Determinants of the Prices of Bare Forestland and Premerchantable Timber Stands: A Spatial Hedonic Study
In this study, we examine the determinants of market prices of bare forestland and premerchantable timber stands in Southwest Alabama and Southeast Mississippi. Applying a spatial hedonic pricing model to forestland sale data from 2001 to 2007, we find that road access, topography, land productivity, and population density are the main determinants of bare forestland prices, whereas land productivity, potential for higher and better uses, and age of plantation are determinants of premerchantable timber stand prices. In particular, the value of a premerchantable stand increases along with the age of plantation by $56 per acre per year and compared with a tract with only one use in timber production, an identified higher and better use makes its value increase by $736 per acre or 45%.
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