SILVICULTURAL INVESTMENTS

There is a Lack of Economic Information for Southern Landowners and Forest Managers to Effectively Evaluate Silvicultural Investments and their Economic Impacts¹

The Nation's demand for timber products has been rising in recent decades.  Between 1952 and 1991, the consumption of roundwood from U.S. timber resources increased by 8.7 billion cubic feet to 18.2 billion cubic feet, an increase of 92 percent.  Demand is expected to continue to expand in the coming decades with an additional increase of 37% between now and the year 2040.  Current direction makes significant expansion of harvest from public forestland unlikely.  As a consequence, the rising demands can be met only by increases in harvest on private lands, growth in net imports (increased imports and/or decreased exports), expanded use of recycling and other technologies that conserve on wood use and/or extend the service life of end products, increased use of hardwoods, and increased use of non-wood substitutes.

Currently, softwood growing stock removals exceed growth on forest industry lands and nonindustrial private lands in the South.  Land management is expected to be fairly intense with the area of pine plantations increasing from 23 million acres today to about 45 million acres by 2040.  Timber harvest from these plantations is projected to increase from 831 million cubic feet currently to 6.1 billion cubic feet annually in 2040. Harvest from other forest management types in the South is projected to decline.  Most of the net increase in U.S. softwood harvest of 4 billion cubic feet between 1992 and 2040 is projected to come from pine plantations in the South.

If these plantations are not established as projected, prices for timber products will rise more than projected, especially in the long term. In addition, increased state and local regulation of private lands could detract from investments for timber production, causing further pressures on softwood prices.

Changes in the timber supply situation elsewhere in the United States are shifting future timber demand southward.  In particular, many national forests in the western states are likely to have reduced harvest levels over the next few years as new forest plans are implemented and habitat requirements for threatened or endangered species are accommodated.   Foreign demand for southern wood products also is rising.

Recent surveys of forests in the South show that net annual timber growth, after rising for decades, has begun to decline. Current softwood growth, in particular, is less than harvest in some Southern states.  Over the past two decades, the number of acres containing seedling and sapling pines has not been increasing fast enough to guarantee adequate wood supplies in the next century.  This is a symptom of inadequate regeneration of recently harvested stands, and the fact that other suitable pine land is understocked with pines.

Landowners usually do not attempt to regenerate each acre on which timber is harvested. This a key decision because regeneration costs are the largest single expenditure of growing a new stand and are carried the longest before harvest returns are received.  Non-forestry land uses, such as crop production or urban development, may appear to offer higher net returns.   In some instances, this perception is accurate.  More often, the landowner lacks the necessary information on the regeneration investment, so the reforestation option is never realistically explored.  The land is taken out of forestry by default.

Landowners who do attempt to regenerate cutover land are often dissatisfied with the results.  Two situations frequently occur, that result from inadequate information on management activities, including their costs and returns.  First, some landowners over spend on regeneration and the harvest value of the established stand fails to provide an adequate rate of return.  The key to solving this problem is to find lower cost regeneration options and then use only those needed.  Second, some landowners may fail to use the best methods available for a particular site, hence the regeneration investments are inefficient.  For example, improper site preparation methods may fail to control competing vegetation.  Consequently, the established stand suffers from low stocking density and growth, leading to a lower than expected harvest value.  Again, the rate of return on the regeneration investment is below the acceptable threshold. The solution to this problem is to identify the cost-effective options for specific situations; and to identify low-cost supplemental treatments that can be applied to young stands that will boost harvest returns sufficiently to create an acceptable return on the total investment.

If the South is to meet its expectations for increased timber growth in the immediate years ahead, established stands also must be managed to accelerate wood production.  Such practices as intensive site preparation and better regeneration practices will not substantially help the supply situation in the next 20 years.  During this time the South can increase its share of the expanding national and world markets for timber products without severely depleting growing stock by applying intermediate silvicultural practices to existing stands.

The two principal objectives of managing stands are to: (1) increase volume growth and (2) increase the quality of yield.  These can be met by utilizing various silvicultural treatments that include thinning, improvement cuts, salvage cuts and sanitation cuts.   Non-cutting practices include control of competing vegetation.

At present, there is a lack of economic information for landowners and forest managers to effectively evaluate silvicultural investments in southern forestry.  To adequately address this problem will require studies in three problem areas: (1) determine the costs and returns of forest management and restoration practices, (2) determine the costs and returns of various intensive management practices, (3) estimate the regional economic impacts of changes in forest management.

¹All four problem areas of our research work unit are in the process of undergoing revision. Updated problem statements will be posted when the process is complete.

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