Koa beats grazing for steady land profits
HILO » A new study says its possible to make money -- in both the short and long term -- transforming grazing land into koa forests.
Investing in a koa farm can be daunting because planting the trees frequently requires substantial initial investment, and the trees cannot be harvested for at least 30 to 40 years after seeds are put in the ground.
But a new study in last month's Proceedings of the National Academy of Science, an academic journal, says there are ways for farmers to generate immediate cash flow from koa forests.
Josh Goldstein, who co-authored the study with five colleagues, studied a hypothetical 500-acre koa forest at an altitude of 5,000 feet on the Kona side of the Big Island.
Their analysis showed the farm would be profitable in the long term. It would also generate a short-term cash flow if the planters took advantage of U.S. Agriculture Department programs and sold "carbon credits."
"Basically what I'm doing is trying to find ways to make conservation profitable," said Goldstein, a postdoctoral fellow at Stanford University.
His group found the trees would net $26.3 million and cost only $1.04 million to produce.
They also discovered the end payoff would eclipse whatever revenue cattle grazing would produce over the years.
The study's authors proposed a way to reduce the startup cost to $170,000 from $380,000 by taking advantage of a U.S. Department of Agriculture program designed to retire agricultural lands.
The program also would provide an annual rental payment of $48 per acre, giving the owner a $24,000 cash flow every year.
Planters could reap an additional $7,500 in annual cash flow by selling carbon credits to companies that want to make up for their own greenhouse gas emissions by buying "share" from others whose work -- like tree planting -- reduces greenhouse gases.
The credits are traded on the Chicago Climate Exchange.
Goldstein and his team analyzed timber and grazing combined but found the shorter-term revenue of the cattle hurt the longer-term payoff of the wood.
Generally, the fundamental challenge in growing koa is that it costs a lot of money to start, and there is no payoff for decades.
"It's almost impossible to have a profit motive with something you can't harvest within at least 30 or 40 years, probably longer than that," said Craig Elevitch, an agroforestry specialist in Holualoa. "Most people are looking to a leave a legacy because they probably won't be alive when the trees are harvested."