What is the worst case scenario and risks involved when investing in timber plantations?
As with nearly every type of investment, there are some risks involved when investing in tropical hardwood plantations that you should be aware of prior to purchasing, as well as some common concerns. Since traditional market forces do not affect growing trees, most risks when investing in hardwood are natural, and are as follows:
It is important to note that the need for plantation teak is growing exponentially due to the world’s concerns for the environment. At this point in time, plantations produce less than 1% of all the tropical hardwoods that are consumed worldwide. Every single year, at least 50 million acres of rainforest are destroyed in order to harvest the desirable teak trees contained within. With the world consensus growing greener every day, as well as the world’s desire for beautiful tropical hardwood products increasing every day, it is unlikely that enough tropical hardwood plantations could ever be established to keep teak prices from spiralling.
Hurricanes do on occasion hit the Caribbean coast of Costa Rica; however all of the timber plantations that are offered by Costa Rica Invest are off the Pacific Ocean side of the country, and according to all records available, no hurricane has ever struck any of the areas in which we have established our tropical hardwood plantations.
Although none of our timber plantations are planted in areas that are capable of long term flooding, flash floods may occasionally occur, but this is not detrimental to the growth of the trees.
Due to the heavy humidity and moisture in the air, forest fires are not normally a problem in the tropics. In addition, teak trees are naturally very resistant to fire, and trees that are over 4-6 meters high are not usually damaged by moderate forest fires. Other precautions are also undertaken to deter the risk of forest fires within our tropical hardwood plantations: weeds and vegetation covering the ground are removed before the dry season and firebreaks are systematically built between fields. In addition, 24 hour surveillance is provided by our on-site foresters and management team.
Teak is an incredibly resilient tree. Although your trees are systematically and constantly monitored for immediate action, there are no known pests or diseases within the teak family in general.
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