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Timberland investment under both financial and biophysical risk

Publication ,  Journal Article
Mei, B; Wear, DN; Henderson, JD
Published in: Land Economics
January 1, 2019

We extend real options analysis of timberland investments to examine a combination of financial and biophysical risk effects on optimal investment strategies in the southeastern United States. Results show that, despite a slight downward drift in price, expected returns for loblolly pine management fall between entry and exit thresholds, indicating an optimal "hold" strategy. This is explained by an offsetting upward trend in biophysical productivity associated with climate changes across a range of modeled futures. Monte Carlo analysis indicates a small positive difference between entry and exit outcomes consistent with observed rates of expansion in timberland investments in the region.

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Published In

Land Economics

DOI

EISSN

1543-8325

ISSN

0023-7639

Publication Date

January 1, 2019

Volume

95

Issue

2

Start / End Page

279 / 291

Related Subject Headings

  • Agricultural Economics & Policy
  • 3801 Applied economics
  • 1402 Applied Economics
 

Citation

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Mei, B., Wear, D. N., & Henderson, J. D. (2019). Timberland investment under both financial and biophysical risk. Land Economics, 95(2), 279–291. https://doi.org/10.3368/LE.95.2.279
Mei, B., D. N. Wear, and J. D. Henderson. “Timberland investment under both financial and biophysical risk.” Land Economics 95, no. 2 (January 1, 2019): 279–91. https://doi.org/10.3368/LE.95.2.279.
Mei B, Wear DN, Henderson JD. Timberland investment under both financial and biophysical risk. Land Economics. 2019 Jan 1;95(2):279–91.
Mei, B., et al. “Timberland investment under both financial and biophysical risk.” Land Economics, vol. 95, no. 2, Jan. 2019, pp. 279–91. Scopus, doi:10.3368/LE.95.2.279.
Mei B, Wear DN, Henderson JD. Timberland investment under both financial and biophysical risk. Land Economics. 2019 Jan 1;95(2):279–291.
Journal cover image

Published In

Land Economics

DOI

EISSN

1543-8325

ISSN

0023-7639

Publication Date

January 1, 2019

Volume

95

Issue

2

Start / End Page

279 / 291

Related Subject Headings

  • Agricultural Economics & Policy
  • 3801 Applied economics
  • 1402 Applied Economics