The impacts of climate-induced insect damage on timberland values in the southeastern U.S.

Abstract

This paper estimates the impacts of insect damage on private timberland values in the Southeastern U.S. using a large, pooled cross-section of parcel-level timberland transaction price data and county-level insect damage data. Our econometric analysis indicates that a 1000 acre increase in a county's average insect damage acreage reduces timberland prices by approximately 1 %. Using a variety of approaches to estimate the link between seasonal precipitation, temperature, and insect damage acreage, we project an average increase of between 168 and 550 additional acres of annual insect damage per county under future climate projections to 2050 relative to the current climate. Using our econometric estimates, the predicted acreage increase in insect damages will lead to an approximate 0.2 % ($6/acre) to 0.5 % ($14/acre) reduction in weighted timberland prices, resulting in total losses of between $1 billion to $2.5 billion for the entire timberland population in the Southeastern U.S. The methods and results highlight how to use empirical data to project future natural disturbance risk from climate change on the economic value of forested natural capital.