Submitted:
20 March 2022
Posted:
24 March 2022
Read the latest preprint version here
Abstract
The effect of capitalization premium in forest estate markets on forest management and climate change mitigation economics is investigated. It is shown that proportional goodwill in capitalization induces linear scaling of the financial return, without any contribution to sound management practices. However, there is a financial discontinuity as harvesting deteriorates goodwill. On the contrary, capitalization premium set on bare land as a tangible asset would increase timber storage and carbon sequestration. Observations indicate that the proportional goodwill is closer to reality within the Nordic Region, resulting in continuity problems but a reduced capital expense for carbon storage.
Keywords:
capital return rate
; expected value
; carbon storage
; carbon rent
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