and other sources. 

The Nicaforest High Impact Reforestation Program is Gold Standard certified, giving the option to commercialize carbon credits in the premium voluntary market.

Shared Benefit Agreements

The Nicaforest Reforestation Program plants trees on leased land where the payment is paid in accordance with the cashflow from sales of timber and carbon credits. Consequently, no funds are allocated for procurement of land.

This reduces the investment levels dramatically, as well as mitigating both financial and operational risk.

 

There are several benefits with this approach:
 

  • All operations focus on the forestry assets (timber and carbon) as the core business reduces operational costs and risks in the long run. Real estate is a different type of industry and would require a less focused approach. Choice of land vs. utilization of land would have to be a combination of forestry related issues and real-estate issues.
     

  • Not buying land makes it much easier for investors to exit. When the forestry assets are sold during or at the end of the growth cycle (as timber or standing trees), there is no need to find a buyer for the land, which can be a lengthy process in rural Nicaragua.
     

  • Risks are severely reduced. Financial risk is reduced through the much lower investment, market risk is reduced because there is no land to sell, operational risk is reduced through the focused approach, and political risk is reduced though no foreign land ownership.
     

  • The Nicaforest Reforestation Program overlaps Nicaragua’s REDD+ areas as well as areas allocated for the 20by20 Initiative by World Resource Institute. This contributes to security as well as reduced political risk.

Teak

  • Traditional hardwood with a long history and multiple uses

  • Growing demand (and limited supply) for plantation teak with known origin

  • High biomass growth

  • Teak plantations have reached a level of industry and developed practices

  • Major market drivers:

    • Restricted logging of natural forests, especially Asia (banned in Thailand, Laos and India, restricted in many other Asian countries, e.g. Myanmar)

    • Strong demand from large markets, especially China and India

    • Competitive wood properties compared to substitutes

Return on investments

Nicaforest invites investors to share the revenues derived from the establishment and maintenance of forest plantations. The sale of timber throughout the growth cycle represents the largest revenue stream. The return on investment from a reforestation project is very difficult to estimate because of the long cycle. However, benchmarking shows a variation between 8% – 15% based on wood revenues. The sale of Co2 offsets may increase this by 1-4%.

Across Forest AS/Across Nature AS, Storgt. 85,

9008 Tromsø, Norway.  

phone: +47 913 35 558  

e-mail; post@across.no

Nicaforest Plantations S.a, Santo Tomas, Chontales, Nicaragua.  

phone: +505 8995-2125

e-mail; cjperez60@gmail.com or  jhr@nicaforest.com