Additional Timberland Investment Region Information
Current major timberland investment regions in the United States are the South, Pacific Northwest, and the Northeast. Internationally, other investment areas are New Zealand, Australia, Canada, and South America. The American South is the predominant investment region. The timber investment regions of the United States differ by ownership patterns, timber species grown, timber inventory, and harvest levels. This impacts regional returns and is a reason that investors usually diversify across regions.
In terms of timberland acres the Southeast has 40 percent of the acreage, the Northeast 32 percent and the West 28 percent. Growing stock or timber inventory is 44 percent in the West, 31 percent in the Southeast, and 25 percent in the Northeast. Just because large inventories still exist in the West does not mean they are available for harvest. Most of the West is in public ownership and public policy has restricted harvest levels there. Sixty-four percent of the Western timberland is in public ownership, while roughly 20 percent of the timberland in the East is owned by the public. Forest industry owns roughly 10 percent of timberland in both the West and East. Non-industrial private forestland is about 70 percent of Eastern timberland and only 25 percent of Western timberland. This is reflected in regional harvest levels; 64 percent of harvests come from the Southeast, 17 percent from the Northeast, and 19 percent from the West.
The southeastern forests are predominately southern pines with rotation ages ranging from 20 to 40 years. The northeastern forests are mostly oak-hickory and maple-beech-birch. Many of these stands are managed with uneven-aged harvests (harvest parts of stands at one single time). The western forests are stands of Douglas-fir and ponderosa pine with rotation ages ranging from 45 to 60 years.
Pine plantations are mainly in the eastern United States with 40 million acres of planted pine (10.4 percent of forestland). Western softwood plantations cover about 13 million acres (3.6 percent of forestland). About two-thirds of softwood plantations in the United States are in the Southeast. This makes economic sense as just over one-half of all the forestland in the United States that is ranked highly productive is in the South. Forestland in the South is rated as 43 percent high productivity, 52 percent medium productivity, and 5 percent low productivity. Thus investors tend to favor the South because most of the better forestland is there, at least in terms of growing wood.
Institutional investors now have about $12 billion invested in timberland. From 10 to 15 million acres of large forest holdings are expected to change hands over the next decade. TIMO's owned about 4 million acres in the South at the turn of the century. Projections for the year 2010 show that this acreage could triple to 12 million acres.