Red Alder – Return on Investment

Glenn AhrensOSU Extension Forester

Clatsop and Tillamook Co.

My Background

• Focus on hardwood forestry since 1984• 25 years of Research and Extension at

Oregon State University • Private Forestry Consultant

Returns from Red AlderOutline

• Forester ‘s perspective - Not an Economist• Growth & yield• Important considerations for site specific

investment analysis• Economics – ROI, NPV• Future outlook and needs

Forester ‘s perspective Alder seems very promising!

• Relatively high log values• Good performance in plantations – success being

demonstrated• Rapid early growth + short rotations should

produce favorable rates of return• General economic assessments have indicated

returns competitive with conifers (equal or greater alder log values)

Foresters often leave alder in young stands when it appears to be the “best tree”.

0

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0 50 100 150Age

Vo

lum

e (c

u.f

t/ac

)

DOUG-FIR SI 110

RED ALDER SI 100

Douglas-fir vs. Alder DF has much greater yield per acre over the long term

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0 50 100 150Age

Mea

n A

nn

ual

Incr

emen

t (c

u.f

t/ac

/yr)

DOUG-FIR SI 110

RED ALDER SI 100

Similar rates of annual production Alder culminates much earlier – potential for good rate of return

Important considerationsNeed to Assess Site-Specific Investment

Alternatives

• Estimates of expected yield over time for alternative species and management regimes.

• Optimum rotation ages .• Variability in site quality and performance.

Source: A Demonstration Set of Yield Charts, Forest Biometrics Research Institutewww.forestbiometrics.com

Analysis of Forestry Investments Need Site-Specific Estimates of Yield Over Time

Source: A Demonstration Set of Yield Charts, Forest Biometrics Research Institutewww.forestbiometrics.com

Analysis of Forestry Investments Rotation Age - Maximizing Net Present Value

160

45

Ft3/ac/yr

Source: Florian Deisenhofer and Eric Aubert, Washington Department of Natural Resources, 2005

Important considerationsSite-Specific Investment Alternatives

• Intensive and Expensive Plantation management required to ensure good performance of alder.

• Yield and return from conifer species will also respond very well to such intensive management.

Empirical Yield – WA DNR and BC Ministry of Forests. Managed – Red Alder: State of Knowledge Symposium 2005, Douglas-fir – Talbert and Marshall 2005 .

26-year old Douglas-fir 17-year old red alder

Intensive management produces fast-growing trees: both alder and conifer

Knowledge of and management for alder is increasing.

• As with many tree species, basic forest

management steps are expected to improve

timber yield for alder.

• Forester’s are recognizing that management is

often needed to ensure good performance of

alder.

Improved timber value expected from management of red alder

Dense Alder Thicket = low sawtimber volume

Open, brushy alder = low sawtimber volume

Well-distributed, well-spaced trees will make the best of incidental alder patches…

Who will plant alder for the next rotation ?

Competitive rates of return from alder appear possible. But better information on yield and returns is still needed to help managers decide where to plant alder.

Important considerations for land managers Assumptions, Sensitivity, Confidence, Risk

• What do you think the relative value of alternative species and products will be at harvest time?

• What is your level of confidence in your management practices; in meeting your expectations for field performance?

• How do you feel about the risks?

Return on Investment in Alder?Outlook for Filling the Information Gaps

• Growth and yield model for managed stands is coming soon.

• Professional knowledge and skills in Alder Management are increasing.

• Demonstrated success with alder management and transfer technology is increasing.

Regime SpeciesSite

Index AgeYield

mbf/acAvg. Log

Pricelogging

Cost StumpageNet

Harvest$Prep+Plant

CostPCT cost

PCT year

1990 RA30 Red Alder 100 30 15 350 200 150 2250 500 100 7

2000 RA30 Red Alder 100 30 15 525 200 325 4875 500 100 7

2007 RA30 Red Alder 100 30 15 660 200 460 6900 500 100 7

Equal RA30 Red Alder 100 30 15 500 200 300 4500 500 100 7

1990 DF 45 Douglas-fir 120 45 30 580 180 400 12000 500 0 0

2000 DF 45 Douglas-fir 120 45 30 590 180 410 12300 500 0 0

2007 DF 45 Douglas-fir 120 45 30 515 180 335 10050 500 0 0

Equal DF 45 Douglas-fir 120 45 30 500 180 320 9600 500 0 0

1990 DF 45 H Douglas-fir 120 45 40 580 180 400 16000 500 0 0

2000 DF 45 H Douglas-fir 120 45 40 590 180 410 16400 500 0 0

2007 DF 45 H Douglas-fir 120 45 40 515 180 335 13400 500 0 0

Equal DF 45 H Douglas-fir 120 45 40 500 180 320 12800 500 0 0

Assumptions for Douglas-fir and Red Alder Plantation Scenarios