Effect of Land Prices, Transportation Costs, and Site Productivity on Timber Investment Returns for Pine Plantations in Colombia

background

This study assesses the importance of  land costs, site quality, and forest location on financial returns of forestry investments. 

Goals & Methods

The factors mentioned above were analyzed using data from pine plantations in the Andean region of Colombia.  Researchers determined site quality based on annual growth rates and they calculated  comparative return on forest investment based on sales of wood, market prices, wood transport costs, and bare land costs.

Conclusions & Takeaways

Timber prices have increased significantly in Latin America in recent years (2000-2010) even though they have remained stable in North America. Site productivity was the most important factor determining the profitability of the plantation (much more than transport costs). Traditional pine species such as P. patula and P. oocarpa are being replaced by faster growing P. maximinoi and P. tecumanii. Genetically improved seeds are few (indicating room for future growth). The study authors forecast increasing demand for forest products in Latin America.