Over the last few weeks trees have been a big news topic. Recent headlines include 4 Years of Catastrophic Fires in California due to climate change and lightning storms, Rainforest Destruction Accelerates in Brazil due to human greed, and The World is Losing Its Old Trees while BP is working on protecting the forest while Preserving Trees has Become Big Business, Due to Emissions Rules.
I monitor the global tree patterns because the quicker the deforestation rate happens, the faster our path to reaching Watergeddon. The reality of the scenario where water scarcity, energy generation crisis, and food production shortages become part of the perfect storm is entirely possible. Imagine massive migrations across the world, hunger, and devastation of habitats and cultures because we did not manage water resources when we had the opportunity to do so.
Below is Exhibit 1 that analyzes the forest area in millions of hectares. Forests worldwide cover roughly four billion hectares.
I began to wonder, if the total world forest was an asset on a balance sheet, how much is it worth?
I was not the only one asking the question. In June of this year, Boston Consulting Group (BCG) conducted a thorough analysis to answer the same question. BCG estimates the value of the forests across the globe at $50 trillion to $150 trillion. Yes, you read those numbers right. That is a staggering amount. The report also discussed the various actions we could take to stop the deforestation rate; otherwise, the global forest rate will drop by 30% between now and 2050. That comes up to 15 trillion on the low end to 45 trillion on the high-end spectrum of the valuation line. Think about that for a moment.
This report is a must-read, whether you're a tree hugger or not. And yes, I've been a tree hugger since I was six years old. While growing up in Serbia, I lived on the farm where we had Rainier cherries, red cherries, walnuts, red apples, yellow apples, peaches, and plum trees. During the summers, my twin brother and I would climb the trees like monkeys and eat the incredibly fresh fruit for a snack. We ate organic before organic was a trend.
Boston Consulting Group did great work on analyzing the value of trees. Money may not grow on trees in the form of currency, but it adds an incredible amount of value to humanity from an environmental perspective. So, you could say trees are money.
Suppose we don't solve the deforestation problem in the next few years. In that case, the negative water trends will accelerate and create self-reinforced feedback loops that further accelerate the negative water trends. It will become a vicious circle where burning trees increases the level of CO2 going into the air while lowering the forest’s capability to conduct free environmental services for the entire planet. The threat is dire when you read the current news:
FACTS
The world’s forests—which today cover 30% of the earth’s land surface—are an incredibly valuable resource, storing massive amounts of carbon, helping to purify water and air, ensuring natural biodiversity, and providing livelihoods for millions of people. But despite the vital importance of forests, they are under worldwide assault, with the equivalent of 30 soccer fields disappearing every minute.
The estimated total value of the world’s forests is as much as $150 trillion—nearly double the value of global stock markets. The ability of forests to regulate the climate through carbon storage is by far the largest component of that total value, accounting for as much as 90%.
The most serious threats are not always the ones garnering the most public attention. Recent media coverage, for example, has intensely focused on the devastation brought by wildfires. However, our analysis finds that land use changes and rising global temperatures, major drivers of deforestation, will actually be the main causes of forest value losses. Of the five primary threats to forest value that we identified, these two account for about 70% of projected losses between now and 2050. Ultimately, if the five major threats to forests today are not addressed, global forest value will drop by roughly 30% by 2050.
We have identified six critical actions that can protect forests and limit deforestation—and therefore preserve forest value: (1) restore and plant forests for the purpose of protection as well as wood production, sustainably manage these and more of the existing forests, and increase their productivity; (2) boost sustainable and productive agriculture; (3) reduce meat consumption; (4) push for deforestation-free production of palm oil, soy, beef, and timber; (5) increase wood recycling; and (6) limit global temperature increase to less than 2°C. Ambitious but realistic action, including follow-through on current global pledges for forest protection, can preserve 20% of value and thus reduce value loss to about 10% by 2050.
If anything, the commercial value of forests is likely to increase. To meet the demands of a growing population while decarbonizing the global economy, humanity must increasingly rely on nature-based solutions—what is called the “circular bioeconomy.”
Humans need to look at natural ecosystems as if it's an asset on the global balance sheet. All the gold in the world and global stocks that we own won't matter if the ecosystems collapse to no return.
Humans underestimate the value of trees. In Exhibit 4, I think the total forest value is most likely on the high end of the valuation spectrum. It may even be more than $150 trillion. Climate-regulatory importance may be understated.
MY COMMENT
Soccer is my sport. When I think about 30 soccer fields burning every minute across the planet, it’s mind boggling to visualize it. “We lose an area equivalent to 40,000 soccer fields every day.” When I was growing up, my soccer idol was Pele. I used to try to practice imitating the Brazilian soccer style by watching Pele, Garrincha, Falcao, Rivelino, Jairzinho, and other Brazilian great players. I've never been to Brazil, but I am saddened that the current government doesn’t protect their most precious natural resource, the Amazon rainforest. I watched a documentary that discusses this highly toxic situation.
Video: Saving the Amazon: The fight to preserve the world's largest tropical rainforest | Four Corners
4 Years of Catastrophic Fires in California: ‘I’m Numb’
For the eight million residents of the San Francisco Bay Area, a ring of fire across Northern California feels inescapable. By Thomas Fuller, New York Times, August 24, 2020
FACTS
The pall of choking smoke outside their windows — four times worse than the air quality in Beijing or New Delhi on Monday morning — is a reminder that the wildfires ravaging large parts of Northern California are only a few canyons away.
More than 100,000 people have received evacuation orders, and in some neighborhoods there was the added worry over looting, after the Santa Cruz County Sheriff’s Office said it had arrested five people on charges of stealing items from vacated homes.
Gov. Gavin Newsom laid out the scale of fires burning across the state. By this point last year, he said, 4,292 fires had burned 56,000 acres. This year, 7,002 fires have chewed through more than 1.4 million acres.
California Wildfires Surpass 1 Million Acres
A pair of massive blazes close to San Francisco are largely uncontained, and weather poses risk of growth. By Julie Wernau, August 23, 2020 3:21 pm ET
FACTS
Two clusters of wildfires have surrounded the San Francisco Bay Area, after exploding in size over the weekend to become the second and third-largest by acreage in the state’s recorded history.
According to fire officials, California has been hit by nearly 12,000 lightning strikes in just over a week, the primary cause of the blazes. More thunderstorms were forecast Sunday, further hampering firefighting efforts.
According to the National Interagency Fire Center, approximately 93 active fires have burned nearly 1.6 million acres in 13 states. California accounts for 1.1 million acres. Wildfires are also burning in Arizona, Colorado, Montana, Nevada, Oregon and Texas.
MY COMMENT
I used to live in Silicon Valley, and to see how close the fires are to cities is scary. During the summers, I would take my family to Santa Cruz for the weekend. It's a sad situation. I think it's only going to get worse.
Rainforest Destruction Accelerates in Brazil
Nearly 3,000 square miles of trees lost in 11 months as military deployments fail to slow illegal logging. By Paulo Trevisani, July 16, 2020 3:38 pm ET
FACTS
According to preliminary numbers from Brazil's National Institute of Space Research, nearly 3,000 square miles of tree coverage were lost in the 11 months ended June 30. That is a 64% increase from the same period a year earlier, when 1,772 square miles of forest were destroyed.
Brazilian President Jair Bolsonaro, who says expanding business and improving living standards in the Amazon is the best way to protect it, has questioned the institute's measurements. The agency's top scientist was fired last year after he chided Mr. Bolsonaro.
During the decade before Mr. Bolsonaro took office in January 2019, annual average deforestation in the Amazon was 2,507 square miles, according to space agency measurements.
MY COMMENT
The world needs to take drastic steps in saving the Amazon. I can understand that President Jair Bolsonaro wants progress for his country, but burning down the Amazon will not add value to his country in the long term. Money talks. We can save Amazon if the world's leading countries decide to preserve the rainforest by providing financial incentives to the Brazilian government to protect the forest. In the not far future, I can see jobs created to protect the trees from deforestation.
The World is Losing its Big Old Trees
Even if some new forests are growing, the remaining canopies are becoming shorter—and so less able to absorb carbon. By Daily Chart, The Economist, August 20, 2020
FACTS
A recent study, published in Science, finds that the world has lost over one-third of its primary forests (defined by the researchers as those undisturbed by humans for more than 140 years) between 1990 and 2015 to land-use change (eg, to create farms) and tree harvesting for wood. At the same time the area of younger forests has almost tripled (see left-hand chart)
In any case, old trees are dying at a faster rate than in the past. In North America and Europe, where most data are available, tree-mortality rates have doubled in the past 40 years.
Much of the loss is the consequence of decades of forest-harvesting, but rising global temperatures have also produced more wildfires, droughts and insect infestations. In recent years more fires have roared through Siberia, Australia and the Amazon. Droughts have grown longer and more severe. What is more, scientists suspect that more frequent fires and droughts have made trees less resilient to deadly insect invasions. For the first time, bark beetles have ravaged California’s giant sequoias, the largest living organisms on Earth, despite their bug-repelling tannins.
All this means the world’s forests are, collectively, becoming smaller, younger, shorter—and more vulnerable.
MY COMMENT
We have seen deadly insect invasions in Unites States and other parts of the world due to more frequent droughts. This is going to continue to accelerate.
Preserving Trees Becomes Big Business, Driven by Emissions Rules
California kicked off a market in forest preservation and now energy giants such as BP are betting it’s going to become lucrative. By Ryan Dezember| Photographs and video by Brett Carlsen for The Wall Street Journal, Updated August 24, 2020 5:42 am ET
FACTS
The good news for trees is that the going rate for intact forests has become competitive with what mills pay for logs in corners of Alaska and Appalachia, the Adirondacks, and up toward Acadia. That is spurring landowners to make century-long conservation deals with fossil-fuel companies, which help the latter comply with regulatory demands to reduce their carbon emissions.
One of the most enthusiastic, BP PLC, has already bought more than 40 million California offset credits since 2016 at the cost of hundreds of millions of dollars. Last autumn, the energy giant invested $5 million in Pennsylvania's Finite Carbon, a pioneer in the business of helping landowners create and sell credits. The investment is aimed at helping Finite hire more foresters, begin using satellites to measure biomass and drum up more credits for use in the voluntary market.
“The investment is to grow a new market,” said Nacho Gimenez, a managing director at the oil company’s venture-capital arm. “BP wants to live in this space.”
Old-growth forests are also a defense against wildfires, because they are less susceptible than the scrubby growth that fills in after a clear-cut.
About 153 million forest credits have been issued, each representing a metric ton of sequestered carbon. They limit logging on about five million U.S. acres. That’s a sliver of the 740-million-odd acres of U.S. forests and woodlands that aren’t already reserved, but the amount of offset-protected property is growing fast.
MY COMMENT
BP has always been at the forefront of going Beyond Petroleum. The trend of preserving trees will continue because it makes sense from a financial perspective. There are plenty of opportunities for this market to grow based on Boston Consulting analysis quantifying forests estimated worth up to $150 trillion.
SUMMARY
We will continue to see forests burning at a higher rate every year across the world due to droughts caused by climate change. Everything is so connected and interconnected. What happens to forests will have considerable consequences on the triple threat facing humanity—water scarcity, sufficient production of energy, and food availability over the next ten years. Reducing the deforestation rate across the world is critical to our survival. Cutting trees at 40,000 soccer fields every day is insane.
Together we can save our forests.
– Damir
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