Discount rates used for forest valuation - results of 2011 survey

Authors: Bruce Manley
Publication: New Zealand Journal of Forestry, Volume N.Z.J.For. 2011, Issue N.Z.J.For. 56(4) 2012, pp 21-28, Jan 2012
Publisher: New Zealand Institute of Forestry

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Abstract: Summary Eleven forest valuers responded to the survey and provided information on 14 New Zealand transactions between mid-2009 and 2011. The average reported IDR (implied discount rate) for each of these transactions was in the range 4.4 to 8.4% for posttax cashflows and 7.8 to 10.6% for pre-tax cashflows. Overall averages were 6.7% (post-tax cashflows) and 9.3% (pre-tax cashflows), compared to 6.9% and 8.6% in the 2009 survey. Forest valuers also provided the discount rate they use to estimate the market value of a forest. They are using discount rates for forest valuation that are on average 0.1% lower than in 2009. Introduction Forest valuers were surveyed during the last quarter of 2011 about the discount rate used for forest valuation. The survey is an update of similar surveys carried out every two years since 1997 (Manley 1998, 1999, 2001, 2003, 2005, 2007, 2010).

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