📘 Read the full study in Forest Policy and Economics, Vol. 162 (2024):  https://doi.org/10.1016/j.forpol.2024.103188 or contact Dr. Bruno da Siva for more information.
Timberland valuation is a cornerstone of forest investment and management. Yet, many models overlook a critical component: terminal value—the projected worth of unharvested timber at the end of a planning horizon.
In a 2024 study, Silva et al. demonstrate that excluding terminal value can lead to significant undervaluation, especially in short-term plans. For example, a five-year harvest plan without terminal value could undervalue a pine plantation by over $1,200 per acre. Even in 100-year plans, the difference can be $25–$30 per acre.
The study used a harvest scheduling model for loblolly pine plantations and tested various planning horizons and constraints. Including terminal value not only improved financial accuracy but also influenced harvest timing, inventory recovery, and age class structure—key factors in sustainable forest management.
🌲For forest professionals, the takeaway is clear: terminal value is a vital input for accurate valuation, strategic planning, and long-term sustainability. Whether you’re managing a family forest or a large institutional portfolio, incorporating terminal value ensures you’re capturing the full economic potential of your timberland.
