In his presentation at Arena Alternative Investment Forum in London on October 19th, Indufor’s Senior Partner Petri Lehtonen described the key drivers for global timberland value and focused on the importance of the industrial infrastructure development.
Industrial infrastructure enables scalable and diversified wood industries and energy production. These, in turn, will be able to appreciate timberland value.
Both risks and returns are higher in frontier markets with no or limited infrastructure, few plantations, unsecured land tenure and limited information, whereas the contrary is true for mature markets with developed industrial infrastructure. Lack of internal growth, stabilised land ownership and nearly perfect information lead to lower risks but also lower returns. This rationale was evidenced with case studies from Brazil, Vietnam, Mozambique and Ethiopia.
Petri’s presentation can be found here.