For a forest-rich country, Colombia faces a surprising economic dilemma. More than half of the country is covered by forest, and yet the growing demand for wood products is being supplied by imports – not local industry.

While the construction sector – the largest consumer of wood in Colombia – has grown by an impressive 7 percent between 2005 and 2014, the contribution of the forestry sector to national GDP has actually fallen over this time period, from 1.4 percent to 1.1 percent. Meanwhile, Colombian exports of wood products have stagnated around 3 percent of national production. Based on projections of future demand, this supply gap will only widen: by 2030, Colombian markets will need 4 million m³ more in raw wood materials than it currently produces domestically.[i]

These numbers suggest that Colombia is missing out on a significant investment opportunity, according to a new report commissioned by the Government of Colombia and the World Bank, with support from the Program on Forests (PROFOR).

The study finds that Colombia could not only use its own resources to meet all local demand for wood products, but also supply international markets, which are also on the rise: global demand for timber, pulp and paper products could quadruple by 2050.

Such an expansion would require an ambitious export scenario, where Colombia increases its commercial forest plantations by 464,000 hectares, but is well within the realm of possibility. According to recent land classifications, Colombia has 24.8 million hectares of land suitable for commercial reforestation, of which 30 percent (7.3 million hectares) are considered highly suitable.[1] Eventually, the gross production value of Colombia’s forestry sector could be as high as 12 trillion Colombian Pesos (over 4 billion USD), while creating 35,000 permanent jobs in forest plantations and industries.

“Colombia has broad potential for developing commercial reforestation programs, given its excellent conditions for tree growth, as well as its strategic geographic location for foreign trade and numerous free trade agreements,” said Karin Kemper, World Bank senior director for the Environment and Natural Resources (ENR) Global Practice, at the official launch of the report in Bogotá, Colombia. “This effort would not only have important economic and social impacts by creating jobs and reducing poverty in the countryside, but also play a significant role in mitigation and adaptation to climate change.”

Indeed, commercial reforestation could contribute to Colombia’s pledge of reducing its greenhouse gas emissions by 20-30 percent – a promise that the government takes seriously. "Colombia is committed to policies and tax reforms that help us successfully implement the Paris Agreement, as evidenced by the structural tax reform approved last year," confirmed Minister of Finance Mauricio Cárdenas.

"This report is fundamental in the context of transforming rural areas and the Colombian Government’s Green growth strategy,” said Silvia Calderón, director for environment at Colombia’s National Planning Department, in separate remarks. “Its recommendations will contribute to the sustainable use of natural resources and to the development of the forest economy."

Given Colombia’s high level of political support for green growth policies, what will it take, in practice, to fulfill the potential of the country’s forestry sector? The report lays out detailed recommendations for increasing the productivity of commercial forest plantations and the governance structure around them, as well as improving the competitiveness of Colombian wood processing industries in domestic and international markets.

“By providing very realistic and concrete recommendations, with set targets and timelines, we hope this report can guide the Colombian government in making the most of its exceptional forest resources, while also helping to protect natural forests that might otherwise be threatened by the growing demand for wood products,” said Franka Braun, World Bank senior carbon finance specialist. “Colombia has already expressed interest in commercial reforestation investments in the Orinoquía region, so this initiative is off to a promising start.”