Deriving simple and adjusted financial rates of return on Mississippi timber lands by combining forest inventory and analysis and Timber Mart-South data

Abstract

This study compares returns on investments in Mississippi timber lands with returns on alternative investments. The real annual rates of return from mature, undisturbed timber lands in Mississippi over a 17-year period (1977-94) were computed. Southern Research Station Forest Inventory and Analysis (FIA) timber volume data and Timber Mart-South (TMS) data on timber prices were employed. FIA trees were assigned a TMS dollar value based on species, size, and condition. The dollar value of each plot was derived by summing the per acre value of all trees on the plot. Simple and adjusted financial maturity concepts are investigated and compared. Simple financial maturity reflects the value of the timber only, while adjusted financial maturity reflects the implicit costs of holding timber. Average annual rates of change in monetary value and volume change were computed and compared for three distinct time periods: 1977-87, 1987-94, and 1977-94. These rates of return are compared to those for alternative investments such as stocks, bonds, certificates of deposit, and treasury bills. The effects of various plot- and condition-level strata such as ownership, forest type, survey unit, and ecoregion on financial rates of return are investigated.

Parent Publication

• Proceedings of the seventh annual forest inventory and analysis symposium

Citation

Hartsell, Andrew J. 2007. Deriving simple and adjusted financial rates of return on Mississippi timber lands by combining forest inventory and analysis and Timber Mart-South data. In: McRoberts, Ronald E.; Reams, Gregory A.; Van Deusen, Paul C.; McWilliams, William H., eds. Proceedings of the seventh annual forest inventory and analysis symposium; October 3-6, 2005; Portland, ME. Gen. Tech. Rep. WO-77. Washington, DC: U.S. Department of Agriculture, Forest Service: 81-88.