Financial analysis of potential Pinus patula plantations in Antioquia, Colombia

The establishment of commercial forest plantations requires the selection of sites where reasonable profitability can be attained. A financial analysis was made for the identification of the most suitable areas for the establishment of new Pinus patula plantations in the central region of Antioquia, Colombia. The analysis was performed assuming basic silvicultural treatments at the establishment but no management during the entire rotation period. A volume yield data at the stand level was obtained from a previously fitted model that uses biophysical variables and stand density as predictors. The estimated stand volume, a detailed cash flow, and a derived stumpage price were combined to perform a financial analysis. The Land Expectation Value (LEV) and Internal Rate of Return (IRR) at the optimal rotation age, along with their spatial variation, were calculated in this study. Results suggest that the estimated volume and the current stumpage price are not sufficient to guarantee reasonable profitability for new timberland investments. While the LEV was negative, the IRR was in the range 4.1±1.5%, which is less than the discount rate of 6.8% used in the financial analysis. However, a positive LEV and an IRR at 8% would be achieved if forest productivity increases by 20% because of silvicultural practices or costs reduction in a similar proportion (obtaining IRRs up to 8.4%). Moreover, if the government provide subsidies, the IRR would increase up to 10.3% (without requiring an increase in productivity or a decrease in costs) on sites with high growth potential (mean annual increment greater than 16 m3 ha-1 year-1), and close to the mills (less than 45 km radii).

An Assessment of Stumpage Price and the Price Index of Chinese Fir Timber Forests in Southern China Using a Hedonic Price Model

Research Highlights: Stumpage price is the most important factor affecting the value of forests. Therefore, an understanding of the factors affecting stumpage prices and trends is critical for effective forest management. Background and Objectives: Chinese fir is the most important fast-growing timber species in China, it is also the tree species with the largest trading volume in the stumpage markets of Southern China. The aim of this study was to analyze the determinants and trends of stumpage prices for Chinese fir timber forests. Materials and Methods: Data on 928 sales of Chinese fir timber forests transacted between 2007 and 2016 were gathered from the stumpage markets in Southern China. We analyzed the relationship between stumpage prices and sales characteristics using the hedonic price method (HPM) and measured the stumpage price index with a dummy time hedonic index. Results: (1) The double logarithmic form of the HPM yielded a more accurate estimate than the semi logarithmic form. The R2ad values in the nine annual prediction models were all above 80%. Stock volume made the greatest contribution to stumpage price, followed by stand age. Stand area had no significant impact on the stumpage price. (2) Stumpage prices of Chinese fir timber forests fluctuated greatly, especially in 2010 and 2015 when the sequential price indexes were 180.01% and 74.95%, respectively. Taking 2007 as the baseline, we calculated the base price index in 2016 to be 197%, with an average annual growth rate of 7.82%. (3) The stumpage market was associated with a higher degree of risk than the timber market. Conclusions: Our findings provide valuable inputs that can guide and facilitate the Chinese government’s efforts to optimize resource allocation and standardize the stumpage market.

The 30-year dynamic of the softwood sawtimber stumpage market in Louisiana: insights from quarterly data from 1988 to 2017

Based on a 30-year quarterly data set, this paper examines the dynamics of the softwood sawtimber stumpage market in Louisiana, United States, from 1988 to 2017. Cointegration analysis and the vector error correction model were used to examine the demand and supply of softwood sawtimber stumpage products in Louisiana. Competition among different stumpage products, seasonality patterns in the market, and the impact of some exogenous events were also investigated. The results showed that the demand for softwood sawtimber products is inelastic to its own price, whereas the supply is elastic. Strong seasonality patterns were detected for both stumpage price and harvest quantity. Significant substitution effects were also found among different types of stumpage products. In addition, the estimation results of the dynamic model suggested that, when facing an exogenous impact, the harvest quantity adjusts far quicker than the stumpage price in the Louisiana softwood sawtimber stumpage market.

Evaluating the Most Suitable Tree Species Using Land Expectation Value: A Case Study from Plantation in North of Iran

Plantation in north of Iran is rapidly increasing by local farmers and state but it is not clear which species is most suitable for perpetual timber production. Thus, this study is carried out to evaluate the most suitable timber species among ash (Fraxinus excelsior), elm (Alnus glutinosa), maple (Acer velutinum), oak (Quercus castanifolia), bald cypress (Taxodium distichumin) in north of Iran for evaluation of most suitability using Land Expectation Value (LEV). Data such as wood price at forest road side and variable harvesting cost was collected from secondary souce especially General Office of Natural Resources in Guilan province for a period of 20 years. Average annual increment of different species derived from previous researches. Consumer Price Index (CPI) was used for deflation of stumpage price. Regression analysis was used to predict the stumpage price of different species. Then, the mean price process was determined for different species. Faustmann's formula was used to determine the LEV or Net Present Value (NPV) for a perpetual timber production of different species. The results showed that the LEV of ash, elm, maple, oak and bald cypress were 2623.883, 4653.042, 4319.9644, 2206.8788, 8064.667 (0.33 US dollar/ m3), respectively. The LEV of bald cypress was the highest, so it can be concluded that this species is the most suitable for timber production.

Hardwood Stumpage Price Trends and Regional Market Differences in Pennsylvania

Pennsylvania is a major hardwood lumber producing state. Since 1984, the Pennsylvania Timber Market Report (TMR) has provided quarterly stumpage and mill-delivered prices for important timber species groups for four subregions within the state. Stumpage price data covering the period from 1984 to 2000 are available for eight species groups. These series were analyzed with log-linear regression to determine nominal and real price growth rates. While all species show increasing prices over the period, three distinct groups are identified. Black cherry and hard maple show the highest rates of price growth (10.1% to 14.1% nominal and 6.5% to 10.7% real); northern red oak, soft maple, and yellow-poplar form an intermediate group (6.6% to 9.5% nominal and 3.1% to 6.1% real); and white oak, white ash, and miscellaneous hardwoods show the lowest rates of growth (4.3% to 6.8% nominal and 0.0% to 3.6% real). Additionally, a regression model with qualitative regional variables (i.e., “dummy” variables) was used to test whether the four market regions used by the TMR are statistically different, in terms of both the general level of prices and rates of change. The results clearly show significant differences in the price levels and trends among all regions for at least some species groups. The two regions showing the fewest significant differences are the southeast and southwest regions. The two northern regions are quite different from the southern regions. The northwest region was the most distinct of all the regions. Specific regional differences are noted for individual species groups. North. J. Appl. For. 20(3):124–130.