David H. Newman

Production Economics of Private Forestry: A Comparison of Industrial and Nonindustrial Forest Owners

This paper compares the production behavior of industrial and nonindustrial private forestland owners in the southeastern U.S. using a restricted profit function. Profits are modeled as a function of two outputs, sawtimber and pulpwood, one variable input, regeneration effort, and two quasi-fixed inputs, land and growing stock. Although an identical profit function is rejected, the results indicate behavior consistent with profit-maximizing motives under both ownerships. The two ownerships have similar responses to input and output price changes, both in the short-run and in the long-run. However, nonindustrial owners appear to place a higher value on their standing timber and forestland than do industrial owners. The difference in estimated shadow values indicates that significant nonmarket benefits are being captured by nonindustrial owners and the benefits are reflected in their production behavior.

Modeling Willingness to Pay for Land Conservation Easements: Treatment of Zero and Protest Bids and Application and Policy Implications

This study compares an ordered probit model and a Tobit model with selection to take into account both true zero and protest zero bids while estimating the willingness to pay (WTP) for conservation easements in Macon County, NC. By comparing the two models, the ordered/unordered selection issue of the protest responses is analyzed to demonstrate how the treatment of protest responses can significantly influence WTP models. Both models consistently show that income and knowledge are positive and significant factors, while distance to poorer quality streams and duration of residency are negative and significant factors on WTP.

Estimating the Economic Value of Lethal VersusNonlethal Deer Control in Suburban Communities

Negative people/wildlife interaction has raised public interest in wildlife population control. We present a contingent valuation study of alternative deer control measures considered for Hilton Head Island, SC. Lethal control using sharpshooters and nonlethal immuno-contraception techniques are evaluated. A mail-back survey was used to collect resident willingness-to-pay (WTP) information for reduced deer densities and consequent property damage. Residents are unwilling to spend more for the nonlethal alternative. The estimated WTP appears theoretically consistent as increasing levels of abatement for both lethal and nonlethal alternatives demonstrate diminishing marginal benefits. Over 60% of respondents bid zero regardless of control measure, suggesting a referendum would fail. However, only half of these zero bidders expressed no problem with deer, while the other half bid zero because of distaste for the control alternative, safety concerns, or doubt about effectiveness. Inclusion of these responses as legitimate zero bids depressed mean WTP estimates from 22 to 31%.

Testing for market integration among southern pine regions

Abstract We conduct co-integration tests of southern timber regions using alternative tests and specifications, and data from 13 pine sawtimber and 11 pulpwood markets. We find that southern timber regions are not fully integrated. Our results imply that a single market does not exist across the entire U. S. South. Instead, these regions may form a few contiguous market segments. The main reason that some timber regions fail to track others closely lies in the nature of the good - timber, a bulky commodity with low value. We believe that this finding has significant implications for timber market modeling as well as forest policy analysis based on timber market models.

Tax Reform and Land-Using Sectors in the U.S. Economy: A General Equilibrium Analysis

A computable general equilibrium model of the U.S. economy is used to assess the effects of the Tax Reform Act of 1986 on land-using sectors (forestry and three classes of agriculture). The models components include twelve production sectors, six consumer groups, a balanced-budget government sector, and a zero surplus foreign sector. In relative terms, Tax Reform reduces total value added output in land-using sectors to a greater extent than other sectors in the economy. Experiments are also performed comparing partial and general equilibrium specifications of the economy and the impact of choice of input substitution elasticities.

Community choices and housing demands: a spatial analysis of the southern Appalachian highlands

This paper examines housing demand using an integrated approach that combines residential decisions about choices of community in the Southern Appalachian region with the application of a Geographical Information System (GIS). The empirical model infers a distinctive heterogeneity in the characteristics of community choices. The results also indicate that socio-economic motives strongly affect urban housing demands while environmental amenities affect those of rural housing demand.

Forest Ownership and Management Outcomes in the U.S., in Global Context

SUMMARY Land is of critical importance for provision of wood and nonwood forest products and environmental services. Ownership is a key factor influencing forest land management and protection. Most forests in the world, 86%, are in public ownership which accounts for a commensurate share of forest degradation. U.S. forest land ownership is dominated by private owners, and this has largely worked well for production and for provision of environmental services. International comparisons of forest land ownership and corresponding management outcomes indicate that private forests provide proportionally more market based goods such as wood, and that their environmental performance in terms of forest management plans, forest certification, and compliance with forest regulations appears to be similar to that of public forests. In fact, private lands have increased environmental conformance with regulations and adopted forest certification for many high production lands. Both public and private lands should more closely link tenure rights and conservation and management control. Government ownership and incentives must evolve for both private and public lands to produce forest goods and services more efficiently and equitably.

Conservation use valuation and land protection in Georgia

Abstract This paper analyses the first 5 years of the implementation of the Conservation Use Valuation (CUV) program in Georgia. This program provides for current use tax assessment for land dedicated to selected uses for a period of 10 years. Using a sample of counties from the north Georgia region where the program has been most heavily utilized, we analyze the economic and land use impacts of the program. We show that while there is substantial variability in enrollment across counties, the average land area per enrolled covenant is 27.6 ha. If we use this average value for the entire region, then over 22% of the eligible land in north Georgia is currently enrolled in the program. The fiscal impacts are also varied, with some counties showing a substantial reduction in property tax revenues while others showed only a marginal impact.

The Simon-Ehrlich Bet: Teaching Relative Vs. Absolute Scarcity:

Absolute resource scarcity is all too real for many students, especially those from noneconomic disciplines. They have a Malthusian economic worldview. We describe a pedagogical model using “The Bet” between Paul Ehrlich and Julian Simon as its focus. The model includes a “Bet” – the students taking the Ehrlich position; a directed discussion providing students with an approach to determine who wins the Bet; and a written assignment, oral presentations, and reflection. The learning outcomes are: 1) students examine their Malthusian beliefs through developing hypotheses, analyzing and testing them, and writing and presenting their conclusions orally; 2) that markets incorporate changes in substitutes, technology, recycling, and discovery; 3) that market prices rise and fall in the short term but it is the long term that illustrates how markets respond to changes in information; and 4) students reflect critically on their initial absolute scarcity assertion.

Putting Samuelson's Economics of Forestry into Context: The Limits of Forest Economics in Policy Debates

Paul Samuelson’s 1976 paper, “Economics of Forestry in an Evolving Society (EFES)”, is justifiably hailed as one of the most important articles in the field of forest economics. A relatively recent review of the optimal rotation literature found the article to be the second most cited article (Newman, 2002), following only Faustmann’s (1849) original study. It pointed the field in a number of important directions and heralded a very rapid expansion in the literature as more individuals began to examine a host of economic questions related to forests and forest management. However, it is important to consider the context in which Samuelson’s work was written. The paper was a keynote presentation at the Economics of Sustained Yield Forestry Symposium held at the University of Washington on 23 November 1974. Professor Barney Dowdle organized the symposium and the speakers, who were not forest economists, came from more mainstream economic disciplines. The symposium was attended by over 150 people and reflected a broad diversity of forestry experience from throughout North America. For years after the symposium, the presentations were copied and passed on to students and practitioners as only two of the papers were actually published (Samuelson’s and John Ledyard and Leon Moses’) and only Samuelson’s was easily accessible. There were five papers presented at the symposium touching on a variety of issues associated with the topic of sustained yield. In addition to Samuelson, Jack Hirshleifer of UCLA discussed the trade-off between sustained yield and capital theory; John Ledyard and Leon Moses of Northwestern University discussed economic dynamics and land use change in relation to forestry; Marc Roberts of Harvard discussed sustained yield and economic growth; Anthony Downs, then Chairman of the Real Estate Research Corporation in Chicago, discussed sustained yield and American social goals. Together, these papers made a strong argument that worshipping at the altar of sustainability (specifically sustained