Recently I was asked to come and have a look at a woodland by a friend looking to buy somewhere to camp and produce a bit of firewood. He had gone along to an auction with the intention of putting in an offer on a little bit of woodland for sale locally. To his surprise, the woodland (a pretty unremarkable block of about 0.8 ha, on a steep hill, near a main road) had failed to meet its’ reserve price and not been sold. He wanted me to have a look at it and tell him what I thought the woodland was actually worth. Now, I am not particularly experienced in woodland valuation, but I do know how to find out what I need to know, and I couldn’t find anything in the woodland itself to justify the price tag. This got me thinking, it’s not a secret that woodland prices are high, but what is the typical price for small woodlands in England and is it really justified?
Well; once I started down that particular rabbit hole, things began to get a little involved. WARNING this is a bit more technical than usual – skip down to the results if you need to!
First I found all the woodland price information publicly available without too much effort and found these agents: www.woods4sale.co.uk, www.forests.co.uk, www.woodlands.co.uk, and www.johnclegg.co.uk. A bit of web scraping and plenty of data manipulation resulted in a data set was composed of 662 individual woodland compartments with information on size, price per ha, and a rough indication of region (you can see the detailed methodology here).
Then I made some assumptions about likely timber revenue based on a standing value of 40 £.m^3 standing, and low / high yield estimates of 4 and 12 m^3/ha/a and discounted it back to the present for the next 50 years to give the net present timber value (£3,923 and £11,770 per ha).
The price of woodland per ha by size class varied as expected with the highest prices being assigned to the smallest woodland areas as shown in this graph.
These were converted to trends and mapped against the estimated timber value as shown in this graph to show where the woodland area becomes profitable.
The minimum profitable area (based on these assumptions) is 12 ha for England, 4.7 ha for Scotland and 4.9 ha for Wales if the timber revenue is equal to the higher assumption. If the timber revenue is equal to the low estimate, none of the woodlands would turn a profit without additional revenue from other activities.
First we have to acknowledge that the data and assumptions will mask some variation. Many of the sites quoted areas of “about” or “around” and prices “offers beginning at” etc. We also have to acknowledge that my assumptions about timber price may not be valid – I have only used increment as a measurement of growth and not included existing standing timber, and the variation in price between different product streams is quite high.
Regardless of the variation, however; there is a substantial difference between the value of English woodland and the same areas in Wales and Scotland – this implies that something other than expected timber revenue is determining the woodland price. What is this factor? Is is an expectation that woodland will grow in value? If so, then it seems reasonable to assume that a bubble is developing in the market; or is it simply a higher value being placed on the amenity value of woodland than other factors?
What do you think? Is this a useful way of analysing the woodland market? Do you have a better set of assumptions to use? and (most importantly) do you know of any woodland going in Derbyshire or South Yorkshire for well below the going rate! Give me a shout
Will Rolls is an independent consultant with expertise in forestry, biomass and sustainability, with a strong personal interest in developing sustainable systems and practices. This article originally appeared on LinkedIn here