The Hidden Purpose of This Web Site
A Little Expose
As a consulting forester and forest landowner, my purposes in putting all this information up on the Internet are both altruistic
and selfish. I want to be an effective advocate for good forest management and sustainable economic development. I also want to increase the value of my business and increase the value of my
forest land. But because of how markets work, the only way that any of these goals can be achieved is if ALL foresters increase the perceived value of their services, and ALL landowners increase the
value of their land.
You might wonder how can one web site do this? How can value be created out of thin air? Well, as indicated in the Economics
subsection of this web site, there's a lot of misinformation out there about tree value growth rates. As a result, forest management and forest land are significantly undervalued. Since trees really do create great value with good management, the value of management and land can be increased by simply exposing the misinformation for what it is, and spreading the truth.
The real estate market hasn't recognized the value that trees create because buyers, sellers and realtors don't understand how trees grow in value. Many foresters don't understand this
either, especially the government foresters who have controled the flow of information about forestry for nearly a century. They have no incentive to understand. Some would claim
that they actually have a disincentive to understand because their jobs are based on the premise that forestry isn't profitable and therefore needs to be subsidized by government.*
The Internet: A Revolution in Access to Information
But now, thanks to the Internet, it's possible to bypass the control that government has had on the flow of forestry information.
Correct information about tree value growth rates and the attractiveness of forestry investments can be spread to potential buyers, sellers and realtors. All you have to do is go to the pages in my
subsection, then click on File, Send Page, and enter the names and email addresses of friends and associates you would like to share this information with!
In order to understand how
forest land investment values are generally higher than current market values, a quick comparison of two hypothetical investments may be useful. If Investment A is now worth $600, and if it grows at 4%
per year for 10 years, it's present value at a 4% discount rate is $600. Meanwhile, if Investment B is also now worth $600 and if it grows at 11% per year for 10 years, its present value at a 4%
discount rate is $1200. (See my Profitability Reports page for more information.)
Of course in this example, Investment A and Investment B are the per acre timber values of the exact same stand of
trees. It's just that the Investment A scenario is looking at those trees from the old government forestry misinformation point of view, while the Investment B scenario is looking at them from the
correct point of view. So if buyers, sellers and realtors take the correct point of view, the value of the trees doubles! Just like that! And thanks to the Internet, this kind of sea change
in thinking CAN happen very quickly.
Timber investment is not the only reason that people want to own forest land. Many prospective buyers look for recreational opportunities, wildlife
habitat features, and aesthetic values. The fact that these ownership objectives are not in conflict with sound timber management can be illustrated on the Internet (Wildlife Habitat Database, Aesthetics subsection). Also, these objectives
can be enhanced with good management specifically for recreation, wildlife habitats and aesthetics.
Forests provide many ecosystem services
that are currently not recognized by the market. The value of these services must be recognized and brought into the market in some fashion in order to allow forestry uses to better compete with development uses. One way to do this would be to simply put ecosystem services in the same category as other charitable contributions, and allow forest landowners to deduct the value of ecosystem services from their income taxes.
Other Players in This Game
If this little educational campaign is successful, forest land prices will go up. Then at some point, the real value of timber production will be
reflected in purchase prices. At that point, the speculative part of forestry investments will be reduced. It will still be possible to make a good return on forestry investments, it's just that
acquisition costs will be higher. But for now, that point is still years in the future. How many years depends on you!
Over the past 10-20 years some major institutional and private
investors have learned about tree value growth rates. They've been busy buying large tracts of forest land and pushing up prices in the South and Pacific Northwest. The same thing is beginning to
happen now in the Lake States and northern New England and New York. But they haven't turned yet to southern New England and other areas where tracts of land are smaller.
This could change in the future because, despite small tract size and typically
bad past management, there are bargains out there. As mentioned in some of my papers, even on high-graded stands, there's usually sufficient
quality growing stock to make restoration forestry
a profitable venture. Good management can bring these woodlots back in 10, 20 or 30 years. The actual returns from sales may not be there for 20 or 30 years, but the value of the timber and growing stock can be appraised and recognized much sooner.
If You Own Forest Land and Want to Increase its Value
Go to the Economics
subsection on this web site. Start at the top of the list of papers and go down to whatever level of detail you feel comfortable with. Tell your friends and neighbors what you've learned. Help get the word out so that public consciousness about tree value growth rates can begin to change. We have nearly a century of misinformation to overcome, so this will take some time and effort. But it's definitely possible, especially with the Internet technologies now available to us.
If You Don't Own Forest Land or Want to Buy More
Contact realtors in the towns that you're interested in. Get copies of maps of tracts of forest land and go out and
look around. If you find something that appears to have significant volumes of grade hardwoods and pine, you'll want to hire your forester to do a quick preliminary inventory to determine ballpark
volumes and values so that you can calculate whether the value is close to the asking price, and thereby eliminate from consideration those properties that are priced too high.
But make sure
your forester understands all the economic information on this web site. Otherwise he/she won't be able to correctly appraise the true investment value of properties that you may be considering
buying. (Unfortunately, the same misinformation about tree value growth rates that was passed on to landowners was also passed on to forestry students in most universities.)
narrowed the search to properties that seem reasonably priced, then send your forester back for more detailed inventories. You may want to spend the money for treatment and growth simulations and
financial analysis. You may need appraisals of potential houselots and other marketable resources on the properties in question. You may also need information on boundary locations to know
whether the maps that have been provided are correct.
*The recent announcement of an upcoming workshop
indicates that this situation may be changing. Whether this workshop is in any way a response to information on this web site is open to speculation.