T. Heikkilä

The interest rate of forest

Heikkilä T. (1929). The interest rate of forest. Acta Forestalia Fennica vol. 34 no. 7 article id 7220. https://doi.org/10.14214/aff.7220

Abstract

The result of forest valuation depends heavily on the interest rate and hence determining the rate of interest for forest is the one of the most important tasks of forest valuation.

When defining the interest rate for forests, we need to take into account not only the common interest rate in the country, but also other factors. Those are for example the increase in timber price. By calculating the land expectation value we assume that costs for felling, regeneration and other management will rise by same percent.

The article presents the common formula of land expectation value and discusses its pros and cons. Because of the bad condition of Finnish forests, the forest valuation has not been used widely in practice and hence also the research on theme has been minor. The development of the forests in future will make the theme more relevant. 

The volume 34 of Acta Forestalia Fennica is a jubileum publication of professor Aimo Kaarlo Cajander.

Keywords
forest valuation; land expectation value; interest rate

Published in 1929

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Available at https://doi.org/10.14214/aff.7220 | Download PDF