From the financial point of view, timberland investments present a number of characteristics that make them particularly attractive for long-term investors:

  • Competitive risk-adjusted returns – this means that, for a given level of risk, timberland investments provide higher returns compared to other asset classes or, conversely, that they involve less risk for a given rate of return;
  • Inflation hedging capacity –timberlands are real asset that maintain or increase its value over time, timberland investments provides protection against inflation;
  • Low correlation to the main assets –timberland returns have historically shown to be inversely or negatively correlated with traditional asset classes in the stock market.

These characteristics result from the nature itself of this asset class: biological growth, being the most important return driver, is independent of macroeconomic and financial markets conditions typically affecting traditional asset classes. Moreover, the flexibility in terms of harvest timing (harvest when market conditions are ideal) reduces the risk, making timberland investments a good opportunity in terms of portfolio diversification.


Besides the financial performances, timberland investments are increasingly attractive in the framework of Sustainable and Responsible Investment (SRI) and impact investments strategies, in particular for those segments related to climate-change mitigation and adaptation. Indeed, forests play an important action absorbing carbon dioxide (CO2) from the atmosphere and are essential for the provision of renewable raw materials as well as many other valuable environmental services such as the conservation of soil properties, regulation of the water cycle, protection of biodiversity; moreover, they play an important role for human social and economic development.

At the core of SRI and impact investments strategies there is the ability to measure Environmental, Social and Governance (ESG) impacts and monitor progress and, in this regard, the forestry sector is at a very advanced level, adding substantial value to the asset. Specifically, today there are more than 50 standards, quality protocols and rating systems applicable to forestry investments to ensure their environmental sustainability and to mitigate technological, legal, reputational and social risks

Take a look at our latest publication on “Planted forests in emerging economies“.

Read the article dedicated to the Certification of Ecosystem Service.


Timberland investments represent an allocation of financial capital in a real asset, and consist of the acquisition and management of bare land to afforest or of a forest stand, with the goal to obtain a financial return, which is generated by four components:

  • The biological growth of trees producing timber, fibres or other marketable forest products, which is considered to be the most important return driver;
  • The long-term forested land capital appreciation.
  • The increase over the medium long term in the prices of timber and wood products, since the demand for timber has been estimated as increasing by over +30% from the present to 2030. This increase is driven, on the one hand, by the evolution in consumption habits that are shifting towards products with low environmental impact and, on the other hand, by bioeconomy policies that foster the transition towards production and energy systems based on biomaterials, such as timber and biomass.

In addition, in recent years, timber trade is no longer the one and only purpose, but the investment models are often extended also to the marketing of other forestry products and services. Therefore, an increasingly important component of timberland investment returns derives from High and Better Use (HBU) sales, such as CO2 sequestration, recreational services, biodiversity protection, soil conservation and other ecosystem services.

Take a look at our “ECOSTAR” reports on ecosystem services markets.

Average composition of timberland return (%)

Timberland investments have been traditionally held by forest products industries to secure their timber supply as well as by local landowners as a source of income or for maintaining their capital. Timberland investments as assets for financial investors have a more recent history.

The first remarkable examples of financial timberland investments have been promoted by pension funds in the United States and in the United Kingdom already in the 1970s and 1980s, which started to invest in timberland as a mean to diversify their investments to minimize the risk of large losses.

In recent decades, research highlighted the strategic potentials of timberland investments within investment portfolio, attracting new professional investors and expanding into new regions and market segments. Globally, the capital placed in timberland has increased from about 1 billion USD in the 1980s to over 100 USD billion at present.

Source: Bridge Ventures modified (2015)


Etifor provides consultancy support to investors throughout the investment process and portfolio management:


We are members of the Italian Sustainable Investment Forum (ItaSIF) and signatory of the United Nations Global Compact. In addition, we are a members of the Forest Stewardship Council (FSC®) and 100% of the investments supported by us are certified according to the FSC standard, an independent third-party certification which is the international reference of environmentally appropriate, socially beneficial, and economically viable forest management.

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