The global demand on timber isn’t about to change. During the last 100 years the world population has risen from just under 2 billion people, to more than 7 billion today. By 2050 it is expected to break 11 billion, and the appetite for natural resources isn’t likely to slow down. Timber is a valuable commodity that is constantly in demand. According to the United Nations, the demand for timber by 2050 will be double that of today. You don’t have to be an economics major to understand that higher demand combined with a diminishing supply will inevitably lead to higher lumber prices.
This projected demand on limited supplies is fueled not only by the development of countries such as China and India, but from ageing developed nations that face massive and long overdue infrastructure rebuilding. Yes, China’s demand for wood is forecasted to increase in-line with the global population, implying a 55.88% (UN) increase by 2050, but China isn’t equipped with the raw materials to sustain that growth. Take the World Bank funded commercial and residential projects that have China building as many as 50,000 new skyscrapers and twenty new mega-cities the size of New York. The urban population explosion is projected to leap from 572 million to 1 billion by 2025, and all of these people are going to need a place to live and work.
India is in a similar situation. In a 2004 WWF (World Wildlife Fund) report it stated that India is likely to face a severe timber shortage. The shortfall is estimated to be as much as 95 million cubic meters annually by 2050, and the gap will need to be met by sustainable imported timber. The story isn’t much better in Europe either, where according to EU Member States, 40% of timber used in the region is from illegal timber felling operations. The EU’s Forest Law Enforcement, Governance and Trade (FLEGT) have created a task force focused on stopping illegal imports. Trade agreements have been implemented and it now appears these agreements have created a void within the marketplace adding growing pressure to the supply chain which could easily cause wholesale timber prices to increase.
All of these statistics lead to the same destination – the fact that massive amounts of timber will be needed to fulfill every nation’s growth and rebuilding projects, providing a financially comforting and predictable future for timberland owners and investors.
Newly planted, renewable and sustainable plantations, such as the ones we create, will be drawn upon more and more in the decades ahead to fill the supply side gap. Financial experts, institutions, endowments, and high net worth investors are realizing this and have been adding renewable forestry to their investment portfolios in greater numbers than ever before.