Methods of determining land cost in the forest activity

Abstract

This work studied the importance of land cost and pointed out the different approaches of including it in the economic analysis of forest projects and in the wood producing cost, discussed each method and, by comparing them, it was pointed out the best method of approaching the problem. The following methods were analyzed: Interests on the value of the land; to consider that the land values changeover time at real interest rate; to include land value as cost and later, at harvest time, as revenue; and Soil Expectation Value (SEV). It was concluded that all methods differ one from each other, because they are based on different economic principles. The method of interests on land value indicated more coherent result with the market value, while the SEV was most sensible to the discounting rate variation and it catches only land productive value. However none of them considered the land market value and its real valorization overtime.