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Impact of Forestry Incentives Programs

Current and past forestry incentives programs have focused primarily on providing assistance to NIPF owners in tree planting, management planning, and improving forest management practices. They have increased timber production, investment returns, and environmental benefits.

The Forest Incentive Program (FIP), a Federal cost-share program enacted in 1973, was aimed at increasing timber supply by promoting tree planting, timber stand improvement, natural regeneration, and firebreak construction (Gaddis and others 1995). From 1974 through 1992, the program's cost-share incentives exceeded $200 million in the South and funded tree planting on nearly 2.5 million acres (40-percent increase), timber stand improvement on 0.3 million acres, and site preparation on nearly 10,000 acres. The program was most intensively implemented in the 1970s. In the 1980s and early 1990s, inflation increased treatment costs and reduced real FIP appropriations. The program was terminated in 1995. Timber supply was predicted to increase by 1 billion cubic feet each year due to the program (Gaddis and others 1995). The program was characterized by retention reaching 90 percent. It generated rates of return of about 10 percent.

The Forest Stewardship Program (FSP) and the Stewardship Incentives Program (SIP) were authorized in 1990 to replace FIP. FSP is operated in cooperation with State forestry agencies and assists in enhancing and protecting multiple forest values on NIPF land by developing forest management plans (New and others 1997). From 1990 to 1994, FSP developed 13,000 forest management plans covering 2.5 million acres in the South. FSP cost sharing amounted to $27 million. By 2000 FSP management plans were primarily developed and implemented for growing trees, improving wildlife habitat, harvesting trees, and improving water resources (Esseks and Moulton 2000). About 80 percent of prepared plans in the South were being implemented.

An FSP-approved forest management plan is a prerequisite for cost-share support under SIP. From 1992 to 1994, SIP in the South provided nearly $9 million in support for 4,000 owners with nearly 0.5 million acres (Gaddis and others 1995). The majority of funding was spent on tree planting activities. SIP and FIP supported tree planting on nearly 0.5 million acres in the South.

The Forest Legacy Program (FLP) is a Federal program aimed at environmental protection (Sampson and DeCoster 1997). FLP was designed to protect environmentally sensitive and valuable forest areas that are threatened by conversion to nonforest uses. This program supports State and Federal efforts through direct acquisition and conservation easements purchased from NIPF owners. The Rural Forest Management Program (RFMP) provides matching funds to State agencies to support their technical and financial assistance programs for conservation planting on NIPF land (U.S. Department of Agriculture Forest Service 2001).

State forestry assistance programs provide numerous services, including timber marketing, firebreak construction, forest management planning, forest seedlings sales, rental or loan of equipment, and literature and educational videos (Cubbage and Haynes 1988). Some States also enacted incentives programs. Expenditures for State cooperative forestry and landowner assistance programs in the South amounted to nearly $52 million in fiscal year 1998 (National Association of State Foresters 2001).

Forest industry firms also provide technical assistance to NIPF owners (Cubbage and Haynes 1988). Assistance ranges from forest regeneration to timber stand improvement and harvesting. These programs often require that tracts be of a minimum size and within a maximum distance from the mill. Land management practices are often performed for free or at a reduced cost to NIPF owners. Forest industry firms that offer these programs include, for example, Georgia Pacific (Forest Management Assistance Program), Stone Container Corporation (Land Owner Assistance Program), Louisiana-Pacific Corporation (Tree Enterprise Program), and Rayonier (Landowner Assistance Management Program) (Thompson 1995).

Overall, the majority of forestry incentives programs have promoted tree planting and more intensive forest management, better marketing of forest products, improved protection of existing resources, and enhanced planning. They have resulted in substantial increases in tree planting and more widespread development of forest management plans. The results and returns are generally satisfactory. Some critics have argued that these programs simply substitute public funds for private funds that would be invested in any case. While some capital substitution is possible, forestry incentives programs undoubtedly have resulted in substantially increased inventories and future timber supplies (Gaddis and others 1995, Lee and others 1992, New and others 1997).