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Estimating Annual Investment Returns from Industrial Planted Forests of Radiata Pine in New Zealand

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  • David Evison

Abstract

The purpose of this paper is develop an industry-level (average) estimate of annual investment returns from industrial planted forests in New Zealand, from publicly-available financial statement data. The research used data from seven New Zealand commercial forest-growing companies, for the period 2008 to 2018. These companies managed around 600,000 ha of planted forest (or about half of the industrial forest estate in New Zealand), and had a total asset value of approximately NZ 11 billion in 2018. The data were used to calculate an average industry-level estimate of annual investment returns, from 2009 to 2018. The calculated value is directly equivalent to the one-period internal rate of return and is separable into two components – cash return on assets and the real change in asset value. Since 2009, commercial forestry investment returns (unleveraged, pre-tax) have increased. The average investment return for 2009 to 2013 was 5.4%, while for 2014 to 2018 the average investment return was 14.7%. These returns are superior to returns from pastoral farming.

Suggested Citation

  • David Evison, 2022. "Estimating Annual Investment Returns from Industrial Planted Forests of Radiata Pine in New Zealand," Journal of Forest Economics, now publishers, vol. 37(2), pages 185-198, March.
    • Handle: RePEc:now:jnljfe:112.00000544
    DOI: 10.1561/112.00000544
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