Comparative global timber investment costs, returns, and applications, 2020
Comparative global timber investment costs, returns, and applications, 2020
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Frederick Cubbage
Department of Forestry and Environmental Resources, North Carolina State University, Raleigh, NC, USA
Rafael Rubilar
Cooperativa de Productividad Forestal, Departamento de Silvicultura, Facultad de Ciencias Forestales, Universidad de Concepción, Concepción, Chile; Centro Nacional de Excelencia para la Industria de la Madera (CENAMAD), Pontificia Universidad Católica de Chile, Santiago, Chile
timber investments, benchmarking, internal rates of return, capital budgeting, planted forests, carbon mitigation
Abstract
We estimated stand level timber investment returns for a range of 16 countries and 47 planted species/management regimes in 2020, using capital budgeting criteria, at a real discount rate of 8%, without land costs. Plantation management financial returns were estimated for the principal plantation countries in the Americas—Brazil, Argentina, Uruguay, Chile, Colombia, Ecuador, Paraguay, Mexico, and the United States—as well as for China, Vietnam, Laos, Spain, New Zealand, Finland, and Poland. South American, New Zealand, and Spain plantation growth rates and their concomitant investment returns were generally greater, with the exception of some pulpwood regimes, with real Internal Rates of Return (IRRs) of more than 11%. Southeast Asia had the highest timber prices and highest calculated stand-level IRRs in the world, at more than 20%. Temperate forest plantations in the U.S. and Europe returned less, from 3% to 7%, but those countries have less financial risk, better timber markets, and more infrastructure. These timberland benchmarking research efforts can be used by the private sector for considering timber investments in different countries and regions in the world, or by government and nongovernment organizations to estimate their management costs and returns, or for providing government incentives for the provision of ecosystem services such as forest carbon storage.
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Cubbage, F., Rubilar, R. ., Mac Donagh, P., Kanieski Da Silva, B. ., Bussoni, A., Morales, V., Balmelli, G., Vitor Afonso Hoeflich, Lord, R., Hernández, C., Zhang, P., Ha Tran Thi Thu, Yao, R., Hall, P., Korhonen, J., Luis Díaz-Balteiro, Roque Rodríguez-Soalleiro, Davis, R., Chudy, R., De La Torre, R., Lopera , G. ., Somvang Phimmavong, Garzón, S., & Cubas-Baez, A. (2022). Comparative global timber investment costs, returns, and applications, 2020 . Journal of Forest Business Research, 1(1), 90–121. Retrieved from http://forest-journal.com/index.php/JFBR/article/view/global-timberland-investment-returns
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