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A FINANCIAL WALK IN YOUR FOREST
Second of a series describing biological and financial
development of pine plantations

In "..A SHORT WALK IN YOUR FOREST..," we used PTAEDA2V and a typical forest from Jim Vardaman's presentation at our 1996 seminar to demonstrate how too many trees per acre and too much hardwood in the stand decreased the size and volume of the trees to be produced. Now we will go a step farther; by analysis with ECONVR, we will calculate whether it is more profitable to eliminate the hardwood at the outset or wait until the first thinning.

The tables below show pairs of stands at different ages. The upper one of each pair shows the stand with hardwood removal at the beginning; the lower one shows the stand with hardwood removal delayed until time of the first thinning. By contrasting the two, notice the hardwood's effect on DBH, height, and crown ratios of the pine trees.

If we eliminate the hardwood at the beginning, here is the stand at age 13:

INPUTSPREDICTED
Site Index65.0Dominant Height40.7
Growing Seasons Completed13.0 Average DBH6.8
Planted Trees363.0Average Height38.8
Percent Hardwood.0Average Crown Ratio52.8

DBH
Class 		Number
Trees 		Average
Height 		Basal
Area		Volume
cu.ft.		Volume
cords		Volume
bd.ft.
3 9.1 27.8 .5 8.3 .0 .0
4 21.8 31.5 1.9 32.0 .0 .0
5 45.4 35.6 6.3 111.3 .9 .0
6 60.8 37.9 12.1 222.1 2.1 .0
7 65.3 40.1 17.6 335.1 3.4 .0
8 48.1 41.1 16.6 321.9 3.3 .0
9 41.7 42.8 18.3 366.9 3.8 .0
10 21.8 43.9 .6 237.5 .6 .0
Total 314.0 84.9 1635.1 14.0 308.0

If we delay hardwood removal, here is the stand at age 13:

INPUTSPREDICTED
Site Index65.0Dominant Height40.7
Growing Seasons Completed13.0Average DBH6.3
Planted Trees363.0Average Height38.5
Percent Hardwood15.0Average Crown Ratio44.9

DBH
Class		 Number
Trees		 Average
Height		 Basal
Area		Volume
cu.ft.		Volume
cords		Volume
bd.ft.
2 .9 23.6 .0 .5 .0 .0
3 12.7 27.7 .6 10.5 .0 .0
4 33.6 32.4 2.9 49.9 .0 .0
5 56.3 36.1 7.6 136.1 1.0 .0
6 67.2 38.7 13.4 250.7 2.4 .0
7 63.5 40.4 16.9 325.2 3.3 .0
8 43.6 42.1 15.3 304.1 3.1 .0
9 29.9 43.2 13.2 266.2 2.7 .0
10 6.4 45.8 3.3 69.9 .1 .9
Total 314.0 73.2 1413.2 12.6 108.9

Early hardwood removal: here is the thinning at age 13:

INPUTSPREDICTED
Site Index 65.0Dominant Height40.7
Growing Seasons Completed13.0Average DBH5.7
Planted Trees363.0Average Height36.4
Percent Hardwood.0Average Crown Ratio48.7

DBH
Class		 Number
Trees		 Average
Height		 Basal
Area		Volume
cu.ft.		Volume
cords		Volume
bd.ft.
3 9.1 27.8 .5 8.3 .0 .0
4 21.8 31.5 1.9 32.0 .0 .0
5 45.4 35.6 6.3 111.3 .9 .0
6 56.3 37.7 11.1 202.6 1.9 .0
7 7.3 40.4 2.0 37.8 .4 .0
8 7.3 41.2 2.6 49.6 .5 .0
9 6.4 43.5 2.8 56.9 .6 .0
10 5.4 43.7 2.9 59.0 .6 .0
Total 158.8 30.0 557.5 4.8 .0

Delayed hardwood removal: here is the thinning at age 13:

INPUTSPREDICTED
Site Index 65.0Dominant Height40.7
Growing Seasons Completed13.0 Average DBH 5.3
Planted Trees363.0 Average Height 35.9
Percent Hardwood .0Average Crown Ratio 41.3

DBH
Class		 Number
Trees		 Average
Height		 Basal
Area		Volume
cu.ft.		Volume
cords		Volume
bd.ft.
2 .9 23.6 .0 .5 .0 .0
3 12.7 27.7 .6 10.5 .0 .0
4 33.6 32.4 2.9 49.9 .0 .0
5 56.3 36.1 7.6 136.1 1.0 .0
6 29.0 38.0 5.4 99.6 .9 .0
7 9.1 39.9 2.4 46.2 .5 .0
8 12.7 42.3 4.4 88.4 .9 .0
9 5.4 43.8 2.4 48.4 .5 .0
10 .9 45.6 .5 9.7 .1 .0
Total 160.6 26.3 489.3 3.9 .0

Early hardwood removal: Here is the stand to be grown for the final crop:

INPUTSPREDICTED
Site Index 65.0Dominant Height40.7
Growing Seasons Completed13.0 Average DBH 8.0
Planted Trees363.0 Average Height 41.3
Percent Hardwood .0Average Crown Ratio 56.9

DBH
Class		 Number
Trees		 Average
Height		 Basal
Area		Volume
cu.ft.		Volume
cords		Volume
bd.ft.
6 4.5 39.1 1.0 19.4 .2 .0
7 58.1 40.1 15.6 297.3 3.0 .0
8 40.8 41.1 14.0 272.3 2.8 .0
9 35.4 42.6 15.5 310.0 3.2 .0
10 16.3 43.9 8.7 178.6 .0 308.0
Total 155.2 54.9 1077.5 9.1 308.0

Delayed hardwood removal: here is the stand to be grown for the final crop:

INPUTSPREDICTED
Site Index 65.0Dominant Height40.7
Growing Seasons Completed13.0 Average DBH 7.4
Planted Trees363.0 Average Height 41.1
Percent Hardwood .0Average Crown Ratio 48.7

DBH
Class		 Number
Trees		 Average
Height		 Basal
Area		Volume
cu.ft.		Volume
cords		Volume
bd.ft.
6 38.1 39.3 8.0 151.1 1.4 .0
7 54.5 40.4 14.5 279.0 2.8 .0
8 30.9 42.0 10.9 215.7 2.2 .0
9 24.5 43.1 10.8 217.8 2.2 .0
10 5.4 45.9 2.8 60.2 .0 .9
Total 153.4 47.0 923.8 8.7 108.9

Early hardwood removal: here is the final crop at age 23:

INPUTSPREDICTED
Site Index 65.0Dominant Height61.9
Growing Seasons Completed23.0 Average DBH 10.6
Planted Trees363.0 Average Height 63.2
Percent Hardwood .0Average Crown Ratio 40.5

DBH
Class		 Number
Trees		 Average
Height		 Basal
Area		Volume
cu.ft.		Volume
cords		Volume
bd.ft.
8 2.7 57.9 1.0 27.7 .3 .0
9 38.1 60.6 17.4 490.6 5.1 .0
10 42.7 62.8 23.3 679.4 .0 1417.3
11 27.2 63.2 17.8 521.3 .0 1180.2
12 27.2 65.1 21.1 636.3 .0 1584.0
13 16.3 67.0 14.8 458.2 .0 1249.4
14 .9 73.9 .9 31.8 .0 97.3
Total 155.2 96.4 2845.4 5.4 5528.2

Delayed hardwood removal: here is the final crop at age 23:

INPUTSPREDICTED
Site Index 65.0Dominant Height61.9
Growing Seasons Completed23.0 Average DBH9.9
Planted Trees363.0 Average Height 63.0
Percent Hardwood .0Average Crown Ratio 38.5

DBH
Class		 Number
Trees		 Average
Height		 Basal
Area		Volume
cu.ft.		Volume
cords		Volume
bd.ft.
7 .9 56.6 .3 6.9 .1 .0
8 22.7 57.9 8.2 221.5 2.3 .0
9 49.0 62.8 21.8 636.8 6.6 .0
10 29.0 63.2 15.8 463.4 .0 967.8
11 29.0 64.9 19.2 576.3 .0 1327.4
12 18.1 65.5 14.3 433.7 .0 1091.2
13 4.5 70.2 4.0 129.0 .0 353.8
Total 153.4 83.6 2467.7 8.9 3740.2

Early removal: the real rate of return (RRR) for all invested funds is:

Evaluation of Thinning
DBHCordsUnit
$ Value		Total
$ Value
5 .859 18.00 15.46
6 1.892 23.00 43.52
7 .380 29.00 11.01
8 .504 35.00 17.64
9 .588 35.00 20.57
10 .611 35.00 21.40
11 .000 35.00 .00
12 .000 35.00 .00
13 .000 35.00 .00
14 .000 35.00 .00
129.59
Less 20.0% selling fee 25.92
Net103.67

Evaluation of Harvest
MBF/
Cords		Unit
$ Value		Total
$ Value
.0000 18.00 .00
.0000 23.00 .00
.0000 29.00 .00
.2839 35.00 9.94
5.0806 60.00 304.83
1.4173 250.00354.33
1.1803 250.00 295.06
1.5840 265.00 419.77
1.2494 325.00 406.05
.0973 325.00 31.63
1821.61
Less 4.0% selling fee 72.86
Net1748.75

Cash Flow Stream and RRR Calculation:

YearActivity $ Costs $ Revenues
0 Land 225.00
0 Planting 29.00
0 Seedlings 13.00
0 Woody control at start 90.00
1-24 Annual cash flows -4.00
13 Thinning 103.67
23 Harvest 1748.75
24 Sale of land 225.00
RRR=7.63%

Delayed removal: the real rate of return (RRR) for all invested funds is:

Evaluation of Thinning
DBHCordsUnit
$ Value		Total
$ Value
5 1.025 18.00 18.45
6 .908 23.00 20.89
7 .463 29.00 13.41
8 .897 35.00 31.39
9 .498 35.00 17.44
10 .101 35.00 3.52
11 .000 35.00 .00
12 .000 35.00 .00
13 .000 35.00 .00
105.11
Less 20.0% selling fee 21.02
Net $ 84.09
Evaluation of Harvest
MBF/
Cords		Unit
$ Value		Total
$ Value
.0000 18.00 .00
.0000 23.00 .00
.0704 29.00 2.04
2.2585 35.00 79.05
6.5786 60.00 394.72
.9678 250.00 241.95
1.3274 250.00 331.86
1.0913 265.00 289.19
.3538 325.00 114.99
1453.80
Less 4.0% selling fee 58.15
Net $ 1395.64

Cash Flow Stream and RRR Calculation:

YearActivity $ Costs $ Revenues
0 Land 225.00
0 Planting 29.00
0 Seedlings 13.00
13 Year 13 woody control 90.00
1-24 Annual cash flows -4.00
13 Thinning 84.09
23 Harvest 1395.64
24 Sale of land 225.00
RRR = 7.35%

Therefore, although delaying the $90 cost of hardwood control for 13 years reduced the required initial investment, the damage to pine growth from hardwood competition started immediately and, by age 13, had reduced over-all RRR%.

The margin in favor of early removal may be much larger than the calculated 0.28%. As you can see, the thinning in the second alternative is very small. Under normal conditions, it is too small to be merchantable; we showed it here merely to give it the benefit of the doubt.

Furthermore, predicting the further development of stands from evidence available at Age 0 is full of chances for errors, and hardwoods are more efficient than pines in capturing growth factors on most sites, so the hardwood component never decreases. If the hardwood component at age 13 were even a slight bit more than the estimated 15%, thinnings could not be sold, and RRR% would be much lower. The more conservative approach is to remove hardwood at the beginning while it is of minimum size.

There's a lesson here for landowners who clearcut their tracts, but do not regenerate them. There's nothing wrong with clearcutting; it may be highly desirable to remove a poor stand that has resulted from repeated high-grading over decades with little or no cultural improvements or to obtain the maximum funds for other uses with no damage to remaining trees. But because all pine tracts contain low-value upland hardwoods, which sprout vigorously from roots and can easily capture more than 25% of the site, failure to regenerate clearcut tracts will seriously reduce future incomes from them.

PART I