Forestry to be looked at as a lucrative investment.

• Author: Khatoon, Akram

Byline: Akram Khatoon

Ongoing campaigns for growing trees countrywide, strategically meant for combating adverse impact of climate change particularly increased global warming causing frequent drought conditions in major parts of Sindh, Balochistan and Khyber Pakhtunkhwa, are also aimed at promoting investment in forestry. No doubt investment in forestry is a long term investment with globally established rate of return of 10 to 12 percent, no doubt lesser than returns from other avenues for investments, but seems more viable in a volatile global economic environment because of negligible or much lesser risk involved in this business.

Globally March 21st is observed as Forest Day. The United Nation has linked this recognition to Sustainable Developmental Goals to be achieved by 2030. Under this agenda efforts are on for planting trees in urban areas to reduce global warming for creating carbon stocks.

Although forests or tree plantation comes within the purview of crops, but in case of other agriculture crops drought and flood conditions completely destroy the crops, but in case of trees loss is much low. secondly forest owners can wait for a decade before felling or cutting them and earning a profit. During waiting period forests gain value as the trees further grow. Similarly in case of decline in demand of wood, owners can wait and meanwhile trees further grow and when market is favorable owner can get better price.

Presently investors in economically rich countries and emerging economies have embarked on greater diversity of their investments. Investments in equity involving high risk promise on the average 12 to 15 percent return, but return of 12 percent from forest industry in USA and 9 percent in UK ensures stability of return on their investments. Besides that investment in forestry in these economically rich countries is tax free. Forests owners of UK do not pay capital gain tax for growing timber and no income tax for selling it. Inheritance income tax also does not apply to forests owners.

According to World Bank's information regarding collection of development indicator acquired from officially recognized sources, share of Pakistan's forestry is hardly 1.20 percent of total global forests. Forest development is still being overlooked in the sense that it should be part of the agenda for government to vigorously combat climate change, which results in frequency of natural disasters like pollution, drought conditions and...