Three econometric analyses of southern timber markets
Armstrong, Matthew Victor
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Timberland attracts capital as an investment. Timberland is an asset class that institutional investors are pursuing for inclusion in mixed portfolios. The reason that investors are including timberlands into mixed portfolios is because the timberland asset class provides significant diversifying benefits to institutional investors. The attractiveness of timberland as an investment starts with the underlying investment return drivers. The returns for timberland assets are driven from the appreciation of the underlying land and the income from selling timber products. This dissertation focuses on investigating timber product prices and specifically econometrically analyzing timber prices. The first essay uses a mixed effects model to explain the effects of precipitation and temperature on softwood timber prices in the US South. The results of the model indicate that softwood timber prices are inversely related to changes in temperature and positively related to changes in precipitation. This result explains part of the softwood timber price variability attributable to weather in the US South. The second essay uses a mixed effects hedonic model to examine the effect of timber sale characteristics on timber prices in the US South. The results of the model provide coefficient estimates for timber sale type, number of bidders, harvest type, and area harvested. This result explains part of the timber price variability attributable to the timber sale type, number of bidders, harvest type, and area harvested in the US South. The third essay tests for cointegration between the softwood sawtimber prices in a region in Georgia and a region in Oregon using the Engle and Granger test. The results of the test suggest that the softwood sawtimber prices in a region of Georgia and a region of Oregon are cointegrated. The consequence of this result is that one would expect the long-run price change between the respective regions in Georgia and Oregon to be similar.