Redefining “Productive”: Implications for Sustainable Forest Management

PI: Joshua Farley Community Development and Applied Economics, UVM

joshua.farley@uvm.edu205B Morrill Hall, UVM

Collaborators: Dr. Marta Ceroni, UVM; Laura French, Vermont Family Forests

Completion date: May 31, 2007

•A Delphi survey revealed a consensus among state forestry experts that Vermont’s forest should be managed for ecological as well as economic benefits, and that the Use Value Appraisal program should be modified to include the provision of ecosystem services as a productive use of forests. •Community ownership schemes for forest resources are likely to improve their allocation while respecting private property rights, but may still provide fewer ecosystem services than is socially optimal.

Funding support for this project was provided by the Northeastern States Research Cooperative (NSRC), a partnership of Northern Forest states (New Hampshire, Vermont,

Maine, and New York), in coordination with the USDA Forest Service.<http://www.uvm.edu/envnr/nsrc/>

Project SummaryVermont’s forests can be developed, converted to timber (a critical input into the market economy) or left intact to

provide critical ecosystem system services such as habitat for biodiversity, climate regulation, water regulation and so on. While the market economy is effective at allocating timber towards economic products that maximize its value, it fails to adequately account for the production of social and ecological benefits. In order to prevent the excessive development of forest land, Vermont’s Use Value Appraisal (UVA) program offers tax incentives for maintaining forest lands in timber production, but still fails to account for the production of many social and ecological benefits. The goal of this project was to outline a new, practical definition of ‘productive use’ that can be implemented within the current property tax structure for Northern Forest states to favor a more sustainable use of private forestland. A Delphi survey of forestry experts in Vermont revealed a consensus that forests should be managed for both ecological and economic benefits, but failed to find any consensus concerning social benefits. Delphi participants also agreed that existing property rights should be respected, that incentives were preferable to regulations, and that redefining ‘productive use’ under the UVA program to include ecological benefits was appropriate. A subsequent survey of almost 400 forest land owners which has undergone only preliminary analysis so far suggests that the majority of landowners would be willing to manage their forests for a variety of ecological benefits but lack information on how to do so. Concerning policies for promoting management for ecological benefits, they favor education programs, tax incentives and payment for ecosystem service schemes, in that order. Regulations were the least favored option. We also examined the Little Hogback Community Forest (LHCF) project, designed by Vermont Family Forests, as one model for improving the sustainable, just and efficient allocation of ecosystem services and goods provided by forests. We found that this model offers many advantages over individual ownership, but it also confronts serious problems with sustainable financing and fails to effectively account for regional and global-scale ecosystem services provided by forests. We are currently in the process of analyzing results from our second survey which will help us to refine policy alternatives for promoting sustainable forestry in the Northern Forest region.

Background and Justification• Forests can easily be converted into economic products and financial capital through

clearing and development or through unsustainable timber harvests. • Alternatively, forests can be conserved to provide vital ecosystem services, included the

sustained production of timber. • Healthy economies depend on both economic products derived from forests as well as

ecosystem services. • However, most ecosystem services provided by forests cannot be owned, bought, or sold,

and are therefore ignored by market forces. • Because financial capital invested in the stock market often grows faster than timber in a

forest, there is a market incentive to liquidate timber stocks. • Markets therefore systematically favor the conversion of forests into market outputs over

conservation for the production of ecosystem services. • In the past, Vermont has seriously depleted its forest resources and in the process did

serious harm to its economy, but fortunately the damage was not permanent. • However, economic forces are now pushing for the development of forest land, which is very

difficult to reverse. • There is a serious need to address the failure of the market economy to account for

ecosystem services, while at the same time respecting existing property rights of Vermont forest landowners.

Background and Justificationthe NFLC policy report (1994) laid out three fundamental principles for policy reform aimed at reinforcing the

traditional patterns of land ownership and uses of large forest areas in the Northern Forest :• The greatest public benefit must be secured for any additional investment;• Proposals must be judged by their long-term benefits, at least 50 years ahead; and• Existing programs must be evaluated, built upon, and improved, before new ones are created.The NFLC found that major threats to achieving this goal include existing market forces that ignore the value of

well-functioning ecosystems and that favor short-term gain over long-term sustainability. This project seeks to develop feasible policies options that address this significant shortcoming of market forces while respecting the policy principles laid out above.

Public funds are scarce, existing legislation already subsidizes ‘productive use’ of forest lands in Northern Forest states, and certification covers many of costs of implementing SFM. A redefinition of ‘productive use’ within existing incentive programs as a complement to SFC evaluates, builds upon, and improves existing programs, and is therefore likely to provide the greatest public benefit for the least additional investment. That public benefit is likely to be realized for many years to come, as by definition SFM will benefit future generations.

Background and JustificationThis project addressed a number of objectives of the NSRC request for proposals,

such as:• “Sustainable Forest Management”

We define and evaluate a sustainable approach to Northern Forestmanagement that takes into account the social, economic, and ecological challenges facing Northern Forest communities

• “Watershed Science and Planning” We are developing a strategy to achieve and sustain productive forestland and the ecosystem services that such forests provide.

• “Ecological Economics”We are developing policy options that will improve the allocation of forest resources between:

– Clearing for development– Timber harvest– Ecosystem services

The survey targeted a comprehensive sample of Vermont’s consulting foresters (including private and state) with the goal of characterizing management planning, landowners’ objectives, the adoption of sustainable management practices and foresters’ opinions on current policy tools to promote forest sustainability. A total of 55 foresters filled our mail-delivered survey (out of 145 recipients).

Methods: Forester survey

Methods: expert Delphi survey

We used a three-round survey technique to formulate a consensus of responses among forestry professionals over the appropriate forest management to achieve economic, ecological and social goals in Vermont.The first round of the Delphi survey was distributed by email to 70 professionals in the Vermont forestry field (state, private, academic, and non-profit). Fourteen participants completed all three rounds of the Delphi. Each round contained a section on economic, ecological and social goals of forest management in Vermont and a section that focused on determining an ideal forest structure for achieving those goals. Questions shifted from mostly open-ended in the first round to a more structured format in the second and third round, as described in the figure.

Consensus was measured based On Tastle and Wierman (2005)as follows:

X = The Likert Scale pi = The probability of the frequency associated with each X dx = The width of X (number of Likert options: 5 in this case) Xi = The particular Likert attribute (1 to 5)

x = The mean of X (3 in this case

Tastle, W. J., Russel, J., & Wierman, M. J. (2005). A New Measure to Analyze Student Performance Using the Likert Scale. Proceedings of ISECON, 22, 1-7.

• The Forester Survey targeted a comprehensive sample of Vermont’sconsulting foresters (including private and state) with the goal of characterizing management planning, landowners’ objectives, the adoption of sustainable management practices and foresters’ opinions on current policy tools to promote forest sustainability. A total of 55 foresters filled our mail-delivered survey (out of 145 recipients).

• The goal of the landowner survey was to assess what type of incentives or market mechanisms could be designed to manage Vermont's forests for a comprehensive set of economic, ecological and social goals as stated by the expert panel in the Delphi survey as well as in VT resource management plan and as recognized by many VT experts and landowners (e.g. the Roundtable on Forest Parcelizationand Fragmentation at Vermont Natural Resources Council).

• A total of 2500 landowners were contacted and invited to fill the online survey (www.surveymonkey.com/LandownerSurvey). The sampled population comprised forest landowners with parcels over 25 acres in size. We have received nearly 400 responses so far.

• A set of questions was based on the National Woodland Survey (reasons for owning forestland and the factors that affect landowners’ forestland decisions ) but additional questions were added to specifically assess what effect current and potential future policies may have on landowners’ ability to achieve their forest management goals.

Methods: Forester survey and expert landowner survey

Methods: Ecological Economic Analysis

• Ecological economics studies the allocation of available resources among alternative desirable ends.

• We used the Delphi survey to assess the desirable ends towards which forests should be allocated.

• We assessed the physical characteristics of Vermont’s forest resource, according the to the following criteria:– Stock-flow (transformed into what is produced) vs. fund-service (not

transformed into what is produced)– Rival (if I use it, you can’t, e.g. timber) vs. non-rival (my use does not

leave less for you to uses, e.g. scenic beauty, climate regulation)– Excludable (property rights exist, can be bought and sold) vs. non-

excludable (no property rights exist)• Starting from the baseline of existing property rights and based on the

physical characteristics of the resources, we assessed various policies to improve the allocation of forest resources.

• We paid particular attention to Vermont Family Forest’s community owned forest initiative

Results/Project outcomes: Forester survey

Landowners’ reasons to request a management plan• All interviewed foresters cited enrollment in the Use Value Appraisal (UVA) tax

program as a very common or somewhat common reason. By contrast, enrolling in federal cost-share programs or enrolling in a forest certification program was cited as very uncommon and uncommon reason by 76% and 91% of the interviewed foresters, respectively. Most interviewed foresters (70%) indicated that first-time clients often request a management plan regardless of available tax incentives or programs, based on

their interest as landowners to attend properly to the land and do the “right thing”.Adoption of sustainable harvesting practices

• Foresters were presented with Vermont Family Forest’s checklist of sustainable harvesting practices. For each practice they were asked to indicate how often they adopt them based on their experience at different sites. The majority of interviewed foresters seemed to frequently adopt many of the 27 sustainable practices on the checklist. As an example, more than 80% of foresters favor native species over non-native when regenerating stands, avoid harvesting in spring, and use skid trails and log lands only when adequately dry or frozen.

Results/Project outcomes: Forester surveyTo the extent possible please estimate the percentage of first tim

request a UVA management plan base soley on timber manag

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15

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75-100%50-75%25-50%0-25%

To what extent do you agree that the UVA is helping to achieve the objectives promoting long-term forest stewardship in Vermont?

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5

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Strongly AgreeAgreeMixedDisagreeStrongly disagreeDon't know

Landowners often intend to harvest just enough timber to be eligible in UVA (62% of foresters maintain this is a frequent or very frequent case). Additional objectives such as managing for wildlife, recreation, and aesthetics, are also commonly cited.

The Use Value Appraisal program doesn’t seem to be perceived as restrictive by the respondents in terms of management decisions, as expressed by sixty percent of foresters, in contrast to 27% that think otherwise or the 13% who didn’t express an opinion.

Results/Project outcomes: Delphi results for management

The Delphi Survey revealed varying degrees of consensus among Vermont forestry experts concerning

• Ecological goals of forest management:– Consensus: Include ecological benefits in addition to economic benefits,

such as maintaining soil productivity, protecting water quality and riparian zone health; Discourage parcelization

– Near consensus :Protect ecologically sensitive areas, wildlife, and unique habitats even if this means there are no timber harvests at all on those sites

– Moderate consensus: Minimize development• Economic goals of forest management

– Consensus: Provision of economic benefits from forests should bevoluntary

– Moderate Consensus: Should not be determined solely by the economic goals of the landowner

• Social goals of forest management– Consensus: Provision of social benefits from forests should be voluntary– Near Consensus: Should maintain educational opportunities for forest

landowners, forest industry professionals, state residents and visitors, maintain research and monitoring opportunities and recreation opportunities

Results/Project outcomes: Delphi results for policy

• Consensus:– Use value appraisal program should be

continued, should include ecological benefits as well as timber as productive use.

– Government should create economic incentives that make conserving forests for economic and ecological benefits more attractive to landowners than liquidation or development

• Near consensus:– government should play a role in promoting local

value added opportunities and better markets for undervalued forest resources.

Results: Ecological Economic Analysis: Suggestions for the allocation of forest resources based on their physical characteristics

Rival

Non-rival

Excludable Non-Excludable

Market Good: Stock-flow resources; Ecosystem structure, i.e. timber, land for development. Markets work well if other systems in place to ensure enough structure remains intact to provide adequate function

Tragedy of the non-commons: e.g. recreation on posted land where congestion is not a problem; information. Markets create artificial scarcity. For example, oil shortages or limits on use could increase timber harvests for fuel. While alternative energy sources would reduce this pressure, patents would increase their price and reduce their use. Public funding and free dissemination of such information increases use.

Pure Public Good:Fund service resources. Information, most ecosystem services e.g. flood control, water purification, climate stability, biodiversity, recreation, cultural values. Conventional markets fail. Payments for ecosystem services respect existing property rights, can be financed from use fees on common property assets.

Open Access Regime:Waste absorption capacity; “tragedy of the commons”. Possible to create common property rights, cap and trade system with revenues belonging to Vermont citizens.

Results/outcomes ecological economic analysis

• Private ownership of forest resources is unlikely to result in adequate provision of ecosystem services if landowners are primarily motivated by self interest.

• Common ownership is likely to produce more sustainable, just and efficient allocations than private ownership.

• The Little Hogback Community Forest (LHCF), designed by Vermont Family Forests could lead to more sustainable, just and efficient allocation of forest resources while respecting existing property rights.

• LHCF confronts serious problems with sustainable financing and fails to effectively account for the regional and global-scale ecosystem services provided by forests.

• Payments for ecosystem service schemes could help account for regional and global ecosystem services.

Preliminary results/outcomes from landowner survey

• Over 50% of landowners would manage forests for water quality, site productivity, biodiversity, recreation and education, and aesthetics without compensation; 49.7% would be willing to manage for all of these and carbon fixation and storage without compensation.

• Preferred policies to protect ecosystem services provided by Vermont’s forests include reduced taxes for land uses that enhance ecosystem services (81.2% favor, 3.1% oppose), improved education about ecosystem services and the land uses that provide them (70.6% favor, 1.4% oppose), and altering the definition of ‘productive use’ in the UVA program to include ecosystem services (51.4% favor, 8.4% oppose).

• The least preferred policy option is regulations that would mandate specific land uses (14.3% favor, 48.7% oppose).

Future directions

• Analyze results from landowner survey and prepare journal article Vermont Forest Landowner Attitudes Towards Managing for Ecosystem Services by Joshua Farley, Marta Ceroni et al. Journal to be decided.

• Prepare policy article for Environmental Science and Policy, synthesizing results from Delphi, landowner survey and ecological economic analysis.

• Study on common asset trust in Vermont– Identify unowned ecosystem services in Vermont– Assess mechanisms for creating common property rights– Estimate revenue that could be generated from cap and trade system.– Expect to work in collaboration with State Senator Hinda Miller– Will apply for funding from Ford Foundation, Hatch program

• Study on payments for ecosystem services in Vermont (including lower property taxes on land providing such services)

– Estimate what forest land provides highest value of ecosystem services in Vermont

– Estimate spatial distribution of services– Estimate how much landowners would require to manage their land for

different services– Assess mechanisms through which recipients of services in different

regions could pay for their provision– Will apply for funding from Hatch program

Implications and applicationsin the Northern Forest region

• In the face of rapid ecological, economic and social change, we must continually re-evaluate the goals of forest management. Our study helps to clarify expert opinion on the current priorities for forest management as well as the willingness of forest landowners to manage their lands accordingly. Armed with this knowledge, we will be able to design policies that more effectively allocate forest resources towards our current needs, while maintaining future options.

• We found considerable support for Vermont’s Use Value Appraisal program among both experts and landowners, as well as suggestions for how to improve it to meet current needs.

• Our survey of landowners suggests a greater than expected willingness to manage private lands for public benefits. It pinpoints a lack of knowledge of ecosystem services and appropriate management strategies as obstacles that could be readily overcome with appropriate policy interventions.

• In an evolving ecological and economic landscape, sustainable forestry requires adaptive management. One step in the adaptive management process is to continually re-evaluate the goals and strategies of forest management as we gain new information. Our study lays out the Delphi survey as one suitable approach that can be replicated in the future. It also adds to baseline data against which future management strategies can be compared.

Outcomes• 2 presentations by Marta Ceroni for the Roundtable on

Parcelization and Forest Fragmentation, a year-long forum organized in 2006-2007 by the Vermont Natural Resources Council

• Provided material for keynote address by Joshua Farley at the New England Society of American Foresters annual conference, Fairlee, VT. March 21, 2007 Seeing the Forests and the Trees: Insights into the Allocation of Forest Resources.

Outcomes• Master’s Thesis in Community Development and Ecological

Economics at UVM:Massanari, J. (2007) Maximizing the Public and Private Benefits of Vermont’s Forests: Finding a Balance Between the Production ofForest Products and the Provision of Ecosystem Services. Master’s thesis, UVM. CDAE

Outcomes• Draft paper to be submitted to the Adirondack Journal of

Environmental Studies: Managing Forests for Multiple Benefits: the perspective of Vermont Foresters. Marta Ceroni, Joshua Farley, Nicholas Goulette, David Brynn

• Draft paper to be submitted to Ecological Economics on Community Forestry as a Model for the Improved Allocation of Forest Resources in Vermont by Jess Massanari, Joshua Farley, Marta Ceroni, David Brynn* and Deborah Brighton*(*tentative)

• Draft paper to be submitted to Society and Natural resources on Utilizing a Delphi Survey to Determine Expert Consensus Opinion on Appropriate Forest Management in Vermont Jessica Massanari, Joshua Farley, Marta Ceroni et al.