SCA is the largest private owner of forests in Europe with 2.6 million hectares (6.4 million acres) of forestland. A hectare is 100 x 100 meters. A soccer field is 68 x 105 meters, which is 0.7 hectares (1.7 acres). So SCA owns forestland equal to about three million soccer fields.
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SCA recognizes standing timber at fair value, with the value amounting to SEK 24.7 billion at year-end 2008. Added to this is the value of forestland, SEK 911 million.
The value per hectare of productive forestland was SEK 12,232, compared to SEK 9,050 in 2006. | |
Forest analysts traditionally value forests based on their supply of timber.
Productivity value
When trees are felled and placed on a trailer truck to the sawmill or paper plant, they are definitely product. When they are still in the forest, they are at the same time product and production because they are continuously growing and producing more timber.
For that reason, people usually talk about the productivity value of the forest. That is the total of the timber supply that exists right now plus the timber that will be available for felling in the future.
Source of energy
Forests have also taken on a new role, one they had in the past as well. As bio-fuel starts to replace oil and coal, more parts of trees can be used for energy.
Affection and location
Still, forests are not just trees and finance. That complicates things for forest analysts. Many people who buy forests are not just out for the economic value of trees. They want to be able to walk around in the woods and feel what a beautiful place it is. Realtors dealing in forest properties indicate that buyers from their area are paying a higher price for a beautiful forest than for a less attractive forest that has more timber.
Another factor affecting the price of a forest property, just as when a person buys a home, is location. Forests within a 100-km (60-mile) radius of densely populated areas are in general twice as expensive per cubic meter of timber as a property in a remote location.
Other factors
But there are other factors apart from the timber supply and location that affect the price. These include hunting, leaseholds, lakes and other water on the property. All these can generate income during the year.
In its annual report, SCA has chosen to value its trees and land separately. Trees are called “biological assets,” and their value is calculated based on the estimated cash flow they can generate in the future. This cash flow is based on the expected value of their timber less felling costs. That also includes the cost of planting new trees on the land.
Source Shape 4/2009 Text Carina Gerken Christiansen