Valuing timber, making financial assets: the role of US generally accepted accounting principles (GAAP) in the financialization of nature

Through large land sales and corporate restructuring during the 1990s and 2000s, institutional investors have come to be the largest owners of private timberland in nearly all rural timber-dependent communities in the United States. As a result, forests, like many other types of landed property, are increasingly subject to “financialized” ( Gunnoe, 2014 ) forms of management and control. While scholars generally acknowledge the importance of tax and pension law reform for making land investable ( Mendell, 2016 ), I demonstrate how accounting norms play a critical—yet understudied—role as well. This paper focuses on US Generally Accepted Accounting Principles (GAAP), which provides a unified set of standards for US-based companies and aims to ensure that assets and debts are being valued prudently and consistently. Drawing on fieldwork conducted in Oregon and Georgia, as well as archival research and participant observation at timberland investment events, I show how the forest products industry increasingly became an appealing target for financialized landownership because of accounting norms that artificially depressed timberland values on corporate balance sheets. Given the fundamentally conservative nature of GAAP, land is generally valued based on its book (or historic) value, rather than fair market value, creating major discrepancies over time that could only be unlocked through land sales or corporate restructuring. I conclude by raising the fact that understanding historical precedents for the financialization of land demands that scholars engage much more closely with the norms of accounting and other standards of corporate governance.