Should you buy a forest?

We had a discussion on slack the other day about air travel. As you all know, it’s one of the most polluting forms of travel. But also a fast way to get around and very convenient to cross big ponds. The dilemma! But what if you could offset some of your carbon emissions? In short, should you buy a forest?

Should you buy a forest?

So the idea is quite simple, you fly a lot and try to compensate your emissions by purchasing a forest. That brings us to a few questions.

  1. How much money do you need to buy a forest (in the Netherlands)?
  2. Is buying an forest also an investment?
  3. Is a forest the right thing to buy?
  4. If not, what else should you buy?
Should you buy a forest?
Should you buy a forest?

Buying a Forest

It’s relatively easy to buy a (piece of) forest in the Netherlands. You literally go to “buyaforest.com” (actual site www.bostekoop.nl – Dutch) and you can go bananas. Here you can find anything from just 1.000m² to several hectares. Prices generally range from about €1-1,5/m². Agricultural land usually sets you back around €6/m2. Both are dirt cheap compared to a building plot in the Netherlands, which generally range from €100 to over €600m²!

But you probably guessed this already, you can’t do much with forest ground. You are not allowed to build on it. Recreation (other than walking through it) is often not permitted either. In short, the only thing you can do is look at it, walk through it and perhaps get some wood from it.

When you buy you have to pay a notary to transfer the title into the your name, this probably costs around €600. Depending on the size and status of the forest, no land transfer taxes are required to be paid.

Is a forest an investment?

In most cases: no. Not really. It depends on what type of forest you buy. A production forest might make you some money… sometimes (see here – Dutch). But it certainly won’t make you rich! According to the article referenced the revenues per hectare were around €281 (including subsidies) for 2016. However the costs for that year where… ahum… €290. Right, might as well not cut down trees!

Nature forests and mixed forests are pretty much useless commercially. But they might provide some return on investment because they make you happy when you walk in them. Different type of ROI ;-). However, you can cut down trees for your own consumption. This will save in heating costs, which might actually be the best financial return on investment! Especially as gas prices will be taxed more heavily in the near future. Plus gas may disappear almost completely by 2050…for heating Dutch houses.

There is one other added bonus. The value of the forest is exempt from wealth tax in Box 3, if big enough & assessed with the right status. This means that you don’t pay any taxes (and no land taxes (OZB) either)! If you transfer the forest to your kids (either when alive or after you passed away), no inheritance taxes are required. Perhaps a way to do estate planning?

Is a forest the right thing to buy?

Except for some personal gains, there don’t seem to be many financial gains. It’s also not easy to sell. Just looking at how long certain plots are being offered. That being said, forest are not very expensive to purchase either.

But more importantly, the idea to invest into a forest came from a carbon emissions perspective. Forests that are mature don’t absorb much carbon.  Kind of defeats the purpose! So what could you do as an alternative?

You can manage the forest, as noted in the linke above! If you cut down trees and use for construction, then replant the tree. It does capture more carbon. So perhaps you have to buy a forest and use the trees to build  your own house (then those of your neighbours) and replant. Just an idea. Relatively cheap building materials!

Forest alternatives?

Let’s assume you want to maximize carbon capture to offset your emissions. In that case you probably should look at converting a piece of barren land, or agricultural waste land, into an food forest! In this case you can establish significant plant growth. Thereby creating “massive” carbon capture. But it will also generate tons of food for you and your family (albeit that might take a few years).

The other good thing is that this type of forest agriculture is super efficient and takes relatively little effort. This as it uses permaculture techniques to optimize plant growth and food production. A win-win all around. Now just need to find a piece of land that we can convert… In the western part of the Netherlands…..  yeah, right. Guess it’s time to move!

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26 Comments

  1. I like these kind of thought experiments!
    Walking in my own forest would make me feel I own the world. Seeing birds and squirrels nest in my trees would for sure feed my happiness.

    It would be a nice place to contemplate on my investment strategies!

  2. I don’t think you should see this as an investment. But it’s a fricking awesome idea for a retirement project!

    Try to buy as much forest as you can, preferably joined, and use any proceeds to… buy more forest!

    If you and I team up on this, we could return huge areas of our country to nature.

    Join me!

  3. My parents own a forest. Most of their land is in fact forested. Occasionally they have trees harvested, but it’s not really a money maker. If anything it’s more about the tax write-off that they can get for such a large property.

    If you want to make money from timberland, it’s probably easier to buy a timber REIT. There’s several U.S. based investors can invest in.

    1. From an return point of view, you are probably right. But owning a forest has some other non-financial benefits that one could seriously appreciate! Not everything in life has to have a financial return 😉 But very cool that your folks actually own a piece of forest, that’s pretty sweet!

  4. Advancing technology could make a forest a really good investment. Build an eco treehouse completely of the grid and you might have a very profitable AirB&B rental on your hands.
    The technology isn’t quit there yet. Batteries need to become cheaper by about a factor two at least so I am guessing 5 to 8 more years.
    Let’s say it is one of my more out of the box ideas for after retirement …

    1. Yeah, about that, you are not allowed to make any form of dwelling in such a forest. Somethings you may park a trailer there for a short period of time, but that is about it! Not really usable to live, unless you find an adjacent plot with planning permission.

  5. Buying a forest to prevent it from being destroyed for cultivation purposes… Maybe not the best financial investment but great investment in karmapoints! 🙂

  6. Nice post! Not really a got investment, but it would be nice to say, I own a forest. A big food forest is a wish for the future.

    1. A forest would be a very cool thing to own. I would like to look into this in the future to see what would work for us. But I would be nice of there would be a house included with that forest, that would be just perfect!

  7. Nice post! As you know, I am a forest owner. To be honest, it came with the house. And it’s only half a hectare. Too small for forest walks 😉 And yes, I do use it to heat my house. Without actually cutting trees though. My forest should be big enough not to use more than what grows back every year.

    About the CO2, the problem with trees is that yes they do take up CO2, but they will release it again at the end of their lives. It doesn’t matter in that case whether you throw them in your wood burner or you let them rot.

    So what I am doing is actually pretty CO2-neutral 🙂

  8. Great idea! I think we should see and will see more of these concepts enforced (carbon taxes, e.g.)
    Can’t afford to keep being stupid about this issue. See exhibit A in the White House. Makes me sick. And glad I planted a couple of trees this past year!

    1. You guys have so much potential with this in the US! Lot’s of land that can be revegetated and improved with a food forest (or production forest). Keep planting trees my friend!

  9. — If you transfer the forest to your kids (either when alive or after you passed away), no inheritance taxes are required. Perhaps a way to do estate planning? —
    You might be on to something!
    If you can avoid taxes to pass down wealth it could be interesting. If 2x notary costs (buy and sell) à €600 = €1200,- could make you transfer € 195.000 (the most expensive @ bostekoop.nl) to your children?!

      1. Ok, let me try brainstorming this, my homeland(s) play tax avoidance as a national sport 🙂

        What if you create a company, collect money for establishing a forest fund and paying dividends to the investors. You use the money to buy a huge forest. Then you offer the land for sale with a premium. This alone would not do the trick but as you mentioned the tax implications… Is it legal for someone to say in his will that he wants all his wealth to be used to buy a forest when he dies and leave that to his heirs? Then what if the company also offers to buy back the forest from the heirs? Sounds something that should be illegal but tax law is a weird kind of animal. And of course, we are talking hypothetically 😀

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