Timberland Investment Calculator

Timberland investment calculator measures returns from forestry. Trees grow 4-8% annually in volume, harvest income 2-4% annually, terminal land appreciation. 100k investment at 6% biological growth + 2% harvest yield over 15 years + 1.2x terminal multiplier: 8.6% IRR. Inflation hedge with low correlation to stocks/bonds.

Example: 100,000 in timberland. 6% annual biological growth (trees physically grow). 2% annual harvest income. 15-year hold. Terminal value 1.2x original. Final biological value: 239k. Cumulative harvest income: 30k. Total: 269k. MOIC 2.69x. IRR 6.8%. Trees keep growing whether stocks crash - true alternative asset.

Timberland characteristics: (1) Inflation hedge (timber prices generally rise with inflation). (2) Low correlation with equities (~0.1 correlation). (3) Tax efficient (long-term capital gains on harvest in many jurisdictions). (4) Carbon credit potential (growing income source). (5) Land appreciation. Disadvantages: illiquid (10+ year holds typical), large minimum investments (1M+ direct), professional management essential, weather/fire/disease risks. Access for retail: listed timber REITs (Weyerhaeuser WY, Rayonier RYN, PotlatchDeltic PCH).

A worked example

Try the defaults: initial investment of 100,000, annual biological growth of 6%, annual harvest yield of 2%, hold period of 15 years. The tool returns 6.84%. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Initial Investment, Annual Biological Growth %, Annual Harvest Yield %, Hold Period (years), and Terminal Value Multiplier. The rate and the time horizon usually dominate — compounding means a small change in either reshapes the final figure more than a similar shift in contribution size. Test this by doubling one input at a time.

The formula behind this

Final value = biological growth + cumulative harvest. IRR from MOIC. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

Where this fits in planning

This is a "what-if" tool, not a forecast. Use it to test ideas before committing: what happens if the rate is 2% lower than hoped, what happens if you add five more years. The value is in the scenarios you run, not the single answer you get from the defaults.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.