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Forest Valuation
Evergreens forests were independently valued at 30 June 2002 by Jaakko Pöyry Consulting (Asia-Pacific) Limited. The net present value, or expectation value, approach was used, whereby projected future net cash flows were discounted to provide a current market value of the collective forest and land resource. An estimate of the land value was then subtracted to provide a value of the tree crop. The following process was adopted in the valuation methodology:
- A stand-based approach was employed whereby stands are scheduled to be harvested at or near their optimum economic rotation age.
- The cash flows are those arising from the current rotation of trees only. No account was taken of revenues or costs from re-establishment following harvest, or of land not yet planted.
- The cash flows do not take into account income taxation.
- No allowance for inflation was provided. Future revenues and costs were expressed in current dollar values.
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EFFECT OF REAL PRICE INCREASE AND DISCOUNT RATE ASSUMPTIONS
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FOREST CROP VALUATIONS ASSUMING THREE ANNUAL REAL PRICE INCREASE SCENARIOS: IN $NZ MILLIONS
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DISCOUNT RATE
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NIL%
REAL PRICE
INCREASE*
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ONE%
REAL PRICE
INCREASE*
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TWO%
REAL PRICE
INCREASE*
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Eight per cent
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184.3
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206.1
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229.4
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Nine per cent
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162.4
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180.0
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201.0
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Ten per cent
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143.9
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159.8
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176.9
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*Per annum, over the ten-year period 2007 to 2017.
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LOG PRICES ADOPTED IN THE 2002 VALUATION
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IN $NZ PER M3 AT WHARF GATE/AT MILL GATE
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2003
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2004
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2005
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2006
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2007+
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Pruned P1 Sawlog
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175
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178
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179
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180
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180
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Pruned Small Pruned & High Quality Structural
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132
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134
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136
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138
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139
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Export A
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97
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96
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95
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96
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98
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Export K
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83
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82
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82
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83
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84
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Domestic S1/S2
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92
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94
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95
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96
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97
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Domestic Packaging
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70
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71
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72
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73
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74
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Domestic Pulpwood
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50
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50
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50
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50
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50
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Note: Prices from 2008 onwards are the same as those shown for 2007.
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PROJECTED AVAILABLE HARVEST VOLUMES
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IN 000m3
PERIOD
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PRUNED
LOGS
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SAWLOGS
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PULP
LOGS
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TOTAL
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2003-2007
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313
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1,032
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391
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1,736
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2008-2012
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250
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1,057
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425
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1,732
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2013-2017
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287
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1,054
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428
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1,769
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2018-2022
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509
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1,954
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615
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3,078
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2023-2027
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670
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2,480
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645
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3,795
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2028-2031
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317
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620
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157
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1,094
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Total
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2,346
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8,197
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2,661
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13,204
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VALUE DISTRIBUTION BY AGE CLASS
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$NZ MILLIONS USING 9% DISCOUNT RATE
AGE
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AREA IN
HECTARES
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VALUE
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%
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0 to 4 years
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1,961
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$1.5
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1%
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5 to 9 years
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7,463
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$26.6
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16%
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10 to 14 years
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3,086
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$22.0
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14%
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15 to 19 years
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2,803
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$26.7
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16%
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20 to 24 years
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3,008
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$39.2
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24%
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25 years and over
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2,752
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$46.4
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29%
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Total
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21,073
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$162.4
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100%
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The tables on this page are sourced from the Jaakko Pöyry Consulting forest valuation as at 30 June 2002.
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