J.P. Morgan Asset Management’s timberland investment division has acquired approximately 250,000 acres (101,171 ha) in the Southern Pine region (Southern Pines) for more than 500 million US dollars. This latest acquisition may have been made with carbon markets in mind.

The investment manager announced that its Campbell Global unit, which invests on behalf of pension funds, endowments and other institutional investors, will manage commercial forests in Mississippi, Oklahoma and Arkansas to ensure timber production and carbon sequestration.

The latter is usually achieved through lower harvest volumes. Companies seeking to offset their emissions pay forest owners to leave trees standing, thus allowing the growing forest to absorb carbon from the atmosphere. Such deals create tradable financial instruments known as carbon offsets.

Carbon pricing, as well as increasing corporate pledges to operate without increasing greenhouse gas levels in the atmosphere, have prompted investors to rethink the value of forest land and place long-term bets on forest properties that are based on more than just the amount that can be earned by selling roundwood to timber processors.

In November, Oak Hill Advisors LP, a significant player in credit markets, completed one of the largest US forest land purchases in recent years, paying 1.8 billion US dollars for hardwood forests across 17 states. The plan for these areas is to reduce harvesting and sequester carbon.

In December, one of the largest forest owners in the US, Manulife Investment Management, announced that it plans to raise 500 million US dollars to acquire properties where carbon sequestration in growing forests will be a priority, rather than their exploitation for timber products.

“For large forest land acquisitions, carbon is an integral part of the valuation, just like timber,” said Anton Pil, head of alternative financial instruments at J.P. Morgan Asset Management, which manages 2.45 trillion US dollars and acquired Campbell in 2021. “Managing these lands in the longer term is a balance between timber harvesting and CO₂ sequestration.”