Overview This report explores the economic potential of establishing new commercial timber plantations in Australia, between 2020 and 2050, under current and alternative market conditions. The findings of the report are intended to assist industry and policymakers anticipate and adapt to expected changes in the industry. Key Issues: ABARES estimates that if log exports remain at 2015-16 levels the volume of softwood sawlogs available to the domestic market could fall short of demand by 3.4 million cubic metres per year by 2050. To meet this shortfall, an additional 200,000 to 250,000 hectares of new softwood plantations would be required by 2050. However, given the uncertainty around future softwood sawlog supply and log equivalent demand in 2050, it has been proposed that the required area could be as high as 490,000 hectares (Omega Consulting 2017). However, ABARES analysis indicates that there is likely to be limited investment in new plantations between now and 2050, assuming current market conditions persist. Based on a range of factors such as tree growth rates, regional processing capacity and costs, log and wood product prices, land prices, and regional demand for wood products ABARES estimates that around 24,009 hectares of new softwood plantations and 4,773 hectares of new hardwood plantations could be established by 2050. The estimated increase in the softwood estate (24,009 hectares) is far below the area needed to meet domestic demand for softwood sawnwood in 2050, if log exports remain at 2015-16 levels. As a result, ABARES estimates that softwood sawnwood imports will more than double between 2020 and 2050. The estimated area of new hardwood plantings (4,773 hectares) is expected to be far less than the 100,000 hectares of existing hardwood plantations expected to return to agriculture over the next 10 years. As a result, ABARES estimates a decrease in the total area of hardwood plantations of around 95,227 hectares by 2050. However, most hardwood plantations are managed for woodchip exports, having little impact on the domestic market. The report also estimates the potential area of plantation establishment under alternative market conditions. The analysis reveals that while changes in land prices, tree growth rates and demand for wood products have a moderate impact on plantation investment, changes in exchange rates and interest rates could have very large impacts on the profitability of establishing new plantations.