Costs & Returns

Costs & Returns for Management Activities
on a Hypothetical 100 Acre Woodlot
 

Service

Cost/Year

 

Benefit

Return/Year


Ch 61 Management Plan
10 Yrs @ $600+$6/Ac
Land Tax @ 5% Ch 59 Rate
8% Stumpage Tax for $50/Ac/Yr

   



Eliminate Ch 59 Tax
Ch 59 Tax @ $700/Ac,
Tax Rate of $18/$1000

 

$120

 

$63

 

$400

$1,260

       

Boundary Blazing & Painting
10 Yrs @ $60/1000 LF

 

Lower Risk of Timber Trespass
Identify Property

 

$50

$50

       


Mark & Tally Timber,
Administer Sale Every 10 Yrs
3 Mbf/Ac @ $20/Mbf

 



Increased Value from
Competitive Bidding*

 
   

$600

$600

       


Commercially Thin &
Weed Residual Stand
with Above Timber Sale
2 Cd/Ac @ $5/Cd

 


Increased Rate of Value Growth
on Residual Stand from
Harvest & Thinning
40% Above Base $35/Ac/Yr

 
   
   

$100

$1,400

       




Recreational Development Plan
10 Yr Cost = $1000

 


Quicker Sale of Property
Interest for .5 Yr @ 8%
& $700 per Ac Reduced
to Annual Cost/10 Yrs

 
   
   

$100

$280

       



Inventory Data Processing,
Simulations & Analysis
10 Yrs @ $200+$1/Ac

 


Quicker Sale of Property
Internest for .5 Yr @ 8%
& $700 per Ac Reduced
to Annual Cost/15 Yrs

 
   
   

$20

$280

       

TOTALS

$1,453

 

$3,870

       

Discounted 10 Yr Costs (@ 8%)

$9,751

Compounded 10 Yr Returns (@8%)

$56,065

       

Rate of Return on Costs

19.1%

   
       

NOTE:  These costs and returns are those attributable to management.  Returns are over and above those from unmanaged land, which, as indicated above, would be about $35 per acre per year or $3,500 per year for this hypothetical 100 acre property.  Therefore the total annual return would be $7,730.

*This is a minimum amount for increased value from competitive bidding.  Studies have shown that after-cost returns from bid sales are the in range of 20-40% above non-bid sales.  See Free Silviculture page.

Karl Davies
August, 1998