The prospects of tropical timber plantation investment funds

As financial markets start to acknowledge the significance of environmental issues, it is interesting to analyse how they combine finance and sustainable development. Dutch investment funds participating in tropical forest plantations project high expected returns. However, they carry huge financial risks, in particular country risk, currency risk, price risk and credit risk. The environmental and developmental returns appear to be positive but rather small. In addition, the environmental and developmental risks do not appear to be very large, as most plantations are established on former farmland and the quantitative impact of the plantations is still limited.