In 2025, the buzzwords for diversifying income streams sound straight out of a sci-fi novel: crypto, share portfolios, and the ever-elusive metaverse. These concepts, while seemingly just a click away, often leave the average person scratching their head. How do you even begin to wrap your mind around a virtual token being worth as much as a car? It’s absurd, yet here we are.
Amid all this digital dazzle, it’s easy to overlook a far more grounded investment opportunity: trees (pun intended).
The enduring property law principle of ‘cuius est solum, eius est usque ad coelum et ad inferos’ (whoever owns the soil, owns from the heavens to the depths below) historically implied that landowners held rights to everything above and below their land. However, forestry rights challenge this traditional notion. This means that someone can own land whilst an entirely separate party has rights to the trees on that land, whether for timber, carbon sequestration, or other purposes. This separation offers both environmental and financial returns, creating a compelling intersection between sustainability and profitability.
Forestry rights and the law in NSW
Under the Conveyancing Act 1919 (NSW), forestry rights are distinct from the land itself and can exist as separate legal interests. Section 87A of the Act grants the holder the entitlement to enter the land, establish and maintain a crop of trees, and construct necessary facilities for these purposes. These rights can also extend to carbon sequestration, allowing the holder to claim the legal and commercial benefits associated with carbon absorption from the atmosphere. Furthermore, Section 88AB recognises forestry rights as a form of profit à prendre, ensuring they are legally recognised as a legitimate interest in land.
What makes this market particularly interesting for investors is the demand for carbon credits, which depends on factors like location, size, and quality of the carbon project. As governments and corporations ramp up their environmental commitments, the value of these credits continues to rise. For clients, this represents an emerging opportunity to integrate sustainable practices with a solid return on investment.
Why should you care?
If you’re a landowner, investor, or even just someone with an interest in diversifying your financial portfolio, forestry rights and carbon credits can offer unique advantages:
- Environmental impact: Investing in forestry rights supports global climate change mitigation efforts by promoting carbon sequestration.
- Financial returns: As demand for carbon credits increases, landowners and investors can generate revenue by selling these credits or leveraging them for commercial benefits.
- Asset diversification: Forestry rights provide a tangible and sustainable asset class that diversifies your investment portfolio beyond traditional stocks or real estate.
Legal considerations for clients
Navigating the legal landscape of forestry rights and carbon credits requires careful consideration. Engaging legal practitioners familiar with these areas can ensure that your interests are protected and that you maximise the potential of your investments.
Key legal services to consider:
- Property due diligence: Assessing whether a property is subject to a registered forestry right or carbon project and advising on the implications for purchase, sale, or development.
- Contract drafting and negotiation: Drafting and negotiating agreements for the sale or transfer of carbon credits, including rights assignments and profit à prendre agreements.
- Registration services: Assisting clients with registering forestry rights and related covenants with NSW Land Registry Services to ensure their interests are protected.
- Compliance and risk management: Advising on the ongoing obligations tied to forestry rights, such as maintenance, carbon sequestration reporting, and environmental compliance.
- Dispute resolution: Handling disputes related to the interpretation or enforcement of forestry rights, carbon credit agreements, or land use restrictions.
- Corporate and investment advisory: Assisting investors and companies in navigating the carbon market, evaluating the viability of forestry projects, and structuring investment deals.
A sustainable and profitable future
As the world moves toward a greener and more sustainable future, forestry rights present an exciting, albeit complex, opportunity for clients who wish to combine environmental stewardship with financial growth. While money might not grow on trees it can certainly lead to a profitable race for those willing to invest strategically.
If you’re exploring forestry rights and carbon credits as a potential investment opportunity, the team at Hamilton Locke can help you navigate your legal considerations. For more information, reach out to John Frangi.
