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Forest investors debate what to do with all their trees: timber or carbon credits?

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on The Wall Street Journal or enjoy below:

🗞️ Driving the news: As the demand for carbon credits increases, investment managers holding forestland are meticulously evaluating whether trees should be harvested for timber or preserved for generating carbon credits
•  This shift indicates that the value of forests now transcends traditional timber production, incorporating the environmental benefit of carbon sequestration into investment strategies

🔭 The context: Forestland investments are being re-evaluated in light of their potential to generate carbon credits
•  This involves detailed assessments of each tree's species, growth rates, and the comparative value of timber versus carbon credits

🌍 Why it matters for the planet: The focus on forestland for carbon credits highlights the evolving role of forests in climate change mitigation
•  With forests becoming central to carbon credit markets, they offer a tangible means for companies, especially in hard-to-abate sectors, to offset their carbon emissions

⏭️ What's next: The carbon credit market's potential growth, projected to reach $40 billion by 2030, signifies a significant shift towards valuing forests not just for their timber but for their capacity to sequester carbon
•  However, the market faces challenges, such as ensuring the credibility and genuine environmental benefit of carbon credits, which will require ongoing scrutiny and innovation

💬 One quote: "If you invest in a forest, the question we ask is, ‘How do you manage wood products versus carbon?’ The answer to us is, ‘What do our clients want?’" - Brian Kernohan, Chief Sustainability Officer, Private Markets, Manulife Investment Management.

📈 One stat: The voluntary carbon credit market could be worth as much as $40 billion by 2030, up from $2 billion in 2021, indicating the growing importance of carbon sequestration in forest management strategies.

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