📘 Read the full study in the Journal of Forest Business Research (2023): https://doi.org/10.62320/jfbr.v1i1.15 or contact Dr. Jacek Siry for more information.
As timberland continues to attract institutional capital, understanding the transaction costs associated with these investments is critical. Hiegel et al. (2023) conducted a comprehensive survey of timberland professionals to quantify these costs and assess their impact on investment decisions.
The study found that transaction costs are inversely related to estate size; smaller properties incur higher costs relative to their value. Regionally, the Pacific Northwest stands out as the most expensive U.S. region due to complex terrain, legal frameworks, and environmental regulations. In contrast, the Southeast and South Central regions offer more cost-efficient transactions.
Globally, Latin America and Oceania are perceived as high-cost regions, often due to legal and land record challenges. Despite these costs, most investors remain active, suggesting that transaction costs are not a major deterrent—though they are closely tracked and discussed internally.
Interestingly, only about 60% of organizations capitalize these costs, meaning many may understate the true cost basis of their investments. This has implications for reported returns and investor transparency.
🌲For forest industry professionals, this research underscores the importance of cost diligence, regional awareness, and accounting practices in timberland transactions. As the sector evolves—especially with growing interest in carbon markets—understanding and managing transaction costs will be more important than ever.
