Profit efficiency in the provision of ecosystem services in the Cross Timbers forests

Abstract

We focused on modeling the profitability of the Cross Timbers (CT) forests with regards to the provision of ecosystem services, including timber production, carbon sequestration, and water yield. The Cross Timbers region spans from southern Kansas to central Oklahoma into Texas, encompassing marginally productive timberlands. We utilized a translog stochastic profit frontier approach to analyze forest plot data collected from the Forest Inventory Analysis program between 2008 and 2019. Our results indicated that, on average, the CT forests yield around 85% of the maximum profit. Only 12% of the forest plots generated positive revenues, and the average profit across all forest plots was -$484.51 ha−1. This means that even with a 15% reduction in profit losses, the majority of the forest plots in the CT region would still not be economically viable. Forest age, ownership, forest species, and site productivity were statistically significant impacts on profit efficiency. At the margin, we found that profit inefficiency increased under private ownership and with higher levels of site productivity. Furthermore, as forests age, profit efficiency was also reduced. These findings highlight the complexity and variability of forest management systems and underscore the need for further research to fully understand the factors influencing efficiency in different contexts.