Land Expectation Value Research Articles

Will intensity of forest regeneration measures improve volume production and economy?

ABSTRACT The prevailing regeneration methods in Scandinavian countries are artificial regeneration methods including measures such as site preparation and planting. These measures are considered to be a part of a more intensive forest management and require an initial investment. The use of artificial regeneration measures can, however, increase the growth of a forest stand. In this study, the purpose was to investigate if such an investment is profitable by comparing three different intensity levels (low, medium and high) applied during the regeneration phase, with aspect on both economics (LEV, land expectation value) and growth (MAI, mean annual increment) after a full rotation. The forest stands used in this study were regenerated between 1984 and 1988 and the future growth of the stands was simulated using Heureka StandWise. It was clear that naturally regenerated (low intensity) stands resulted in better economics than stands actively regenerated (medium and high intensity). However, actively regenerated stands resulted in both higher volume production and growth, and the uncertainty of regeneration success was reduced using artificial regeneration measures. These factors are important when considering both the ongoing mitigation of carbon dioxide in the atmosphere and future access to raw material.

The Value of Hybrid Aspen Coppice Investment under Different Discount Rate, Price and Management Scenarios: A Case Study of Estonia

Hybrid aspen is one of the most promising tree species for short-rotation forestry in Northern Europe. After the clearcutting of hybrid aspen plantation, the next generation arises from root and stump sprouts. The economic feasibility of different management strategies of hybrid aspen coppice stands has not yet been comprehensively evaluated in Northern Europe. We compared the land expectation values (LEVs) of hybrid aspen coppice stands managed according to four scenarios: three early thinning methods (corridor, cross-corridor and single-tree) followed by conventional management and intensive bioenergy production (repeated harvests in 5-year rotations) over a 25-year period in hemiboreal Estonia. We considered the historic price volatility of aspen wood assortments under various discount rates (1–20%). We found that the 25-year rotation with different early thinning methods was more profitable than short bioenergy cycles in the case of low discount rates (<5%). The LEV of short coppice cycles for only bioenergy production became more profitable in comparison with those by thinning methods, when higher discount rates (>10%) were applied. Hybrid aspen coppice stands can be managed profitably, but more risks are taken when the management strategy focuses only on bioenergy production.

Assessing the land expectation value of even-aged vs coppice-with-standards stand management and long-term effects of whole-tree harvesting on forest productivity and profitability

Key message Whole-tree harvesting makes forests more profitable than conventional harvest as long as the impact on tree growth remains under 2.3% for even-aged oak ( Quercus petraea (Matt.) Liebl.) and 3.4% for sweet chestnut ( Castanea sativa Mill.) coppice with oak standards. Coppice-with-standards may have potential to be more profitable than even-aged oak in case of 50% rise in fuelwood prices with 10% decrease in timber prices. ContextMaking the shift to renewable energy sources requires increasing biomass removal from the forest in a sustainable way. Today, the most common practice for forest biomass extraction is whole-tree harvesting rather than conventional harvest in which only stems are harvested or sometimes branches larger than 7 cm in diameter. However, intensive biomass harvesting can certainly increase economic profitability but it could affect long-term forest productivity because more nutrients are exported from sites.AimsWe explored the land expectation value of even-aged oak (Quercus petraea (Matt.) Liebl.) and sweet chestnut (Castanea sativa Mill.) coppice with oak standards under different discount rates and wood prices scenarios, tree mortality triggered by climate variation as well as the effects of a decrease in forest productivity due to whole-tree harvesting on the land expectation value (LEV).MethodsWe modeled two plausible harvesting scenarios for both stands and assessed their LEV. We first analyzed the sensitivity of the valuation results to discount rate, wood prices changes, and increased tree mortality rates. Second, we compared conventional harvest to whole-tree harvesting in which removing the fine wood implies a decrease in tree growth over the long term (between 1 and 10%).ResultsIn the current economic situation, the LEV of even-aged oak is higher than coppice-with-standards but this situation could be reversed in case of rising energy prices and lower timber prices in the future. The variation of the discount rate has a significant impact on the LEV but 3% seems to be adequate for European forests. A gradual increase in annual tree mortality rate of 0.6 and 0.9% along even-aged and CWS rotation, respectively, reduced the LEV by half, while increased mortality with constant rates along the rotations had more negative effect on the LEV than gradual increases: 0.4–0.5% increases in mortality rates reduced both LEV’s by half.Whole-tree harvesting is able to improve the LEV for both stands by 36 to 64% compared to conventional harvest; but this improvement of LEV only lasts as long as the impact on tree growth remains under 2.3 and 3.4%, respectively, for even-aged oak stand and coppice-with-standards.ConclusionWhole-tree harvesting system increases forest profitability as long as the sustainability guidelines for biomass harvesting are respected. With the increased demand for fuelwood, the coppice-with-standards regime may become financially attractive once again and fulfill a multitude of forest owner objectives with a wide range of additional options.

Economics of Southern Pines With and Without Payments for Environmental Amenities in the US South

During the early 1900s, nearly 37 million hectares of land in the Southern United States were under longleaf pine (Pinus palustris) relative to the current area of 1.6 million hectares. This study compares the economics of southern pines (longleaf, loblolly (Pinus taeda), and slash (Pinus elliottii)) to facilitate the decision making of family forest landowners and design suitable financial incentives for increasing the area under longleaf pine in the region. We simulated six growth and yield scenarios for selected southern pines over three site indices in the Lower Coastal Plain of South Georgia. We estimated land expectation values (LEVs) of each scenario for the three cases, i.e., payment for forest products, payment for forest products and net carbon storage, and payment for forest products, net carbon storage, and net water yield. Our findings show that pine straw income significantly increases the LEV of longleaf pine. The financial risk of growing longleaf pine is lower than that of other southern pines. Existing financial support through various governmental incentives or additional monetary support for ecosystem services provided by longleaf pine ecosystems is needed to increase the area under longleaf pine in the Southern United States, in general, and in South Georgia, in particular. However, a need exists to reevaluate the conservation values provided by longleaf plantations considering expected shorter rotation ages due to the income provided by pine straw markets in Southern United States.

Modelling effects of regeneration method on the growth and profitability of Scots pine stands

ABSTRACT Despite numerous studies there are still uncertainties regarding regeneration strategies that are optimal for productivity and profitability. Thus the aim of this study was to establish effects of three regeneration methods (planting, direct seeding and natural regeneration) on the production and profitability of Scots pine (Pinus sylvestris L.) stands in southern Sweden. Long-term stand development was simulated, with the StandWise application of the Heureka decision support system, starting from short-term regeneration outcomes observed in several field experiments at sites with relatively high productivity (H100 site indices, i.e. heights of dominant pines at 100 years: 27–30 m). Financial and production results of each approach were assessed in terms of Land Expectation Value (LEV) and Mean Annual Increment (MAI), respectively, across a whole rotation. Planting on clear-cuts with 1600–3265 seedlings per hectare resulted in the highest profitability and production, whereas high-density planting (10,000 seedlings per hectare) resulted in negative LEV. However, sensitivity analysis showed that the results depended on the interest rate. Retention of seed-trees incurred additional costs relative to single-operation clear felling. In contrast, retention of shelter-trees had good financial results (at 0% and 2.5% interest rate), although they depended on the site index and average tree size.

Financial viability of a fully simulated transformation from even-aged to uneven-aged stand structure in forests of different ages

Abstract For the first time, an economic analysis of a fully simulated forest transformation process from even-aged to uneven-aged stand structure using natural regeneration was performed using an individual tree growth simulator. A comparison to a ‘business as usual’ management approach (i.e. age-class scenario) was also made. Norway spruce (Picea abies (L.) Karst.)-dominated forests of different ages were selected for the simulation: forest at thinning stage (52 years; hereafter, ‘younger stand’) and a mature stand (95 years) to explore different starting points for the transformation. The harvested and remaining stand volume showed only little fluctuation over the course of the simulation period in the case of the transformation (uneven-aged) scenario. The age-class scenario, on the other hand, showed peaks and drops in the timber volume. The land expectation values at the end of transformation were higher (i = 1 or 2 per cent) or equal (i = 3 per cent) to those of the age-class scenario for the younger stand. The transformation of younger forests appears to be economically interesting (under interest rates above 2 per cent) as the early revenues of more intensive thinnings achieve an equilibrium growing stock well below the potential maximum growing stock of an even-aged stand. This suggests transformation management to be economically efficient under the given silvicultural and economic conditions. The transformation of mature stands was found to be less economically viable due to the lower holding values for the transformation (uneven-aged) scenario compared with the age-class scenario. However, the holding values of the younger stand were higher for all interest rates compared with the age-class scenario. This study concludes that transformation (uneven-aged) scenario yielded more economically viable silvicultural approach (in the case of younger forests) and a steadier trend in harvested and remaining timber volume showing no major fluctuations. Transformation approach also forms a better foundation where other ecosystem services can be built.

Heuristic Optimization of Thinning Individual Douglas-Fir

Research Highlights: (1) Optimizing mid-rotation thinning increased modeled land expectation values by as much as 5.1–10.1% over a representative reference prescription on plots planted at 2.7 and 3.7 m square spacings. (2) Eight heuristics, five of which were newly applied to selecting individual trees for thinning, produced thinning prescriptions of near identical quality. (3) Based on heuristic sampling properties, we introduced a variant of the hero heuristic with a 5.3–20% greater computational efficiency. Background and Objectives: Thinning, which is arguably the most subjective human intervention in the life of a stand, is commonly executed with limited decision support in tree selection. This study evaluated heuristics’ ability to support tree selection in a factorial experiment that considered the thinning method, tree density, thinning age, and rotation length. Materials and Methods: The Organon growth model was used for the financial optimization of even age Douglas-fir (Pseudotsuga menziesii (Mirb.) Franco) harvest rotations consisting of a single thinning followed by clearcutting on a high-productivity site. We evaluated two versions of the hero heuristic, four Monte Carlo heuristics (simulated annealing, record-to-record travel, threshold accepting, and great deluge), a genetic algorithm, and tabu search for their efficiency in maximizing land expectation value. Results: With 50–75 years rotations and a 4% discount rate, heuristic tree selection always increased land expectation values over other thinning methods. The two hero heuristics were the most computationally efficient methods. The four Monte Carlo heuristics required 2.8–3.4 times more computation than hero. The genetic algorithm and the tabu search required 4.2–8.4 and 21–52 times, respectively, more computation than hero. Conclusions: The accuracy of the resulting thinning prescriptions was limited by the quality of stand measurement, and the accuracy of the growth and yield models was linked to the heuristics rather than to the choice of heuristic. However, heuristic performance may be sensitive to the chosen models.

Determination of Financial Rotation of Acacia nilotica (L.) Plantations: A Case Study in Faridpur District of Bangladesh

Knowing the rotation age of farming trees is important to urge maximum return from it. Acacia nilotica (Babla) may be a widely planted farming tree especially in modern agroforestry practice mainly in northern, north western and south western region of Bangladesh. Farmers have little idea about optimum age of the trees to be cut. So, they fail to realize maximum enjoy it. No study has been undertaken to work out the optimum rotation age for A. nilotica in Bangladesh. during this study, an effort has been taken to unravel this problem. Plantations done by Bangladesh Forest Department (BFD) in Faridpur district has taken into consideration as study area. Total cost and total benefit for every plantation site was identified first. Then, Present Value of Benefit (PVB), Present Value of Cost (PVC) and Net Present Value of Benefit (NPVB) were determined to live the Land Expectation Value (Le), Internal Rate of Return (IRR) and Benefit-Cost Ratio (B/C). Using those parameters during this study, it's found that 11 to 14 years old plantations provided highest benefit to the farmers and this could be the acceptable rotation age for Babla trees in Faridpur district. Keywords: Babla, Financial rotation, Forest Management, Faridpur, Bangladesh. DOI: 10.7176/JESD/12-4-05 Publication date: February 28 th 2021

Economics of intercropping loblolly pine and oilseed crops for bio-jet fuel production in the Southern United States

Currently, there are 13.9 million hectares of loblolly pine (Pinus taeda L.) in the Southern United States. Reforested hectares could be used for intercropping oilseed crops such as carinata (Brassica carinata) and white lupin (Lupinus albus L.). The oil obtained from these crops could be used for bio-jet fuel production to reduce the carbon footprint of the aviation sector. This study determines the profitability for three scenarios: loblolly pine with no intercropping (baseline), loblolly pine with carinata (once every three years), and loblolly pine with carinata and white lupin rotated annually. We ascertained the land expectation value (LEV) for three site indices of 15.3 m, 18.3 m, and 21.3 m. Carinata and white lupin were planted during the initial eight, seven, and six years for site indices 15.3 m, 18.3 m, and 21.3 m, respectively. Sensitivity and risk analyses were undertaken for determining the influence of input variables on LEVs and the probability of loss for intercropping production systems relative to a baseline production system, respectively. For site index 21.3 m, the LEV of loblolly pine with no intercropping was $2816/ha at a 21-years rotation period. Intercropping with carinata only and both carinata and white lupin yielded LEVs of $3346/ha and $3607/ha at a 21-years rotation period, respectively. The LEVs of production systems were sensitive to interest rate, price, and yield of carinata seeds. The intercropping approach had > 50% probability of being less profitable than loblolly pine alone in over half of the scenarios considered. Future research should focus on the impacts of intercropping on loblolly pine yield and adoption behavior of forest landowners.

Management of spontaneously regenerated mixed stands of birch and Norway spruce in Sweden

Timber production and profitability were evaluated for spontaneously-regenerated mixtures on two formerly clearcut areas. The abandoned areas developed into birch-dominated ( Roth and Ehrh.) stands with successional ingrowth of Norway spruce ( (L.) H. Karst.). An experiment with randomized treatments within blocks was established, using three management strategies and one unthinned control, resulting in variation in optimal rotation age, merchantable volume and species composition. The management strategies were evaluated based on total production (volume) by using measured growth data 42 years after clearcutting and the modelled future stand development. The long-term effects of spontaneous regeneration and management strategies were evaluated based on land expectation value (LEV) and compared with a fifth management strategy using artificial regeneration and intense thinnings. 12 years after treatment, at a stand age of 42 years, the unthinned control had produced the highest total stem volume. At interest rates of 2% or higher, the unmanaged forest was an economically viable strategy, even compared to an intensive management strategy with a preferred merchantable timber species. Interest rates clearly impacted the profitability of the different management strategies. This study shows that when spontaneous regeneration is successful and dense, the first competition release can have a high impact on the development of future crop trees and on the species mixture.Betula pendulaBetula pubescensPicea abies

A Discounted Cash Flow and Capital Budgeting Analysis of Silvopastoral Systems in the Amazonas Region of Peru

Silvopasture is a type of agroforestry that could deliver ecosystem services and support local livelihoods by integrating trees into pasture-based livestock systems. This study modeled the financial returns from silvopastures, planted forests, and conventional cattle-pasture systems in Amazonas, Peru using capital budgeting techniques. Forests had a lower land expectation value (USD 845 per hectare) than conventional cattle systems (USD 1275 per hectare) at a 4% discount rate. “Typical” model silvopastures, based on prior landowner surveys in the Amazonas region, were most competitive at low discount rates. The four actual silvopastoral systems we visited and examined had higher returns (4%: USD 1588 to USD 9524 per hectare) than either alternative pure crop or tree system, more than likely through strategies for generating value-added such as on-site retail stands. Silvopasture also offers animal health and environmental benefits, and could receive governmental or market payments to encourage these practices.

Financial Effects of the 2017 Tax Cuts and Jobs Act on Nonindustrial Private Forest Landowners: A Comparative Study for 10 Southern States of the United States

Abstract Changes in tax codes applicable to timberland investments can affect tax treatment of timber revenues and expenses. The 2017 Tax Cuts and Jobs Act (TCJA) is regarded as the most expansive overhaul of tax codes in the United States since 1986; however, our understanding of its effects on timberland investments for family forest owners has yet to be explored. Using the discounted cash-flow method, we estimated and compared effects of TCJA on land expectation value (LEV) and net tax from managing timberland for two classifications of median-income family forest owners in 10 southern states. Results showed a decrease in LEV and net tax for both material participants and investors, with a greater effect on landowners managing timberland as investments. Thus, owning timberland can become less beneficial under the current law for median-income family forest landowners. Study Implications: Family forests occupy a large portion of the total forest area in the United States and provide various goods and services to society. Taxes and tax policies are regarded as important issues for these landowners because policies could ultimately influence timberland investment, ownership structure, and management activities. After the 2017 tax reform, landowners became concerned about the effect of the new act on profitability and financial return from timberland investment. Here, we attempt to provide a better understanding of tax effects by estimating change in net benefit of owning and managing timberland under the current law compared with the previous law in 10 southern states. For policymakers, this study can provide insight into the importance of considering unique characteristics of timberland investment during the tax policy design and evaluation process. For landowners, this study can facilitate the timberland investment decisionmaking process and serve as a guide to the effects of the new tax rules on returns.

Determining the optimal rotations of larch plantations when multiple carbon pools and wood products are valued

Plantations can provide a large amount of wood products for human society but also have incredible potential to sequester carbon dioxide from the atmosphere due to its growth. However, management of these even-aged plantations to maximize the joint benefits of wood production and carbon sequestration objectives for forest managers and policymakers remains unclear, especially under the stringent targets of 2 °C climatic change mitigation. Therefore, an efficient theoretical framework based on the typical Hartman model was developed in this paper to determine the optimal rotations of even-aged plantations, in which multiple wood products and carbon pools within an infinite time horizon were considered. As an example, the sensitivity of the optimal rotations and their corresponding land expectation values (LEVs) with respect to different carbon pools (i.e., wood products, bioenergy, harvested residuals, stump roots, and naturally generated dead organic matter), as well as a set of stand conditions (site index and stand density) and economic parameters (carbon price and discount rate) were quantitatively evaluated for state-owned larch plantations in northeast China. The results showed that the alternative carbon pools could increase the optimal rotations of larch plantations by 1–3 years for a commonly used management scenario (site index = 16 m, carbon price = 100 CNY/ton)). The optimal rotations decreased linearly with increasing site indices (R2 = 0.95) and initial densities (R2 = 0.98) but increased linearly with increasing carbon prices (R2 = 0.99); however, significant negative exponential trends were observed with increasing discount rates (R2 = 0.92). Except for some extreme cases (site index ≤12 m, discount rate ≥ 6%), the optimal rotations of LEVs are usually larger than those of maximizing sustainable timber yield, in which the differences between them were as much as approximately 4 years of site index (20 m), 6 years of initial density (6666 trees/ha), 15 years of carbon price (1000 CNY/ton) and 9 years of discount rate (3%).

Impact on profitability, risk, optimum rotation age and afforestation of changing the New Zealand emissions trading scheme to an averaging approach

The current New Zealand Emissions Trading Scheme (ETS) allows forest growers to earn units under the stock change approach. Carbon price risk means that most participants are only trading safe units that they do not need to surrender after harvest provided that they replant. Consequently, the ETS has provided less incentive for afforestation than had been envisaged.This paper evaluates averaging as an alternative approach to carbon accounting. Two variations are considered: averaging based on nominated rotation age and averaging based on realised rotation age (i.e. carbon units are earned and sold up to the average for a base age of 28 years but carbon is only received up to the average for older ages after that age is attained). Both variations produce a higher Land Expectation Value (LEV) than that for the safe approach. Averaging with nominated rotation age has LEV within 90% of the carbon-stock change (i.e. sawtooth) approach but with much less risk. Averaging with realised rotation age has lower LEVs than averaging with nominated rotation age but has much less impact on optimum rotation age.Averaging provides the opportunity for all forest growers, regardless of area, to benefit from improved profitability under the ETS without taking on carbon price risk. Implementing the averaging approach in the ETS is forecast to lead to higher rates of afforestation than under the current ETS.

Financial analysis of potential Pinus patula plantations in Antioquia, Colombia

The establishment of commercial forest plantations requires the selection of sites where reasonable profitability can be attained. A financial analysis was made for the identification of the most suitable areas for the establishment of new Pinus patula plantations in the central region of Antioquia, Colombia. The analysis was performed assuming basic silvicultural treatments at the establishment but no management during the entire rotation period. A volume yield data at the stand level was obtained from a previously fitted model that uses biophysical variables and stand density as predictors. The estimated stand volume, a detailed cash flow, and a derived stumpage price were combined to perform a financial analysis. The Land Expectation Value (LEV) and Internal Rate of Return (IRR) at the optimal rotation age, along with their spatial variation, were calculated in this study. Results suggest that the estimated volume and the current stumpage price are not sufficient to guarantee reasonable profitability for new timberland investments. While the LEV was negative, the IRR was in the range 4.1±1.5%, which is less than the discount rate of 6.8% used in the financial analysis. However, a positive LEV and an IRR at 8% would be achieved if forest productivity increases by 20% because of silvicultural practices or costs reduction in a similar proportion (obtaining IRRs up to 8.4%). Moreover, if the government provide subsidies, the IRR would increase up to 10.3% (without requiring an increase in productivity or a decrease in costs) on sites with high growth potential (mean annual increment greater than 16 m3 ha-1 year-1), and close to the mills (less than 45 km radii).

Optimal forest rotation under carbon pricing and forest damage risk

Forests have two notable economic roles in the future: providing renewable raw material and storing carbon to mitigate climate change. The pricing of forest carbon leads to longer rotation times and consequently larger carbon stocks, but also exposes landowners to a greater risk of forest damage. This paper investigates optimal forest rotation under carbon pricing and forest damage risk. I provide the first-order optimality conditions for this problem and illustrate the setting with numerical calculations representing boreal forests. Under the considered range of parametrizations, carbon price has far greater impact on the optimal rotation than the damage probability. Increasing forest carbon stocks through longer rotations is thus economically attractive option for mitigating climate change, despite the forest damage risk. Carbon pricing increases land expectation value and reduces the economic risks posed by disturbances. The production possibility frontier between harvests and carbon storage suggests that significantly larger forests carbon stocks are achievable, but implies lower harvests. However, forests' societally optimal role between these two activities is not yet clear-cut; but rests on the future development of relative prices between timber, carbon and other commodities dependent on land-use.

Cut or keep: What should a forest owner do after a windthrow?

After a windstorm hits a forest stand the forest owner has two possibilities: clear cut and start a new rotation or let the standing trees grow until maturity. We compute the Land Expectation Value (LEV) under the risk of windthrow and introduce an endogenous rule to account for this decision. We compare the result with the default alternative of systematic clear felling and replanting (commonly assumed in existing literature). We have calibrated our model to represent maritime pine plantations in south-western France. Results show that by following this rule, payoffs may increase by up to 90% when the economic risk (i.e. probability of having a windstorm) is high. About 75% of the time it is profitable to keep the standing trees until maturity. Although payoffs are sensitive to economic risk, the optimal rotation age does not change much with significant increases in the risk probability.

An economic analysis of thinning intensity and thinning type of a two-tiered even-aged Forest stand

The issue of the optimal thinning type has occupied foresters since the beginnings of modern forestry. Thinning from below and thinning from above represent the two extreme solutions in a continuum of thinning types. This paper provides a general economic analysis of the thinning intensity dependent on the social class and the decision between thinning from below, above or both ends. Therefore, a two-tiered even-aged forest stand is assumed, in which only a dominant and a suppressed class of trees can be distinguished. Optimal thinning intensities are derived for each cohort to maximize the land expectation value and analyzed in a comparative static analysis. The results provide a general insight into the thinning type decision and identify conditions under which a certain thinning type is likely to be optimal. The findings are discussed in comparison to existing literature.

Conventional versus genomic selection for white spruce improvement: a comparison of costs and benefits of plantations on Quebec public lands

Intensive plantation forestry is a potent strategy for forest managers to increase wood production on a smaller forest land acreage, especially with the use of genetically improved reforestation stock. The main drawback with conventional conifer improvement is the several decades it takes before stock deployment, which is particularly acute in the context of climate change and evolving wood markets. Use of genomic selection allows to drastically shorten breeding cycles, resulting in more flexibility and potentially increasing benefits. This study compares the financial performance of five white spruce (Picea glauca) breeding and deployment scenarios, from conventional breeding to genomic selection in conjunction with top-grafting or the use of somatic embryogenesis, in the context of plantations established by the Quebec government on public lands with banned herbicide use. We estimated the land expectation value (LEV) for the five scenarios applied to eight site productivity indices, and considered costs and revenues from breeding, plantation establishment, silviculture, and harvest. LEVs at 4% discount rate were positive for all scenarios on all site indices, and varied from $197 to $2015 ha−1 assuming mechanical brushing of the plantations. The scenarios integrating genomic selection resulted in the highest LEVs, which increased with site index. We also conducted sensitivity analyses with 3% and 5% discount rates, with a range of costs and benefits, and with herbicide control of competing vegetation. These results should help orientate public investment decisions regarding the integration of genomic selection at the operational level in tree breeding and reforestation programs on public lands.

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

Abstract Understanding 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.