Forestry investments through vehicles such as unit funds are essential to the long-term development of the sector, according to industry experts.

"The Irish Forest Industry Chain firmly believes that, if the right conditions are created, forestry can make a huge contribution to the Irish economy both in terms of GDP and from an environment perspective," said group director Mr Pat Ivory at the first forestry investment conference yesterday.

"Forest cover in Ireland is still only 9 per cent, which is less than one-third the EU average of 32 per cent. The target is to increase the area under forest to 17 per cent by the year 2030," he said.

Unknown variables and overall risk assessment are some of the hurdles facing potential forestry investors. Although foresters can forecast rates of growth, "what some of us are less sure of is the financial forecasting of what trees will return because, unlike most other commercial enterprises, forestry has an additional consideration and that is time - both its costs and associated risks," said Mr Donal Magner, chairman of the lobby group.

Despite the risks, forestry is well regarded by members of the public. Forestry is perceived as a solid long-term investment with tax incentives, said Irish Forestry Funds managing director, Mr Declan Kennedy.

However, two negative investment factors existed. The time frame for return on the investment and the high price of land were problematic, he said.

The funds devised a number of strategies to overcome these concerns, including unitising the investment, incorporating each fund as a public limited company facilitating easier share trading and proposing floatation of the forestry funds' shares on the Irish Stock Exchange.

Not all the funds' strategies have been welcomed, said Mr Kennedy. "The returns which we have suggested investors are likely to secure from our share issues has, in particular, generated a surprising level of discussion. Indeed, some in the sector have strongly and actively objected to our approach," he said.

Although the industry consensus for real rate of return, net of inflation, over 30 years has been between 5 and 8 per cent, Mr Kennedy says the Irish Forestry Funds stand by its original projected returns, which are above these figures.

The "Investing in Growth" conference was sponsored by the IBEC-affiliated Irish Forestry Industry Chain, which represents all sections of the forestry sector in the Republic.