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Evaluating timberland investment opportunities in the United States: A real options analysis

Publication ,  Journal Article
Mei, B; Clutter, ML
Published in: Forest Science
January 1, 2015

In recent years, timberland prices in the United States have been chased to an unprecedentedly high-level owing to the restructure of the forest industry, whereas stumpage prices have been flat or declining over the same time period, primarily due to the economic downturn. This seems to make timberland investments more expensive and less rewarding. In this study, the real options approach is applied to analyze the timberland market. Results from the numerical example of a hypothetical loblolly pine plantation in the state of Georgia show that it is not optimal to make new investments with current timberland and stumpage prices. For existing landowners, however, stumpage prices fall close to the mothballing threshold. This implies less timber harvesting activities. These results can help investors make better capital budgeting decisions in the timberland industry

Duke Scholars

Published In

Forest Science

DOI

EISSN

1938-3738

ISSN

0015-749X

Publication Date

January 1, 2015

Volume

61

Issue

2

Start / End Page

328 / 335

Related Subject Headings

  • Forestry
  • 0705 Forestry Sciences
 

Citation

APA
Chicago
ICMJE
MLA
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Mei, B., & Clutter, M. L. (2015). Evaluating timberland investment opportunities in the United States: A real options analysis. Forest Science, 61(2), 328–335. https://doi.org/10.5849/forsci.13-090
Mei, B., and M. L. Clutter. “Evaluating timberland investment opportunities in the United States: A real options analysis.” Forest Science 61, no. 2 (January 1, 2015): 328–35. https://doi.org/10.5849/forsci.13-090.
Mei B, Clutter ML. Evaluating timberland investment opportunities in the United States: A real options analysis. Forest Science. 2015 Jan 1;61(2):328–35.
Mei, B., and M. L. Clutter. “Evaluating timberland investment opportunities in the United States: A real options analysis.” Forest Science, vol. 61, no. 2, Jan. 2015, pp. 328–35. Scopus, doi:10.5849/forsci.13-090.
Mei B, Clutter ML. Evaluating timberland investment opportunities in the United States: A real options analysis. Forest Science. 2015 Jan 1;61(2):328–335.
Journal cover image

Published In

Forest Science

DOI

EISSN

1938-3738

ISSN

0015-749X

Publication Date

January 1, 2015

Volume

61

Issue

2

Start / End Page

328 / 335

Related Subject Headings

  • Forestry
  • 0705 Forestry Sciences