Timberland Asset Pricing in the United States Available to Purchase

In this paper we investigate the drivers of U.S. timberland property value, returns, and risk represented by the NCREIF Timberland Index from 1987 to 2016. We use the Faustmann-Hartman model to develop and test one timberland property value model and two timberland return models that include macroeconomic and microeconomic (or forestry-specific) factors respectively. We find that U.S. timberland value are positively related to U.S. GDP and negatively to interest rate and that U.S. timberland returns are positive to GDP growth and timber price change, and are influenced by some exogenous events. We further confirm that timberland has established itself over the last three decades as a steady asset class, especially when viewed in light of the extraordinary volatility and shifts in the broader financial markets and sector-specific factors.