The economic impact of green-up constraints in the southeastern United States

Abstract

Green-up, or adjacency, requirements are a common constraint in forestry. The American Forest and Paper Association has developed a Sustainable Forestry Initiative that includes a green-up constraint which limits the average clearcut opening to 48 ha for 3 years or until the average height of the regenerated trees is >1.4 m. In addition to constraining the average clearcut size, many forestry companies in the southeastern USA voluntarily limit their maximum clearcut size to between 60 and 90 ha. In this research, a heuristic algorithm was used to develop tactical forest plans that consider both the maximum and average clearcut sizes. Economic effects of the green-up constraints were estimated for situations where intensive management can reduce the length of the green-up time from 3 to 2 years on a 21 600 ha ownership in Georgia (USA). For a 60-ha maximum opening size, this reduction in green-up time from 3 to 2 years resulted in an additional US$ 66 600 in present net worth (PNW) over a 10-year analysis period. This corresponds to a US$ 10 per harvested ha, or a 0.8% increase in PNW. The benefit gained by reducing the length of the green-up period is less with a 90-ha maximum clearcut size, where PNW increases by US$ 45 600, or US$ 6.70 per harvested ha, a 0.5% increase. While the total volume per period was near the volume goal produced by a strategic forest plan, the spatial restrictions and the desire to maximize net present value resulted in lower volume of timber products (sawlogs and chip-and-saw logs) from older forest stands. A sensitivity analysis showed that an increase in price or yield further reduced the economic incentive for the reduction of the length of the green-up constraint. As price or volume decreased below expectations, however, the incentive to use intensive forest management practices to reduce the length of the green-up constraint became more attractive, since the differences between a 2-year and 3-year green-up time requirement may be large enough to pay for more intensive management practices.