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Swedish buffer fund AP2 seeks to grow timber, agricultural portfolio

Swedish buffer fund AP2 seeks to grow timber, agricultural portfolio | Timberland Investment | Scoop.it

Sweden's second buffer fund hopes to increase its agricultural and timberland investments beyond the current 10% strategic benchmark for real estate, the fund's chief investment strategist has told IPE.


Speaking shortly after the SEK241bn (€28bn) AP2 announced returns of 13.5% in 2012, boosting its assets under management to the highest-ever level, Tomas Franzén said he was "quite pleased" with the results.

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"I would say agriculture and timber is probably a better diversifier [than real estate]. So, to the extent we find the investment vehicles we think will add the value we expect, I guess we will continue building that as well."


He said a potential change in the strategic asset allocation would see overall alternatives exposure increased alonside the current 10% real estate ceiling – and that the latter would likely be weighted in favour of agriculture and timber.


"As long as we get the kind of investments we have been getting so far, it will be more valuable for us to tilt it towards timber and agriculture," he said.


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Timberland Investment
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Sponsored by...

Sponsored by... | Timberland Investment | Scoop.it

Prentiss & Carlisle  is one of the largest timberland asset managers in North America. P&C provides ongoing management services on approximately 1.75 million acres of timberland located in Maine, Michigan, New York, Vermont, Wisconsin, Ontario and Quebec. Nearly every acre under management is certified by the Forest Stewardship Council through either our clients or through P&C itself, which holds FSC certificates for both Forest Management and Chain-of-Custody.


P&C provides turnkey land management from long-range forest planning through on-ground forestry, marketing of forest products, harvesting, transportation, road construction and maintenance, stump-to-mill accounting and reporting, client cash management, administration of third-party relationships, public advocacy/representation and strategic asset planning. P&C also provides specialized consulting services in related areas of expertise:

  • Timber inventory design, execution and analysis
  • G&Y modeling and timber harvest scheduling
  • GIS mapping and data management services
  • Timberland valuations and appraisals
  • Acquisition and disposition due diligence
  • Market studies
  • Timber supply modeling


About this magazine

Our aim is to provide a gathering place for news and opinion about timberland investing. We cover both publicly traded issues including listed timber companies, real estate investment trusts (REIT's), and exchange traded funds (ETF's), and the more private world of institutional investing in timberland. Our focus is on: the rationale for investing in timberland; performance of publicly traded timber investments; timberland deals and transactions; timber supply, demand and prices, and; public policy issues that impact timberland investing. Not interested in all of these topics? You can easily filter the stories by using the Tags button above.


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Prentiss & Carlisle newsletters

Quarterly updates on conditions in our operating regions


Timber Mart North 

Lake States price reporting service published by P&C


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Rayonier Completes Two Timberland Acquisitions in the U.S. South and Pacific Northwest for $60 Million

Rayonier Completes Two Timberland Acquisitions in the U.S. South and        Pacific Northwest for $60 Million | Timberland Investment | Scoop.it
Rayonier Inc. RYN, -0.51% announced today the company has acquired approximately 18,000 acres of high-quality timberlands in southwest Louisiana and northwest Oregon in two separate transactions from BTG Pactual Timberland Investment Group. Both properties are located near existing Rayonier landholdings:

The Louisiana property – known as the King parcel – consists of approximately 12,200 acres of high quality, well managed southern pine timberland located in strong timber markets. The property was purchased for $25.5 million. It contains merchantable inventory of approximately 560,000 tons, is comprised of approximately 86% plantable lands, and is expected to improve the company’s sustainable yield by approximately 45,000 tons per year. This acquisition expands Rayonier’s ownership in Louisiana to approximately 150,000 acres.
The Oregon property – known as the Scappoose parcel – consists of approximately 5,600 acres of highly productive, well-stocked and highly-operable timberland tributary to strong domestic and export markets in the northwest corner of the state, near current company holdings in southwest Washington. The property was purchased for $34 million. It complements the age-class profile of the company’s Pacific Northwest timber holdings, contains merchantable inventory of approximately 102,000 tons (12.7 MMBF) of which an estimated 95% is high-value Douglas-fir, is comprised of approximately 88% operable lands, and is expected to improve the company’s sustainable yield by approximately 35,000 tons (4.4 MMBF) per year. This acquisition expands Rayonier’s footprint into the state of Oregon and grows Rayonier’s total Pacific Northwest ownership to approximately 374,000 acres.
Sam Radcliffe's insight:

More than $2000 per acre in the South and more than $6000 per acre in the PNW. Or another way: $45.50 per ton of inventory in the South, $333 per ton in the PNW. Or another way: $566 per ton of increased allowable cut in the South, $971 per ton in the PNW.

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Chinese demand for US hardwood soars to 1.53b

Chinese demand for US hardwood soars to 1.53b | Timberland Investment | Scoop.it
The export value of United States hardwood to China jumped 34 percent year-on-year in 2014 as the country increased its demand for more sustainably sourced materials for its urbanization program and for environmental projects.
The value of US hardwood products sold into China reached $1.53 billion last year, according to data from the foreign agricultural service of the US Department of Agriculture.
The most popular timber was red oak, tulipwood and ash, mainly for furniture, veneers, flooring, and decorative plywoods. The market now accounts for 42.6 percent of total export volume of US hardwoods, by far the world’s largest single customer.
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Gary Glenn, CDPE's curator insight, June 29, 6:22 PM

US Trees go to China

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Alibaba’s Jack Ma Buys $23 Million Property in New York’s Adirondacks

Alibaba’s Jack Ma Buys $23 Million Property in New York’s Adirondacks | Timberland Investment | Scoop.it

Jack Ma, the Chinese billionaire and co-founder of e-commerce giant Alibaba, has quietly made a new acquisition: a 28,100-acre property boasting trout streams, woodlands and a maple-syrup operation in New York’s Adirondacks. Mr. Ma paid $23 million for the sprawling upstate New York property, which he bought principally for conservation purposes, but also plans to use as an occasional personal retreat, according to a spokesman.


The estate, known as Brandon Park, includes more than 9 miles of the St. Regis River, as well as lakes, streams, ponds, forests and a 1940s log camp behind its gated entrance. There are two homes on the property, as well as lean-tos and a horse barn.

The land was originally part of neighboring Bay Pond, a private nature preserve created around the turn of the last century by William A. Rockefeller Jr., a co-founder of Standard Oil. In 1939, Brandon was acquired by the family of Wilhelmina du Pont Ross. The Ross family in 1999 transferred the property into Brandon LLC, according to public records. Brandon was first listed for sale in 2012 with an asking price of $28 million. In 2014 the asking price was lowered to $22.5 million.

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Vermont produces guide to help foresters deal with climate change

Vermont produces guide to help foresters deal with climate change | Timberland Investment | Scoop.it
The Department of Forests, Parks and Recreation released a guidebook last month on adapting forests for climate changes.
The guidebook, titled “Creating and Maintaining Resilient Forests in Vermont: Adapting Forests to Climate Change,” was written with the purpose of supplementing current forest management planning and practices with forest-adaptation strategies that are more relevant to the current climate change trends and projections.
Immediate risks to the forests due to climate change are increases in chance of fire, changes in freeze cycles that could disrupt regular cone production among many others, according to the guidebook.
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13,000-acre koa forest near Hilo up for sale

13,000-acre koa forest near Hilo up for sale | Timberland Investment | Scoop.it

Honolulu-based Finance Factors is selling a 13,129-acre property known as the “Hilo Koa Forest.”
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The price tag: $14 million, or $1,066 per acre. Whoever buys it will become the the 20th-largest private land owner in the state and the eighth largest on the Big Island, according to the listing.
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While the majority of the acreage is zoned for conservation use, about 1,264 acres are zoned agricultural use and could be developed with 20-acre minimum lot sizes, according to Steven Sofos, president and CEO of Sofos Realty Corp., one of two firms marketing the property.
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In addition to a dense forest of koa, an exotic hardwood endemic to Hawaii , the property features rivers, waterfalls, ocean and mountain views, and a variety of colorful native birds, according to Sofos. A 2002 survey identified 31 native flowering plant species.
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Currently, there are no structures or utilities on the parcels. However, the 1,264 acres of agricultural land could potentially be developed into more than 600 20-acre lots. Permitted uses include an array of agricultural uses, a single-family dwelling or farm dwelling, forestry, equestrian and wind energy uses, according to Sofos. Additional uses may be possible with a permit.
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Just to the north, 3,137 acres of largely untouched forest near Akaka Falls, known by its owners as the “Ohana Sanctuary,” is being sold at an asking price of $25.3 million, or $8,065 per acre. That property hosts the third largest old-growth koa forest on private property, according to its listing.

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World Demand for Forestry Equipment to Reach $9.3 Billion in 2019

World Demand for Forestry Equipment to Reach $9.3 Billion in 2019 | Timberland Investment | Scoop.it
World demand for forestry equipment (including both purpose-built and converted machinery) is forecast to climb 4.5 percent annually to $9.3 billion in 2019.  This will represent a moderation from the 2009-2014 pace of increase, a period during which market gains were spurred by a rebound in roundwood production from lows posted during the 2009 global recession, as well as by the institution of new engine emissions standards in the European Union (EU) and US, raising average equipment prices and total spending.  Analyst Ken Long further notes that “sales advances will be driven in part by the ongoing mechanization of forestry operations in developing regions.” These and other trends are presented in World Forestry Equipment, a new study from The Freedonia Group, Inc., a Cleveland-based industry research firm.
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Wood Bioenergy Update

Wood Bioenergy Update | Timberland Investment | Scoop.it

Wood bioenergy projects have slowed in the U.S.; meaningful potential growth, if realized, will occur in the next five years.
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Regionally, the U.S. North still has the largest share (47%) of viable wood bioenergy projects while the South accounts for 53% of the potential wood use for bioenergy

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The single largest source of growth in U.S. wood bioenergy markets remain pellet projects planned and under construction in the South built to serve export markets to the U.K. and EU.

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Navy, Pope Resources agree to Dosewallips easement

Navy, Pope Resources agree to Dosewallips easement | Timberland Investment | Scoop.it
Naval Base Kitsap expanded the buffer around its operations Monday by purchasing a restrictive easement with Pope Resources on 3,392 timbered acres near the Dosewallips River.

The Navy is spending $4.9 million to prevent significant development or construction from ever occurring in the area. Pope agrees to continue to do no more than it is now — manage and harvest the trees.

At the same time, Washington State Parks bought 215 acres running two miles along the river’s length that will be added to Dosewallips State Park. It used a grant from the Salmon Recovery Fund and matching funds from the Navy for the purchase.

The Trust for Public Land, a national conservation organization, brokered the deal.
Sam Radcliffe's insight:

$1,444 per acre for a working forest easement, demonstrating that easement prices can vary widely depending on the specific location and development potential of the property.

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Launch of Climate Change Report

Launch of Climate Change Report | Timberland Investment | Scoop.it

A new report from Mercer modelling the potential impact of climate change on investments, has found investors cannot ignore the implications for investment returns.

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The investment modelling in Mercer’s report estimates the potential impact of climate change on returns for portfolios, asset classes and industry sectors between 2015 and 2050, based on four climate change scenarios and four climate risk factors.
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The investment modelling supports the following key findings:

(1) Climate change will give rise to investment winners and losers

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(2) The biggest risk is at the industry level
Differentiation between winners and losers is most apparent at the industry level – For example, depending on the climate scenario which plays out, the average annual returns from the coal sub-sector could fall by anywhere between 18% and 74% over the next 35 years...

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Conversely, the renewables sub-sector could see average annual returns increase by between 6% and 54% over a 35 year time horizon (or between 4% and 97% over a 10-year period) depending on the climate scenario.


(3) Asset-class return impacts will be material, but vary widely by climate change scenario
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A 2°C scenario could see return benefits for emerging market equities, infrastructure, real estate, timber and agriculture. A 4°C scenario could negatively impact emerging market equities, real estate, timber and agriculture.

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Calpers to Cut External Money Managers by Half

Calpers to Cut External Money Managers by Half | Timberland Investment | Scoop.it
Only the group that invests in timber and infrastructure projects like roadways is expected to rise, from about six managers to 10. Some 15 slots will go to upstart firms that Calpers plans to identify over the next several years.
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New Timbervest Website Makes it Easy to License Land for Hunting and Outdoor Recreation

New Timbervest Website Makes it Easy to License Land for Hunting and Outdoor Recreation | Timberland Investment | Scoop.it
Timbervest LLC is making it easier for hunters and other outdoor enthusiasts to license prime timberland with the launch of its new interactive land licensing website, www.timbervesthunting.com. The Atlanta-based timberland investment and management company offers recreation license opportunities for hundreds of thousands of acres of real estate in 14 states across the U.S. Southeast and Gulf regions. The new website includes an interactive map of available properties, called recreational license units (RLUs). Users can click on an RLU and instantly see acreage and license price, as well as maps showing general location, aerial photography and topography.
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Plum Creek sells 6,500 acres to conservation group

Plum Creek sells 6,500 acres to conservation group | Timberland Investment | Scoop.it
The Nature Conservancy in Maine has purchased more than 6,500 acres of diverse forestland, including old growth and sub-Alpine fir forest, southwest of Jackman.

The purchase from Plum Creek Timber Co. will allow the Nature Conservancy to expand its Leuthold Forest Preserve to more than 16,000 acres.

The property includes remote ponds and nearly 15 miles of streams that provide habitat for Eastern brook trout as well as waterfowl and wading birds.
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Tacoma’s Murray Pacific Corp. selling Lewis County timber lands to California forest giant

Tacoma’s Murray Pacific Corp. selling Lewis County timber lands to California forest giant | Timberland Investment | Scoop.it
A family-owned Tacoma company that has owned and managed thousands of acres of timberland in Washington for more than a century is selling its Lewis County lands to an aggressive California wood products company.

The acquisition of Murray Pacific Corp.’s 54,000 acres of forested land is Sierra Pacific Industries’ latest foray into the timber business in Washington. The sale is expected to be consummated by the end of July.

“The sale marks the end of Murray Pacific’s 104-year history in the timber business, and ensures that the timberland it has carefully managed for many decades goes to new owners with similar values,” the Tacoma-based company said Friday in a news release.

Toby Murray, the firm’s chief executive officer, said the company and the family that owns it are not going away.

“We’ve been in the investment business for more than 25 years now. This sale will give us much more money to invest,” he said.
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Judge: Timberland value plummets after conservation easement

Judge: Timberland value plummets after conservation easement | Timberland Investment | Scoop.it
More than 187,000 acres of forest in Minnesota fetches a lower price when you have to sell it all in one chunk.

That was the ruling this month of a Minnesota Tax Court judge who rejected the land appraisals from four Minnesota counties and delivered a victory to UPM Blandin, which owns the giant baby blue paper mill in Grand Rapids.

The judge ruled that Blandin’s forest — restricted by a conservation easement with the state — is worth about one-eighth the collective value quoted by the county’s assessors.

As a result, the tax base will decline in four counties; Itasca County, where most of the land is, will be hit hardest. The ruling also sets precedent for how swaths of forest in state conservation easements will be valued and taxed in the future.
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25th anniversary of spotted owl listing: fewer owls, less timber industry

25th anniversary of spotted owl listing: fewer owls, less timber industry | Timberland Investment | Scoop.it
The heated debate over whether to curtail the logging of old-growth forests to protect the northern spotted owl was at full throttle when the federal government declared the bird a threatened species June 22, 1990.

At the time, environmentalists worried that the federal plan would fall short of saving the spotted owl.

Timber interests worried that a wave of environmental rules would gut the Olympic Peninsula’s wood-products industry and devastate communities.

Twenty-five years later, the effects of the landmark decision can be seen in the reams of economic, industry and environmental data routinely gathered by state and federal governments. The outcomes are by turns expected, disheartening and surprising.

A quarter-century of state and federal data and studies show:

■   The number of spotted owls on the Olympic Peninsula declined an estimated 40 percent between 1992 and 2006. The federal study may be updated later this year.

■   Between 1988 and 2013, annual timber harvests by all public and private owners in Clallam, Grays Harbor, Jefferson and Mason counties plunged 64 percent to 753 million board feet.

■   Timber harvests on the Olympic Peninsula’s federal lands plummeted 96 percent to 10.8 million board feet during the same period.

In 1988, 13.2 percent of the region’s commercial timber came from federal lands. By 2013, the figure was 1.4 percent.

■   Private timber harvests on the Olympic Peninsula plunged 61 percent to 598 million board feet during the same period. Over that time, timber companies on the Peninsula supplied between 69 percent and 92 percent of commercial logs.

■   The number of wood-products mills in the Olympic Peninsula’s four counties sank 71 percent to 32 mills between 1988 and 2012.

The Olympic Peninsula’s diminished wood-products industry is the result of 25 years of trends, decisions and events, of which the listing of the spotted owl is one.
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Alabama’s timberland acreage increases to 23 million acres

Alabama’s timberland acreage increases to 23 million acres | Timberland Investment | Scoop.it
All it takes is a drive down virtually any road in Alabama for one to come to the conclusion that there is an abundance of timberland – commercial forestland – in the state. This conclusion is substantiated by 2014 Forest Inventory & Analysis (FIA) data which shows that the amount of timberland in Alabama has increased to an all-time high of 23 million acres. The only states in the nation having more timberland than Alabama are Georgia and Oregon. These 23 million acres of timberland account for 69 percent of Alabama’s total area, an increase of 360,000 acres since the year 2000.

Despite the perception of some that trees and forests are vanishing, FIA data also shows an increase in timber volume over previous years. The fact is that the amount of timber growth exceeds the amount of timber being harvested annually. More specifically, for every ton of timber harvested, 1.55 tons of new growth are added to our forests each year. Total timber volume has increased 18.7 percent since 2000 to a total of 1.17 billion tons. Softwood timber volume (primarily pine species) has increased 31.1 percent, while hardwood timber volume has increased 7.6 percent.
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Lothian sees returns boosted by listed infrastructure, timber

Lothian sees returns boosted by listed infrastructure, timber | Timberland Investment | Scoop.it

Strong performance from listed infrastructure and timber holdings saw Lothian Pension Fund return 16.5% last year, exceeding its benchmark by several percentage points.
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“Within alternatives, the bond portfolio generated very strong returns of 28%, while the timber assets returned 25% and listed infrastructure returned 23%,” it said.

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At the end of March, Lothian was slightly overweight equities, accounting for 69.1% of assets, with a further 6.1% in index-linked assets and 21% in alternatives. It has returned 8.9% per annum over the last decade, 1.3 percentage points above benchmark.


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Rayonier (RYN) Approves $100M Common Stock Buyback Plan

Rayonier (RYN) Approves $100M Common Stock Buyback Plan | Timberland Investment | Scoop.it
Rayonier (NYSE: RYN) announced that the company’s board of directors has approved the repurchase of up to $100 million of the company’s common shares. Repurchases may be made at management’s discretion from time to time on the open market or through privately negotiated transactions. The repurchase program has no time limit and may be suspended for periods or discontinued at any time.

"This share repurchase authorization is an important component of our capital allocation plan, underscores our commitment to creating value for shareholders, and demonstrates our conviction in the underlying net asset value of the company relative to the current share price," said David L. Nunes, president and CEO.
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The Rise of Separate Accounts

The Rise of Separate Accounts | Timberland Investment | Scoop.it
Separate account mandates, which hit something of a plateau between 2006 and 2012, are becoming more of a force to reckon with as both investors and managers discover their attributes. Preqin said Wednesday that private real separate accounts hit a new high for raising capital in 2014, and have already comprised more than a quarter of the funds closed as of mid-May this year.

““The growth in separate account use represents a change in the way investors access the real estate asset class,” says Andrew Moylan, head of real assets products with Preqin. “Larger investors are utilizing their size to put large amounts of capital to work, gain greater control of investment decisions and negotiate better terms. Separate account structures are likely to continue to grow in prominence with rising investor appetite and fund managers offering more separate accounts to investors.”

Over a seven-year period spanning the prior market peak and the global financial crisis, separate accounts accounted for 8% of the total number of private equity real estate funds and just 7% of the total capital raised, Preqin says. Since 2013, that average has reached 22% of the number and 15% of the aggregate capital, while more capital--$17.8 billion—was raised through separate accounts in ’14 than in the eight prior years combined.
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Fighting Forest Fires Before They Get Big—With Drones

Fighting Forest Fires Before They Get Big—With Drones | Timberland Investment | Scoop.it
AT 10 AM on Friday, May 15, wildland fire season kicked off in California. Officials from the Bureau of Land Management, the US Forest Service, and a few other agencies gathered at the Kern County Fire Department Headquarters in Bakersfield to, if not celebrate, at least observe the moment. Everyone knew they were looking at a rough year. The ongoing western drought will make sure of that.

Now, a team of researchers believes they may be able to help. The idea is to enable early location and identification of fires using drones, planes, and satellites mounted with special infrared cameras. They’re calling it the Fire Urgency Estimator in Geosynchronous Orbit—or Fuego—and once fully operational the system could spot new wildfires anywhere in the Western US barely three minutes after they start. “All year round is going to be fire season now,” says Carlton Pennypacker, an astrophysicist at UC Berkeley and lead researcher on Fuego. “That makes this more urgent.”
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Deer hunters seek $19 million to save forest

Deer hunters seek $19 million to save forest | Timberland Investment | Scoop.it
The conversion of thousands of acres of central Minnesota’s pine forests to potato fields has sparked environmental concern.

Communities, citizens and state officials are worried the transformation is polluting and depleting aquifers.

But there’s another worry: loss of wildlife habitat.

In response, the Minnesota Deer Hunters Association (MDHA) is proposing a novel and ambitious $19 million plan to buy about 10,000 acres of forest from Potlatch Corp. in Cass, Wadena and Hubbard counties to prevent their conversion to cropland, reopen them for public hunting and allow people to use them to access thousands of acres of other public lands.
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BMO urges Grief to liquidate timberlands

Sam Radcliffe's insight:

Mark Wilde values the ~250,000 acres of Grief timberland at ~$1,800 per acre.

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How Europe’s climate policies led to more U.S. trees being cut down

How Europe’s climate policies led to more U.S. trees being cut down | Timberland Investment | Scoop.it
For the sake of a greener Europe, thousands of American trees are falling each month in the forests outside this cotton-country town.

Every morning, logging crews go to work in densely wooded bottomlands along the Roanoke River, clearing out every tree and shrub down to the bare dirt. Each day, dozens of trucks haul freshly cut oaks and poplars to a nearby factory where the wood is converted into small pellets, to be used as fuel in European power plants.

Soaring demand for this woody fuel has led to the construction of more than two dozen pellet factories in the Southeast in the past decade, along with special port facilities in Virginia and Georgia where mountains of pellets are loaded onto Europe-bound freighters. European officials promote the trade as part of the fight against climate change. Burning “biomass” from trees instead of coal, they say, means fewer greenhouse gases in the atmosphere.

But that claim is increasingly coming under challenge. A number of independent experts and scientific studies — including a new analysis released Tuesday — are casting doubt on a key argument used to justify the cutting of Southern forests to make fuel. In reality, these scientists say, Europe’s appetite for wood pellets could lead to more carbon pollution for decades to come, while also putting some of the East Coast’s most productive wildlife habitats at risk.

“From the point of view of what’s coming out of the smokestack, wood is worse than coal,” said William H. Schlesinger, the former dean of Duke University’s Nicholas School of the Environment and Earth Sciences and one of nearly 100 scientists to sign a letter to the Environmental Protection Agency last year asking for stricter guidelines on using biomass to generate electric power. “You release a lot of carbon in a short period of time, and it takes decades to pull that carbon back out of the atmosphere.”
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The Conservation Fund chosen to manage NCSU’s Hofmann Forest

The Conservation Fund chosen to manage NCSU’s Hofmann Forest | Timberland Investment | Scoop.it
The Endowment Fund of N.C. State University has chosen a national nonprofit organization to handle land-use negotiations for the 79,000-acre Hofmann Forest.

The Conservation Fund, based in Virginia, has a dual mission of environmental protection and economic development. It was one of 14 entities that sought the contract after NCSU officials announced in March that they would keep most of the forest and seek to generate income for the College of Natural Resources by selling various rights and easements.

The university had earlier agreed to sell the property in Eastern North Carolina for $131 million to a group that included timberland investors and agribusiness officials. Now university officials say they want to conserve as much as 70,000 acres and maintain access for students and faculty.

The Conservation Fund, supported by the Atlanta-based law firm Sutherland, Asbill and Brennan, will seek the carry out the university’s plan for the forest that includes exploring the sale of rights to the Department of Defense to allow continued training on and above as much as 70,000 acres; selling rights to take over timber farming on about 56,000 acres of pine plantation, and negotiatng permanent conservation easements that would permanently protect a sensitive 18,000-acre section of “pocosin” or wetland.

The plan also calls for selling off 1,600 acres of farmland for continued agricultural use and crafting a long-term strategy for about 4,000 acres south of U.S. 17 near Jacksonville that could include making it available for development.
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