The relative economics of woodland management systems

Working paper

The objectives and priorities for managing woodlands vary widely. They can range from maximizing timber production or returns on investment, to management for sporting purposes or conservation and amenity. The financial viability of a woodland management regime is usually assessed by considering the return on the investment at an appropriate real discount rate. This is conventionally done because forestry, unlike many other forms of investment, has very long cycles between investing the money in a new plantation and obtaining a return. Discounting provides a method of bringing all expenditures and returns to a single point in time and expresses the disadvantage of having to wait. The discount rate selected depends on such factors as the financial risks involved, or conversely the value put on woodlands as a secure investment and values other than maximised return. The factors which influence profitability are numerous. They include site quality, in terms of soil and climate, the species and silvicultural system used, the size of a woodland block, ease of access for removal of timber, proximity to markets, and the availability of grants and fiscal incentives. In general, low discount rates, short rotations and early returns from thinning increase the attractiveness of an investment, while high discount rates, high early expenditure and very long rotations do the reverse...

Authors: Crockford, K; Spilsbury, M; Savill, P

• Publication status: Published
• Publisher: Oxford Forestry Institute, University of Oxford
• Series: O.F.I. Occasional papers
• Publication date: 1987-01-01
• ISSN: 0269-5790
• Paper number: 35
• ISBN: 0850741017
• Language: English
• Keywords: Oxford Forestry Institute; OFI
• Subjects: Plant sciences; Forests and forestry