Journal of Forest Economics > Vol 35 > Issue 1

Timberland Asset Pricing in the United States

Daowei Zhang, Auburn University, USA, , Richard W. Hall, Forest Investment Associates, USA
Suggested Citation
Daowei Zhang and Richard W. Hall (2020), "Timberland Asset Pricing in the United States", Journal of Forest Economics: Vol. 35: No. 1, pp 43-67.

Publication Date: 22 Jan 2020
© 2020 D. Zhang and R. W. Hall
Timberland investmentReturnsRiskFaustmann-Hartman modelInstitutional Investors


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In this article:
1. Introduction 
2. Timberland as an Investment Asset Class 
3. The Fundamental Value of Timberland 
4. Determining the Drivers of the NCREIF Timberland Value and Returns 
5. Conclusions 


In this paper we investigate the drivers of U.S. timberland property value, returns, and risk represented by the NCREIF Timberland Index from 1987 to 2016. We use the Faustmann-Hartman model to develop and test one timberland property value model and two timberland return models that include macroeconomic and microeconomic (or forestry-specific) factors respectively. We find that U.S. timberland value are positively related to U.S. GDP and negatively to interest rate and that U.S. timberland returns are positive to GDP growth and timber price change, and are influenced by some exogenous events. We further confirm that timberland has established itself over the last three decades as a steady asset class, especially when viewed in light of the extraordinary volatility and shifts in the broader financial markets and sector-specific factors.