Forest restoration projects could create billions in new revenue
The economic benefits of restoring degraded or deforested land are an estimated $84 billion, roughly the entire gross domestic product of Sri Lanka in 2015.
Nearly 5 billion acres of degraded and deforested land awaits restoration worldwide. As the economy surrounding landscape restoration, the New Restoration Economy, continues to develop, prospective investors are intrigued by the financial returns restoration projects can deliver.
Investing in landscape restoration may seem different from buying a bond or trading stocks online, but the fundamental structure is the same. Restoration projects, like conventional investments, also generate both income and capital gains.
Income refers to recurring payments received following an investment. Investments in restoration, such as planting bamboo along gullies or agroforestry systems on degraded land, can deliver income in a variety of ways, including from the periodic sales of sustainable wood fibers or annual revenues from ecotourism.
For example, a study of an Indonesian forest restoration concession sought to quantify its economic benefits for local households. Depending on the ethnic group and their associated reliance on forests, the study found that households earned between $455-663 per year through the sale of multiple forest products, including rubber, honey and rattan.
If we only consider income from restoration projects through sales of goods and services such as bamboo or carbon credits, we risk overlooking the returns from capital gains because of improved land quality. As restoration emerges as a promising opportunity for investment, it is important to consider both types of returns to realize the true financial potential of restoring land.
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