Land Expectation Value Calculation in Pinus pinaster forestry

Appraisers often use discounted cash flow (DCF) techniques to value timber and timberland. Land expectation value (LEV) is a standard DCF technique applied to many timberland situations. LEV calculates the value of bare land in perpetual timber production and is often used to value even- aged pine plantations. However, it is also useful in the valuation of immature timber stands and uneven-aged timber stands cut periodically. These models have wide applicability in timberland appraisal situations. LEV as used to estimate the oportunity costs or varoius management regimes for pinnus pinaster forestry in several locations in Portugal. We made modelation to estimate present value of costs and revenues from an infinite series of identical even-aged forest rotations starting from bare land and take a Forest Value (a generalization of LEV): the present value of a property with an existing stand of trees plus the present value of a LEV for all future rotations of timber that will be grown on the property after harvesting the current stand. So we determine when a given stand should be cut; separate the management of the current stand from that of future stands and account for price changes that might occur during the life of the current stand. We will still assume that the rotations and prices associated with the future stands (i.e., the stands that are established after the current stand is cut) will be the same. We show some exemples os land value and timber value for the pinnus pinaster forestry.