Approaches to forestry investment in Ireland.

Abstract

The ultimate economic question about commercial forestry is 'what is it worth'? Confusion and misunderstanding surrounds the analysis of forestry investments. Forestry practitioners and private investors are unfamiliar with the terminology and techniques used. In the absence of a tradable market in forests in Ireland, it is generally recognised that discounted cash flow (DCP) is the most acceptable technique for the valuation of forestry investments. This is particularly appropriate to Ireland where the majority of investment concerns the establishment of new plantations. The various elements involved in carrying out a DCP analysis are discussed including risk elements - wind, disease, frost etc. - which up to now have to a large extent been ignored. Indicative returns based on economic analysis are given, together with published data.