Your Forest Can Be Managed For Long-term Profit While Enjoying Its Beauty and Recreational Value.
 Private forest landowners come from all walks of life and are as varied as the reason they own forest property. Some are farmers whose forestland represents family property that was not suitable for farming due to steep slopes and thin soils. Others may own forestland for hunting and recreational values. One common misconception is that this forest property has little or no current value since it does not produce an annual income. Forests are unique in that each tree represents both the final product as well as the manufacturing plant. Although they do not provide yearly end products such as corn or grain crops, this does not mean that they are not increasing in value. For example, a red oak tree that is currently 14 inches in diameter at 4.5 feet above the ground (diameter at breast height-DBH) and has 27 feet of clear stem wood, has a value of $37.41. In just 10 years, as this tree grows larger in diameter and gains additional height, it can be worth $101.31, which is equal to an annual return of 10.5%. Different tree sizes have value for various forest products ranging from pulpwood (smaller diameter trees) for making paper based products to lumber and veneer for high value furniture. Management of your woodlot can be done to increase its current and potential timber value and this can be accomplished in conjunction with, not instead of, other hunting, recreational and esthetic goals and objectives. It is possible to enjoy economic returns now and in the future while improving wildlife habitat diversity and improving access to your property.
Woodlots in the Appalachian region are quite varied in that they contain trees of many different species with a wide variety of tree sizes. Tree value varies by species and in general, increases in value with increasing stem diameter (DBH) and quality (the amount of the stem in clear, knot free wood). We have included a “Stumpage/Log Value” calculator link to an Excel spreadsheet in order to provide a glimpse of the variability in value between different tree species. Most forest landowners do not recognize the value of their woodlot simply because they lack the knowledge of how to measure and evaluate their timber resource. This website introduces you to basic forestry concepts and provides linkages to other forestry information sites such as tree species identification and sources of forest management assistance. A newly created worksheet in the “Stumpage/Log Value” calculator Excel spreadsheet is meant to assist you in calculating the volume and value of your woodlot based on a simple tree inventory. This calculator will also provide POSSIBLE rates of return as your forest ages. Contact Jeff Slahor or Dr. John R. Brooks |
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WERC Credit
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Forestry Basics
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In order to help better understand and accurately value your woodland we present the following three "lessons." Other concepts such as forest management and rate of return are briefly discussed.
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Forest Management
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 HARVEST the WORST FIRST
Deciding when to harvest your forest to achieve your management goals can be complicated. Not only do you need to consider the rate of return of individual trees, you also need to know how your trees will respond to management in the form of harvesting. As a generalization, “Harvest (cut) the worst trees first” is a good motto. Other things being equal, you want to harvest the trees with the lowest rate of return first (see Example below). Trees that are worth less money have lower rates of return because they have poor quality stems and/or they are smaller and less healthy than the better quality trees. The “worst” tree will not become better with time so it should be harvested first. Leaving the better quality, larger, healthier trees to grow longer allows them to add volume and value over time. In addition, the healthier trees also serve as a seed source to regenerate the next forest.
Example: You have 2 savings accounts - one earning a 4 % ROR and the other earning a 7% ROR - and you want to withdraw $100.00 dollars. You would take the money out of the account that had the smallest ROR first leaving money in the account that was earning a higher ROR. Similarly with trees, those with the lowest rate of value growth should be harvested first.
Compare and contrast the following five management options and the possible effect they have on dollar value; a full harvest (clear cut), a thinning, an actual stand with no treatment done, and two diameter limit harvests. Click on the links below.
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Rate of Return and Trees
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Trees Generate a Positive Rate of Return
The economic value of trees and forests increases over time as the trees grow. As trees grow larger in diameter and height, their value as a harvested product also increases. Anyone of us who invests money in a business or a mutual fund expects a positive rate of return on our investment. For example, a farm business invests labor, land and money into growing and harvesting crops that will produce a profit when sold. The amount of profit is reflected in the “rate of return” on the initial investment. The greater the profit is, the greater the rate of return.
Examples:
1. A red oak tree that is 10” dbh and has a straight stem is worth $6.97. In ten years, the tree has grown to about 12.5” dbh and the value of that tree has more than doubled to $15.63. The rate of return over that 10-year period is 8.4%.
2. A red oak tree that is 14” dbh and has a straight stem is worth $37.41. In ten years the tree is about 16.5” dbh and the value has tripled to $101.31. The rate of return over that 10-year period is 10.5%.
3. A red oak tree that is 18” dbh and has a straight stem with no branches or other defects can be considered a veneer tree worth $125.15. In ten years that tree is about 20.5” dbh and the value is $185.66. The yearly rate of return over the 10-year period is 4.02%.
The rate of return on a growing tree changes according to how fast it grows, the quality of the stem and market conditions. The annual rate of return can be compared with other investments of similar risk and duration. Forest landowners should check current timber prices and seek professional advice about the quality of their trees before they harvest. It may be financially advantageous to wait to cut your trees if the rate of return of the growing forest is higher than selling the timber now and investing the money in another option such as a Certificate of Deposit.
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