What risks are involved with investing in timberland?
• Economic risks include changes in pricing, supply, demand, regulations, and liquidity. Physical risks include natural disasters, pest infestation, disease, and wind, which average 0.8% on private timberlands on an annual basis.1 Diversification is the greatest means of mitigating these risks, because it minimizes the impact of any one risk on the full timberland portfolio. Also, exposure to certain risks can be reduced through forest management techniques such as silvicultural practices and harvest timing. In fact, privately managed lands are far less likely to experience forest fires than federally managed public areas because of the many preventative measures professional forest managers use to keep timberland safe and productive long-term. Moreover, history has shown that, even after a forest fire, the majority of the wood is often salvageable. 2 While all timberland investments involve these risks, there are additional risks that are unique to Wells Timberland. Wells Timberland i
