The ROE of a tree
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The ROE of a tree

Planting trees could be a profitable activity, not least for farmers.

Forests are important

The Food and Agriculture Organization of the United Nations (FAO) estimates that the total carbon stock in forests is 662 Gt of CO2, which is more than all the carbon added by human activity since 1870. At present, forests sequester 11 Gt of CO2 per year – or 30% of human-induced emissions.

Forests absorb 30% of CO2 emissions

However, data on deforestation provides a worrying picture:

  • The amount of forest area has halved during the last 1,000 years due to urbanization and agriculture.
  • In just over 30 years, a total of 420 million hectares of forest has been lost due to deforestation (around 6.5­ times size of France).
  • Deforestation in tropical areas (Amazon rainforest and those in Africa) is worryingly high; this is compounded by the high carbon sequestration abilities of these areas.

Although deforestation trends appear to be improving, it is nowhere near where it needs to be: the net decline in global forest area is slowing down, but deforestation rates in Africa and South America continue to accelerate.

Only since 1990 420 million hectares of forest has been lost due to deforestation

Changes in dietary habits could accelerate afforestation

Global forest area has decreased mainly because of agriculture. Therefore, to achieve a net-zero future we need to reduce the amount of land used for pasture and crops. Afforesting agricultural land when the world's population looks set to increase to around 10 billion by 2050 would require the remaining agricultural land to produce much more yield. Furthermore, the development of alternative food solutions – and the consumption of these – need to ramp up as well.

Our estimates suggest that up to 27 million square kilometers of land could become available and be used for afforestation if consumers were to eat more alternative meats and if vertical farming were adopted. This could capture more than 80% of the current anthropogenic emissions.

Afforestation and reforestation as an investment opportunity

We estimate that planting a tree could yield a return of over 11%, while its net present value could be at least seven times higher than most traditional farming activities. A full afforestation/reforestation scenario would cost less than 2% of global GDP per year, assuming that governments would pay farmers for each ton of carbon stored.

Despite all of this, afforestation/reforestation does not replace the need for a paradigm shift in how we view and use energy. This approach requires a change in people's behavior, a global emissions trading scheme, and some 4 trillion new trees. Needless to say, this process will not be a fast one.