Growth and decay: forest landowner impatience factor
Main Article Content
impatience factor, inflation, transaction evidence approach, timberland appraisal, income capitalization approach, forestland owners
From saplings to mature stems, trees grow into new log-size classes expanding in both timber volume and monetary value. Forestland financial decay becomes discernible when timber revenues are discounted to their present-day value. Net present value (NPV) calculations require application of a financial discount rate moderated against the forestland’s macroeconomic inflation rate. The discount rate is significantly determined by the forestland owner’s ‘impatience factor’ uniquely guiding timber harvest rotation timing for each forestland investor. The importance of appropriately defining the impatience factor is discussed in this manuscript. A 15.78 hectare (39.0-acre) forested parcel value is considered, as viewed through the impatience factor lens for various investor classes to appreciate observed variability in discounted asset values and how it influences timber harvest rotation timing. Natural resource managers, investors, and advisors may find the techniques described here helpful in their timber management financial decisions.