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 THE GENERATION FOREST CONCEPT

We establish and manage permanent, financially viable, and biodiverse forests that protect soil & water and compete with other land uses.

To make tropical plantations more economically, ecologically, and socially responsible, we have developed a new permanent forest model for the Tropics and Subtropics. Moving beyond the traditional ​plantation, we are building new productive perennial forests with more precious hardwood trees per hectare than natural forests. Over the long-term individual trees are selectively harvested, never clearing the entire forest.

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We plant 825 native trees per hectare, with thinnings in years 12, 20, 25 and 30th. In contrast to monoculture plantations, another generation of trees will be planted in the vacant spaces after each thinning. After these initial thinnings, there will be no further ones, only selective harvesting of individual trees. Each year a little less wood-volume is extracted from the forest than its natural growth. About 20 to 30% of the area will stay unmanaged and natural. This can be achieved by the protection of remaining forest areas or the creation of new conservation corridors, for example, along streams and rivers.

The first Generation Forest project with a volume of US $5 million was launched in 2014 in Panama for a German investor. Panama has investment-grade; investment-grade status means that Panama is a financially sound jurisdiction and that it can pay its debt; the US dollar is the national currency, and reforestation investors don’t pay land nor profit taxes. Potentially, insurance can protect against risks if necessary. There are few places in the world where investment security can be connected this well to biodiversity as in Panama, where many of the tropical tree species are native. The inflation-adjusted IRR expectancy is 5-7%. That is a lower return than the monoculture plantation; however, it provides greater security. The Generation Forest will meet both the risk/return expectations of investors as well as high-impact requirements.

The Generation Forest offers many of the benefits of a traditional forest investment: Tropical Hardwoods have a low correlation with other asset classes. Forest investments are tangible asset investments that are mostly unaffected by inflation and stock exchanges. The product (timber) may be sold in any currency, reducing currency risks. Less vulnerability to poor market conditions, because assets develop further during waiting periods. Lastly, the forest is an ideal wealth safeguard. Nevertheless, above all, the Generation Forest avoids the disadvantages of monoculture plantations: There is not one, but many wood species; it does not come with typically high susceptibility to insect infestation like a monoculture, no degradation of the soil, and low use of chemicals. Moreover, the investment is realized by acquiring and developing unsustainable pastureland; reforesting degraded land.

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“I am convinced that planting forests with native tree species is the only way to save the Earth – even if many people are not aware of this yet.”
Guillermo Navarro
Senior Forestry Engineer at the Food and Agriculture Organization of the United Nations (FAO)
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``(...) the Generation Forest (GF) model has a very important role to play in efforts to combine genuine income and forest conservation. The GF merges the native forest with the forest in regeneration and lines with plantations of native and exotic species. The density of trees with economic value makes the GF at the beginning very attractive for long term investors. The degree of intervention is compatible with the preservation of habitat for species of global significance. Its carbon content is also higher than the one of the secondary forests and could be above the one of primary forests. At the social level, it contributes to the generation of local employment since its maintenance requires labor. In my opinion, the biggest challenge is to be able to scale this model to large areas, and the shortage of professionals with knowledge of the management protocol will be a bottleneck to be addressed. In any case, this management model is very promising, and I hope it attracts attention from investors.``
Gabriel Labbate
Ph.D. Senior Programme Officer UN-REDD Programme. Latin America Latina and the Caribbean.