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Do Forest Assets Hedge Inflation?


  • Courtland L. Washburn
  • Clark S. Binkley


Forest assets are commonly viewed as good hedges against inflation. The view is based largely, however, on anecdotal evidence rather than empirical analysis. This paper examines the historical relationship between forestry returns and inflation. The results suggest that forests in the U.S. West and South have been superior hedges against higher-than-anticipated inflation; forests in the Northeast have been less effective inflation hedges. The results also indicate that western and southern forests have been overvalued during periods of relatively high expected inflation. Markets for forests in the Northeast, however, have been relatively efficient processors of inflation expectations.

Suggested Citation

  • Courtland L. Washburn & Clark S. Binkley, 1993. "Do Forest Assets Hedge Inflation?," Land Economics, University of Wisconsin Press, vol. 69(3), pages 215-224.
  • Handle: RePEc:uwp:landec:v:69:y:1993:i:3:p:215-224

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    Cited by:

    1. Sun, Changyou, 2013. "On the market risk of securitized timberlands," Journal of Forest Economics, Elsevier, vol. 19(2), pages 110-127.
    2. Sadorsky, Perry & Henriques, Irene, 2001. "Multifactor risk and the stock returns of Canadian paper and forest products companies," Forest Policy and Economics, Elsevier, vol. 3(3-4), pages 199-208, November.
    3. Yao, Wenjing & Mei, Bin, 2015. "Assessing forestry-related assets with the intertemporal capital asset pricing model," Forest Policy and Economics, Elsevier, vol. 50(C), pages 192-199.
    4. La, Le & Mei, Bin, 2015. "Portfolio diversification through timber real estate investment trusts: A cointegration analysis," Forest Policy and Economics, Elsevier, vol. 50(C), pages 269-274.
    5. Hyytiainen, Kari & Penttinen, Markku, 2008. "Applying portfolio optimisation to the harvesting decisions of non-industrial private forest owners," Forest Policy and Economics, Elsevier, vol. 10(3), pages 151-160, January.
    6. Jette Bredahl Jacobsen & Frank Jensen & Bo Jellesmark Thorsen, 2015. "Forest value and optimal rotations in continuous cover forestry," IFRO Working Paper 2015/08, University of Copenhagen, Department of Food and Resource Economics.
    7. Wan, Yang & Clutter, Michael L. & Mei, Bin & Siry, Jacek P., 2015. "Assessing the role of U.S. timberland assets in a mixed portfolio under the mean-conditional value at risk framework," Forest Policy and Economics, Elsevier, vol. 50(C), pages 118-126.
    8. repec:eee:foreco:v:30:y:2018:i:c:p:52-57 is not listed on IDEAS
    9. Ian Keay, 2007. "Resource Rents and their Impact on Institutional and Economic Development," Working Papers 1143, Queen's University, Department of Economics.
    10. repec:eee:jebusi:v:91:y:2017:i:c:p:24-40 is not listed on IDEAS
    11. repec:kap:enreec:v:69:y:2018:i:4:d:10.1007_s10640-016-0098-z is not listed on IDEAS
    12. Parajuli, Rajan & Chang, Sun Joseph, 2015. "Real Assets and Inflation: Which Real Assets Hedge Inflation," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205283, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    13. Fulli-Lemaire, Nicolas, 2013. "Alternative inflation hedging strategies for ALM," MPRA Paper 43755, University Library of Munich, Germany.
    14. Fulli-Lemaire, Nicolas, 2012. "A Dynamic Inflation Hedging Trading Strategy Using a CPPI," MPRA Paper 42851, University Library of Munich, Germany, revised 13 Nov 2012.

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