FIGURES have revealed that commercial forestry values have risen strongly once again during 2020.

Speaking this week, Savills head of UK forestry, James Adamson, said: “In 2000, a hectare of forest was valued at an average of £1,600. This is likely to have grown to around £17,000 in 2020 – that’s a compound annual growth of 12.6% over 20 years and probably as much as 30% in the last year alone.”

As tax regimes changed, instead of being a useful asset for income tax mitigation, forestry has become an important asset for inheritance tax planning, the literal growth of the trees providing a stable store of value. Most recently, a rapid rise of environmental awareness has help sustain the rise in the values, bringing new interest to the market, both for existing forestry and planting land.

While existing commercial plantations offer a great investment, at this time they cannot be used for carbon credits as only new planting qualifies under the Woodland Carbon Code.

The interest in offsetting is driving some to plant forests primarily for carbon sequestration rather than for timber. This will open up some land that was previously constrained as it didn’t offer good enough access requirements for a commercial plantation.

However, land-use change comes with a degree of permanence, so before making a decision to plant trees, Mr Adamson cautions it is important landowners are clear on the objectives and basis of long term returns.

He said: “To trade Woodland Carbon Units you grant rights to whoever purchases your carbon credits over the woodland they relate to, and these last for an extended period of time. The carbon market is emerging and there has to be a strong prospect of a review over the next decade.

“When you have a sector that already offers the returns that commercial forestry does, it is important not to risk limiting long-term potential gain through short term trades, although it will work for some. No one wants to see a land grab for forestry on land that should remain as productive arable land for food production.

“Yes, we need more trees and must encourage more planting, but we must ensure that the right trees are planted in the right place for the right reasons: this may not be offsetting, or indeed it may not be timber production.”