Forests not only help the environment, they help your pocketbook too. Indeed, you can invest and make a serious profit. But they don’t quite work the same way as many markets you may be used to.
Many of these ventures are government-induced and are designed to slow down climate change and preserve biodiversity. Today, we take you through some fascinating things you should know about vegetation investing – its types, how it works, and its impact on the world.
This means the buying and managing of tree assets so that you can earn money through timber growth, the land rising in value, and selling services like carbon credits.
So what qualifies as a forest, first of all? It’s an extensive expanse of area featuring a dense growth of trees and shrubs. A timberland, meanwhile, refers to expanses of trees managed primarily for the purpose of growing and selling wood. For example, the U.S. Department of Agriculture (USDA) considers orchards as agriculture. Also, pure conservation projects that don’t sell timber aren’t part of timberland investing.
Sustainable investing has grown quickly as more people continue to use environmental, social, and governance (ESG) standards. By 2020, sustainable ventures in major markets totaled $35.3 trillion, accounting for 36% of all professionally managed money and up 15% from two years earlier.
A 2024 Deloitte and Fletcher School survey found 79% of global investors now follow sustainable investing rules. That’s a 20% jump over five years. This change happened because of new laws, better returns, and hiring top talent.
In recent years, peer-to-peer digital funding projects have appeared, allowing environmental projects and businesses to obtain funding with the burden shared by numerous different investors. One such project has been the Green Energy project by Maclear in Italy.
These endeavors come in different forms. Each type has its own features and ways to make money. The types include:
Like the name implies, investors buy backwoods land to grow and sell trees. They benefit if the land’s value goes up. In the U.S., there are about 80–90 million acres of timberland worth $100–$200 billion that institutions can invest in.
These are group collaborations run by professionals such as timber investment management organizations (TIMOs). They pool money to buy and manage large tree expanses, and they also sell timber and related products.
Investors pay to protect or plant trees, which absorb carbon dioxide. They then earn carbon credits that they can sell in voluntary markets. In 2024, this market was worth $1.7 billion and is expected to grow by 25% each year from 2025 through 2034.
These are legal deals that limit how land can be used so it stays protected. Investors often get tax breaks or other payments for agreeing to these limits.
Forest investments combine diverse income streams with sustainable woodlands to maintain and grow asset value. Revenue comes from cutting and distributing trees, vending carbon credits, nature-based tourism (like hiking and wildlife tours), and selling tree products such as nuts, berries, and plants used for medicine.
Rangers and land owners take care of the woodlands using eco-friendly methods, such as cutting only so many trees at a time, replanting new trees, and following strict environmental rules to keep nature areas healthy.
They can also employ the help of certified organizations that have obtained certification from bodies like the Forest Stewardship Council (FSC). These certified organizations follow sustainable vegetation management practices when caring for woodlands.
No venture comes without a risk. Forest investments come with risks that investors should be aware of. For example, wildfires in California in 2020 burned 4.3 million acres, showing how natural disasters can reduce profits. There are also market risks, like timber prices fluctuating or new laws that affect vegetation area use.
More than just the profitability, tree endeavors are seen as a smart choice that helps the environment, society, and the economy all at once. It's the reason why individuals with ethical considerations look to invest in it. So, what are these benefits?
Forests absorb huge amounts of CO2 pollution. They soak up around 16 billion tons yearly, slowing climate change. Tropical expanses alone prevent over 1 °C of global warming. Forests also protect wildlife.
These places are home to several land-based plants and animals, including most amphibians, birds, and mammals. They keep the soil in place, stop erosion, and filter water to keep it clean.
Forests create work for 33 million people worldwide, including nearly 1 million in the U.S. woodlands industry. Many of these jobs are in rural areas, boosting local economies.
In addition to creating jobs, tree expanses also help indigenous communities keep their traditions alive. These communities manage over 38 million square km of land globally. Woodlands offer hiking, wildlife tours, and other activities that improve people’s lives and earn money.
Timber investments have grown 10.7% yearly on average since 1987. Over 28 years, they beat stocks and bonds with 9.3% returns.
Forest assets don’t rise and fall like stocks. Their value changes more slowly (6.9% vs. the S&P 500’s 15.9% swings). Wood and carbon credits stay in demand even during inflation or economic downturns.
Even with their benefits, some wonder if such endeavors will last or fade away. Well, we’ve provided you with market trends, real-world examples, and expert opinions to let you decide. Here’s what’s happening:
Here are some things experts are projecting:
Mexico’s forest investment program has reduced poverty, created jobs, and helped communities adapt to challenges, thereby achieving rural development. Costa Rica’s Payment for Environmental Services (PES) program reversed deforestation and doubled forest cover in 26 years by paying locals to protect forests. A 2024 project raised $1.8 million to plant trees and create jobs.
Wildfires and changing laws can hurt investments though. Some solutions are better for fire safety, spreading investments across regions, and insurance.
Forest investments are a smart choice for people who care about the environment. They help fight climate change by storing carbon, protecting wildlife, and supporting local communities, while offering you solid financial returns. It gets better as it helps spread risk in your portfolio.
Yes, there are risks, but experts and trends show these ventures are here to stay. So, if you're looking to grow your finances while doing good for the planet, you should give forest investments a serious thought. And if you eventually invest, make sure to manage them responsibly.
If you’re interested in joining a project with promise, Maclear’s Green Energy project offers a 14.7% interest rate, and 36% LTV.
