TDRI pushes forest bonds

The promising 15% returns advertised for a proposed forest bond model should attract investors and the public to take part in forest preservation, said Adis Israngkura, adviser to Thailand Development Research Institute (TDRI).

TDRI estimates 1 million rai of “economic forest” could generate some 25 billion baht in income, contributing up to a 15% rate of return from investment in forest bond in 20 years, said Mr Adis.

The forest bond model attempts to create an intertwining chain of value that benefits all stakeholders, preserving the forest’s ecosystem with full participation, he said.

“The model provides an alternative for locals who rely on illegal logging for a living. It is also a deterrent to proliferating illegal corn farming, which is invading forest areas. Once locals realise the economic forest scheme can bring them reasonable profits, enough to feed themselves and their families, there will be no need for them to take part in activities that pose threats to the forest,” said Mr Adis.

The forest bond attracts capital from investors and the public. The capital generated from the bond will be loaned only to interested companies who will use it to grow and sell valuable trees, hiring locals for plantations, creating jobs and stimulating inclusive growth along the way, he said.

The proposal calls for valuable trees including teak, gurjan and other restricted trees to be grown and sold for profit.

The major obstacle to the model is the 1941 Forest Act that prohibits possession and felling of these kinds of trees.

“We need to amend the law and liberalise use of the forest. A lot can be gained from doing so,” said Mr Adis.

Jongklai Worapongsatorn, deputy director of the Royal Forest Department, said the natural resources and environment minister had set up a forest bond working group to monitor and assess the possibilities of the scheme.

Nikom Laemsak, dean of the forestry faculty at Kasetsart University, was entrusted by Mr Jongklai with drafting an economic forest and forest bond working plan, he said.

“The draft plan will be completed by Sept 15. Clear goals and directions will be set to make sure the model can be trusted by the government and other stakeholders. The plan will be presented to the natural resources and environment minister for consideration,” Mr Nikom said.