Timberland Investment Resources Glossary -Timberland Investment Resources

ACRE - An area of land measuring about 43,560 square feet. A square 1-acre plot measures about 209 feet by 209 feet; a circular acre has a radius of 117.75 feet.
AD VALOREM TAX - A tax levied as a percentage of asset value (see property tax).
AERIAL PHOTOGRAPHY - Photos taken from the air at regular, spatial intervals and used in photo interpretation to provide information about forests and landforms.
AFFORESTATION - General term for establishing trees through planting or seeding, whether or not trees were on the site before. Reforestation establishes trees on formerly forested areas.
AGROFORESTRY - Combinations of trees, other crops, and/or livestock on the same area.
ALL-AGED or UNEVEN-AGED MANAGEMENT - The practice of managing a forest by periodically selecting and harvesting individual trees or groups of trees from the stand while preserving its natural appearance. Most common in hardwood forests.
ALL-AGED or UNEVEN-AGED STAND - A forest stand composed of trees of different ages and sizes.
ALTERNATIVE RATE OF RETURN - The percent rate of return on capital in an investor's best alternative at a risk similar to new ventures being considered.
AMENITY RIGHTS - Society's right to enjoy amenities, such as clean air and water, attractive landscapes, and peace and quiet.
AMORTIZATION - The process of gradually reducing some monetary amount over time.
ARC ELASTICITY - An elasticity of a two-variable function calculated as an average between two points on a curve.
ANNUALIZED COST (or revenue) -An equal annual payment with the same present value as payments that are not annual. May be calculated for a fixed or infinite time horizon.
ANNUITY - Equal payments at regular intervals, for example, monthly or yearly.
APPRAISAL - The procedure for finding market value of an asset.
ASPECT - The orientation of a slope with respect to the compass; the direction toward which a slope faces; north facing slopes are generally cooler than south facing slopes.
ASSESSED VALUE - Taxable value to which the property tax rate is applied; may be market value or a certain proportion thereof.

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BASAL AREA - (a) The cross-sectional area (in square feet) of a tree trunk at breast height (4.5 feet above the ground). For example, the basal area of a tree that measures 14 inches in diameter at breast height is about 1 square foot. (b) The sum basal areas of the individual trees within 1 acre of forest. For example, a well-stocked pine stand might have a basal area of 80 to 120 square feet per acre.
BASIS - For income tax calculations, basis is that part of an asset's original purchase cost that is deducted from the asset sale price in calculating taxable capital gain.
BEDDING - Land prepared before planting in the form of small mounds. The prepared land concentrates topsoil and elevates the root zone of seedlings above temporary standing water. Fertilizer is often incorporated into the bedding.
BENEFIT/COST RATIO -The present value of a project's benefits divided by the present value of costs using the investor's minimum acceptable rate of return.
BEST MANAGEMENT PRACTICES (BMPs) - State or local regulatory or non-regulatory guidelines for proper application of forestry operations, including protecting water quality as required by federal statutes, such as the Clean Water Act and Water Pollution Control Act. BMPs are primarily designed to prevent soil erosion and water pollution, and to protect certain wildlife habitat values in riparian and wetland areas.
BIOCENTRIC - Centered on biology and ecology.
BIOLOGICAL DIVERSITY - The variety of life forms in a given area. Diversity can be categorized in terms of the number of species, the variety in the area's plant and animal communities, the genetic variability of the animals, or a combination of these elements.
BIOLOGICAL ROTATION - A rotation age derived from a biological, not economic, criterion usually based on maximum mean annual increment.
BIOLOGICAL TIMBER SUPPLY SHIFTERS - Factors like fertilization, planting, pre-commercial thinning, and genetic improvement, which can change the physical amount of wood grown in the future.
BIOMASS - The total weight of all organisms in a particular population, sample, or area. Biomass production may be used as an expression of site quality.
BLOCK - An area of land or timber that has been defined for management purposes. One block may be composed of stands of different species or ages.
BOARD FOOT - A unit of wood measuring 144 cubic inches. A 1-inch by 12-inch shelving board that is 1 foot long is equal to 1 board foot. Board foot volume is determined by: length (feet) x width (inches) x thickness (inches)/divided by 12
BOLE - The main trunk of a tree.
BOOK VALUE - Original purchase cost.
BROWSE - Portions of woody plants, including twigs, shoots, and leaves, used as food by such animals as deer.
BUFFER STRIP - A narrow zone or strip of land, trees, or vegetation bordering an area. Common examples include visual buffers, which screen the view along roads, and streamside buffers, which are used to protect water quality. Buffers may also be used to prevent the spread of forest pests.

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CAMBIUM - Layer of living cells between the wood and the innermost bark of a tree. Each growing season the cambium adds a new layer of cells (by cell division) on the wood already formed, as well as a layer of inner bark on the cambium's outer face.
CANOPY - A layer or multiple layers of branches and foliage at the top or crown of a forest's trees.
CAPITAL GAINS - Profit on the sale of an asset, such as timber, land, or other property. Reporting timber sales as capital gains provides certain tax advantages over reporting revenues as ordinary income.
CAPITAL RECOVERY FORMULA - The formula giving the equal annual payment with a present value equal to some specified amount.
CAPITALIZE - (a)To find the present value or to discount it. (b) In income tax calculations, to carry forward a capital expense and deduct it from sale proceeds, or an asset, to find taxable income.
CHAIN - Unit of linear measure (length) commonly used in forestry and equal to 66 feet (80 chains = 1 mile).
CHIP-n-SAW - A sawmilling method used in cutting lumber from trees that measure between 6 and 14 inches diameter at breast height. The process chips off the rounded outer layer of a log before sawing the remaining cant or rectangular inside section into lumber. Chip-n-saw mills provide a market for trees larger than pulpwood and smaller than sawtimber.
CLEAR-CUT HARVEST - A harvesting and regeneration method that removes all trees within a given area. Clear-cutting is most commonly used in pine and hardwood forests, which require full sunlight to regenerate and grow efficiently.
COEFFICIENT OF VARIATION - For a set of variable values, it is the standard deviation divided by the expected value. This measure of variability is useful for comparing variations in populations with different expected values.
COMMUNITY - A collection of living organisms in a defined area that function together in an organized system with relatively similar energy, nutrients, and water cycle.
COMPARABLE SALES APPRAISAL - A method of finding an asset's market value by averaging recent sales prices of similar assets, similarly situated.
COMPETITION - The struggle between trees to obtain sunlight, nutrients, water, and growing space. Every part of the tree - from the roots to the crown - competes for space and food.
COMPOUND INTEREST - Earnings accruing as a percentage of capital value such that earnings occur on the original capital and on all previous earnings, as with interest on a savings account.
COMPOUNDING - Refers to the process whereby a current capital investment (present value) grows over time to a larger future value.
CONIFER - Any tree that produces seeds in cones. See softwood.
CONSERVATION - The protection, improvement, and wise use of natural resources for present and future generations.
CONSERVATION EASEMENT - A purchased right to land, less than full ownership, that allows the holder to use or protect the land for purposes like outdoor recreation, education, open space, wildlife habitat or preserving certain ecosystems.
CONSTANT DOLLARS - Values expressed in real dollars of some base year, excluding inflation.
CONSUMER PRICE INDEX (CPI) - An index of average prices for a typical market basket of consumer goods. The index is set at 100 for a specified base year. The annual rate of change in the CPI is the inflation rate for consumer goods.
CONVERSION RETURN - (a) For standing timber, it is the manufactured end product value minus all costs (including profit) of manufacturing, distribution, transportation, and logging. (b) A residual value that is a logger's estimated maximum willingness to pay for stumpage just before harvest.
CORD - A stack of round or split wood consisting of 128 cubic feet of wood, bark, and air space. A standard cord measures 4 feet by 4 feet by 8 feet. A face cord or short cord is 4 feet by 8 feet by any length of wood under 4 feet.
CORRIDOR - A strip of wildlife habitat, unique from the landscape on either side of it, that links one isolated ecosystem "island" (e.g., forest fragment) to another. Corridors allow certain species access to isolated habitat areas, which contributes to the genetic health of the populations involved.
COST OF CAPITAL - The interest rate firms pay on capital raised for investment. This can be interest on debt (the cost of debt) or dividends on stock sold (the cost of equity). Also see weighted average cost of capital.
COVER - (a) Any plant that intercepts rain drops before they reach the soil or that holds soil in place. (b) A hiding place or vegetative shelter for wildlife from predators or inclement weather.
CROP TREE - Any tree selected to grow to final harvest or to a selected size. Crop trees are selected for quality, species, size, timber potential, or wildlife value.
CROWN - The branches and foliage at the top of a tree.
CROWN-CLASS - A tree classification system based on the tree's relative height, foliage density, and ability to intercept light. Crown-class measures previous growth performance and calls attention to crop trees that could benefit from future thinning and harvest operations. There are four classifications: (1) Dominant Trees - Larger than average trees with broad, well-developed crowns. These trees receive direct sunlight from all sides and above. (2) Codominant Trees - Average to fairly large trees with medium-sized crowns that form the forest canopy. These trees receive full light from above, but are crowded on the sides. (3) Intermediate Trees - Medium-sized trees with small crowns below the general level of the canopy. Intermediate trees receive little direct light, are poor crop trees, and should be removed during thinning operations. (4) Suppressed or Overtopped Trees - Small trees that grow below the tree canopy and receive no direct sunlight from any direction.
CRUISE - A survey of forestland to locate timber and estimate its quantity by species, products, size, quality, or other characteristics.
CULL - A tree or log of marketable size that is useless for all but firewood or pulpwood because of crookedness, rot, injuries, or damage from disease or insects.
CURRENT DOLLARS - Values in dollars of the year in which they actually occur, including inflation. Also known as nominal values.
CUTTING CONTRACT - A written, legally binding document used in the sale of standing timber. The contract specifies the provisions covering the expectations and desires of both buyer and seller.
CUTTING CYCLE - The planned time interval between major harvesting operations within the same stand – (usually uneven-aged stands). For example, on a 10-year cutting cycle in a hardwood stand, trees are harvested every 10 years.

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DECIDUOUS - Shedding or losing leaves annually. Trees, such as maple, ash, cherry, and larch, are deciduous, as opposed to evergreen.
DEFECTS - Characteristics of an individual tree that reduce its quality and utility.
DEFORESTATION - The unintentional or intentional conversion of land use from forest to nonforest. Associated with nonrenewable timber harvesting practices in ecologically sensitive areas, such as tropical rainforests.
DEFLATE - To deflate a current dollar value means to express it in constant dollars of a base year some number of years earlier, removing inflation.
DEMAND - In economics, demand refers to the quantities of a good or service that will be consumed per unit of time at different prices for a given group or individual. A demand curve (function) shows this relationship graphically (mathematically) with price on the y axis and quantity on the x axis.
DEMAND-PULL INFLATION -Inflation caused by too many buyers chasing too few goods; thus, prices are bid higher.
DENSITY - With reference to timber stands, it is a measure of stem crowding. For example, the number of trees per acre, percent crown closure, or volume per acre.
DEPLETION - An accounting charge for the wearing out of certain assets.
DEPLETION PERIOD - That period over which a given timber tract is completely harvested.
DEVELOPMENT PERIOD - The number of years it takes after regeneration before partial cutting begins in uneven-aged forestry.
DIAMETER AT BREAST HEIGHT (DBH) - The diameter of a tree measured in inches at breast height - a standard 4.5 feet above the ground.
DIAMETER-LIMIT CUTTING - A selection method in which all marketable trees above a specified diameter are harvested. Diameter-limit cutting can lead to long-term degradation of the stand.
DIMENSION LUMBER - Hardwood dimension lumber is processed to be used whole in the manufacture of furniture or other products. Softwood dimension lumber consists of boards more than 2 inches thick, but less than 5 inches thick. This wood is used in construction and is sold as 2x4s, 4x8s, or 2x10s.
DIRECT or BROADCAST SEEDING - (a) Sowing seed for broad coverage from the air or on the ground. (b) Seeding of forest stands, roadways, or specified plots for wildlife.
DISCOUNT RATE - The interest rate at which future values are discounted to a present value.
DISCOUNTING - The process whereby a future value is reduced to arrive at the present value.
DISTURBANCE - A natural or human-induced environmental change that alters one or more of the floral, faunal, and microbial communities within an ecosystem. Timber harvesting is the most common human disturbance. Windstorms and fire are examples of natural disturbances.
DIVISIBLE - An investment is divisible if you can invest in part of it, as with adding money to a savings account or acres to a fertilization project (as opposed to indivisible).

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ECOLOGY - The science or study of the relationships between organisms and their environment.
ECONOMETRICS - A field involving the measurement of economic variables using applied statistical techniques to estimate demand and supply functions and predict economic outcomes.
ECONOMIC MATURITY - The point in the life cycle of a tree or stand when harvesting can be most profitable (i.e., when the rate of value increase of an individual tree or stand falls below a desired alternative rate of return).
EDGE - The transition between two different types or ages of vegetation.
ENDANGERED SPECIES - A species is endangered when the total number of remaining members may not be sufficient to reproduce enough offspring to ensure survival of the species. See also “threatened species.”
ENVIRONMENT - The interaction of climate, soil, topography, and other plants and animals in any given area. An organism's environment influences its form, behavior, and survival.
EQUITY - That portion of a firm's assets on which no debt is owed to creditors.
EROSION - The wearing away of land or soil by the action of wind, water, or ice.
EVAPOTRANSPIRATION - The evaporation of water from the soil and the transpiration of water from the plants that live in that soil. Approximately one-quarter of a forest's annual rainfall returns to the air through evapotranspiration.
EVEN-AGED MANAGEMENT - A forest management method in which all trees in an area are harvested at one time, or in several cuttings over a short period of time, to produce stands that are all the same age or nearly so. This management method is commonly applied to shade-intolerant conifers and hardwoods.
EVEN-AGED - Refers to forests in which trees have been established at about the same time, and thus, are roughly the same age.
EVERGREENS - Plants that retain foliage year round.
EXCHANGE RATE - The rate or price at which one country's currency is exchanged for another country’s currency. For example, if the United States dollar costs 140 Japanese yen, the exchange rate for the dollar is 140 yen.
EXPECTED VALUE - (a) The mean value of some variable in a given population. (b) The sum of possible values multiplied by their probabilities of occurrence (not always equal to the arithmetic mean).
EXPENSING - In income tax calculations, it is the practice of deducting or subtracting allowable costs from income to arrive at taxable income.

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FEE TIMBER - Standing timber that a firm owns outright on its lands (derived from the term "ownership in fee simple").
FINANCIAL MATURITY - The age beyond which an asset's growth rate is unacceptable or less than the owner's minimum acceptable rate of return; can refer to a forest (timber and land combined) or to individual trees. Assets at or beyond this age are financially mature.
FIREBREAK - Any nonflammable barrier used to slow or stop fires. Several types of firebreaks are mineral soil barriers; barriers of green, slow-burning vegetation; and mechanically cleared areas.
FIXED COSTS - Costs that remain fixed as a firm's output increases. For example, in the short run, if a firm increases plywood output from a given sized mill, property taxes and insurance on the mill will be fixed costs.
FIXED-INCOME INVESTMENT - An investment from which annual income remains fixed in nominal terms (current dollars) regardless of the inflation rate.
FIXED-PAYMENT LOAN - A loan on which payments at regular intervals are fixed in nominal terms.
FORAGE - Vegetation such as leaves, stems, buds, and some types of bark, that can be eaten for food and energy.
FORB(ES) - Any herb other than grass.
FOREST FRAGMENTATION - The subdivision of large, natural landscapes into smaller, more isolated fragments. Fragmentation affects the viability of wildlife populations and ecosystems.
FOREST - In financial discussion, forest refers to land and trees combined.
FOREST MANAGEMENT - (a) Proper care and control of wooded land to maintain health, vigor, product flow, and other values (soil condition, water quality, wildlife preservation, and beauty) in order to accomplish specific objectives. (b) The practical application of scientific, economic, and social principles to forest property.
FOREST MANAGEMENT PLAN - Written guidelines for current and future management practices recommended to meet an owner's objectives.
FOREST TYPE - Groups of tree species commonly growing in the same stand, because their environmental requirements are similar.
FOREST VALUE GROWTH PERCENT - Annual percent rate of change in the liquidation value of trees and land.
FOREST - A biological community dominated by trees and other woody plants.
FORESTRY - The science, art, and practice of managing and using trees, forests, and their associated resources for human benefit.
FRAGMENTATION - The segmentation of a large tract or contiguous tracts of forest to smaller patches, often isolated from each other by nonforest habitat. Results from the collective impact of residential and commercial development, highway and utility construction, and other piecemeal land use changes.
FUTURE VALUE - The value of any income or wealth accumulated with compound interest to a specified future date. A future value is a current value multiplied by (1 + r)n, where r = (interest rate)/100, and n is the number of years in the future.

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GENOTYPE - Growth or development characteristics dependent on genetic information. The genetic constitution of an organism or a species in contrast to its observable characteristics.
GEOGRAPHIC INFORMATION SYSTEM (GIS) - A computer system that creates maps using a Global Positioning System (GPS). These maps are linked then to a database that stores important information about them.
GIRDLING - A physical cutting or disruption of the cambial sap flow within a tree. Girdling by humans, animals, or insects can often kill a tree.
GLOBAL POSITIONING SYSTEM (GPS) - A computer that uses satellites in space to pinpoint where you are on the earth.
GROUP SELECTION - (a) The removal of small groups of trees to regenerate shade-intolerant trees in the opening (usually at least 1/4 acre). (b) A specific type of selective cutting.
GROWING STOCK - Sum (by number or volume) of all the trees in a forest or in a specified part of the forest.
GROWTH RINGS - Also called annual rings, these are the layers of wood a tree adds each season. These rings frequently are visible when a tree is cut and can be used to estimate its age and growth rate.
GROWTH - Increase in diameter, basal area, height, and volume of individual trees or stands during a given period of time. Also known as increment.

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HABITAT - (a) An area in which a specific plant or animal can naturally live, grow, and reproduce. (b) For wildlife, habitat is the combination of food, water, cover, and space.
HARDWOODS (DECIDUOUS TREES) - Trees with broad, flat leaves as opposed to coniferous or needled trees. Wood hardness varies among the hardwood species, and some are actually softer than some softwoods.
HARVEST - The cutting, felling, and gathering of forest timber.
HEARTWOOD - The inner core of a woody stem composed of nonliving cells and usually differentiated from the outer wood layer (sapwood) by its darker color.
HEIGHT CLASS - Any interval into which the range of tree heights is divided for classification and use.
HOLDING VALUE - The owner's net present value of future cash flows from an asset.
HIGH-GRADING - A harvesting technique that removes only the biggest and most valuable trees from a stand and provides high returns at the expense of future growth potential. Poor quality, shade-loving trees tend to dominate in these continually high-graded sites.
HURDLE RATE - A minimum acceptable rate of return or "hurdle" that new investments must clear before they are acceptable to an investor.

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IMPROVEMENT CUT - An intermediate cut made to improve the form, quality, heath, or wildlife potential of the remaining stand.
INCOME APPRAISAL - A method of finding an asset's market value by calculating the net present value of estimated future cash flows therefrom. Also called the income approach.
INCREMENT BORER - An auger like tool with a hollow bit designed to extract cores from tree stems for the determination of age and growth rate.
INDIRECT EFFECTS - When a new project is started, indirect effects in the region are the resulting new employment and income in industries supplying and servicing anything related to the project.
INDUSTRIAL WOOD - Sawlogs, veneer logs, poles, pulpwood, and chips that are destined for non-fuel uses.
INFLATION - A general increase in prices of all goods and services in an economy, usually expressed as an annual inflation rate, or percentage increase per year. This rate is only an average, since not all prices will change at the same rate.
INFLATION INDEXING - A procedure that adjusts a value or cash flow to increase at the inflation rate.
INTERNAL RATE OF RETURN (IRR) - For a given project, the interest rate at which the present value of revenues equals the present value of costs (see rate of return).
INTOLERANCE - A characteristic of certain tree species that does not permit them to survive in the shade of other trees.

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LAND ETHIC - The principles and values guiding our use and treatment of the land. Forest stewardship is a land ethic. (See stewardship.)
LAND EXPECTATION VALUE - See “willingness to pay for land.”
LANDING - A cleared area within a timber harvest where harvested logs are processed, piled, and loaded for transport to a sawmill or other facility.
LAW OF ONE PRICE - Under free trade, the tendency for the price of any traded good to become the same in all areas, except for differences caused by shipping costs.
LEAKAGE - That part of a region's income that is spent outside the region (i.e., on federal taxes, imported goods, and travel).
LEVERAGED - Describes a purchase made in part with borrowed money.
LIABILITY RULE - A rule for legally, or conceptually, considering who is liable for preventing environmental damage.
LIQUIDATION VALUE - For any asset, the value to be received for immediate sale for consumption purposes; for standing timber, the stumpage value for harvesting purposes.
LOG RULE or LOG SCALE - A table based on a diagram or mathematical formula used to estimate volume or product yield from logs and trees.
LUMP-SUM SALE - A timber sale in which an agreed-on price for marked standing trees is set before the wood is removed (as opposed to a unit sale).

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MANAGEMENT PLAN - A document prepared by natural resource professionals to guide and direct the use and management of a forest property. It consists of inventory data and prescribed activities designed to meet ownership objectives.
MARGINAL - In economics, added or extra, as opposed to total.
MARGINAL LAND - Land that does not consistently produce a profitable crop due to infertility, drought, or other physical limitations (i.e., shallow soils).
MARKETING - The selling of timber or other forest resources. Successful sellers seek a satisfactory price through competition, skillful negotiation, knowledge of timber markets, and the aid of a competent broker or consultant.
MARKING - (a) The physical process of selecting trees to be cut or left during a harvest. (b) delineating a boundary. Marking is usually done by spraying a spot of bright paint on a prominent part of the tree.
MAST - Fruits or nuts used as a food source by wildlife. Soft mast includes most fruits with fleshy coverings, such as persimmon, dogwood seed, or black gum seed. Hard mast refers to nuts such as acorns and beech, pecan, and hickory nuts.
MATURE TREE - A tree that has reached a desired size or age for its intended use. Size, age, or economic maturity varies depending on the species and intended use.
MBF - Abbreviation denoting 1,000 board feet. MBF is a typical unit of trade for dimension lumber and sawtimber stumpage. (It takes 11 MBF of wood to build an average 1,900-square-foot house.)
MEAN ANNUAL INCREMENT (MAI) - Average annual timber volume growth per unit area, for example, in cubic feet per acre per year. Assuming even-aged management with clearcutting, MAI is potential rotation-age harvest volume per acre divided by harvest age.
MENSURATION or BIOMETRICS - (a) The measurement and calculation of volume, growth, and development of individual trees or stands and their timber products. (b) A measurement of forestlands.
MERCHANTABLE HEIGHT - The stem length, normally measured from the ground to a 10-, 6-, or 4-inch diameter top, above which no other saleable product can be cut. Diameter, local markets, limbs, knots, and other defects collectively influence merchantable height.
MERCHANTABLE - Refers to trees salable for commercial products. Trees to be cut in a precommerclal thinning are unmerchantable.
MIXED STAND - A timber stand in which less than 80 percent of the trees in the main canopy are of a single species.
MODEL - A simplified representation of an actual process, situation, or object. Also used as a verb (to model).
MONTE CARLO SIMULATION - A computer-based procedure for simulating uncertain or probabilistic processes.
MULTIPLE USE - The management of land or forest for more than one purpose, such as wood production, water quality, wildlife, recreation, aesthetics, or clean air. (See Stewardship.)
MULTIPLE-USE FORESTRY - Using a forest for many different purposes: (1) many uses on each acre; (2) a mosaic of single uses; (3) one dominant use and other compatible uses; (4) different uses over time; or (5) a combination of these.

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NATURAL STAND (NATURAL REGENERATION) - A stand of trees grown from natural seed fall or sprouting.
NET ANNUAL GROWTH - Increase in volume of trees during a specified year. Components of net annual growth include the increment of net volume of trees at the beginning of the specified year that survive to the year’s end, plus the net volume of trees reaching the minimum size class during the year, minus the volume of trees that died during the year, and minus the net volume of trees that become rough or rotten trees during the year.
NET INCOME - Total revenue minus total cost; here, same as profit.
NET PRESENT VALUE (NPV) - Present value of future revenues minus present value of future costs (see present value).
NOMINAL - With respect to values, or rates of return, it means in current dollars, including inflation.
NON-INDUSTRIAL PRIVATE FORESTLAND (NIPF) - Forestland owned by a private individual, group, or corporation not involved in wood processing.
NUTRIENTS - Elements necessary for growth and reproduction. Primary plant nutrients are nitrogen, phosphorus, and potassium.

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OLD-GROWTH - Forests that approximate the structure, composition, and functions of native forests prior to European settlement. They vary by forest type, but generally include more large trees, canopy layers, standing snags, native species, and dead organic matter than do young or intensively managed forests.
OPTIMAL ROTATION AGE - As defined here, the tree harvest age at which the net present value of a forest is maximized. It may include timber and non-timber values. Generally, it refers to mature timber, but not old growth and not thinnings.
OPTIMIZATION - The process of finding an optimum.
OPTIMUM - In a production process, the point at which you have maximized some output, such as satisfaction (utility), income, present value, profit, volume, etc. The verb is "to optimize"; the adjective "optimal." Optimum is used as both a noun and an adjective.
ORDINARY INCOME - In income tax calculations, any income that is not a capital gain.
ORIENTED STRAND BOARD (OSB) - A board made of thin wood strands glued together under heat and pressure. Three layers of strands are oriented at right angles to one another.
OVERRUN - The extra volume that a sawmill can cut in excess of the originally measured stumpage or log volume due to measurement inaccuracies.
OVERSTOCKED - The situation in which trees are so closely spaced that they compete for resources and do not reach full growth potential.
OVERSTORY - The level of forest canopy that includes the crowns of dominant, codominant, and intermediate trees.

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PARTIAL CUT - Removal of only part of a tree stand when harvesting.
PARTIAL CUTTING - Any harvest removing part of the timber without clear-cutting.
PATCH CUT - A clear-cut on a small area.
PAYOFF PERIOD - The number of years between initial investment and the final yield for investments with primarily one input and one output.
PERIODIC ANNUAL INCREMENT (PAI) - Mean annual growth or increase in volume during a specific period of time.
PERIODIC - Defined here as occurring at regular intervals of more than one year.
PEST - Any organism that is out of place or causes stress to a desired organism.
PESTICIDE - Any chemical used to kill or control pests.
PLANT or HABITAT DIVERSITY - A variety of food or cover for wildlife. Variation may occur at one point in time, or over a period of time, such as during the course of a season. Seasonal diversity of food and cover is often critical to the survival of a species.
PLANTATION - Planted pines or hardwoods, typically in an ordered configuration, such as equally spaced rows.
PLYWOOD - A wood panel made of rotary-peeled veneers glued together under heat and pressure with grains of adjacent perpendicular sheets.
POLES or POLETIMBER - Trees from 5 to 7 inches in diameter at breast height.
PRECOMMERCIAL THINNING - A thinning where stumpage prices are negative. As a result, cut trees are left in the woods, since logging and hauling costs would exceed the delivered log price.
PREMERCHANTABLE - Timber that is not yet saleable.
PRESCRIBED or CONTROLLED BURN - The use of fire under specific environmental conditions to achieve forest management objectives. Used to reduce hazardous fuel levels, control unwanted vegetation, favor desired vegetation, and improve visibility and wildlife habitat.
PRESCRIPTION - A planned series of treatments designed to change current stand structure to one that meets management goals.
PRESENT USE VALUATION - Property tax relief classification based on the land's productivity for agriculture, horticulture, or forestry production, rather than for market value. Can result in substantial tax savings in areas where land values are high. Some restrictions and penalties apply, including a 3-year roll back provision with interest. Consult your county tax supervisor for details.
PRESENT VALUE - Any future value can be discounted to a present value by dividing it by (1 + r)n, where r = (interest rate)/100, and n is the number of years in the future. Sometimes called present worth. This discounting reflects the cost of waiting to receive a future income. The further out the given amount of income is in the future, the less it's worth to you now. Discounting is the reverse of compounding.
PRESERVATION - An attempt to keep forests in an undisturbed state through the control of internal and external influences.
PROBABILITY DISTRIBUTION - A graphic or mathematical function showing the probabilities that the value of some variable will fall within given ranges. Also called a probability density junction.
PROBABILITY HISTOGRAM - A bar graph showing on the y axis the probabilities of occurrence for given ranges of values for some variable on the x axis. Also called a probability distribution.
PRODUCTIVITY TAX - A forest tax, usually in place of the property tax, levied annually as a percentage of a "productivity value" regardless of timber stocking. The taxable productivity value is based on a formula reflecting the productive potential of the land.
PROPERTY TAX - An annual tax levied as a percentage of property value, primarily on real estate and natural resources, although other assets may be taxed depending on localities. Also called an ad valorem tax.
PULPWOOD - Wood used in the manufacture of paper, fiberboard, or other wood fiber products. Pulpwood-sized trees are usually a minimum of 4 inches in diameter.
PURE STAND - A timber stand in which at least 75 percent of the trees in the main crown canopy are of a single species.

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RATE OF RETURN - Earnings on capital expressed as an annual percent of capital value (see “compound interest” and “internal rate or return”).
REAL - With respect to monetary values excluding inflation.
REFORESTATION - Reestablishing a forest by planting or seeding an area from which forest vegetation has been removed.
REGENERATION CUT - A cutting strategy in which old trees are removed while favorable environmental conditions are maintained for the establishment of a new stand of seedlings.
REGENERATION - Process by which trees are reestablished, for example, by planting, natural or artificial seeding, or sprouting.
REGRESSION ANALYSIS - A statistical technique for deriving a regression equation that will predict the value of some dependent variable as a function of one or more independent or "predictor" variables.
REGULATED FOREST - A forest with roughly equal areas of even-aged timber in each age class, so that equal harvests could continue in perpetuity every year (or every two years, five years, etc., depending on the spacing of age classes).
REINVESTMENT RATE - The rate of return at which you assume future income from a project could be reinvested.
RELEASE - Removal of overtopping trees to allow understory or overtopped trees to grow in response to increased light.
REPLACEMENT COST APPRAISAL - Finding market value of an asset by estimating its replacement cost minus any value loss due to depreciation.
REPRODUCTION - (a) The process by which young trees grow to become the older trees of the future forest. (b) The process of forest replacement or renewal through: (1) natural sprouting or seeding; (2) planting of seedlings; or (3) direct seeding.
RESIDUAL STAND - Trees left in a stand to grow until the next harvest. This term can refer to crop trees or cull trees.
RIPARIAN ZONE - An area adjoining a body of water that normally has soils and vegetation characteristic of floodplains or areas transitional to upland zones. These areas help protect the water by removing or buffering the effects of excessive nutrients, sediments, organic matter, pesticides, or pollutants.
RISK AVERSION - The case where an investor dislikes greater variation or risk in an expected cash flow. A risk-averse investor prefers a sure cash flow to a risky one of the same expected value.
RISK PREMIUM - The percentage points that a risk-averse investor adds to the risk-free discount rate to account for risk in future revenues.
RISK - Refers to the variation in an expected cash flow. The greater the variation, the greater the risk. In a general sense, risk refers to the possibility of loss. Under risk, probabilities of occurrences can be calculated Under uncertainty, probabilities are not known.
RISK FREE DISCOUNT RATE - The Interest rate for discounting sure cash flows with no risk. One estimate of a long-term risk-free rate is 3 percent
RISK FREE - Sure or certain; involving no risk.
RISK NEUTRAL - Describes an investor who is indifferent between a sure cash flow and a risky one of the same expected value.
RISK-ADJUSTED DISCOUNT RATE - The interest rate for discounting risky cash flows. For risk-averse investors, the risk-adjusted discount rate for revenues exceeds the risk-free rate.
ROOT COLLAR - The transition zone between stem and root at the ground line of a tree or seedling.
ROTATION - The number of years required to establish and grow trees to a specified size, product, or condition of maturity. A pine rotation may range from as short as 20 years for pulpwood to more than 60 years for sawtimber.
ROTATION AGE - Age, in years, at which mature timber is harvested.
ROUNDWOOD - Harvested wood in round or log form.

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SALE UNIT - A timber sales arrangement in which the buyer pays for forest products removed in units (measured in cords, MBF, or units of weight). Determination of units removed from the area is verified by mill tally, scale tickets, and buyer's or seller's tally.
SALE, LUMP SUM (BOUNDARY) - The sale of specified timber on a specified area. The volume may or may not be estimated and published. The buyer is responsible for determining correct volume. The seller guarantees ownership and boundaries.
SALVAGE CUT - The harvesting of dead or damaged trees, or of trees in danger of being killed by insects, disease, flooding, or other factors, in order to save their economic value.
SAPLING - A small tree, usually between 2 and 4 inches diameter at breast height.
SAWLOG or SAWTIMBER - A log or tree that is large enough (usually 10 to 12 inches in diameter) to be sawed into lumber. Minimum log length is typically 8 feet.
SAWTIMBER - Live trees capable of yielding sawlogs for lumber production.
SHIFTERS - Factors that shift demand or supply curves to the left or right. For example, greater per capita income of a group can shift that group's demand curve for a commodity to the right. Also see tax shifting.
SHORTAGE - In economics, a shortage exists for any commodity when the amount demanded exceeds the amount supplied at a given price.
SCALING - Determination of the gross and net volume of logs using the customary commercial volumetric units for the product involved.
SCARIFYING - With respect to soil, it is the removal of the top litter layer of an area (usually in strips) for site preparation. With respect to seed, it is the abrasion, or weakening, of the seed coat to encourage germination.
SECOND GROWTH - Those forests reestablished following the removal of virgin (i.e., previously unharvested) or old-growth stands.
SEDIMENTATION - The deposition or settling of soil particles suspended in water.
SEED TREE CUT - A harvesting method in which a few scattered trees are left in the area to provide seed for a new forest stand. Selection of seed trees should be based upon growth rate, form, seeding ability, wind firmness, and future marketability. This harvesting method produces an even-aged forest.
SEED YEAR - A year in which a given species produces a large seed crop over a sizable area. Some species of trees produce seeds irregularly.
SEEDLING - (a) A tree, usually less than 2 inches diameter at breast height, that has grown from a seed rather than from a sprout. (b) A nursery-grown tree that has not been transplanted in the nursery.
SELECTIVE CUTTING - The periodic removal of individual trees or groups of trees to improve or regenerate a stand.
SENSITIVITY ANALYSIS - Numerical analysis that tests how sensitive some outcome is to changes in selected variables. For example, you could test how a project's net present value varies as you change the discount rate.
SHADE-INTOLERANT TREES - Trees that cannot thrive in the shade of larger trees.
SHEARING - Slicing or cutting trees or stumps at the ground line. Shearing may be done at harvest or with a KG blade during site preparation.
SHELTERWOOD CUT - Removing trees from a harvest area in a series of two or more cuttings so that new seedlings can grow from the seed of older trees. This method produces an even-aged forest.
SHELTERWOOD CUTTING - Harvesting a mature stand in a series of partial cuts toward the end of the rotation. During this time, an even-aged stand reproduces in the shelter of the original stand. The final cut occurs when new trees are well established.
SILVICULTURAL SYSTEM - Process of tending, harvesting, and replacing forest trees, which results in the production of forests with distinct compositions. Systems are classified according to the method of harvest cutting used for stand reproduction.
SILVICULTURE - The art, science, and practice of establishing, tending, and reproducing forest stands of desired characteristics. It is based on knowledge of species characteristics and environmental requirements.
SITE DEMAND CURVE - A demand curve reflecting some group's willingness to pay any fee to a recreation site. For example, the Y axis could be $/visit and the X axis visits unit of time.
SITE INDEX - A relative measure of forest site quality based on the height (in feet) of the dominant trees at a specific age (usually 25 or 50 years, depending on rotation length). Site index information helps estimate future returns and land productivity for timber and wildlife.
SITE PREPARATION - Preparing an area of land for planting, direct seeding, or natural reproduction by burning, chemical vegetation control, or by mechanical operations such as disking, bedding, scarifying, windrowing, or raking.
SITE QUALITY - The inherent productive capacity of a specific location (site) in the forest affected by available growth factors (light, heat, water, nutrients, anchorage); often expressed as tree height at a given age.
SITE VALUE QA - A property tax levied on the market value of land only, excluding value of improvements.
SKIDDING - The act of moving trees from the site of felling to a leading area or landing. Tractors, horses, or specialized logging equipment can be used for skidding. Skidding methods vary in their impact on soils and the remaining stands.
SLASH - (a) Tree tops, branches, bark, or other residue left on the ground after logging or other forestry operations. (b) Tree debris left after a natural catastrophe.
SNAG - A standing dead tree with few branches, or the standing portion of a broken-off tree. Snags may provide feeding and/or nesting sites for wildlife.
SOCIAL FORESTRY - Planting and managing trees by or for communities for local consumption. Generally occurs in developing nations.
SOFTWOOD (CONIFER) - A tree belonging to the order Coniferales. Softwood trees are usually evergreen, bear cones, and have needles or scale-like leaves. They include pines, spruces, firs, and cedars.
SOIL EXPECTATION VALUE - See “willingness to pay for land.”
SOIL TEXTURE - The feel or composition of the soil (sand, silt, or clay) as determined by the size of the soil particles.
SOIL TYPE - Soils that are alike in all characteristics, including texture of the topsoil. Soil maps and information on site index, erodibility, and other limiting properties are available from your county Soil Conservation Service offices.
SPROUT - A tree growing from a cut stump or previously established root system.
STAND - An easily defined area of the forest that is relatively uniform in species composition or age and can be managed as a single unit.
STAND DENSITY - The quantity of trees per unit area, usually evaluated in terms of basal area, crown cover and stocking.
STANDARD DEVIATION - A measure of the spread in possible values of a variable population. The standard deviation is the square root of the variance.
STEWARDSHIP - The wise management and use of forest resources to ensure their health and productivity for the future with regard for generations to come.
STOCKING - A general term for the quantity of trees on an area, especially with reference to some management objective.
STRATIFICATION - Division of a forest, or any ecosystem, into separate layers of vegetation that provide distinct niches for wildlife. See “canopy,” “understory,” and “herbaceous vegetation.”
STREAMSIDE MANAGEMENT ZONE (SMZ) - An area adjacent to a stream in which vegetation is maintained or managed to protect water quality. The width depends on slope, but 50 feet is the normal minimum. Trees may be removed from SMZs as long as the stream bed is not disrupted and sufficient vegetation is left to protect water quality.
STRUCTURAL PANEL - A wood panel (mainly softwood plywood, waferboard, or oriented strand board) used in building construction.
STUMPAGE - The value or volume of a tree or group of trees as they stand uncut in the woods (on the stump).
STUMPAGE VALUE - The estimated or actual amount that buyers would pay for standing timber for immediate harvesting. This amount, expressed as a price per unit of volume, is called stumpage price, or timber liquidation value.
SUBSIDY - Favored treatment that a government gives to selected private enterprise. Examples are reduced taxes, direct financial or technical assistance, and guaranteed minimum output price levels.
SUCCESSION - The natural sequence of plant community replacement beginning with bare ground and resulting in a final, stable community in which a climax forest is reached. Foresters, wildlife biologists, and farmers constantly battle ecological succession to try to maintain a particular vegetative cover.
SUNK COSTS - Costs that have been already included.
SUSTAINED YIELD - Management of forestland to produce a relatively constant amount of wood products, revenue, or wildlife.

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TAX CREDIT - A direct reduction in taxes. For example, a $200 income tax credit will reduce someone's income taxes by $200.
TAX SHIFTING - A process whereby taxes may be shifted into (1) lower values of land or other assets, (2) higher output prices, (3) lower rates of return, or (4) a combination of these directions.
THINNING - A tree removal practice that reduces tree density and competition between trees in a stand. Thinning concentrates growth on fewer, high-quality trees, provides periodic income, and generally enhances tree vigor. Heavy thinning can benefit wildlife through the increased growth of ground vegetation. Types of thinning are thinning from above (removing mainly the tallest or "dominant" and "codominant" trees), thinning from below (removing trees from the understory), row thinnings (removing selected rows in plantations), and combinations of these types.
THINNING REGIME - A prescribed pattern of thinning over time. One example may be to cut 30 percent of the volume at ages 15 and 25, and clear-cut at age 35.
THREATENED SPECIES - A species likely to become endangered in the foreseeable future throughout all or a significant portion of its range unless protected. A threatened species exhibits declining or dangerously low populations, but still has enough members to maintain or increase numbers. See also “endangered species.”
TIMBER CRUISING - The process of estimating the quality, quantity, and characteristics of trees in a forest.
TIMBER - Refers to trees only, excluding land, for the purpose of producing forest products.
TIMBERLAND - Forestland producing, or capable of producing, crops of industrial wood (more than 20 cubic feet per acre per year), and not withdrawn from timber utilization. Formerly known as commercial forestland.
TIMBER STAND IMPROVEMENT (TSI) - Improving the quality of a forest stand by removing or deadening undesirable species to achieve desired stocking and species composition. TSI practices include applying herbicides, burning, girdling, or cutting.
TIMBER SUPPLY - Stumpage volumes that forest owners will harvest at different stumpage prices for a given region and year.
TIMBER VALUE GROWTH PERCENT - The annual percent change in liquidation value of standing timber, excluding land.
TIMBERLAND - Forestland producing or capable of producing crops of industrial wood (more than 20 cubic feet per acre per year), and not withdrawn from timber utilization. Formerly known as commercial forestland.
TOLERANT SPECIES - A species of tree that has the ability to grow in the shade of other trees and in competition with them.
TOTAL REVENUE - For a firm, total outputs times prices of outputs, before subtracting any costs; same as gross revenue.
TRADE-OFF - In a system of interrelated inputs and outputs, a trade-off refers to the procedure whereby changing one output can change other outputs. Often, but not always, as one increases one output, another decreases. Hence, you trade one for the other.
TREE FARM - A privately owned forest or woodland in which timber crop production is a major management goal. Many tree farms are officially recognized by the American Tree Farm System, an organization sponsored by the American Forestry Council.
TREE SPACING - The distance between trees, which is most often regulated at the time of planting or during a harvest or thinning operation. Spacing, like stand density, affects understory vegetation, seed production, growth rate, and wildlife habitat.
TREE VOLUME - The amount of wood in a tree. This may be expressed in board feet or cubic feet. It may be gross volume or net volume (gross less defects).
TREND LINE - In a plot of y values over an x axis, a smoothed line drawn through the values generally done with regression analysis. For example, a trend line can be drawn through a series of fluctuating prices over time, in which case you'd have trend-line prices and actual prices.

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UNCERTAINTY - The case where an outcome is not known for sure, and a probability can be attached to the outcome.
UNDERSTOCKED - A stand of trees so widely spaced that even with full growth potential realized, crown closure will not occur.
UNDERSTORY - (a) The layer formed by the crowns of smaller trees in a forest. (b) The trees beneath the forest canopy.
UNEVEN-AGED - Refers to stands with trees of many ages. With uneven-aged management, cutting is only partial, and regeneration occurs beneath existing trees. Also called the “election system."
UNEVEN-AGED STAND - A group of trees of various ages and sizes growing together on a site.
UNMERCHANTABLE WOOD - Material that is unsuitable for conversion to industrial wood products due to size, form, or quality. May include rough, rotten, and dead trees; the tops, limbs, and cull sections from harvested trees; or small and noncommercial trees.
UNMODIFIED PROPERTY TAX - The current property tax rate applied to full market value of the property annually.

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VALUATION FACTOR - A timber tract's net present value expressed as a proportion of its current stumpage value.
VALUATION - The procedure for finding an individual investor's value of an asset; could be either asking price or bid price.
VARIABLE INCOME INVESTMENT - An investment where unit prices of the output and the asset tend to rise at least as fast as the inflation rate (as opposed to a fixed-income investment).
VARIANCE - A measure of the spread in possible values of a variable in a population. The greater the spread, the higher the variance. The variance of a population is the sum of squared deviations from the mean, and each squared deviation is weighted by its probability of occurrence. The variance in any variable value is also the square of the standard deviation.
VENEER - Wood that has been peeled, sawed, or sliced into thin sheets.
VIRGIN FOREST - A forest that has never been harvested or altered by humans.
VOLUME GROWTH PERCENT - The annual percentage change in timber volume for a tree or a stand.
VOLUME TABLE - A table showing the estimated average tree or stand volume based on given tree measurements, usually diameter and height.

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WAFERBOARD - A board made of randomly oriented wood chips glued together under high temperature and pressure.
WATERSHED - A region or area defined by patterns of stream drainage. A watershed includes all the land from which a particular stream or river is supplied.
WEIGHTED AVERAGE COST OR CAPITAL (WACC) - A firm's average cost of obtaining capital from debt and sale of stock, expressed as an average interest rate weighted by the firm's percentages of debt and equity. For example, suppose a firm's assets are 40 percent debt and 60 percent equity, and it pays 10 percent interest on debt and pays a 6 percent dividend on stock. Its WACC is 0.40(10) + 0.6(6) = 7.6 percent
WETLANDS - Areas which are either transitional between land and water (where the water table is at or near the land surface) or areas of land which are covered by shallow water (such as marshes, swamps, bogs, and fens). Wetlands fulfill an essential role in our landscapes by maintaining water quality, stabilizing shores and stream banks, controlling floods and erosion, and providing critical habitat to many plant and animal species.
WILDFIRE - An unplanned or unwanted natural or human-caused fire, or a prescribed fire that escapes its bounds.
WILDLIFE HABITAT - The native environment of an animal. Habitats ideally provide all the elements needed for life and growth: food, water, cover and space.
WILLINGNESS TO PAY FOR LAND (WPL) - Starting with bare land, WPL is the net present value of all future expected cash flows discounted at some minimum acceptable rate of return (MAR). Thus, WPL is the maximum a buyer can pay for land and still earn the MAR. The WPL is usually expressed in dollars per unit area, for example, $/acre (In forestry, WPL is also known as land expectation value or soil expectation value.
WINDTHROW - Trees uprooted by excessive wind. Shallow-rooted trees are almost always affected.

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YIELD - Amount of product output recovered from a quantity of raw material input in forest product industries. Estimate in forest mensuration of the amount of wood that may be harvested from a particular type of forest stand by species, site, stocking, and management regime at various ages.
YIELD TAX - A tax levied as a percentage of harvested stumpage value.
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