University of Georgia Researchers to Timberland Owners: Improve
Forest Inventories or Risk Losing Billions in Timber Value
MORGANTOWN, W. Va. (Business Wire EON/PRWEB ) July 22, 2008 --
Researchers at the University of Georgia’s Warnell
School of Forestry and Natural Resources (Warnell) say that
inaccurate forest inventories can be causing timberland owners to lose
some $70 an acre, according to a study published today in the Canadian
Journal of Forest Research.
“With some 350 million U.S. timberland acres
in private hands, even a small portion of poorly managed and
inaccurately assessed acreage could amount to tens of millions, if not
billions, of dollars in diminished value,”
said Bruce
Borders, Ph.D., the author of “The
value of timber inventory information for management planning.”
Dr. Borders said that his research team undertook a large simulation
study to evaluate current timber-inventory methods, focusing on the
usefulness of stand level (defined as 50 to 100 acres of timberland
whose trees share similar characteristics) inventory data typical of a
commercial forest owner in the southern United States.
“Our findings indicate that, with current
methodology, timber management organizations that view collecting
inventory data as a cost to be minimized are producing management plans
that fail to maximize the profitability of their holdings,”
Dr. Borders said. “Our study indicates that it
is likely that they are experiencing expected losses in net present
value (NPV) of close to $70 an acre on a large proportion of the acreage
found on typical plantation timberland parcels in the southern United
States.”
A recognized specialist in forest management, biometrics and mensuration
(the process of determining dimensions, quantity or capacity), Dr.
Borders explained that, typically, only about one to three percent of a
forest is actually sampled through field cruises, during which foresters
manually record the diameter, height, species, product and grade of a
small sample of trees. Then appropriate sample expansion techniques are
used to estimate the composition and value of an entire forest.
“By its nature, this method is costly in
human and financial resources and produces imprecise results at the
stand level with sampling errors of 25 percent or greater,”
he continued.
“We showed what can happen to decisions about
thinning and harvesting when foresters and owners rely on imprecise
stand data. Basically, their management plans do not accurately reflect
the condition of standing timber, so they cannot achieve an accurate
assessment of its worth, or the maximum return on their investment
through development of optimal management regimes,”
he said.
“Today, with new technology, it is possible
to have real-time data about the location, dimensions and health of
trees, all of which lead to more-informed decisions about forest
management and investment,” Dr. Borders
noted. “The methodology we used in this study
can help improve timberland management by showing the effects of precise
inventory data at the stand level.”
Warnell researchers assisting Dr. Borders in the research were Dr.
Michael Clutter, Warnell’s dean; William
Harrison, forest biometrician; and Dr. Barry Shiver, professor emeritus.
Also assisting was Dr. Ray Souter, research forester, USDA Forest
Service in Stoneville, Miss. Borders noted that ImageTree
commissioned the report.
Select report highlights:
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Although foresters differentiate timber inventory information used for
management planning from that used for timber sales, it is the
high-sampling-error “management cruise”
(25% error or greater at the stand level) that is applied to help
guide management decisions.
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Timber inventory data should not be viewed as a cost center but rather
as a vital asset, crucial for maximizing timberland value; improved
inventories will have a profound effect on forestry management and
asset evaluation.
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A company that buys acreage based on a timber inventory indicating
8,000 standing tons of stumpage valued at $40/ton when, in fact,
only 6,000 tons of stumpage is present, overpays by $80,000.
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For a hypothetical 10,000-acre forest of pine and hardwood, if stand
level sampling error is reduced from 25% to 10%, the additional
expected net present value (NPV) realized from the forest would be
about $325,000 at a discount rate of 6% and about $537,000 at a
discount rate of 4%.
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Additionally, with the likelihood that overall forest management was
not as effective with poor inventory practice, the actual value
increase in realized returns will be substantially larger than these
expected gains in NPV indicate.
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Timberland management organizations should reduce stand level sampling
error below 15% when developing management plans to optimize financial
returns.
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Future studies should address:
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The effect that error in individual inventory variables has on
expected NPV.
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The effect that improperly timed and missed silviculture (care and
cultivation) and harvest decisions can have upon expected NPV when
based upon faulty inventory information.
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To review or obtain a copy of Dr. Borders’
complete study, please go to this
page. pubs.nrc-cnrc.gc.ca/rp-ps/issueDetail.jsp?jcode=cjfr&=eng&vol=38&is=8
About University of Georgia, Warnell School of Forestry and Natural
Resources
Warnell provides students with five degree-path programs in forestry and
natural resource science and management, including majors in forestry,
fisheries and aquaculture; natural resources recreation and tourism;
water and soil resources; and wildlife management and ecology. With more
than 23,000 acres of teaching lands, Warnell is the Southeast’s
oldest, and one of the most respected, forestry and natural resource
education providers in the United States.
About the Canadian Journal of Forest Research
Published since 1971, the Canadian Journal of Forest Research is
a peer-reviewed
journal of the National
Research Council Canada covering many research topics related to
forest resource management. The monthly journal features articles,
reviews, notes and commentaries by internationally respected scientists
on all aspects of forest science.
About ImageTree Corporation
ImageTree is “the precision forestry company”
that provides accurate and consistent assessment of forest assets,
significantly improving both forestland management practices and
investor returns. Its patented process, which combines remote sensing,
automated software, and advanced mathematics and analysis, enables
superior site-specific economic, environmental and sustainable-forest
decision making. ImageTree’s ForestSense
evaluation platform provides precise, timely and cost-effective forest
inventory analysis and its process can reduce a typical five-year
inventory-cycle time up to 80 percent, as well as enable a carbon-sequestration
assessment, including qualification and monitoring. The company, whose
customers include timber investment management organizations (TIMOs) and
real-estate investment trusts (REITs), has academic
relationships with the Forest Nutrition Cooperative; University of
Georgia’s Warnell School of Forestry and
Natural Resources; Yale Global Institute for Sustainable Forestry; and
Davis College of Agriculture, Forestry and Consumer Sciences at West
Virginia University.
Note: ImageTree, ForestSense and The Precision Forestry Company
are trademarks of ImageTree Corporation. The names of other actual
companies, organizations and/or products/services mentioned herein may
be the trademarks of their respective owners.
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