Optimizing continuous cover and rotation forestry in mixed-species boreal forests

We study the management of mixed-species boreal forests and tree species composition in a stand-level economic–ecological, size-structured model. The model includes ecological tree species interaction, a detailed harvesting cost module, optimal harvest timing, and optimization between continuous cover and rotation forestry. Optimization is solved by applying a trilevel structure in which the optimal rotation is the highest-level problem, harvest timing is the mid-level problem, and thinning intensity is the lowest-level problem. Given realistic regeneration costs and a 3% interest rate, continuous cover forestry is optimal and may include up to a 40% fraction of broadleaves. A low interest rate and low regeneration cost together with the presence of light-demanding Scots pine (Pinus sylvestris L.) favours rotation forestry. Eurasian aspen (Populus tremula L.) decreases the bare-land value but is optimal to fell without utilization only when it has no commercial value. Overyielding in terms of cubic metre output does not reveal the economically preferable species combination. Managing single-species stands by removing other species that are naturally regenerated decreases the economic outcome by 35%–44%. Felling noncommercial trees without utilization shows that the economically optimal solution avoids high-grading. Maintaining the number of large-diameter trees beyond the level that maximizes profitability implies only minor losses. Omitting thinning decreases the bare-land value up to 73%.

Effects of Catastrophic Insect Outbreaks on the Harvesting Solutions of Dahurian Larch Plantations

Optimal harvesting under pest outbreak risk was studied on a set of even-aged Dahurian larch (Larix gmelinii) stands in northeastern Inner Mongolia, China. The effects of catastrophic pest outbreaks caused by the Siberian moth (Dendrolimus sibiricus) on the economic harvesting plan are compared through both deterministic and stochastic cases. Stand simulation is based on an individual-tree growth system. A scenario approach is applied when simulating the effects of catastrophic pest outbreaks. Insect damage is assumed to be a Poisson process with an average rate of 0.1 per year. One hundred scenarios of insect damage are created using the Poisson process to simulate the distribution of bare land value of each of the optimal regimes. Numerical results show that the optimal rotation is shortened with an increasing probability of a catastrophe. The average bare land values in the stochastic case are approximately 14.8% to 22.9% lower. Numbers of thinnings are decreased for most plots when seeking a highest bare land value, compared to the deterministic optima. If given a constant thinning rate, increasing risk-taking shortens the optimum rotation, as the model set used.

Reforestation Tax Incentives Under the American Jobs Creation Act of 2004

The American Jobs Creation Act of 2004 made significant changes in the reforestation tax incentives available to private forest owners. Owners can now deduct outright reforestation costs up to $10,000 per year for each qualifying timber property and amortize any additional amount over 8 tax years. To assess the financial benefit the new incentives provide to forest owners, the authors developed spreadsheets that calculate after-tax Bare Land Value (BLV) for a representative southern pine management plan under three tax situations: no reforestation incentives, the incentives under previous law, and the incentives under the current law. They found that compared to no tax incentive, the current law chiefly benefits owners with high non-timber income, increasing BLV by an amount equivalent to a reforestation cost share of roughly 25 to 30% as opposed to 5 to 15% for owners with low or median income. Compared to previous law, the current law chiefly benefits owners of large forest holdings, increasing BLV by an amount equivalent to a reforestation cost share of roughly 10 to 20%. For owners of small forest holdings, however, BLV decreased by an amount equivalent to a 5 to 10% increase in reforestation costs. These findings are significant as Congress likely intended that the new incentives continue to benefit primarly “small woodland owners” with modest incomes and forest holdings.

Variable Bedding, Planting, Harvesting and Transportation Costs Impact Optimal Economic Management Regimes

Stand management decisions should be based on economic considerations for profit-oriented organizations and individuals. Maximization of bare land value is an appropriate criterion to use for such decisions. It is argued that planting, bedding, harvesting, and transportation costs vary by stand density and should therefore be incorporated into the decision-making process as variable costs on industrial lands. It is shown that not allowing for such variable costs leads to less than optimal decisions concerning planting density and rotation age. South. J. Appl. For. 15(1):38-43.

An analysis of forest property tax burdens under a land and reforestation tax system: a western Washington case study

A per acre property tax model is proposed for taxing plantation-grown timber in western Washington State. The taxable assets consist of the bare land value plus the reforestation investment necessary to establish the timber stand. Under this system, an annual ad valorem property tax, or a harvest yield tax that substitutes for all, or part, of the annual ad valorem tax is levied on the full value of the tax base. Thus, unlike the traditional case where an annual property tax is levied on modified bare land and timber values to reduce the deferred yield bias associated with long-lived timber crops, the tax base under the proposed system requires no comparable modification. A variety of input scenarios are used to compare the numerical consequences of applying the proposed tax system with those of a land only, a land plus timber, and a harvest yield tax system; all levied at full value. Further comparisons with Washington's existing forest tax system, which is composed of an annual ad valorem property tax on a legislatively mandated statutory bare land value and a 5% harvest yield tax imposed in lieu of an annual ad valorem property tax on maturing timber, demonstrates how highly modified Washington's current system has become to accommodate forest owners and temper the deferred yield bias the property tax theoretically fosters.

Economic Aspects of the Forest Regeneration Delay Decision

Regeneration lag, the cost resulting from a delay in reestablishment of a forest stand, represents an important opportunity cost̶the cost of the foregone opportunity to grow timber over the period of the delay. The land expectation value (Le) criterion is used to evaluate the costs associated with one-time-only and perpetual lags. Significant decreases in wealth, or bare land value, were found using a simplified example with real-world cost and price data. Changes in required land bases resulting from regeneration delays were also reviewed. The additional land requirements resulting from scheduled delays in regeneration can be costly.