The timber business is worth billions of dollars annually and one wonders will there be a forest exchange traded fund (ETF)? Precious natural resources are growing scarce at a rate that is undeniably fast, and like clean water, virgin forests are vanishing before us. Unscrupulous loggers work outside of authorized zones, not respecting size limits in their quest for the highest financial returns, reports Tansa Musa of Reuters. A lot of the rampant deforestation around the world has to do with Chinese economic growth fueling a timber frenzy. China has expanded from importing wood for domestic use to becoming the world’s leading exporter of furniture, plywood and flooring. In turn, this is driving up the prices, triggering loggers to open more forest up to be ripped apart, and drawing huge global investment to the companies.
Could an ETF with a forestry or tree focus help limit some of the buying or trading of illegal wood by holding companies with a legitimate practice? Financial returns are important to companies, but these days sustainability is also important. With the legitimate timber companies working for both, ETF shareholders could be happy.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.