United States 

Department of 

Agriculture Rate of Value Change in 

1 - 

Forest Service New Enaland Timber Stands 

Northeastern Forest 

Experiment Station 

Research Paper NE-639 Stanford L. Arner 

David A. Gansner 

Thomas W. Birch 
Abstract 

Analyses of remeasured plot data show that between the last two forest inventories I of New England, compound rates of value change in timber stands averaged 4.2 1 percent and ranged from -26 to +43 percent. Three key characteristics of stand 

condition (species composition, tree size, and stocking) can be used to estimate 

economic growth. For example, stands with (1) more than 10 square feet of basal 

area per acre in softwood species; (2) tree of average basal area less than 7 inches 

in diameter; and (3) more than 50 percent of total basal area in white pine have a 

14.7-percent average rate of value change. 

The Authors 

STANFORD L. ARNER, DAVID A. GANSNER, and THOMAS W. BIRCH are 

resource analysts, Northeastern Forest Experiment Station's Forest Inventory and 

Analysis unit at Radnor, Pennsylvania. 

Manuscript received for publication 14 September 1989 I 

Northeastern Forest Experiment Station 

100 Matsonford Road, Radnor, PA 19087 

April 1990 
/ Introduction 

How much growth in value can we expect from various 

stands of timber? The answer holds important implications 

for people wanting to make rational judgments about the 

economic potential of forest land. For example, a forest-land 

owner with a stand of timber growing at an annual rate of 1 

or 2 percent, while assured market rates at local banks are 

averaging between 8 and 9 percent, might want to consider 

some options, e.g., thinning, cull tree removal, or 

regeneration. 

, Growth in value is not the only item considered in timber 

management decisions. Protecting and enhancing 

1 nontimber resources such as water, wildlife, and esthetics 

are extremely critical to many. Likewise, a person's age, 

wealth, and financial obligations come into play. And we 

can't forget the importance of things like changing timber i markets and tax structures. Throw in the unpredictable 

effects of insects, disease, and even weather and it adds up I to an extremely complex matter. But the rate of change in 

1 timber value continues to be an important piece of the 

I puzzle. 

Unfortunately, growth in value can vary greatly from stand I to stand. For example, a recent study shows that compound I annual rates of change in value for forest stands in Maine 

1 between 1971 and 1982 ranged from -12 to + 43 percent.' 

1 With such wide variation in value growth, we can use all the 

: help we can get in determining financial rates of return for 

; woodlands. This analysis of forest inventory measurements 

quantifies value change for forest stands in New England I (Connecticut, Maine, Massachusetts, New Hampshire, ' Rhode Island, and Vermont). Our findings provide a better 

understanding of the link between timber-stand 1 characteristics and prospective value change. 

Approach 

Data 

The USDA Forest Service updates statewide timber 

resource informaton approximately every 10 years. Part of 

/ the updating process includes remeasuring a network of 

permanent forest-inventory plots in each state. Plots (0.1 to 

0.2 acre) that were previously measured in New England 

during the early 1970's were remeasured from 1982 through 

1985 (Powell and Dickson 1984; Frieswyk and Malley 

1985a,b; Dickson and McAfee 1988a,b,c). Data from more 

than 1,100 of these plots were used to analyze value 

growth. We included only those plots that remained 

relatively undisturbed, i.e., had less than 15 percent of their 

- - - - - - - - - 

'Gansner, David A.; Arner, Stanford L.; Zarnoch, Stanley J. 

Timber value growth rates in Maine. Submitted to Northern 

Journal of Applied Forestry. 

original basal area removed between inventories. These 

plots accounted for more than three-fourths of the total area 

sampled. The analysis incorporated more than 27,000 trees 

that were alive and 5.0 inches or larger in d.b.h. (diameter 

at breast height measured 4% feet above the ground) at the 

time of the initial inventory, plus another 20,000 trees that 

grew to more than 5.0 inches in d.b.h. between inventories. 

Analysis 

Rates of change in stand value were based on measured 

changes in tree diameter, merchantable height, and quality. 

Compound annual rates of value change (r) were obtained 

using the expression: 

where n is the number of years between measurements, V, 

is the value of a stand after n years. and V, is its initial 

value. 

Dollar values for hardwood sawtimber trees were based on 

tree-value conversion standard^.^ These standards 

represent consistent regional measures of a standing tree's 

net value (marginal value product or shadow price) in the 

production of 414-inch lumber, allowing for the cost of 

conversion. They account for a tree's species, diameter, 

merchantable height, and tree grade (based on butt-log 

grade measures). For example, a 16-inch-diameter red oak 

with a grade 2 butt log and merchantable height of 2 logs 

was valued at $29. For trees other than hardwood 

sawtimber, merchantable height, d.b.h., and cull estimates 

were converted to net volumes (Scott 1981) and assigned 

value based on recent local stumpage price reports. For 

example, white pine sawtimber stumpage averages about 

$70 per thousand board feet and spruce and fir pulpwood 

averages about $10 per cord. 

The same dollar-value standards were applied to both initial 

and current measurements to evaluate stand development, 

thereby eliminating valuation items that are irrelevant to 

biological change. This ignores unpredictable effects of 

inflation and changes in timber prices and markets, but 

does account for the value of biological change in tree 

diameter, merchantable height, and tree grade. The few 

trees that were harvested between inventories were 

assigned the same value for both occasions. 

The combined influence of tree and stand characteristics on 

rates of change in timber stand value was studied by 

Automatic Interaction Detection (AID) (Songuist et al. 1973). 

More than 40 variables thought to be related to value 

change were analyzed. These variables are measures of: 

2DeBald, Paul S. Tree value conversion standards revisited. 

Research Paper, Northeastern Forest Experiment Station. 

In preparation. 
Species composition 

Tree size 

Stocking 

Site productivity 

Physiographic class 

Timber volume 

Tree quality 

Timber value 

The AID technique searched these characteristics of the 

trees and timber stands for the best predictors of value 

change. Starting with the entire sample of stands in one 

group, the stands were partitioned through successive twoway splits into a series of subgroups. The splits occur so 

that at each step, the chosen predictor variable forms two 

new groups that cause the greatest reduction of variance in 

the dependent variable (value change). The result is a best 

set of predictors selected by the AID algorithm, and 

presented as a branching diagram that details the rate of 

value change configuration for individual stands as they 

responded to timber stand dynamics between the New 

England forest surveys. 

Results 

Rates of Value Change 

Between the last two forest inventories, compound annual 

rates of value change for sample plots representing 

timberland in New England ranged from -26 to +43 

percent and averaged 4.2 percent, reflecting the great 

amount of variability in value change for forest stands in the 

region. 

About 8 percent of the forest had enough mortality and 

degrade to register negative rates of growth (Fig. 1). These 

stands show evidence of the detrimental effects of spruce 

budworm, gypsy moth and other destructive agents at work 

during the 1970's and the early 1980's. But most of the 

other woodland fared relatively well. One-fourth of all stands 

recorded rate increases of 6 percent or more; one-eighth of 

them earned better than 8 percent. Such rates are 

impressive when you consider they are for forest land that 

had virtually no human disturbance or improvement cutting 

between inventories. 

Predicting Rates of Change 

Automatic interaction detection analysis of the rate of value 

change for our sample plots generated 14 mutually 

exclusive final groups (No. 9, 10, 14, 15, 16, 17, 18, 19, 20, 

23, 24, 25, 26, and 27) and an average rate of value change 

for each group (Fig. 2). Each plot is a member of one of the 

groups. Only three of many elements of timber-stand 

condition analyzed as predictor variables were retained in 

this value growth-rate classification system: species 

composition, tree size, and stocking. Their inclusion makes 

good intuitive sense. 

Rates of value change for the 14 groups ranged from 2.1 to 

15.1 percent. Stands in the group with the highest average 

rate have: 

Less than 10 square feet of basal area per acre in 

softwood species. 

Less than 20 square feet per acre of total basal area. 

Tree of average basal area less than 6 inches in 

diameter. 

These conditions identify them as members of group 15. 

Stands like this included two percent of our sample. 

Ranking right up there with stands in group 15 were those 

in group 19 (14.7 percent). They have: 

More than 10 square feet of basal area per acre of 

soft wood species. 

Tree of average basal area less than 7 inches in 

diameter. 

More than 50 percent of total basal area in white pine. 

At the other end of the scale are stands in group 16, where 

rates of value change average only 2.1 percent. Stands in 

this group represent one-fifth of New England's timberland. 

Six other final groups (10, 14, 18, 23, 25, and 27) fall above 

the regionwide average rate of 4.2 percent. 

- 

-5 0 5 10 15 20 

CoMPoUND RATE OF VALUE CHANCE (PERCENT) 

Figure 1 .-Compound rate of change in timber value for 

New England forests. 
.20 BASAL AREA IN 

WASH AND RED OM 

1 PER ACRE 

DLAMUER OF 

TREE OF AVERAGE 

BASAL AREA 

63 

17 IN. A BASAL AREA 10-50 X 

r-5.6 .02 IN WHITE PINE 11 

BASAL AREA 

PER ACRE IN 

SOFTWOOD SPECIES 

BASAL AREA 

1 r= 10.2 IN WHITE PINE 19 

sot X r= 14.7 1 

20 

.18 BAW AREA 

TREE OF AVERAGE BAN AREA IN 

r-5.5 

':{.06 PER ACRE 

.08 BAW AREA 23 

L 

<20 Fr2 I 

r= 11.2 TREE OF AVERAGE 

Figure 2.-Guide for estimating rates of value change for New England forests. A timber 

stand is assigned to a value-change group on the basis of characteristics of the stand. 

The average compound rate of value change (r) is shown for each group. Decimal 

fractions on each leg show the portion of the New England sample in that group. 

WASH AND RED OM 

~5.7 
The base or initial value of trees is important to the relative 

differences in their rate of change in value. Consider for 

example: 

Initial End Rate of 

value value Value No. of value change 

(VO) (V,) change years (percent) 

In both examples, value increased by $1. But the smaller 

initial value in the first example ($1 versus $5) yields a much 

greater rate of value change over the 10 years. 

Summary 

Timberland owners and others in the Northeast can use all 

the help they can get in determining the economic potential 

of the region's woodlands. Presented here is a simple guide 

for estimating rates of value change for timber stands in 

New England. Measures of species composition, tree size, 

and stocking are key characteristics of initial timber-stand 

condition that can be used to separate stands into 14 

mutually exclusive value-change groups. Average rates of 

value change for the groups range from 2.1 to 15.1 percent. 

These estimates provide useful baseline indexes for 

comparing the economic potential of timber stands and 

prospective stand management options. Further analyses 

will focus on rates of value growth in other areas of the 

Northeast. Our prime purpose is to gain a better 

understanding of the relationship between timber-stand 

characteristics and value change so as to develop improved 

methods for predicting rates of value growth for forest 

stands in the region. 

Literature Cited 

Dickson, David R.; McAfee, Carol, L. 1988a. Forest 

statistics for Connecticut-1972 and 1985. Resour. 

Bull. NE-105. Broomall, PA: U.S. Department of 

Agriculture, Forest Service, Northeastern Forest 

Experiment Station. 102 p. 

Dickson, David R.; McAfee, Carol L. 1988b. Forest 

statistics for Rhode Island-1972 and 1985. Resour. 

Bull. NE-104. Broomall, PA: U.S. Department of 

Agriculture, Forest Service, Northeastern Forest 

Experiment Station. 96 p. 

Dickson, David R.; McAfee, Carol L. 1988c. Forest 

statistics for Massachusetts-1 972 and 1985. Resour. 

Bull. NE-106. Broomall, PA: U.S. Department of 

Agriculture, Forest Service, Northeastern Forest 

Experiment Station. 11 2 p. 

Frieswyk, Thomas S.; Malley, Anne M. 1985a. Forest 

statistics for New Hampshire 1973 and 1983. Resour. 

Bull. NE-88. Broomall, PA: U.S. Department of 

Agriculture, Forest Service, Northeastern Forest 

Experiment Station. 100 p. 

Frieswyk, Thomas S.; Malley, Anne M. 1985b. Forest 

statistics for Vermont 1973 and 1983. Resour. Bull. 

NE-87. Broomall, PA: US. Department of Agriculture, Forest 

Service, Northeastern Forest Experiment Station. 102 p. 

Powell, Douglas S.; Dickson, David R. 1984. Forest statistics 

for Maine: 1971 and 1982. Resour. Bull. NE-81. 

Broomall, PA: U.S. Department of Agriculture, Forest 

Service, Northeastern Forest Experiment Station. 194 p. 

Scott, Charles T. 1981. Northeastern forest survey revised 

cubic-foot volume equations. Res. Note NE-304. 

Broomall, PA: U.S. Department of Agriculture, Forest 

Service, Northeastern Forest Experiment Station. 3 p. 

Songuist, J. A.; Baker, E. D.; Morgan, J. N. 1973. 

Searching for structure. Ann Arbor, MI: University of 

Michigan, Institute for Social Research, Survey Research 

Center. 236 p. 
Arner, Stanford L.; Gansner, David A.; Birch, Thomas W. 1990. Rate of 

value change in New England timber stands. Res. Pap. NE-639. 

Radnor, PA: U.S. Department of Agriculture, Forest Service, 

Northeastern Forest Experiment Station. 4 p. 

Analyses of remeasured plot data show that between the last two forest 

inventories of New England, compound rates of value change in timber 

stands averaged 4.2 percent and ranged from -26 to + 43 percent. Three 

key characteristics of stand condition (species composition, tree size, and 

stocking) can be used to estimate economic growth. For example, stands 

with (1) more than 10 square feet of basal area per acre in softwood 

species; (2) tree of average basal area less than 7 inches in diameter; and 

(3) more than 50 percent of total basal area in white pine have a 

14.7-percent average rate of value change. 

1 ODC: 653:748 

Keywords: Compound interest; financial objectives; hardwood and 

softwood forests 

I au. s. GOVERNMENT PRINTING OFFICE: 199o/74a-o7o1ooo26 

i r 
Headquarters of the Northeastern Forest Experiment Station is in Radnor, Pennsylvania. Field laboratories are maintained at: 

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Orono, Maine, in cooperation with the University of Maine 

Parsons, West Virginia 

Princeton, West Virginia 

Syracuse, New York, in cooperation with the State University of New York, College of Environmental Sciences and Forestry at Syracuse University 

University Park, Pennsylvania, in cooperation with The Pennsylvania State University 

Warren, Pennsylvania 

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