130 VALUATION OF FOIJEST SOIL. 



3. Merits of the Method of the Expectation Value. 

 The expectation value indicates the true economic value of 

 the soil for forest culture, because it is based upon the produc- 

 tive power of the land when used for the rearing of forest 

 crops. It gives the value, which corresponds to the net returns 

 calculated with the adopted rate of interest. On the other 

 hand, the method gives correct results only under the following 

 conditions : — 



(«.) That all items of expected incomes and expenses are 

 accurately known. In order to comply with this con- 

 dition, accurate and suitable yield tables are required. 

 Moreover, future prices of produce and expenses must 

 be estimated on the basis of those at present prevailing, 

 a matter which introduces much uncertainty into the 

 calculation. 

 (h.) That the calculation is made with a suitable rate of 

 interest. It has been shown above, that this is a 

 matter beset by considerable difficulty, 

 (c.) That the rotation, corresponding to the maximum 

 expectation value of the soil, can be adopted and 

 retained without thereby lowering the price of forest 

 produce ; in other words, that the market can readily 

 absorb any extra cuttings, which may be necessary, in 

 order to introduce a rotation lower than that hitherto 

 followed. 

 Generally speaking, the expectation value of forest soil is not 

 a fixed quantity; it changes, not only in the ways indicated 

 above, but also with alterations in the price of forest i^roduce, 

 consequent on changes in the areas set aside for the production 

 of forest crops. 



Section II. — The Cost Value of Forest Soil. 



By the cost value of the soil is understood the sum of all 

 expenses incurred in acquiring the land and rendering it fit 

 for forest culture. These expenses consist of : — 



(1.) The price paid for the land. 



