Comparative global timber investment costs, returns, and applications, 2020

Main Article Content

Frederick Cubbage https://orcid.org/0000-0001-8375-3945
Rafael Rubilar https://orcid.org/0000-0002-4929-7613
Patricio Mac Donagh https://orcid.org/0000-0002-4749-6491
Bruno Kanieski Da Silva https://orcid.org/0000-0002-4007-2717
Adriana Bussoni https://orcid.org/0000-0001-9924-4977
Virginia Morales
Gustavo Balmelli https://orcid.org/0000-0002-5762-4207
Vitor Afonso Hoeflich https://orcid.org/0000-0003-0561-3933
Roger Lord https://orcid.org/0009-0004-6700-8442
Carmelo Hernández
Pu Zhang https://orcid.org/0000-0003-2642-6977
Ha Tran Thi Thu https://orcid.org/0009-0008-6314-9722
Richard Yao https://orcid.org/0000-0002-9408-1862
Peter Hall https://orcid.org/0000-0002-3506-8908
Jaana Korhonen
Luis Díaz-Balteiro https://orcid.org/0000-0002-4435-2740
Roque Rodríguez-Soalleiro https://orcid.org/0000-0001-6914-4748
Robert Davis https://orcid.org/0009-0005-2493-4400
Rafał Chudy https://orcid.org/0000-0001-5741-6822
Rafael De La Torre
Gabriel Lopera https://orcid.org/0000-0001-6651-9348
Somvang Phimmavong https://orcid.org/0000-0002-1557-5451
Sebastián Garzón
Ana Cubas-Baez https://orcid.org/0000-0001-9361-3890

Keywords

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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