No matter what state you are in, the largest landowner is the government. Most of the land outside the urban areas has some forests or desert, but when thinking about the forests, the largest landowner is the government. There are multiple government departments you can think about, but most private timber companies lease land from the government to cut wood. The timber companies own a little of their cuttings, but they pay the government (whether you think it is enough is a different issue) and cut wood to provide jobs to both the people in the field and at the mill.

If you go to other countries, the equation remains the same and in Brazil the government maybe changing its way. In an article by Fabiano Maisonnave of the Associated Press, for years the Amazon Rail Forest has been cut back to expand farming. This was reduced the size of the Forests and for some has been a factor toward increasing carbon in the environment. The rational being the trees need CO2 in order to grow, less trees mean less CO2 being used by the trees.

The government has both allowed it to happen and has not considered how the Amazon should be cut, but there maybe a change. The government announced an area the size of the island of Costa Rica will have selective logging or less clear cutting.

In Brazil, similar to other countries with forests, vast lands are designated as public lands yet have no special protection or enforcement and are vulnerable to land grabbing and illegal deforestation. Criminals frequently take over the land and clear cut it, hoping the government will eventually recognize them as owners, which happens more often that not.

The new rules mean companies that do get timber concessions or leases, have to follow strict rules. They can log up to 6 trees a hectare over a 30 year period.

The idea behind recently elected President Luiz Inacio Lula da Silva is to expand the rules from the size of Costa Rica to the size of Italy. Rules are good for a country because if they are broken leases can be cancelled.

Linking to dividend paying stocks, when people came to America they were amazed at the number of trees. The history of the country is trees can be cut down faster than they grow and people moved westward. At some point there was a desire to save trees or slow down the cutting and planting trees to grow. At the same time, the issue of the value of the leases and how high or low should they be? One side wanted higher; the other side wanted lower to maintain the ability to move the logs to the mill at a profit. Governments make a choice and it is up to the communities and the companies to adapt to it. Often times in the past, the people in the government that made a choice were closely connected to the logging industry, perhaps that has changed a bit. If you invest in companies that own natural resources it is always important to note at what fee does the company make less money?

There are more questions than answers, till the next time – to raising questions.