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Ireland to sell off forest to pay debts

A dark cloud is looming over Ireland’s forests. Under the terms of its 67.5 billion euro international bailout, the government is being forced to sell off assets and has decided to sell harvesting rights to timber as a way of raising cash. Source: The Washington Post

Karl Boyle, chief executive of Mountaineering Ireland is part of a disparate coalition of sports enthusiasts, trade unionists and timber mill owners opposing Dublin’s decision to raise 400 million to 600 million euros by selling harvesting rights to forests for up to 80 years.

The sale is likely to be pitched at institutional investors such as pension funds, which seek a stable investment over the longer term.

The Save Our Forests campaign is the most vocal opposition to a wider 3 billion euros planned state assets sale, which includes a lottery license, gas and electricity assets, and a 25% stake in Aer Lingus.

Coillte, Ireland’s state forestry company owns 445,000 acres of forest, equivalent to 7% of Ireland’s land cover. Under the government’s plan the company would be restructured and the rights to harvest forest timber would be sold.

Ownership of the land would be retained by the state to ensure public access to the forests. But campaigners warn that forcing investors to provide access to forests would be costly for companies and could be ineffective.

Companies have little incentive to maintain rights of way, particularly given Ireland’s stringent property laws, which unlike Britain do not give the public a “right to roam” on private land.

“Forestry can be a very emotional issue,” said Charlie Daniel from RMK Timberland Group, one of the international investors contacted by Dublin about its planned sale.

“But public access has not been a problem in our experience as terms can be included in leases.”

Many companies in Ireland’s forestry sector, which employs 12,000 people and is worth 2.2 billion euros a year, oppose the sale.

Sawmill owners fear that the break-up of Coillte, which supplies 80% of the logs to their mills, would leave them at the mercy of foreign investors.

“The Irish sawmilling industry could be wiped out within a matter of months if the purchasers decide to withhold supply or export our logs to other European countries or to China,” said Patrick Murray of Murray Timber Group, one of Ireland’s biggest sawmill operators.

A report commissioned by Coillte trade unions claims that restructuring and transforming the state-owned company into a national parks service could cost the state 1.3 billion euros.

Unpredictable timber prices mean that selling harvesting rights “cannot be justified.”

The architects of the government strategy however, point to the success of harvesting projects in New Zealand and Australia.

“Half of Europe’s forests are in private hands yet access is not a problem. Irish sawmills would also be able to bid for timber harvested in Ireland,” said Alan Matthews, an economist who recommended selling harvesting rights in a state-commissioned report.

He notes Coillte has already sold harvesting rights to pension funds and land over recent years.