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Retention of High‐Valued Forest Lands at Risk of Conversion to Non‐Forest Uses in Washington State

 

Legislative Task Force is Critical to Explore the Tradeoffs and Options

Forum participants agree on the need to create a legislative Task Force. The Task Force would be charged with developing an overall strategy for Washington State focused on retaining and enhancing working forests to ensure their long-term viability for producing economic, environmental and social benefits. The Forum proposed that tax reform, regulatory stability and simplicity, incentives for working forest ecosystem management, bio-fuels and biomass production and ecosystem services payments should be addressed by the Task Force. These issues are all
addressed below, with proposed Task Force actions.

The incentives from other states, of existing programs in Washington and recommendations from the Forum need to be explored in order to determine which work now, which could work better and which would be most effective at the lowest possible cost. Incentives for forest land owners can be effective and attractive, if aimed at a time horizon that is realistic for the landowner. The cost may be surprisingly low, if policy makers are prepared to surrogate perpetual encumbrances in order to accomplish relatively long-term protection and management that ensures environmental sustainability.

An Incentive Can Create Public Value if Applied Correctly

The above mentioned reports were effectively catalogs of programs that included classic “incentives” of cost-share and technical assistance as well as programs that Forum participants identified as “mitigation” for loss of management options as a result of the Forest and Fish Agreement and other regulatory impacts. This distinction is important because, from a landowner’s perspective, an incentive provides an opportunity for a voluntary response to create additional, quantifiable public values. The compensation/value received has to be above and beyond the costs of application, conforming to necessary rules and meeting program requirements (usually a forest plan). From a public investment perspective, an incentive should produce “additionality” above and beyond that expected from meeting regulatory standards.

As noted from the current Washington program matrix as well as programs from other states, much of the additional “non-timber value” is based on wildlife and fish habitat enhancement. Timber values are enhanced either directly through financial and/or technical assistance to landowners for reforestation and other silvicultural treatments or through an overall state plan or strategy that commits the state to an integrated set of polices and program to ensure forest stability, ranging from industrial and infrastructure incentives to investments in forest land retention (see Minnesota).

Compensation to reduce fragmentation usually results from purchase or transfer of development rights (Utah, Minnesota, Washington (King County)). Washington’s Growth Management Act appears to be reasonably effective in designating and restricting large industrial forest land ownerships with “long-term significance” for forestry. Nonetheless, all county forest zones (except Whatcom) embed a development right in their zoning code which still provides the potential for fragmentation or large-lot real estate sale and parcelization. Virginia’s program of landownerinitiated special “resource districts” appears to achieve some of the goals of reducing parcelization coupled with a short to mid-term commitment to resource management with little or no public cost.

Mitigations of Losses are Not Incentives

Washington private forest owners, particularly small family forest landowners control 5.7 million acres, predominantly located on low elevation, highly productive land with an abundance of watercourses and a high likelihood of conversion because of the very characteristics which make them good forest land. The Legislature (and the Forest Practices Board) recognized that the Forest and Fish regulations had a disproportionate impact on these small owners (those with fewer than 5,000 acres) in two major ways: 1) riparian buffers disproportionately affected small landowners because they could not spread the impact over a larger area as could owners with larger properties; and 2) repair and replacement of fish passage blockages on forest roads in a specified time frame was difficult, if not impossible, given the episodic cash-flow from timber harvest and the up-front cost of such repairs. Both the Forest Riparian Easement Program (FREP) Program and the Family Forest Fish Passage Program (FFFPP) were designed to partially compensate owners for this loss of timber value and increased complexity of management.

Unfortunately, FREP has been underfunded since its inception. The College of Forest Resources Rural Technology Initiative estimates that the program’s unfunded obligation, if fully implemented, is upwards of $1.5 billion. The FFFPP is also over-subscribed and under-funded. This is a problem because compliance is required by 2015. There is also a Forest and Fish Leave Tree Tax Credit to address loss of value in riparian areas. However, a 2001 Washington Department of Revenue study indicated that small forest land owners received only about 4% of value credit for trees that they were not allowed to harvest.

The net result of these “mitigation” programs is a sense that early and/or lucky applicants are partially kept whole while many landowners simply absorb the costs of providing public benefits. The longer-term problem is that a significant number of these owners or their children may chose not to absorb these costs and simply sell their land for rural residential housing which would both fragment the landscape and change the regulatory framework to county zoning and building codes rather than the Forest Practices Act.

Market‐based Strategies are Fundamental to Success for Ecosystem Services

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There was widespread agreement among Northwest Environmental Forum participants that the state must recognize and create markets for ecosystem services provided by sustainable forests. Some method of paying for those services will ultimately be needed to improve non-timber resource economics and keep working forests on the landscape. Creating markets for carbon, wildlife habitat or clean water, while conceptually attractive, is extremely complex. Hardened perspectives and past concepts of regulation inhibit new ideas that might reward landowners for protecting public resources dependent on private land management. Forum participants from all interest groups want to sustain working forests and forest-related jobs.

The Washington Conservation Markets Study (2009), issued by the Washington Conservation Commission in response to SSB 6805 (2008) evaluates the feasibility of conservation markets in Washington to pay farmers and foresters for environmental benefits from conservation projects on their land. Produced in parallel with the 2008 Forum, the report delves into “ecosystem services” in greater depth than Forum participants were able. Current and potential markets include selling credits for wetland or habitat restoration, for mitigation and compliance requirements and programs that provide ongoing revenue to sustain the long-term viability of farms and small forestry operations, in exchange for maintaining or enhancing environmental benefits. “Markets for greenhouse gas emissions (or carbon markets) appear to be the most promising [market] for early implementation…” and “…this is an excellent time to consider an expansive role for farmers and foresters in creation of greenhouse gas credits” (page 5).

Carbon is a Working Forest Ecosystem Service

Previous reports to the Forum have proposed carbon sequestration as an emerging non-timber “ecosystem services” market. Carbon sequestration values can improve the economics of forest management while simultaneously meeting environmental goals. The report of the Forest Sector Working Group of the state’s Climate Action Team (November 2008), produced in parallel with Forum deliberations, incorporates the most in- depth analysis and investigation of this opportunity to date. That report also contains future policy and legislative consideration. http://www.ecy.wa.gov/climatechange/2008FAdocs/11241008_forestreportversion2.pdf
The framework recognizes the need to provide “incentives for retention of Washington‘s working forests,” and to “not penalize Washington forest landowners for the environmental benefits they already provide as a result of Washington‘s strong forest practices rules.”

The Working Group recommends two mechanisms to enhance the protection of working forests: The first provides offset-based incentives for reducing the “footprint” of development and retention of forest cover. In the “clustering scenario” the offset or credit would be limited to non-designated rural resource lands under the Growth Management Act (GMA). For forest lands of long-term significance, development rights would be transferred into Urban Growth Areas, using the mechanism of Transfer of Development Rights (TDR). The Working Group endorsed the TDR program being developed pursuant to RCW 43.362.020.

The second mechanism provides dual offset and non-offset incentives for carbon-sequestering forest management on productive forests, including accounting for in-forest and wood products carbon pools. Forest landowners and managers recognize the required nexus between a commitment to stewardship and a market for carbon credits such as in the Chicago Climate Exchange. Institutionalizing the necessary mechanisms to allow entry into the carbon market place and the accounting for such incentives still requires considerable work.

Biodiversity Conservation needs a Stable Working Forest Base

A bio-diverse landscape provides clean water, productive soil and habitat, all of which have real value to the economy. However, these values are generally not priced or exchanged in existing markets, so landowners are given few incentives to provide them, beyond what is required by regulation. As with carbon, payments or credit-trading would establish the value of these broad benefits. Market certification programs recognize stewardship practices above required baseline levels. As with organic food, these programs are intended to raise the market price of a commodity in exchange for certifiable improvements in land stewardship practices, and may also bring increased revenue to landowners. Their efficacy for improving the price received by producers of forest products is yet to be demonstrated.

The incentive and market-based mechanisms for forest retention proposed by the Forum are consistent with the Washington Biodiversity Council’s Conservation Strategy, “Sustaining our Natural Heritage for Future Generations,” (December 2007). That Strategy recognizes that working forest management and biodiversity conservation are complementary activities. Both require a stable and un-fragmented land base. Since more than 60% of Washington’s lands are privately owned, private landowners are on the frontlines of efforts to conserve biodiversity. The Council’s strategy recognizes their central role and seeks to foster good stewardship through positive recognition, incentives, and market-based mechanisms rather than increased regulation or mandates (page 10).

Areas simultaneously identified as high-value working forest land with the presence of high biodiversity components provide a useful metric for prioritizing public and private investment and policy initiatives. With this concept in mind, Forum participants reviewed Biodiversity Council maps of priority landscapes. In many cases, high priority areas coincided with high-value forests. Given different regional definitions and dissimilar levels of available data, Forum participants were not able to designate specific areas as under threat, but were able to conclude that protecting the integrity of high-priority contiguous forests would also protect biodiversity.

Simply ensuring an un-fragmented landscape will meet the key threat identified in the Council’s’ Strategy : “If current rates of land conversion continue, the good stewardship practiced by working landowners will ultimately have a limited impact in conserving Washington’s biodiversity.” The best way to maintain landscape continuity and to ensure and enhance biodiversity will be through partnerships of non-profit conservation organizations, local and state agencies and forest land owners. The Council strategy offers “an integrated suite of incentives and market-based programs to private landowners” structured to “make voluntary stewardship and conservation a practical and rewarding option.” Numerous programs in the “Current Program Matrix” (above) are oriented toward protecting and improving habitat conditions. Those programs should be focused on working forest areas threatened with conversion with significant opportunity for biodiversity protection and enhancement.

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What Landowners Say About Incentives to Support Continued Ownership and Management of Forest Land

Analysis of the Forestland data base (see Maps), confirms a working assumption of the Forest Forum - that high value working forest lands at the highest risk of conversion and forest fragmentation are controlled by some 215,000 family forest land owners, in tracts ranging from 2 to 5,000 acres. Located in lower elevation rural landscapes crisscrossed by watercourses, these properties often serve as the “buffer” between development and industrial or public forest land. As indicated elsewhere in this report, further fragmentation of these highly productive forest lands compromises the prospects of the forest industry and its infrastructure, as well as habitat and biodiversity. In turn, conversion of these properties potentially puts into play the larger-scale industrial land base by introducing management conflicts with non-forest neighbors, inducing changes in real estate value and diminishing long-term supply needed for sustaining mill capacity to provide the market value for industrial forest timber.

From its inception, a key question facing Forum participants has been: “What factors or policies would motivate private forest landowners to forego parcelization and to maintain and enhance the biological productivity of their land, including committing that land, long-term or in perpetuity, to sustainable forestry?” In the face of economic pressures to sell all or portions of property for“higher and better uses” and in light of a long-standing and ongoing expressions of frustration with the consequences of a highly complex regulatory environment, are there incentives that might help achieve the desired goal: retaining a permanent, unfragmented forest landscape, sustainably managed for commodities as well as ecological and social values?

Landowner interest in permanently dedicating forestland for resource production and foregoing future options is contingent upon a reasonable likelihood of long-term stability, coupled with a supportive policy framework that recognizes the critical role private forestlands play. Currently, family forest owners have underlying doubts about shifting regulatory requirements and concerns about what might happen on their borders as new neighbors constrain their practices while simultaneously acting as a wedge to drive property values higher and make conversion even more attractive. Until the state makes a commitment to an integrated strategy, it will be difficult for a significant number of landowners to willingly commit to a future in which their ability to continue managing their land for forestry appears to be jeopardized.

Findings from the 2006-2008 Forums strongly emphasized a need for financial incentives as part of an overall strategy to keep working forests viable. The matrices (Tables 6-8) provide an organized framework to view current and potential opportunities to increase working forest values and offset alternative land use values. Within this framework, three key mechanisms can exert a high degree of leverage to affect landowner behavior: Regulatory Reform, Tax Reform and Compensation for Development Rights. What do we know about landowner interest in and support for these mechanisms? A combination of research, anecdotal information, responses to actual rograms and Forum Findings provides some answers.

Regulatory Reform and the “Hassle Factor”

Forum participants representing landowner interests have repeatedly emphasized their frustration with the complexity of the Forest Practices Act rules structure as it has evolved since initial passage of the Timber Fish and Wildlife framework and its subsequent evolution to the current Forest and Fish Agreement. Results from Cascade Land Conservancy workshops (FWF 2007) reveal that “Forest landowners thought that reduction of regulatory complexity would encourage landowners to remain in forestry, as they would see immediate cost-savings and have greater confidence that investments and land management practices would pay off in the long term. Environmental
representatives were generally supportive, on condition that the final proposal ensures that there would be no reduction of resource protection and that there would be proper oversight of management actions.” Forum participants support for a 15 year Forest Practices permit was instrumental in achieving one benchmark for reducing the perceived “hassle factor” for small landowners.

A continuing frustration for small landowners has been the issue of riparian management to achieve “Desired Future Condition” (DFC) of mature forest structure (140 years) while maintaining viable economic land use. “Most family forest owners forego harvesting within the three-tiered Riparian Management Zones because of the complexity/ uncertainty/fear/cost of learning or following these rules for their infrequent harvests.” (Ken Miller, personal communication). The net result of current rules for these owners who cannot average harvest impact over larger acreage is to both reduce potential income and to not achieve the desired DFC in a reasonable time. Foregoing all harvest in the riparian zone results in an estimated 25-57% loss of economic value (FWF, DP7, 2-5).

Building on these concerns about the effect of regulations on creating an affirmative climate for continued forest management and to achieve desired biological conditions, the 2008 Forum recommended “Resource Protections with Regulatory Stability and Simplicity” as one of the “most urgent” elements for a proposed state Task Force to address:

  1. Clarification and simplification of the forest practices-related rules structure to protect the
    ability of small forest landowners to operate as working forest managers. “Clarification and
    simplification” is intended to expand choices to accomplish resource protection and not
    diminish overall protection, as for example, with riparian buffers standards that can be
    managed with lower risk and potential impacts, commensurate with their smaller harvests.
  2. Incentives that enhance landowner ability to effect resource protection standards.

Forum participants recognized the time-consuming realities of grappling with these regulatory complexities. Legislation and current rule changes under considerations by the Forest Practices Board may address these issues. Forum participants support efforts to provide a simpler regulatory framework that removes some of the current disincentives for landowners and provides incentives for long-term stewardship and enhancement of non-timber resources.

Tax Reform and Competitive Position

Since 1971, Washington has used a “Current Use” tax structure for enrolled “Designated Forest Land” (DFL) properties of 20 acres or larger. The legislature’s intent was to assure “… continuous production of timber and forest products from the significant area of privately owned forests…whose forests contribute to the natural ecological equilibrium, and in providing employment and profits to its citizens and raw materials for products needed by everyone” (RCW 84.33010). The annual property tax rate on DFL land ranges from an average of $1.79/acre/ year for western Washington to $0.58/acre/year for eastern Washington. Timber is taxed at harvest at a rate about $19/thousand board feet (MBF). (FWF 2, 133-134) DFL designation requires a 10-year commitment to resource production with significant penalties for withdrawal. The intent is to keep holding costs low for committed forestland owners and for the state to derive revenue at the time of harvest. Approximately 6 million acres of private forest land are enrolled (see Map #3). From a competitive position analysis, Washington has the highest per acre tax burden of any state for forestland and is therefore at a disadvantage when compared with neighboring timber-producing states (Oregon and Idaho).

Over nearly 40 years, there have been numerous amendments and adjustments to this basic framework. Forum participants recognized that a new look at the forest tax system could potentially provide an additional set of incentives for landowners to retain land in forestry, discourage conversion and produce habitat, carbon sequestration and other ecosystem services. In parallel with the 2008 Findings to examine Regulatory Reform, the Forum recommended that the Task Force address:

  1. An integrated forest-specific tax structure that will provide incentives to retain forest land, encourage long-term forest management, produce a range of ecosystem services and provide for the movement of forest products to processing sites.
  2. Notwithstanding potential 2009 Legislative session actions, the Task Force should be charged with developing tangible next steps for:
    1. Introducing incentives for green energy wood sources;
    2. A “sustainability” tax waiver for working forests;
    3. A biomass exemption from the forest excise tax and $10/Ton credit for transportation;
    4. Consideration of a transfer of development rights (TDRs) exemption from the real estate excise tax (REET).

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Compensation for Development Rights and Cascade Land Conservancy Findings

If only one action could be taken to ensure the future continuity of the state’s forests, elimination of the evelopment right from working forestland would be the key. All incentives to encourage biodiversity, reduce the costs of holding timber from the market, and minimize regulatory complexity will be futile unless the issue of parcelization and fragmentation is addressed head on.

The right to build a house on rural or forestry property is a function of county zoning. Under the state’s Growth Management Act, all counties must designate lands of Long Term Commercial Significance for Forestry. Depending on the county and the local zoning code, each parcel of forest land from 5- 80 acres includes the right to build a single family residence. The only exception is Whatcom County which explicitly does not provide a building right in its Commercial Forest Zone.

Ensuring a stable land base for forestry requires that reasonable economic expectation from forest management can be met. Equally important is landowner support for Working Forest Conservation Easements to either permanently remove this development right or ensure that the land remains as working forest for a stipulated time frame. Forum participants have focused significant time examining various mechanisms to monetize this embedded value through private markets, public funding and a combination of mechanisms. As noted in Forum Findings from 2007 and 2008, there is a high degree of support for the concept of Transfer of Development Rights (TDR) and Purchase of Development Rights (PDR) to protect working forestland and for private non-profits to work in partnership with state and local governments to achieve this outcome. From the landowner’s perspective, the actual mechanism to produce the required funds may be relatively unimportant, unless it is too complex.

In 2007, the Cascade Land Conservancy convened a series of landowner focus groups to evaluate a range of possible choices, including transfer or sale of development rights, lease of development rights, lease with an option to purchase development rights and leasing of ecosystem services. (FWF, Sec 6) Focus group interviewees had two responses to the opportunity to remove the threat of development. One segment of family landowners expressed hesitancy to participate in a perpetual easement program due to its permanent nature, concern about whether their land would be financially viable for them or future generations and fear of “seller’s remorse.” The opportunity for permanent protection so attractive to conservationists was seen by these owners as creating a“cloud on the title that will prevent options on the future.”

The interviewer found that “with these landowners in general, simpler agreements are better received, but people will not agree to terms that increase their restrictions.” The other segment of landowners expressed a willingness to sell their development rights or lease those rights with an option to purchase in exchange for a one-time payment or a series of annual payments. Conservationists were interested in the leasing option only if it included a right to purchase a permanent easement. Yearly contract payments that did not guarantee long-term stability were
viewed by conservationists as a less effective use of private and public funds than straight-out purchase of those interests from willing sellers.

Proposals to lease ecosystem services received a uniform and skeptical response. Landowners were reluctant to commit to increasing the quality or quantity of an ecosystem service. “To many forest landowners, adhering to the regulations is difficult enough and performing at an increased level would be financially undesirable or unrealistic.” The interest level of the landowners decreased substantially in response to this option of management above current regulatory baseline (“additionality”). “One work group member asserted that it was unlikely that the lease payments for an ecosystem service could offset the increased management costs and the loss of revenue.

For the leasing entity, the cost to offset the reduced or deferred income from delaying cutting of trees would make the program costly, and perhaps beyond their willingness to invest. Based on these responses, the work group did not recommend pursuing this option despite a multi- year expression from the Forum of conceptual interest. While the theory may be attractive, landowner participation is crucial. It appears, under current circumstances, that there is not the necessary level of interest to make such a program feasible.

Payments for Ecosystem Services – Supply and Demand ‐ What Landowners Said to University of Washington that Encumbrances for Conservation are Worth

A recent University of Washington survey of family forest landowners (Appendix D) explored their willingness to participate in working forest easement contracts within a range of payments per acre and contract terms (ranging from 10 years to perpetuity) (Rabotyagov, 2008). Produced in conjunction with the Family Forest Foundation, preliminary results confirm that a significant number of family forest owners would consider such long-term encumbrances, though fewer indicate a preference for permanent solutions.

Nearly 2/3 (64%) of those surveyed indicated that they would be willing to accept a payment of $100/acre per year for a 50 year commitment to forestry, with no management requirements beyond the regulatory baseline. Willing participation increased as the price /acre was incrementally raised (up to 78% @ $250/acre/ year) and decreased with a longer contract. Half of the respondents would commit their ownership for 100 years at $10/acre/ year but only 33% would make a perpetual commitment for that amount. In order to have a 50% participation rate in a permanent easement contract, landowners would need to be offered $225/acre annually in perpetuity, whereas a higher participation rate can be achieved by offering a $10/acre payment for a 100-year term easement.

The results show that it is more difficult, all other things being equal, to have landowners commit to a particular management regime for biodiversity, in perpetuity. For example, contract duration would have to be reduced from 50 to 30 years in order for 64% of landowners to agree to a conservation easement contract. However, the hurdle is not as high for fairly lengthy term contracts (50 or 100 years). The survey respondents appear to have preferences for preserving forest management flexibility, even if that flexibility can only be realized in decades.

Surprisingly (and affirmative for the goal of stabilizing the forest land base), “landowners concerned about the development pressure on their forestland appear more willing to participate in forest preservation programs…” University of Washington researchers conclude that “forest retention efforts could be informed and made more effective by paying attention to landowners who are concerned with forestland conversion.”

Minnesota Lessons about Landowner Motivations

It is instructive to view these hypothetical survey results in light of a similar, currently operating program in Minnesota. The Minnesota Sustainable Forest Incentive Act (SFIA) is a property tax law, initiated in 2002, that encourages private landowners to make a long-term commitment to sustainable forestry in exchange for annual payments on a per acre/ year basis. Minimum payments in 2006 were about $5/acre/year. In 2006, 731 ownerships encompassing 602,000 acres were enrolled in the program of 8-year rolling contracts. In 2005, a multi-party state Work Group examined the programs’ “relatively low rate of participation in SFIA by family forest landowners in the face of growing development pressure on private forestland.” http://transition.blandinfoundation.org/html/documents/SFIA_Revisions_FINAL_032706.pdf

The Work Group Findings recommended “substantive program changes,” including: “…current SFIA payment formula does not provide a large enough payment to attract a substantial number of family forest landowners to enroll their property in the program.” “… program costs exceed program benefits for most family forest owners. Such costs include obtaining a stewardship plan, submitting an application, preparing and recording a covenant on the land, and annual recertification. …These requirements constitute a major barrier to participation given the perceived low level of the incentive payment provided by the program.”

The net present value (NPV) of these “term easements” was estimated to be less than $300/acre/year. Perpetual working Forest easements at 30%-80% of FMV were estimated at $200- $1,000/acre/year. www.lccmr.leg.mn/ItemsforMeetings/2007/Presentations/2007-06- 13SFIAPresentation-MichaelKilgore.pps

This disparity between what can be paid to ensure a term easement and what must be paid for a perpetual easement should be food for thought when funds are sought for implement a forest incentive policy. This disparity is also addressed in the University of Washington survey of landowners in the next section.

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On‐the‐Ground Feedback from Washington Forest Land Owners

Two current programs provide some perspective on landowner preferences between term and permanent easements. Designed to partially compensate for harvest rights lost under the Forest and Fish agreement, both programs are considered “mitigation” rather than” incentive” programs by forest land owners. The 2008 Environmental Forum recommended that the legislature fully fund the 50-year term contract Forest Riparian Easement Program (FREP) administered by DNR with a $19.6 appropriation. The 2005-2007 budget funded the program at $8 million and the last biennial budget appropriation was $10 million. Since 2000, 177 landowners have protected 3,398 acres. The Rural Technology Initiative estimates that fully-protecting riparian corridors on family forest ownerships would cost over $1.5 billion. Based on landowner response, the program has been underfunded since its inception in 2001.

In contrast, the Riparian Open Space Program, a permanent easement program for channel migration zone protection, also administered by DNR, has been undersubscribed since inception (2001). Only 584 acres have been enrolled. $1.85 million was appropriated for 2008-2009. Both programs attempt to achieve similar goals: compensation to landowners for lost riparian timber value. The preference for a 50 year easement instead of a perpetual easement supports both anecdotal landowner responses and the survey results discussed above.

Policy Choices to Address Fragmentation and Parcelization through Compensation

Forest landowners signal a willingness to contractually encumber property to ensure its continuing use as working forests. With 215,000 ownerships, there is clearly not one single price or term that will satisfy all. University of Washington survey results indicate that those owners who selfidentified as having land at risk of conversion are more willing to consider permanent easements. If specific strategic areas were identified and prioritized in an overall state approach for working forest conservation, financial and other resources would logically be focused in these areas.

If term easements were also an available option, a parallel track to efficiently allocate public funds would be an “auction” in which owners would bid in their properties for a certain yearly price/acre for a specified term. The public policy debate would likely be fierce about whether term easements (probably with an option right) or permanent easements would be the best investment of public resources. If the survey results are indicative, at a certain price a bare majority of owners would be willing to make a permanent commitment and a slightly larger number would be willing to enter long-term (up to 100 year) contracts.

Perpetuity is a Lot Longer than 100‐Years to a Forest Landowner

On average, 17% fewer owners were willing to enter into a permanent contract than a 100 year commitment. There will always be a certain number of owners who, given present circumstances, will choose to not retain future options for their descendants. Translation of the proposed yearly payment schedule to a Net Present Value (NPV) figure would allow potential buyers and sellers to test the proper strike price to consummate protection transactions.

In conclusion, landowners prefer larger per-acre annual incentive payments, they prefer to commit to shorter contract duration and they require extra compensation to engage in ecosystem production-enhancing forest management. Landowners strongly resist permanent conservation easement programs. There is significant drop-off in willingness to accept a perpetual easement from even a100-year contract duration at all payment levels.

Large premiums demanded by forest landowners for long or perpetual encumbrances to their development rights should provide food for thought for policymakers and conservation organizations alike. Tradeoffs between the number of forest landowners participating, the length of programs and the desirability of a wider program coverage at the expense of their permanence will have to be made.

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Conclusions

For the past 5 years, the Northwest Environmental Forum has considered the future of Washington’s forests and how to retain them for the multiple economic, environmental and social benefits they produce. A consensus conclusion has emerged from these deliberations, based on research conducted by the University of Washington. The state’s most productive privately–owned forest lands are under enormous pressures for conversion to non-forest uses. The loss of these forests will permanently and irreversibly affect the economic well-being of key state industries, further diminish fisheries and habitat values and jeopardize the very essence of the state’s identity as the “Evergreen State.”

Despite the current economy and housing down-market, this period should be viewed as a time to take action before the next upturn, given that Washington’s population will continue to grow. Smaller land ownerships around the Puget Sound and other growth corridors are most threatened by regulatory and growth pressures, and are also the least-compensated within the meager programs that are available. Just as it was recognized in 1934, a time of drastic downturn is also a time of opportunity.

The key strategy recommended by the Forum is a legislatively appointed Task Force directed to produce an overall plan for integrating Washington’s regulatory, tax and forest land protection initiatives. The long-term retention of our state’s working forests will require a commitment to an overall program of incentives, policies and actions.

 

References

Comparing the Value of “Forest and Fish” Leave-Trees with the Forest Excise Tax Credit: Report
to the Legislature,2002. Washington State Department of Revenue.
dor.wa.gov/Docs/Pubs/ForestTax/Salmoncredittaxstudy.pdf

Dilley, J., 2008. “Washington State Working Forest Incentive Programs.” University of Washington
Northwest Environmental Forum Handouts (2008)
http://www.nwenvironmentalforum.org/documents/ForestIncentivePrograms.pdf

Dilley, J., 2008 “Working Forests Incentive Programs and Legislation for
Private Forest Lands in United States.” University of Washington Northwest Environmental Forum
Handouts (2008).
http://www.nwenvironmentalforum.org/documents/StateEffortsJanaDilley.pdf

Donegan, M, 2007. “Preserving Oregon’s Working Forests: A Landowner’s Perspective on
Sustainability.” Oregon Task Force on Land use Planning (August 2007).

Findings and Recommendations from Sustainable Forest Incentive Act (SFIA)
Work group, 2006. Minnesota.
http://transition.blandinfoundation.org/html/documents/SFIA_Revisions_FINAL_032706.pdf

Forest Sector Working Group Report, Washington Climate Action Team, 2008.
http://www.ecy.wa.gov/climatechange/2008FAdocs/11241008_forestreportversion2.pdf

Kilgore, M., Minnesota’s Sustainable Forestry Act, PowerPoint presentation to the Legislative-
Citizen Commission on Minnesota Resources (LCCMR),
www.lccmr.leg.mn/ItemsforMeetings/2007/Presentations/2007-06-13SFIAPresentation- MichaelKilgore.pps

Major Findings and Proposals for 2009 Legislative Action, 2008. Northwest Environmental Forum,
College of Forest Resources, University of Washington.
http://www.nwenvironmentalforum.org/documents/2008ForumReport.pdf

Murray, S., 2005. “Recent Efforts by States to Incentivize Working Forests.” University of
Washington Northwest Environmental Forum Handouts (2005).
http://www.nwenvironmentalforum.org/ForestForum/topicpapers/tp13.pdf

Rabotyagov, S., 2009. “Pilot Forest Landowner Survey Results- (Preliminary).
University of Washington College of Forest Resources.

The Future of Washington’s Forests and Forestry Industries, Final Report, July 2007. Prepared for
the Washington Department of Natural Resources, Seattle, WA: University of Washington, College
of Forest Resources, 2007.
http://www.nwenvironmentalforum.org/WFFfinalreport.html

Perez-Garcia, J., H. Kubota, A. Lewis, I. Eastin. .Study 2: Competitive Position. 124-153
Bradley, Gordon, A. Erickson, A. Robbins, G. Smith, L. Malone, L. Rogers, M. Connor
.Study 4: Forest Land Conversion in Washington State. 238-302
Lippke, B, K. Ceder, K. Zobrist, L. Mason. Discussion paper 7 (DPT 7): Westside Regulatory
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. DPT-1-DPT-21.

Washington Biodiversity Conservation Strategy: Sustaining Our Natural Heritage For Future
Generations, 2007. Washington Biodiversity Council.
http://www.biodiversity.wa.gov/council/strategy-sections.html

Washington Conservation Markets Study: Final Report, 2009. Prepared for the Washington State
Conservation Commission, Evergreen Funding Consultants.

Winkenwerder, H.,1935. Report of the Technical Advisory Committee on Forestry of the
Washington State Planning Council, Supplement West Coast Lumberman.

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