Finally a few thoughts on the future.
Forest biomass on a commercial scale is becoming
an important source of renewable energy. Traditionally
the valuation of standing timber has been measured
by reference to log prices; however biomass sourcing
extends to the whole tree, potentially roots and all. As
markets in woody biomass develop, this suggests that
greater, or at least more explicit, recognition should be
given to fuel wood pricing in fair valuing forest assets.
There is also the issue of how environmental benefits
should be recognised, measured, reported and
disclosed. For example, carbon is increasingly
being monetised and hence recognised in financial
statements. In future and especially as active markets
in forest carbon develop, forest owners will need to
consider whether their standing timber has additional
value beyond its log value and further whether forest
currently not accounted for as commercial timberland,
for example, for conservation reasons, has an economic
value requiring recognition.
These are all aspects of climate change. It is noteworthy
that some reporters are making references to climate
change impacts as they have already impacted
valuation assumptions such as growth rates but
otherwise might constitute broader risk factors.
Disclosure of this type of information is likely to become
of increasing currency, especially for longer rotation
timber stands, as the impacts of climate change will
likely have both potentially negative and positive
impacts on standing timber fair values.