Estimating Land Rent from the Market Value of Timberland

Abstract

Modeling empirical investment behavior of timber stand decision makers requires the use of market-generated information. Recent forestry literature has suggested that the available information on market valuations of timberland could be used to estimate empirical timberland rents as the opportunity cost. In this article we point out the fact that the market value of timberland comprises of the value of current market rent as well as values of speculated future market rents. We argue the importance of accounting for the values of speculated future rents, which could differ widely from the value of the current market rent.