Timberland investments in the United States: A review and prospects

In this study, 68 peer-reviewed journal articles in timberland investments in the United States published after 1980 are reviewed. Prior to the synthesis, the history of modern timberland investments, investment vehicles and return indices are summarized. Then, the literature is categorized into four groups, i.e., role of timberland in a portfolio, pricing of timberland assets, public timber real estate investment trusts and other relevant topics, and discussed respectively. The analysis suggests that timberland is a risk diversifier in a portfolio whether standard deviation or value-at-risk is used as the risk metric, that classic asset pricing models have difficulty in pricing private-equity timberland assets resulting in significant alpha, that timber REITs have some risk-reduction ability but no excess returns, and that bioenergy market and contractual rights and obligations on the properties may affect cash rewards from timberland investments. At the end, some concluding remarks and potential future research issues are presented.