Contents lists available at ScienceDirect Forest Policy and Economics journal homepage: www.elsevier.com/locate/forpol Forest plantations in Southwestern Europe: A comparative trend analysis on investment returns, markets and policies Alex Pra a,b, ⁎, Mauro Masiero a , Susana Barreiro c,d , Margarida Tomé c , Inazio Martinez De Arano e , Gabriel Orradre f , Aitor Onaindia g , Lucio Brotto b , Davide Pettenella a a TESAF Department, University of Padova, Viale dell'Università, 16, 35020 Legnaro, PD, Italy b ETIFOR, Padova University spin-off, c/o TESAF Department, University of Padova, Viale dell'Università, 16, 35020 Legnaro, PD, Italy c Forest Research Centre, School of Agriculture, University of Lisbon, Tapada da Ajuda, 1349-017 Lisbon, Portugal d Forest Ecology and Forest Management Group, Wageningen University and Research, Droevendaalsesteeg 3a, 6708PB Wageningen, The Netherlands e Mediterranean Facility, European Forest Institute, St. Antoni M. Claret, 167, 08025 Barcelona, Spain f BOSQALIA, Calle Tudela, 12, 31003 Pamplona, Navarra, Spain g BASOA Fundation, Laskurain Goikoa – Pol. San Esteban, 29, 20400, Tolosa, Gipuzkoa, Spain ARTICLEINFO Keywords: Forest plantations Timber production Investment returns Europe Financial analysis Market trends ABSTRACT This paper represents the first analysis of forest plantation investments on a comparative perspective in the context of Southwestern Europe. We estimated and compared potential investment returns at aggregate level for some of the most important productive forest plantation species in the region, including hybrid poplar in northern Italy, in Castile and León (Spain) and in Navarre (Spain), eucalyptus and maritime pine in Portugal, and radiata pine in the Basque Country (Spain). We carried out a financial analysis before-taxes, using typical capital budgeting indicators. Indicators were calculated according to a baseline scenario as well as in alternative sce- narios, analyzing how the main policy and market factors influence returns. We also carried out a trend analysis to provide means for comparing the evolution of expected and actual returns in recent years. Overall, our results indicate that in Southwestern Europe there are some opportunities for reasonably attractive investment returns (IRR > 5%) from forest plantations mainly for current landowners and forest products industry, and only in some cases potentially interesting also for financial investors. Nevertheless, there are significant differences among species and contexts as well as structural limitations in the region – i.e. related to timber market, biotic and abiotic risks and forest holdings structure – that new investors would have to take into consideration. More in specific, hybrid poplar plantations in Italy and Spain are estimated to provide on average the potentially highest returns, but the large range of variability and the high land and opportunity costs are unlikely to make them an attractive investment for non-landowners. Eucalyptus plantations in Portugal are estimated to be the only investment where non-landowners could expect to get relatively interesting and stable returns, although a recent law reform in the country could limit new investments. Maritime pine and radiata pine plantations in Portugal and Spain present lower returns, suffering the situation of depressed stumpage prices after the 2008 economic crisis, which strongly affected the sawmilling sector. 1. Introduction At global level there is a growing interest towards planted forests as investment opportunities for profit generation, for building strategic assets, but also to address sustainable development challenges through the production of essential goods and services. Based on FAO (2012) definition, planted forests comprise both plantations established for producing industrial roundwood, and those established for protection purposes. Planted forests include the planted component of semi- natural forests as well, which represent large areas in the northern hemisphere. The area covered by planted forests amounts to 278 mil- lion hectares, corresponding to the 6.9% of the world's forest cover, and have been growing at +4.9 million hectares per year between 1990 and 2015(FAO, 2015; Payn et al., 2015).Basedonthe FAO (2005) data, Del Lungo et al. (2006) estimated that 76% of planted forests are estab- lished for productive purposes, playing an important role in supplying the growing demand for wood and fibres in the northern hemisphere as well as in the sub-tropics and tropics (Jonsson and Whiteman, 2008). https://doi.org/10.1016/j.forpol.2019.102000 Received 30 March 2019; Received in revised form 14 July 2019; Accepted 14 August 2019 ⁎ Corresponding author at: TESAF Department, University of Padova, Viale dell'Università, 16, 35020 Legnaro, PD, Italy. E-mail address: alex.pra@etifor.com (A. Pra). Forest Policy and Economics 109 (2019) 102000 1389-9341/ © 2019 Elsevier B.V. All rights reserved. T