Plantation forestry in Paraguay emerges

Abstract

Over the last two decades, investors in the forestry sector have been increasingly active in Paraguay, establishing tree plantations with the aim of profiting from the burgeoning global demand for wood and fiber. Growth rates for commercial tree species are good to excellent, and the country has over 7.6 million hectares (Mha) of land with high to very high potential for cultivating them. Since 2010, Paraguay’s plantation area has quadrupled to more than 204,631 ha and planting rates accelerated sharply in 2023. This wave of planting and related forest industries is bringing jobs to rural communities and helping to diversify the country’s economy. Despite these positives, plantation forestry in Paraguay faces some hurdles: high transportation costs from this landlocked country to overseas markets, time-consuming bureaucratic processes, and governance issues. Another challenge is mainstreaming plantation-grown wood into the domestic supply chain, especially for fuelwood, one of the most important sources of energy for Paraguayan households and industry. With native wood now in short supply due to decades of heavy deforestation and overcutting, sustainable fuelwood plantations are needed to fill the gap. Major investments are nevertheless moving ahead. A new multibillion-dollar pulp mill under construction, an uptick in tree planting, the resolve to address domestic needs, especially for fuelwood, and decades of experience managing modest-sized plantations suggest that Paraguay’s plantation forestry sector is poised to expand. Bolstering this expansion with environmental and social best practices will help underpin its sustainability over the long term.