Keeping Forests in Forests Considering all the options

Richard L. Porterfield

SE SAF Annual MeetingSandestin, FL September 23-25, 2007

The Dawg Factor

• Expected net return from holding forest land.

The Gator Factor

• Expected net returns from alternative uses of forest land or from the cash produced by the sale of the forest land.

The Tiger factor

• The net “psychic” value associated with forest land ownership.

Keeping forests in forests

1. Expected net returns from forest land. (Dawg)

2. Expected net returns from alternative non-forest use of land/cash equivalent. (Gator)

3. Net “psychic” value from forest land ownership.

(Tiger)

To keep forests in forests

Increase the Dawg factor.

Decrease the Gator factor.

Increase Tiger factor.

Forest OwnershipMost Significant Change

• Traditional forest industry has sold nearly all its forest land or converted to REIT structure.– Declining value of stumpage.– Abundant non-company timber.– High return uses for capital elsewhere.– Need to pay down debt.– Inability to monetize the forest land asset.

So,

• Forest industry ownership has decreased significantly.

• TIMO forest land ownership has increased significantly.

• Non-Industrial (non-business) private forest land ownership has increased significantly.

• Public forest land ownership has increased slightly.

New non-business private forest landowners:

• Are younger.• Are better educated.• Own, on average, somewhat smaller forest

tracts.• Value aesthetics and legacy of forest

landownership much more than previous non-business private forest landowners.

• Are more likely to have a management plan.• Are still harvesting timber.

Conservation easements:

Increase the Dawg factor, decrease the Gator factor and may increase the Tiger factor for some forest landowners.

But may be viewed as reducing future options and/or represent loss of control to other forest landowners.

Land use planning, sometimes in the form of zoning, typically reduces the Gator factor.

• Can be used to identify forest land for public purchase.

• In the form of zoning, viewed as “for the greater public good”.

• Can raise the “take” issue.

There is a long history of forestry incentive programs and they typically increase the Dawg factor.

• CRP very successful example.

• Are one way to pay for environmental service values/social benefits from forest land.

• May reduce operating costs or increase returns.

• Often involve tax reductions.

Possible New Incentive Program and New Product Market

• Direct payment for non-market forest resources (water, recreation, habitat, aesthetics, etc.) increases the Dawg factor.

• Development of new products/markets (e.g. carbon sequestration credits) increases the Dawg factor.

But the Tiger factor may be most important to many, if not most, new non-business forest

landowners.

• An opportunity for foresters?

Take advantage of all the methods and means of increasing the probability that forests stay in forests offered at this meeting.

For millions of forest land acres owned by TIMOs, REITS, forest industry and many non-business private forest landowners a traditional forest management plan focused on timber production will be needed.

But for additional millions of forest land acres owned by an emerging majority non-business private forest landowner a forest resources management plan based primarily on non-timber resource goals may well be best.

Now more than ever, keeping forests in forests will require foresters to:

Have comprehensive knowledge of all forest resources and how to manage to favor each.

Have excellent communication skills not only to explain resource tradeoffs but to better understand forest landowner desires/goals for ownership.

Have the ability to show value (both market and non-market) from forest land ownership.

Likely monitor fewer logging operations and make more dreams come true.

Keeping Forests in Forests

The best result of all these ownership changes is that only a professionally trained forester can deliver the dreams envisioned by so many new forest landowners.

The opportunities for foresters may never have been greater than they are today.

Good luck to you all.