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|Title: ||Nonindustrial private forestland owners: Estimating responses to economic and demographic changes|
|Authors: ||Snider, Anthony Glenn|
|Advisors: ||Dr. Jon Stucky, Committee Member|
Dr. Elizabethann O'Sullivan, Committee Member
Dr. Frederick W. Cubbage, Committee Chair
Dr. George Hess, Committee Member
|Keywords: ||property tax|
|Issue Date: ||2-Dec-2002|
|Abstract: ||This research endeavor consisted of two distinct efforts. First, following a literature review of the characteristics, objectives, and incentive programs available to nonindustrial private forest (NIPF) landowners, the potential effects of wood chip mill harvests on forest management practices of these landowners in North Carolina were analyzed. The study estimated NIPF pulpwood harvest volumes and the impacts of changes in timber market returns to NIPF owners. Economic welfare effects of producer and consumer surpluses attributable to market adjustments were also calculated. Potential savings from reduced site preparation costs from cleaner harvests associated with chip mill markets were estimated. Additionally, the potential changes in financial returns to growing timber with wood chip markets were estimated using discounted cash flow analyses of typical forest management returns.
Given the existing market structure and price elasticities for timber, increased timber demand and better markets would consistently increase economic returns for both timber buyers and sellers. In absolute terms, forest industry (buyers) had higher benefits while NIPF owners (sellers) had higher percentage benefits. Based on 1990 trends in timber production and prices, some NIPF owners have experienced decreased returns from softwood stumpage sales. Increasing hardwood pulpwood timber production and prices have yielded average statewide incremental returns of $595,000 per year for NIPF owners. Approximately 80% of the total value accrued to owners in the coastal plain, but the largest average annual percentage increase per year (9.9%) was received for NIPF hardwood pulpwood harvests in the mountains.
Higher timber prices and shorter rotations for growing softwood timber led to sawtimber production with a chip component having the greatest returns for NIPF owners, followed by chipping the stand entirely at a shorter rotation, and last, production of sawtimber alone. These alternatives generated internal rates of return (IRRs) of about 6% to 13%. The lower timber prices and long rotations for hardwoods generally yielded lower investment returns, ranging from about 3% to 7% IRRs depending on the forest type and management regime. The addition of a wood chip component did little to increase these returns. These economic analyses suggest that better markets will benefit both NIPF landowners and timber buyers, thus prompting increased harvests for chip wood.
The second component of this research involved the analysis of archival tax data on the North Carolina Use-Value Property Tax Program. Following a review of rural land preservation tools, an analysis of the effects of property values, property taxes and population density on landowner decisions to sell, subdivide, or withdraw their properties from the use-value program in North Carolina was conducted. Parcel level tax data from nine counties representing the three geophysical regions and urban levels of North Carolina for the period 1987 through 1999 were collected using a disproportionate stratified systematic sample. Data were analyzed using logistic regression.
The odds of landowners subdividing increased with tract size, population density, and acreage value of the tract. Increases in population density, acreage value, and taxes paid, raised the odds of landowners selling their properties. Sales were less likely to occur in urban counties. The odds of landowners deciding to withdraw from the use-value program increased with higher population density, but declined with increases in property taxes. Additionally, withdrawal was less likely in the piedmont and among the largest parcels. The effect of population growth outweighed the effects of other continuous variables on all three landowner decisions and was the only significant variable in regressions on parcel sales, subdivision, and withdrawal from the use-value program.|
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