Forest Valuation of a Guatemala Farm

The Canadian International Development Agency (CIDA) was sponsoring the La Perla pilot project, which was part of a land redistribution strategy within Guatemala. David Barker was engaged to perform a valuation on the forests found on the 2,000 ha La Perla farm in the central highlands.

The forests on the farm were assumed to have a monetary value, however this value was not just in lumber from the trees. Other values were water, wildlife and soil protection. A methodology to value these non-financial assets was needed. This valuation was conducted to give a fair basis for the sale of half interest in the property to a local village co-operative living on the farm.

Surrogate markets and products were created, based on input from the owner of the farm and from the village co-operative. Non-tree products were valued using a comparative labour use approach. The valuation strategy was designed and discussed in advance of use by both parties.

The timber value was estimated based on a field cruise to evaluate the commercial tree species. Other non-tree projected areas and quantities (numbers and species of wild animals, annual water use) were determined from local interviews.

The farm was very isolated and did not have a road. The only access was either by mule trail or by aircraft. This made the determination of an appropriate timber market difficult. The local use market was used in the valuation.

The results showed a value that both parties felt was fair and useful for the transaction. A final report was issued which formed the basis for further negotiations.

The project was unique in that it provided information to two parties involved in the first modern land redistribution strategy in Latin America for many decades. The idea of redistributing land based on corporate shared ownership of a large economic parcel was the concept behind the La Perla project. The valuation provided a basis for negotiations from a fair position of common knowledge.

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