The Effects of Development Constraints on Forest Management at the Urban‐Forest Interface

Abstract

AbstractThis article develops a model of a forest owner operating in a small, open‐city environment where the rent for developed land is increasing concave in nearby preserved open space and is rising over time, reflecting an upward trend in households’ income. Within this framework we examine how changes in nearby preserved open space and alternative development constraints affect an individual private landowner's decisions regarding both regeneration harvests and conversion dates. We also examine how such policies affect development density once conversion from forestry to residential use occurs. We show that when residential rents change over time, the nature of the timber problem at the urban‐forest interface changes because it forces us to allow for the possibility of changes in land use from timber to residential use. As a result, the traditional Faustmann setup is not suitable to study forest management decisions at this interface. We also find that in the presence of rising income, increases in permanently preserved open space hasten regeneration and conversion cuts of a neighboring parcel currently under forest use and leads to lower density development once conversion takes place compared to the case where income is constant. We also find that both a binding development moratorium and a binding minimum‐lot‐size policy can postpone regeneration and conversion cut dates and thus help to protect open space, even if only temporarily. However, the policies do not have the same effects on development density of converted forestland. While the former leads to high‐density development, the latter encourages low‐density development.