Effect of Current-Use Valuation on Forestry Investment Returns in Selected Virginia Counties
Results from three Virginia counties indicate that if forest properties are taxed on the basis of their value for continued timber growing as opposed to their fair market value, forestry investment returns will be increased. Where development pressures were insignificant, real returns roseby less than $40 per acre when measured in terms of Net Present Value (NPV) and by 1 percent age point when measured by the Internal Rate of Return (IRR). However, where development pressures posed a serious threat to continued timber production, NPV's rose by more than $850 per acre and IRR's by over 6.0 percentage points. These findings suggest that in areas experiencing significant development activity, use valuation may be an important policy tool for slowing the conversion of forest land to other uses. This method of assessment can maintain forestry as an attractive investment when it would not be otherwise.