The price for forest land on combined forest estates

Abstract

Prices for forest estates, which also include agricultural land, a residence and outbuildings, were analysed using a hedonic price model. Both productive and consumptive uses of the combined estate were considered. The statistical analysis was based on 198 sales in Sweden during 1992. The independent variables describe both physical characteristics and location. To allow straightforward interpretation of the coefficients, a linear specification with quadratic and interaction terms were chosen. The implicit price for forest land on combined forest estates was a positive function of population density, the percentage of productive forest land compared with the total forest area, site index, and standing volume per hectare of productive forest land. Forest land prices had negative relationships with the area of agricultural land, suggesting negative economies of scope between agricultural and forest land. The estimations suggested economies of scale in agriculture and not in forestry.