Journal of Forest Economics > Vol 37 > Issue 2

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

David Evison, School of Forestry, University of Canterbury, New Zealand,
Suggested Citation
David Evison (2022), "Estimating Annual Investment Returns from Industrial Planted Forests of Radiata Pine in New Zealand", Journal of Forest Economics: Vol. 37: No. 2, pp 185-198.

Publication Date: 30 Mar 2022
© 2022 D. Evison
JEL Codes: M21, Q23
Investment returncommercial forestspastoral farming


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In this article:
1. Introduction 
2. Data and Methods 
3. Analysis and Results 
4. Discussion and Conclusion 


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.



Journal of Forest Economics, Volume 37, Issue 2 Special Issue - The Economics of Global Forest Investment: Articles Overiew
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