Cointegration of Timberland Value in the United States, South and Central America, and Oceania

Abstract

In this article, we examine whether the United States, South and Central America, and Oceania timberland markets have integrated per acre timberland values. The vector error correction model and orthogonal impulse response functions provide strong evidence of a long-run relationship regarding per acre timberland value between South and Central America, the United States, and Oceania. The comovement of per acre timberland values and lack of arbitrage opportunities among regions may induce investors to invest locally or diversify portfolios through other industries. Study Implications: This article explores the relationship between timberland price/value in geographically separate timberland markets to help timberland investors in their portfolio decisions.