Integrated Portfolio Approach:
3GreenTree’s business model integrates multiple ecosystem services within a management portfolio of revenue drivers that can provide returns superior to typical timberland investments.
Some properties or projects may be driven by a single value, or have an ecosystem asset that vastly out-performs other assets.
In many cases, however, we believe that many properties can achieve superior returns and/or meet multiple objectives from an optimized portfolio of ecosystem assets.
The Strength of a portfolio approach:
• Diversified revenue drivers – Timber markets are volatile and cyclical, meaning returns can vary significantly from year to year. While carbon markets are new and expected to experience some volatility as they mature, demand and prices are expected to remain strong, particularly as regulatory restrictions on carbon emissions become established. Investments in support of conservation and biodiversity values as payments for ecosystem services on forestlands have also occurred (PES) (UNEP/IUCN 2007). Moreover, the development of political and regulatory structures for compensating landowners who protect ecosystems and associated ecosystem services is gaining momentum worldwide (TEEB Interim Report 2008).
• Reduce risks and maximize returns - An integrated suite of revenue drivers managed within a portfolio approach allows property managers to minimize losses when specific asset classes experience a market downturn by shifting the emphasis to more profitable assets. There are strong indications that market prices for carbon credits in North America will rise steadily as emission caps become more stringent. This could favor a re-balancing of the portfolio with a heavier weighting of this asset class, at least temporarily. This portfolio approach has strong similarities to the concept of ecosystem forest management (EFM), advocated and described by Binkley et al (2006; An ecosystem-based forestry investment strategy for the coastal temperate rainforests of North America. See www.inforain.org). As with EFM, proper portfolio management provides enhanced exposure to higher-valued, non-commodity markets for timber, lower capital expenditures, and the opportunity to capitalize on emerging markets for (increasingly) valuable ecosystem services.
This portfolio approach is a specialty of 3GreenTree – come talk to us and find out more.
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