As with tropical trees around the world, the koa forests of Hawaii have been decimated — cut down to make way for sugar plantations and cattle ranches. One company is using an innovative business model to bring back koa forests. The secret is a digital tag that helps track individual trees.
At upscale Hawaiian shopping malls like Kings' Shops, wood from the native koa tree is in high demand. Its color ranges from light to dark brown. Koa's curving lines make it popular for furniture, or ukuleles.
"People love the koa," says John Kirkpatrick, owner of Genesis Gallery. "They like the idea that it only grows here in Hawaii."
He points out a 3-foot vase made of lustrous koa wood that's priced at $9,000.
Koa is expensive because it's increasingly rare, as most of the native forests have been cut down.
Several projects aim to reforest the Big Island of Hawaii with koa. One of the most innovative efforts is run by Hawaiian Legacy Hardwoods.
From an all-terrain vehicle, company CEO Jeff Dunster tours the operation, climbing up steep dirt trails to reach 5,000 feet, toward tall grass overlooking fields of new koa.
Dunster started as a consumer of koa furniture. Then he discovered that he was part of the deforestation problem.
"We wanted to be creative with ways where we could put back forests, leave them intact and make it financially viable for the landowner," Dunster says.
The company's business model relies on investors, who pay around $110 per tree.
Over the next few decades, the trees will be harvested for timber — a potential windfall for investors.
"The historical data shows that koa has appreciated 1,000 percent in the past 10 years," Dunster says.
Money from the investments helps the company buy land and plant koa trees that will never be harvested. The company calls them "legacy trees."
"For every investment tree we plant, we plant three legacy trees," Dunster says.
Chief Operating Officer Darrell Fox gets down on his hands and knees to plant a legacy tree. Next, he pours a little water. Finally, he inserts an RFID (radio frequency identification) tag in the soil next to the tree. The ID helps reassure both investors and conservationists.
"The biggest concern was — how do I know you're not selling my tree multiple times?" Fox says. "And that was one of the reasons we got involved in the RFID tagging program in the first place. So, if you look at the quarter-million-plus trees we've planted out here so far, every one of them has its own unique ID number."
That ID number allows customers anywhere in the world to zero in on specific trees via the Internet.
"The individual tree owner will be able to look at the database and see when the tree was planted, what its mother tree was — the one who provided the seed," Fox says. "They'll be able to see what the weather conditions were at the time of its planting."
Despite these innovations, there is some uncertainty in the process. For one thing, no one has successfully planted and grown koa trees for timber.
Though, people have tried.
J.B. Friday, a forester with the University of Hawaii, says: "I've seen koa plantations that I know the original owner had the idea that he was going to be harvesting trees, and in hindsight, it's not going to happen. So, I guess they lost money on that."
There are threats from pests and diseases, and the possibility that these newly planted trees won't yield the kind of wood most valued in the marketplace.
Hawaiian Legacy Hardwoods advises investors about the risks, including the possibility of a total loss.
Nonetheless, the company already has a waiting list of investors lined up to buy trees for next year's planting season.