Financial Assessment of Future Stand Conditions Required to Recover the Opportunity Costs of a North Louisiana Streamside Management Zone

Abstract

AbstractUnderstanding the costs that residual habitat spaces carry into future rotations can provide managers more complete information when financially assessing timber management options that often extend for many decades. This case study assessed a streamside management zone's (SMZ) opportunity costs for a timber harvest site in north Louisiana. Timber removal occurred in summer 2018 by clearcut. A wooded buffer extending 50 feet on each side of a streambank and totaling 7.52 acres was retained; partial harvesting of pine timber was allowed. A timber inventory revealed that 99.6 tons per acre of standing hardwoods resided within the SMZ. Excluding noncommercial species placed its current present value (opportunity cost) at $1,803. Two future active management scenarios, “controlled” and “intensive,” were modeled over the next rotation at a 4 percent real discount rate, where price changes occurred at 0, 1, 2, 3, and 4 percent annually. Both management strategies consistently produced positive land expectation values (LEV) when SMZ opportunity costs were not included in the assessment. However, inclusion of SMZ protection under “controlled” management required timber price changes of 4 percent annually, while the “intensive” management option required timber price changes of at least 3 percent annually to return positive LEVs.