Articles containing the keyword 'interest rate'

Length of the regeneration period is a criterion commonly used for comparing different reforestation methods. The time factor should be evaluated using a realistic system for long-term planning. In this paper the preliminary evaluation is made by simplified calculations based on the development series. The slow regeneration method is assumed to be otherwise equal to the rapid one but it has a 5- or 10-years delay at the beginning, and the rotation is thus the final cutting age plus 5- or 10-years delay. Cost of the time delay is taken to be the difference in reforestation costs that makes the rapid and the slow methods equivalent. Calculations are made using zero costs for the slow method; but if the cost of the slow method increases, the critical cost difference decreases very slowly. The final cutting age and the regeneration method must be decided simultaneously. Therefore, the cost of the time delay is presented as a function of final cutting age. By maximizing the average annual revenue, rotation can be even increased if more rapid but more expensive regeneration method is used.

The PDF includes a summary in English.

• Lappi, E-mail: jl@mm.unknown

The result of forest valuation depends heavily on the interest rate and hence determining the rate of interest for forest is the one of the most important tasks of forest valuation.

When defining the interest rate for forests, we need to take into account not only the common interest rate in the country, but also other factors. Those are for example the increase in timber price. By calculating the land expectation value we assume that costs for felling, regeneration and other management will rise by same percent.

The article presents the common formula of land expectation value and discusses its pros and cons. Because of the bad condition of Finnish forests, the forest valuation has not been used widely in practice and hence also the research on theme has been minor. The development of the forests in future will make the theme more relevant. 

The volume 34 of Acta Forestalia Fennica is a jubileum publication of professor Aimo Kaarlo Cajander.

• Heikkilä, E-mail: th@mm.unknown

The role of the time factor is discussed from the viewpoint that investment calculations are expected to be used to transform and condense information and not necessarily to show the optimum. Some general conclusions are drawn concerning the recommendable form of such a calculation when used by a consultant advising a forest owner. A few of the practical problems arising in the connection of applications to timber growing are also discussed.

In conclusion, a recommendation was developed for the calculation procedure to be used in the so-called contractual research into the profitability sequence of forest improvements. It would seem advisable to carry out the calculations using both varying interest rates and varying time horizons. In addition, it is justifiable also to present the expected series of cash flow changes, such as they are, among the results. Further studies will follow.

The PDF includes a summary in Finnish.

• Keltikangas, E-mail: mk@mm.unknown

Traditional timber production may have negative effects on other ecosystem services. Therefore, new forest management guidelines have been developed in order to enhance a habitat suitable for wildlife. In Finland, a recent example of this is grouse-friendly forest management (GFFM) which emphasises the preservation of grouse species (Tetronidae) habitats. This study aimed to analyse the economic effects of these guidelines. An analysis was made on how the application of GFFM affected the Net Present Value (NPV) in a 30-year simulation of forest management of four large forest holdings located from south to north in Finland. In the simulations, traditional forest management practices were compared to two levels of GFFM. Five levels of interest rate were used, namely 1, 2, 3, 4, and 5%. In most of the simulations, the NPV was reduced by about 1% or less due to the application of GFFM in comparison to the traditional reference forest management. Only in one case with more intensive GFFM, was the reduction of NPV more than 5%. The interest rates had an impact on the differences between the management approaches. For example, a low interest rate resulted in a higher thinning intensity in GFFM in comparison to traditional forest management, which lead to a higher NPV in GFFM. To sum up, it seems that it would be possible to manage forest holdings in a grouse-friendly manner with minor effects on the economics.

• Haara, LUKE https://orcid.org/0000-0002-6895-5300 E-mail: arto.haara@luke.fi
• Matala, Natural Resources Institute Finland, (Luke), Natural resources, Yliopistokatu 6B, FI-80100 Joensuu, Finland E-mail: juho.matala@luke.fi
• Melin, Natural Resources Institute Finland, (Luke), Bioeconomy and environment, Yli opistokatu 6B, FI-80100 Joensuu, Finland E-mail: markus.melin@luke.fi
• Miettinen, Finnish Wildlife Agency, Ratatie 41, FI-91501 Muhos, Finland E-mail: janne.miettinen@riista.fi
• Korhonen, Natural Resources Institute Finland, (Luke), Bioeconomy and environment, Yli opistokatu 6B, FI-80100 Joensuu, Finland E-mail: kari.t.korhonen@luke.fi
• Packalen, Ministry of Agriculture and Forestry, P.O. Box 30, FI-00023 GOVERNMENT, Finland E-mail: tuula.packalen@mmm.fi
• Varjo, Finnish Wildlife Agency, Sompiontie 1, FI-00730 Helsinki, Finland E-mail: jari.varjo@riista.fi