United StatesDepartment ofAgriculture

Forest Service

Southern ForestExperiment Station

New Orleans,Louisiana

Research Paperso-295September 1995

Federal and State Forestry Cost-ShareAssistance Programs: Structure,Accomplishments, and Future Outlook

Terry Haines

SUMMARY

Cost-share assistance programs have been an effective policy mechanism for increasingproductivity on nonindustrial private forest (NIPF) lands. In light of reduced harvests fromFederal lands, timber productivity on these lands has become increasingly important to ensuresufticient timber supplies in the future. Productivity of other forest resources has also beenenhanced through these programs.

Four Federal programs, the Forestry Incentives Program, the Agricultural ConservationProgram, the Stewardship Incentives Program, and the Conservation Reserve Program,provided cost-share assistance for tree planting on 467,000 acres in 1993.

State programs have been established in 19 States to cost-share forestry practices onNIPF lands. These programs contributed payments for tree planting projects on over 150,000acres in 1993. Programs are concentrated in 10 States in the southern pine belt and 6 in theMidwest. Programs have also been established in California, Hawaii, and Oregon. The firstState program was implemented in 1970 in Virginia in response to forest inventory statisticsindicating a lack of investment in forest productivity on NlPF lands. Similar concerns, coupledwith the lack of sufficient Federal funding for incentive payments, prompted a numberof States to establish cost-share assistance programs in the 1970’s and 1980’s. Inaddition to timber-oriented progmms, several States initiated cost-share assistance programsthat focus on the protection and enhancement of wildlife habitats, wetlands and riparianareas, soils and water quality, or other forest resource values in the mid-1980’s and 1990’s.

During the course of this study, the provisions of the individual State programs, fundinglevels, accomplishments, and outlook for continuation or expansion, were examined. Federalprograms were reviewed as well, with respect to their interaction with State-levelprograms. The results of the study are presented in this paper.

Federal and State Forestry Cost-Share Assistance Programs:

Structure, Accomplishments, and Future Outlook

Terry Haines

INTRODUCIION

Nonindustrial private forest (NIPF) landownersplay a vital role in sustaining forest resources.Nearly 60 percent of the commercial forest land in theUnited States is held by NIPF landowners; these landsprovide about half of the timber harvested nationwide.As timber harvests from Federal lands have beenreduced in recent years, the supply of timber fromNIPF lands has become more crucial.

Two important barriers to NIPF landownerinvestments to optimize forest productivity are thelack of “up-li-ont” capital and low expected rates ofreturn. In response, cost-share assistance programshave been implemented to help stimulate NIPFinvestment by reducing landowners’ initial costs forreforestation and improving rates of return.

Several studies have shown that cost-shareassistance programs are effective in terms of increasedproductivity on NIPF lands (Mills 1976, Risbrudt andEllefson 1983, Royer and Moulton 1987). Tree plantingstatistics indicate that these programs have beeninfluential in promoting NIPF forestry investments(table 1). Federal programs provided cost-shareassistance for tree planting projects on 467,102 acresand timber stand improvement practices on 113,608acres in 1993. These acreages represent 47 percent ofthe total tree planting and 20 percent of the timber standimprovement accomplished in 1993 (Nisley 1994).

In addition to projects for tree planting and timberstand improvement, Federal and State cost-shareassistance programs, to varying degrees, provideassistance for the preparation of management plans andfor projects that focus on soil conservation, waterquality, wetlands, and fish and wildlife habitatimprovement.

To date, most studies of cost-share programshave focused on Federal incentive programs. Less workhas been done to evaluate State cost-share programs thatprovide direct monetary incentives for reforestation andstand improvement. In the most recent nationwidestudy on this topic, a brief summary of the features ofeach of the existing State programs as of 1988 is

presented (Bullard and Straka 1988). A brief summaryof the features of the incentive programs of theSouthern States is also presented in Harrell(l989).

A current, more expanded view of State cost-shareprograms is provided in this report, including analysesof new programs that have been implemented since1988. Program features, funding mechanisms, andaccomplishments are reviewed as well as problemsthat have been encountered. The likelihood ofcontinuation or expansion of State-level incentiveprograms is also addressed. Federal programsproviding cost-share payments to NIPF landownersare reviewed as well, with respect to theirinteraction with State-funded programs.

FEDERAL COST-SHAREASSISTANCE PROGRAMS

Cost-share assistance programs of the U.S.Department of Agriculture (USDA) that are available toNIPF landowners include the Forestry Incentive Program(FIP), the Agricultural Conservation Program (ACP),the Stewardship Incentives Program (SIP), theConservation Reserve Program (CRP), and the WetlandsReserve Program (WRP). Funding and administration ofFIP and WRP is through the USDA Natural ResourceConservation Service; the ACP and CRP areadministered by the USDA Consolidated Farm ServiceAgency, and the USDA Forest Service administersSIP. Technical forestry aspects are handled by theForest Service with cooperation from the State forestryagencies. The continuation of the FIP and CRPprograms will likely be decided in the 104th Congressthrough the 1995 Farm Bill legislation. Authority forthese programs expires in 1995 in accordance with the1990 Farm Bill.

Although the legislative intent and goals for eachof these programs differ, forestry practices generallyauthorized in these programs are site preparation, treeplanting, and timber stand improvement. Inaddition, NIPF landowners may receive cost-shareassistance for non-timber related projects, including

Terry Haines is a research forester, Law and Economics, U.S. Department of Agriculture, Forest Service, Southern Forest Experiment Station, New Orleans, LA70113.

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Table 1 .-Accomplishments (in acres) of Federal and State foresq costzhare assistance programs in planting trees on non

industrial private forest (NIPF) landr in selected States in 1993

Federal?

TotalFederal Total

State CRP FIP ACP SIP and State NIPF

Alabama 7,215 13,426 16,596 1,631 4,126 42,994 94,972

California 4,000 163 403 348 157 5,071 9,650

Mississippi 58,768 34,862 19,438 15,676 6,938 135,682 158,286

North Carolina 41,060 3,060 19,218 1,166 ---- 64,504 68,938

South Carolina 5,761 4,598 14,626 13,763 745 3 9,493 47,88 1

Texas 9,361 217 12,401 1,446 2,305 25,730 33,018

Virginia 14,977 810 19,940 3,360 2,006 41,093 57,427

*Sources: USDA Forest Service and USDA Agricultural Stabilization and Conservation Service publications, and personalcommunication with State forestry agency officials.

‘CRP=Conservation Reserve Program, FIP=Forestry Incentives Program, ACP=Agricultural Conservation Program, andSlP=Stewardsbip Incentives Program.

multi-resource planning, wildlife and fish habitatimprovement, and tree planting to protect riparianareas and wetlands. State program committees areauthorized to establish cost-share rates up to theFederal maximum and may set practice prioritiesor other restrictions. The CRP, ACP, and FIPprograms require a practice plan for the acreagetreated. However, SIP requires a more comprehensivemulti-resource evaluation for contiguous forested acreswithin the ownership. Landowners may do the workthemselves or contract the work to others. Uponcompletion, landowners receive the cost-sharepayments, provided the work is done to standards.Furthermore, landowners must maintain the practicesfor a set period, typically 10 years. A summarizeddescription of the Federal cost-share assistanceprograms is given in Moulton (1994) and moreindepth information is presented in the annualUSDA Program Accomplishment Reports for ACP,FIP, CRP, and SIP, which are published by theAgricultural Stabilization and Conservation Service.

STATE FORESTRY COST-SHAREASSISTANCE PROGRAMS

Increased awareness and concern regarding thelow level of investment in the reforestation of NIPFlands after harvest prompted a number of Statesto establish forestry cost-share programs in the1970’s and 1980’s (tables 2 and 3). Funding for theseprograms increased over 60 percent between 198 1 and1985 (Bullard and Starka 1988). Federal cost-sharefunding was insufficient to meet the needs of NIPFlandowners in many States. In more recent years, newState cost-share programs have generally focused ona broader range of resource goals and have addressedspecific resource protection needs or land-usepriorities.

The largest State programs in terms ofcost-share payments and acreage treated are in theSouth. Forest industries are a leading sector of theindustrial base of many States across the South.In 1982, forest industry contributions in wages and

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Table 2-Features ofState levelforesny cost-share programs to improve timberproduction

Program features for determing project eligibility

State program Cost-share Maximumrate payment

Siteproductivity

rankingOwnership

limitsProjectlimits

Practiceretention

Alabama Agriculturaland ConservationDevelopement Program

California ForestImprovement Program

Florida Plant a TreeTrust Fund Program

Illinois ForestryDevelopment Program

Iowa ResourceEnhancement andProtection Program

Maqland WoodlandIncentives Program

Minnesota ForestryImprovement Program

Mississippi ForestResources DevelopmentProgram

North Carolina ForestDevelopment Program

Oregon ForestResource Trust

South Carolina ForestRenewal Act

Texas ReforestationFoundation Program

Virginia ReforestationTimberlands Act

Percent Dollars

60 3,500lyear

75-90t ____

50 10,000

80 ___-

75 365lacre

50

50-65’

5 ,OOO/year15 ,OOOfyears/

3 years

25/acre**

50-75# 8,OOObear

40-60’

Up to loo+

50

50

40

1 oo,ooo/2 years

____

____

75lacre

No

Yes

Yes

No

No

Yes

No

No

No

Yes

Yes

Yes

No

Acres

20 minimum

20-5,000

lo-1,000

5 minimum

--__

lo-5o08

--__

----

lo-5,000

100 maximnm

____

--_

Acres

1nlikluIIl

o-5 minimumX

____

3-5 minimum

____

5-10 minimum*

lnlininlnrn100 maximum

100 maximnm++

lominimum

1-5 minimnm*5OOmaximum

Years

10*

10

2

10

20

15

10

10

____

Commercialharvest

10

10

10

*5 years for limber stand improvement.

+Projeck to meet minimum standards of state forest practice acts not eligible.

$Varies with type of practice.

5 Contiguous acres in tract.l *

Rate of replanting CRP plantations.

t t lO-acre minimum for mechanical site preparation.

Table 3.-Funding and accomplishments of State forestry cost-share programs to improve timber production

State program anddate implemented Source of funding

Annual cost-share paymentsfor reforestation and timber

stand improvement

Annual Accomplishments,reforestation and timber

stand improvementTrends infunding

Dollars Acres

348,913 10,949Interest from oil andgas trust fund

Alabama Agriculturaland Conservation Development Program, 1985

California ForestImprovement Program,1980

Florida Plant a Tree TrustFund Program, 1995

Illinois Forestry Develop-ment Program, 1983

Iowa Resource Enhance-ment and ProtectionProgram, 1989

Maryland WoodlandIncentives Program,1986 -

Minnesota ForestryImprovement Program,1989

Mississippi ForestResource DevelopmentProgram, 1974

North Carolina ForestDevelopment Program,1978

Oregon Forest ResourceTrust, 1993

South Carolina ForestRenewal Act, 1981

Texas ReforestationFoundation Program,1981

Virginia Reforestationof Timberlands Acts,1970

Timber harvestreceipts from Statelands

Voluntary contribu-tions from SunshineGas Pipeline Company

Primarily throughtimber harvest tax

Lottery revenues andState general fund

1,512,142 7,829 Decreasing

70.000 New New

144,951

135,880+

3,608 Increasing

1,100+ Decreasing

Not available 443 Statutory limit$200,000

Transfer tax onagricultural landsconverted to other uses

State general funds 42235+ 1,944+ Not funded1993-94

1,829,608+Timber harvest tax 39,254 Stable

38,441+1,900,000+Timber harvest tax (50%),State general funds (50%)

New

5,904

6,0966,096

NewLottery revenues andPacitiCorp contributions

Timber harvest tax (80%),State general funds (20%)

Vohmtav forest industtyassessment on primaryproducts

State general funds (50%),harvest tax (50%)

New

515,736

280,839

Stable

Increasing

State fundsdecreasing,severancetax fundsincreasing

1,014,331 40,393

1Acreage and payment figures are averages of program years.

t Reforestation practices only.

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salaries ranked fourth or higher among majorindustries-and ranked first in Arkansas, Alabama, andMississippi. Furthermore, in 1982, employment, wages,value of shipments, and value, added by manufacturingfor all forest industries in the region representedroughly one-third of forest industry activitiesnationwide (USDA FS 1988).

Cost-share assistance programs promotingtimber production are concentrated in the southernpine belt States of Alabama, Florida, Maryland,Mississippi, North Carolina, South Carolina, Texas,and Virginia (fig. 1). The Louisiana ForestryAssociation is currently developing a proposal toestablish a program in Louisiana. Outside the South,cost-share assistance programs for timber productionhave been established in California, Illinois, Iowa,Minnesota, and Oregon.

The implementation of cost-share assistanceprograms for forest land management that do notinclude timber production as a primary goal hasexpanded greatly over the past 10 to 15 years. Increasedawareness of the importance of the non-timber forestresources, in particular water quality and wetlands,has been important in this trend. The focus of theseprograms include: (1) retention of agricultural andforestry land uses, (2) protection and enhancement ofriparian areas and wetlands, (3) enhancement ofwildlife habitats, and (4) water quality protection

and soil conservation. Programs for these purposeshave been established in Hawaii, Kentucky, Maryland,Minnesota, Missouri, Nebraska, New Jersey, NorthCarolina, Tennessee, and Virginia. With the exceptionof Nebraska, these programs were initiated after1980, four after 1990.

The total contribution of State cost-shareassistance programs for tree planting was over150,000 acres in 1993. The leading programs interms of reforestation projects were Mississippi andNorth Carolina, with contributions of 58,768 and41,060 acres, respectively, in 1993 (table 1). Theseaccomplishments represented roughly two-thirds ofthe total acreage of all State cost-share assistedplantings across the Nation in 1993.

Most State cost-share assistance programs arepatterned after the Federal FIP, ACP, or SIP (table 2).However, specific program features vary greatlyamong the States.

Program funding is generally from Staterevenues, most commonly from timber harvest taxesand general State appropriations (table 3). Other Statesources of funding include: (1) lottery revenues toestablish the Oregon Forest Resource Trust Fund,(2) oil and gas windfall revenues to stablish a trust tofinance the Alabama Agricultural and ConservationDevelopment Commission Program, (3) realState transfer tax revenues to fund the Maryland

Figure l.atate-level cost-share assistanceprograms topromote conservation, improve timberproductivity and enhance other resourcevalues on non-industrial private forest lands.

Woodland Incentives Program and the TennesseeAgricultural Non-Point Source Program, and (4) aportion of hunting and fishing license fees tofinance the Missouri Streams for the Future Program.

A variety of private sources have contributedto funding in several States (table 3). The Texascost-share assistance program is unique in that it isfunded entirely by a voluntary, self-assessed tax onforest industries. Funding for the Oregon ForestResource Trust Fund was established in partwith contributions from PacifiCorp, a private utilitycompany. Initial funding for the Florida Plant aTree Trust Fund Program was contributed by theSunshine Gas Pipeline Company, and the discontinued

program for reimbursement to NIPF landowners forcosts of pine seedlings in Florida was funded byvoluntary contributions from forest industry and otherprivate donors in the State. The Virginia AgriculturalBest Management Practices (BMP) Cost-ShareProgram is funded in part by contributions from aprivate organization, the Alliance for the ChesapeakeBay.

Program features that are used to defineeligibility-vary among the States but generally includeone or more of the following criteria: (1) minimumor maximum ownership or project size limitations,(2) site productivity ranking, and (3) priority rankingof projects according to State resource goals (table2). All programs focus primarily on NIPF lands;however, other ownerships are eligible in someStates. Corporate and industrial ownerships areeligible for cost-sharing in Alabama, Illinois, NorthCarolina, South Carolina, and Virginia. The SouthCarolina program specifically excludes woodprocessing industries; in contrast, the Illinois, NorthCarolina, and Virginia programs include forestindustries as eligible ownerships. Public ownershipsare eligible in some States as well; these includenon-federal publicly owned lands in Alabama,Mississippi, and New Jersey and municipalholdings in Illinois.

Most programs do not permit landowners toreceive concurrent Federal and State cost-shareassistance for the same project. However, theprograms in Illinois, Iowa, and New Jersey permitState payments to supplement Federal cost-sharepayments to cover landowner’s costs up to 100percent, 50 percent, and 75 percent, respectively.

Eligible forestry practices generally include treeplanting, site preparation for natural and artificialregeneration, timber stand improvement practices, andprescribed burning. Other activities that may be eligible

include management plan development, fencing, soiland water quality protection practices, insect anddisease control, fish and wildlife habitat improvement,and windbreak construction, among others.

Maximum cost-share payment rates in 1993ranged from 40 percent in North Carolina andVirginia to 80 percent in Illinois and up to 90percent in California; most commonly, rates arearound 50 percent. Cost-share rates vary according topurpose in some States. In California, higher ratesare available on projects to restore substantiallydamaged lands; the Mississippi program offershigher rates (75 percent rather than 50 percent) fordirect seeding and mixed stand regeneration; andin 1993, North Carolina began offering a highercost-share rate (60 percent rather than 40 percent) forplanting hardwoods and longleaf pine and for treeplanting projects in wetlands. The Oregon cost-shareprogram is unique; under a contractual agreement withthe landowner, the State pays 100 percent of thetree planting costs of landowners. In exchange, theState is reimbursed with a portion of the proceedsof timber sales at harvest.

All State programs require landowners to developa management plan and, with the exception of NorthCarolina, require that practices be retained for a setperiod, most often, 10 years (table 2).

Summaries of the individual State programsfollow. Information was obtained through contact withoficials of State forestry agencies, and also, from Stateagency reports and bulletins.

Alabama

The Alabama Agricultural and ConservationDevelopment Commission Program was enacted in1985 in response to cutbacks in funding forfederal conservation and reforestation cost-shareprograms. The program is administered by the AlabamaAgriculture and Conservation Commission, with theAlabama Forestry Commission providing technicalsupport for forestry practices. Cost-share funding isprovided through interest earned on a trust fundestablished with oil and gas windfall moneys.

Eligible lands include private, State, and othernon-Federal public holdings of 20 acres or more,with a minimum treatment area of 1 acre (table 2).Approved forestry practices include tree planting,site preparation, natural regeneration, timber standimprovement, prescribed burning, permanent firelane construction, and some soil and water quality

6

protection practices. In the future, beaver controlmeasures and fencing may be included. Thecost-share rate is up to 60 percent, with a maximumpayment of $3,500 per year. Most practicesmust be maintained for 10 years, 5 years for timberstand improvement. The program is not availablefor projects funded with Federal cost-share dollars.Practice priorities are determined by the local Soiland Water Conservation Districts.

In the 1993-94 program year, disbursementstotaling $348,913 were made for reforestation andtimber stand improvement practices on 10,949 acres(table 3). Funding has been stable since the programwas established in 1985 .I

The Alabama Forestry Commission alsoadministers the Southern Pine Beetle ContractProgram to offset part of the losses incurred bylandowners due to southern pine beetle attack and toencourage prompt control of infestations.

Financial support for the program, which hasbeen available since the mid-1980’s, is provided jointlythrough the State’s emergency insect and disease fund(59 percent) and the USDA Forest Service’s southernpine beetle suppression fund (41 percent). Incentivecontracts &e available for salvage, cut-and-leave, andpremerchantable harvest operations. For salvage cuts,incentive payments of $10 per cord and $30 perthousand board feet, up to a maximum of $350 percontract, are available. For cut-and-leave operations,the landowner is paid $10 per cord up to a maximum of$150 per contract. For infestations in stands ofpremerchantable timber, the program offers $1 pertree up to a maximum of $500 per contract. Withthe exception of cut-and-leave contracts, infestedtrees must be removed and green tree buffer stripsestablished within 30 days of the contract date.Commercial salvage operations are not eligible asdetermined by the evaluation of an agent of theAlabama Forestry Commission. Program fundinghas been sufficient to meet landowners’ needs.*

conservation, and fish and wildlife habitat. Theprogram is funded by timber sale revenues fromState lands and is administered by the Departmentof Forestry and Fire Protection. Private ownershipsof between 20 and 5,000 acres are eligible (table2). A minimum project area of 5 acres is requiredfor all practices, with the exception of conservationprojects that have no minimum acreage requirement.Landowners must submit a management plan certifiedby a registered forester and adhere to a lo-yearforest land use agreement. Cost-share rates rangefrom 75 to 90 percent, with the higher rates offeredfor projects located on substantially damaged lands.There is no maximum project allotment. Rankingby site productivity is used to prioritize projects;however, this practice is modified to ensureavailability of the program to regions of the Statewhere overall site productivity is low.

Cost-share payments are available for thedevelopment of forest management plans; sitepreparation and tree planting; timber standimprovement, including hazard reduction; conservationpractices; fish and wildlife habitat improvement;and insect, disease, and rodent control. Practicesrequired to meet standards under the CaliforniaForest Practices Act are not eligible.

From the program’s inception in 1980 through1992, over 21 million dollars were allocated for 2,00 1projects covering 45,030 acres of planted treesand 37,180 acres of timber stand improvement. Inaddition, 1,086 management plans were developedfor 328,442 acres during this period.

Funding has decreased in recent years from$3.5 million initially to $1.8 million in 1993.Expenditures may be reduced further due to decreasingstumpage prices and reduced harvesting to protectthe habitats of endangered species. However, thereis great demand for the program; over 900,000acres of private commercial forest land and 6million acres of non-commercial forest land are inneed of improvement projects3

CaliforniaFlorida

The California Forest Improvement Program wasimplemented in 1980 to encourage forestry practicesfor the enhancement of forest productivity, land

‘Gothard, Tim. 1994. Alabama Forestry Commission. PersonalCommunication.

‘Hyland, Jim. 1994. Alabama Forestry Commission. PersonalCommunication.

The Florida Reforestation Incentives Programwas established through a joint agreement betweenthe Florida Division of Forestry and the FloridaForestry Association in 198 1 to encourage

3Carter, John. 1993. California Department of Forestry and FireProtection. Personal Communication.

reforestation on private lands by providingreimbursement for seedling costs. The program wasdiscontinued in 1993 due to budget cuts at the Divisionof Forestry and the resulting closure of all but oneState tree nursery. In addition, administrative problemswere occurring as a result of requests by somecompanies that their contributions be earmarked forplanting projects in counties close to their mills. Theprogram was administered by the Florida ForestryAssociation and funded, through voluntarycontributions from forest industry and other privatedonors. Technical assistance and the processing ofseedlings were handled by the Division of Forestry.To be eligible, landowners were required to own aminimum of 10 acres of forest land. There was nomaximum acreage limitation; however, a maximumreimbursement for 60,000 seedlings was specified,

The Florida Plant a Tree Trust Fund Programwas established in 1991 to increase urban tree plantingand rural reforestation and is administered by theFlorida Division of Forestry. Funding began in1995 with a contribution of $70,000 from theSunshine Gas Pipeline Company, a natural gastransmission company utilizing right-of-ways in theState. Eligible applicants include local governments,nonprofit organizations, and private landowners (withthe exception of corporations whose stocks are publiclytraded) owning or controlling parcels of at least 10and no more than 1,000 acres (table 2). Requests forfunding must be for no less than $1,000 and no morethan $10,000. A reforestation plan is required forrural plantings, and projects must be maintained for atleast 2 years. Eligible practices include site preparationand tree planting with the following stipulations:(1) trees must be native species of Florida, (2)seedlings must be grade #l specimens or equivalent,and (3) there must be a minimum planting density of500 bare-root seedlings or 400 tubelings per acre.Proposed rural projects are prioritized based onseveral criteria, including contribution to an existingforest management plan, number and size of trees,cost effectiveness, environmental enhancement, andwildlife habitat improvement, among others.Additional funding sources are being pursued.4

Hawaii

The Hawaii Forest Stewardship Program wasenacted in 1991 to encourage private landowners of

4Marcus, Charles. 1995. Florida Division of Forestry. PersonalCommunication.

forest land or formerly forested land to makelong-term commitments to protect, maintain, andrestore important watersheds, timber resources, fishand wildlife habitats, endangered plants, and nativevegetation. The program is administered through theDepartment of Land and Natural Resources and isfunded through general State revenues dedicated on abiennial basis. Outlays were $50,000 in 1992 and$200,000 in 1994. To be eligible, the parcel must notbe recognized as a potential natural reserve area5 or bemanaged under other financial assistance programsand must be a minimum of 5 acres in size. Inaddition to a stewardship plan, landowners mustsubmit annual progress reports for each year theyreceive support under the program and must agreeto maintain practices for a minimum of 10 years. Themaximum cost-share rate is 50 percent. There are nomaximum ownership size or cost-share limits, andunlike most cost-share programs, if indicated by theplan, payments may be made to the landowner forup to 10 years.

Most projects have been established to controlinsects and competing vegetation in native standsand to convert degraded pasture to trees. Currently,owners of lands formerly in sugarcane production arebeing encouraged to plant commercial tropical hardwoodspecies. Several projects have been cost-shared aspilot projects for this purpose. Other projects includethe planting of native tree species to maintain a genepool for the future.6

Illinois

The Illinois Forestry Development Program wasenacted in 1983 to improve management of timberand other resources on NIPF, corporate, industrial(including forest industries), and municipal holdings ofat least 5 acres in size (table 2). The program isadministered by the Illinois Department ofConservation @DC), Division of Forest Resources,on a first-come, first-serve basis and is funded bya 4-percent harvest fee that is deducted from timbersales. Funding has increased each year since inceptionof the program, inception from $24,079 in 1985 to$532,309 in 1992. Landowners participating in theprogram are eligible to receive a 50-percent rebate onharvest fees.

‘Potential natural reserve areas are land or water areas within aprotective subzone of a conservation district.

6Ayers, Nelson. 1995. Hawaii Department of Land and NaturalResources. Personal Communication.

8

Cost-share payments are available for up to 80percent of expenses incurred in carrying out practicesspecified in an IDC approved lo-year managementplan. Maximum dollar limits are set for the variouspractices. Eligible activities include the preparationof management plans, site preparation for naturalregeneration, tree planting, timber stand improvement,livestock exclusion, and firebreak construction.Additional practices are approved for wildlifemanagement, recreation, soil and water conservation,and other resource activities. In addition, seedlingsare available free of charge to landowners who havean approved reforestation plan. Participation in theprogram also ensures forest use valuation forproperty tax purposes.

Illinois is one of the few States that permitthe concurrent use of State and Federal cost-sharefunds. Federal payments are made first, providingreimbursement for up to 65 percent of incurredexpenses; State funds further supplement the landownerfor up to 100 percent of expenditures. However,maximum dollar limits set for various practices areapplicable. The rationale behind the generous packageoffered is to induce landowners to manage for timberproduction, despite the long-term investment requiredfor hardwood species and the increasing pressure forurban and suburban uses of rural lands. In addition,compliance with the high standards of the Divisionof Forest Resources for tree planting operations canbe quite costly.

Program accomplishments include thedevelopment of 3,036 management plans for practiceson 145,487 acres and cost-share payments of$2,761,800 from 1985 through 1992. Although districtforesters will provide a management plan free ofcharge, the IDC’s resources are limited, resulting in anextensive backlog of interested landowners needing amanagement plan. Cost-share payments are beingutilized by some landowners to pay consultant feesfor plan development.’

Iowa

The Iowa Resource Enhancement and ProtectionProgram (REAP) was passed in 1989 as a broadrange approach to protect Iowa’s natural resources.The goal of the forestry component of the programis to increase the economic viability of private

woodlands and to maintain forest cover forenvironmental protection. The program is fundedby general revenue and lottery funds and isadministered through the Iowa Department ofAgriculture. Disbursement of funds for forestry isat the discretion of the individual conservation districts.

The cost-share rate is 75 percent, withmaximum limits set for specific practices (table2). For participation in the program, a comprehensivestewardship plan is required. Eligible forestpractices include: (1) site preparation for naturalregeneration and tree planting on a minimum of 3acres, (2) timber stand improvement on a minimumof 5 acres, and (3) related activities such asimprovement in the habitats of wildlife and endangeredspecies, fencing, and establishment or restoration ofwindbreaks. Forest practices must be maintained forat least 20 years.

The program does not prohibit concurrent useof Federal and State funds. However, unlike theIllinois program where it is feasible to bereimbursed up to 100 percent of costs incurred, REAPlimits total combined cost-share payments to 75 percent.Federal programs must provide the initial funding.

Funding for REAP has decreased since theprogram was initiated in 1989 due to budgetaryproblems. Funding for 1993 was set at $7 million, asizeable decrease from appropriations of $16 millionin 1989 and $20 million in 1990 through 1992. In1993, $500,000 was earmarked for forestrypractices. In 1994, the outlay for forestry wasreduced to $220,000. In the 1992-93 planting season,$135,880 were expended on reforestation projectson 1,100 acres. As of 1993, a $250,000 backlog offorestry projects was awaiting inclusion into theprogram.*

Kentucky

The Kentucky Soil and Water QualityCost-Share Program was initiated in 1994 to promoteagricultural conservation practices. Initial funding of$500,000 was from an increase in the State pesticideregistration fee. other sources of additional fundingare being explored. Practices are prioritized withfunds allocated to the conservation districts accordingly.Currently, agricultural waste control practices aregiven highest priority. Six applicants applied for

‘Schmoker, Dan. 1993. Illinois Department of Conservation,Division of Forest Resources. Personal Communication.

sKemperman, Jerry. 1994. Iowa Department of Natural Resources.Personal Communication.

cost-share funds for forestry practices during the firstsignup, requesting approximately $11,000. Two of theprojects will likely be funded for about $5,000. Inaddition, 15 percent of the initial program funding isreserved for cost-sharing water quality protectionmeasures where recommended BMP’s are determinedinsufficient for compliance with the KentuckyAgricultural Water Quality Act.g

Maryland

The Maryland Woodland Incentives Program wasestablished in 1986 to encourage the development,management, and protection of nonindustrial woodlandsfor sustained production of timber resources essentialto commerce and industry in the State. The program isfunded through an agricultural transfer tax assessed onlands converted from woodlands to non-agriculturaluses and is administered by the Maryland Department ofNatural Resources. Eligible practices include sitepreparation, tree planting, crop tree release, prescribedburning, thinning, pruning, and herbicide treatments.The cost-share rate is 50 percent up to a set maximumlimit per practice (table 2). Total State assistance islimited to $5,000 per year per landowner unless a3-year plan has been approved, in which case thelandowner may receive up to $15,000 per year.

Potential project areas are NIPF lands between 10and 500 acres is size that are capable of producing atleast 20 cubic feet of wood per year. Applicants areprioritized based on site index, size of parcel andtreatment area, and species composition. Landownersmust submit a forest management plan approved by alicensed forester along with a signed. Statement agreeingto the following stipulations: (1) to use the cost-sharefunds for the growth of harvestable forest products ona long-term basis, (2) to not receive Federal andState cost-share assistance concurrently, (3) topermit inspections by the Department of NaturalResources, and (4) to maintain the projects for 15 years.

Funding is limited to $200,000 per year by theenabling legislation and is expected to remain stable inthe future. Since inception of the program, 883acres have been planted, and 1,774 acres have beenimproved. Funding has been sufficient to meetlandowners’ needs. lo

gPerkins, Gary. 1995. Kentucky Division of Forestry. PersonalCommunication.

“Van Hassant, Donald. 1994. Maryland Department of NaturalResources, Public Lands and Forestry. Personal Communication.

The Maryland Buffer Incentives Program wasestablished in 1992 to encourage the planting andmaintenance of forested buffers in proximity of theChesapeake Bay and its tributaries. The program isadministered by the Maryland Resource ConservationService. Funding, which is allocated from general Stateappropriations, was $150,000 in 1993 and $111,000in 1994.

Eligible lands are pasture, cropland, or otherwisebare land between 1 and 50 acres in size that arelocated within 300 feet of open water or lands classifiedas wetlands by the State. Other critical areas outside the300-foot limitation may be eligible under certainconditions. Practices must be maintained for atleast 10 years, and inspections must be agreed to by thelandowner. After successful establishment of abuffer is verified, a $500-per -acre payment is madeby the State to the landowner. In 1993,300 acres wereplanted. Funding level has been sufficient to meetlandowners’ needs.”

Minnesota

The Minnesota Forestry Improvement Programwas enacted in 1989 to provide incentives for forestrypractices not available or inadequately funded underFederal programs. The program is administered bythe Board of Water and Soil Resources and the Divisionof Forestry. Technical assistance and a managementplan for landowners participating in the programare provided by the Division of Forestry. Eligiblepractices include woodland fencing, firebreaks andfire lane construction, pocket gopher control, and otherapproved special practices. Road construction is alsoeligible when needed to access areas for managementpurposes that are not economically viable, such asnon-commercial salvage operations. The minimumcontract amount is $100, and practices must beretained for at least 10 years (table 2).

Cost-share funds are available for 65 percent oflandowners’ expenses, with the exception of roadconstruction, which is eligible for 50 percent, and somespecial practices that may receive up to 75 percent. Fortree planting, funds have been available only forrestocking CRP plantations with less than 50-percentsurvival resulting from drought conditions. The rateis $25 per acre for a minimum of 11 acres; fundingis not available for the first 10 acres. The demand for

“Van Hassant, Donald. 1994. Maryland Department of NaturalResources, Public Lands and Forestry. Personal Communication.

10

replanting drought-stricken CRP plantations has beensatisfied.‘*

Program accomplishments in 1991 included$70,000 in cost-share assistance, of which $42,435was dedicated to replanting 1,944 acres and $20,475to install or repair roads. The program is fundedthrough general appropriations and grew from$50,000 per year in 1986 to $120,000 in 1992. Theprogram was not funded in 1993 and 1994 due to Statebudget cuts, and the prospect for future funding isuncertain. However, funding may be appropriated inthe future for planting hybrid poplar in riparian areasfor nutrient and sediment control.13

The Minnesota Forest Wildlife HabitatImprovement Program was initiated in 198 8 to providecost-share assistance for forest management practicesthat are beneficial to wildlife and not eligible for fundingthrough more traditional forestry cost-share programs.Approved timber management operations are for theregeneration of non-merchantable tree species toenhance wildlife habitat and stand diversity. Eligiblepractices include tree planting, prescribed burning, andmechanical and chemical treatments. The cost-sharerate is 75 percent, with payments limited to $150 peracre. A written plan is required, and practices mustbe maintained for at least 10 years.

The program is funded through generalappropriations associated with the 1987 Reinvest inMinnesota legislation. Funding was $70,000 per yearinitially; however, the program has not been fundedsince 1992 due to State budget problems. From1988 to 1992, a total of 572 agreements werefunded through the programs at a cost of $3 16,058.Approximately $20,000 of funding was used for treeplanting and timber management on 150 acres, withthe bulk of funding being used to improve brushlandwildlife habitat. Public interest in cost-share funds forwildlife habitat projects remains high.13

Mississippi

The Mississippi Forest Resource DevelopmentProgram was authorized in 1974 in response toconcerns regarding the future availability of softwoodtimber supplies; a prime concern in a State where themanufacturing of forest products is the leading industry

*%imanga, Larry. 1994. Minnesota Department of NaturalResources. Division of Forestry. Personal Communication.

“Kroll, Tom. 1993. Minnesota Department of Natural Resources,Division of Forestry. Personal Communication.

(USDA FS 1988). The program is financed through 80percent of timber severance tax collections and isadministered by the Mississippi Forestry Commission.Assistance is available on a first-come, first-serve basisto NIPF and non-Federal public landowners. Nominimum ownership acreage or treatment area isstipulated. Landowners are required to submit amanagement prescription for the desired treatment area,comply with Commission standards during operations,and maintain practices for 10 years (table 2).

The cost-share rate is 50 percent for treeplanting, site preparation, prescribed burning, firebreakconstruction, and timber stand improvement and is75 percent for direct-seeding and mixed-standregeneration. Payments are limited to a total of $8,000per year. The program is not available as a supplementfor treatments performed using Federal cost-sharefunds.

Since the State program was established in1974, expenditures have totaled $32,932,948 for treeplanting on 585,676 acres and release treatments on8 1,646 acres. Funding in the future is expected toremain stable.14

Missouri

The Missouri Soil and Water ConservationProgram was enacted in 1985 to provide anincentive for the conversion of arginal soils to lessintensive uses. The program is administered by theDepartment of Conservation and is funded throughretail sales tax revenues,

Up to 75 percent in cost-share assistance isavailable to private landowners with approvedconservation plans for site preparation, seeding orplanting, fencing for livestock exclusion, establishingwindbreaks, and installing drip irrigation systems.Eligibility is limited to areas susceptible to excessiveerosion and to stream floodplains and upland soils witha slope exceeding 10 percent. Practices must bemaintained for 10 years.

The program does not permit the concurrentuse of State and Federal cost-share payments. Statefunding has been sufficient to satisfy demand; however,landowner participation has been low. Appropriationsfor the program have been stable and are expectedto continue at the current level.15

14Romedy, Randall. 1995. Mississippi Forestry Commission.Personal Communication.

“Wallace, Douglas. 1993. USDA Soil Conservation Service.Personal Communication.

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The Missouri Streams for the Future Program,initiated in 1992, was established as a pilot program insix counties to encourage a number of conservationpractices in stream corridors. The program isadministered by the Department of Conservation andprovides reimbursement for up to 75 percent ofexpenses for tree planting in stream corridors. Fundingfor the program has been $300,000 annually and isappropriated from revenues allotted the Departmentfrom the sale of hunting and fishing licenses andl/8 of 1 percent of sales tax revenues. Theprogram has been well received by landowners.16

The Missouri Wildlife Habitat ImprovementProgram, established in the early 1950’s andadministered by the Department of Conservation,provides 25 percent cost-share payments in additionto the 50 percent available through CRP for treeplanting projects that enhance wildlife habitat. About$300,000 of the Department’s funds are allotted for theprogram annually. In the past, about 500,000 trees peryear were distributed. However, in recent years, forestrypractices have been deemphasized. ’ 6

Nebraska

The Nebraska Natural Resource DistrictProgram, implemented in 1972, established 23Natural Resource Districts (NRD’s) to administer avariety of conservation programs that address localnatural resource concerns. Funding is primarilyprovided through general obligated funds and issupplemented by revenues raised through the taxingauthority of each NRD. All NRD’s have madecost-share funds available for tree planting in varyingamounts from year to year. In eastern Nebraska, mostfunds are used for black walnut, oak, and hickoryplantings. In the western part of the State, funds areprimarily used for field windbreak and farmshelterbelt plantings.

New Jersey

The New Jersey Farmland PreservationProgram was established in 1981 to encourageretention of agricultural lands in the State. Theprogram is administered through the Soil ConservationDistricts, with the New Jersey Bureau of Forest

16Kirby, Samuel. 1993. Missouri Department of Conservation.Personal Communication.

Management establishing standards and specificationsto be followed for forestry operations. Revenues fromthree bond issues, in 1981, 1989, and 1992 for $50million each, have funded the program. The programprovides funding for the purchase of agriculturaleasements, as well as 50-percent cost-share paymentsfor conservation projects including forestry practices.Funding may be available in some instances to publicentities. Concurrent Federal and State cost-sharepayments are permitted; however, State payments mustbe supplemental to Federal payments, and totalreimbursement is limited to 50 percent of landowners’costs. Eligible forestry activities on a minimum of1 acre include: (1) thinning, pruning, and releasetreatments, and (2) site preparation for naturalregeneration and tree planting for plantationestablishment. Practices must be maintained for atleast 8-years. Cost-share payments are based onownership size and range from $400 per acre forparcels up to 50 acres in size to $60 per acre forparcels greater than 100 and less than 5 16 acres insize. No additional funding is available to thelandowner for parcels over 5 16 acres. The cost-sharepayments are limited to $50,000 over an 8 year period.To date, no applications for forest practices have beenreceived; forest management is not prevalent in theState.”

North Carolina

The North Carolina Forest DevelopmentProgram was implemented in 1978 to increase forestproductivity on private forest lands in the Statewhile protecting soil, air, and water resources. Theprogram is available to industrial (including forestindustries) as well as nonindustrial owners. Fundingis provided through a combination of State generalfunds of $700,000 per year and revenues of about$1.5 million annually from a tax assessed on primaryforest products.

A forest management plan, with provisions forassuring forest productivity and environmentalprotection, must be approved by the Division ofForest Resources. Approved practices on a minimumof 1 acre (table 2) include site preparation, silviculturalclearcutting, tree planting or seeding, and timberstand improvement (with the exception of fertilizationand pre-commercial thinning).

“Baumley, Rod. 1994. New Jersey Division of Parks and Forestry.Personal Communication.

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The cost-share rate is 40 percent for mostpractices; however, in 1993, the rate of 60 percent wasoffered for planting hardwoods and longleaf pineand for planting trees in wetlands. There has beensubstantial interest and response to the incentive toplant longleaf pine.

Program eligibility limitations are: (1) landownersare restricted to a maximum of 100 acres per practiceeach year, (2) landowners cannot receive State fundingfor the same acres funded through other State andFederal cost-share programs during the same year,and (3) landowner projects must be initiated within1 year and completed within 2 years after fundingapproval. In addition, projects not conducted inaccordance with State best management practicesmay not be funded and may be subject to penaltiesunder the State’s Sedimentation and PollutionControl Law. In contrast to most State cost-shareprograms, the North Carolina program does notcontain a practice retention provision. In a fewinstances, landowners have received cost-sharepayments for practices that were not maintained overa reasonable period of time.

Program accomplishments include assistanceto over 11,000 landowners for tree planting on morethan 361,000 acres between 1978 and 1992. In 1993,1,4 12 landowners received assistance on 40,240 acresfor planting projects. The program enjoys broadsupport, and funding is expected to remain stablein the future.”

The North Carolina Agricultural Cost-ShareProgram for Non-Point Source Pollution Controlwas established in 1985 to encourage conservationpractices, including tree planting on erodible soilswhere water quality is being impaired. The programis administered by the North Carolina Department ofEnvironment, Health, and Natural Resources, Divisionof Soil and Water Conservation, and is funded throughState general appropriations. The cost-share rate fortree planting is 75 percent of the average cost ofestablishing fescue up to a maximum of $15,000per year. Since the program was initiated in 1985through 1993, $1,662,164 was allocated for cost-sharepayments on 19,503 acres for the conversion ofagricultural lands to trees. In 1993, 820 acres wereplanted.1g

“Sanderford, Eldora. 1994. North Carolina Department of NaturalResources and Community Development, Division of ForestResources. Personal Communication.

lgMoore, Bobbie Joe. 1994. North Carolina Department ofEnvironment, Health, and Natural Resources. PersonalCommunication.

Oregon

The Oregon Forest Resource Trust, enacted in1993, was established to provide funds for financialand technical assistance to NIPF landowners for standestablishment and improvement practices to enhancetimber productivity and other resource values. TheTrust, which was legislatively established with $3.5million from State lottery revenues for funding, isadministered by the Oregon Department of Forestry.In addition, $75,000 was contributed by PacifiCorp inexchange for carbon credits as a means of offsettingcarbon dioxide emissions produced in its coal-burningplants. A primary goal of the program is to reforest andrestore productivity on 250,000 acres of NIPFlands by the year 20 10.

In contrast to true cost-share programs, theTrust is a venture capital program where the Stateand private landowners share the risks and benefitsof forest investments. The State provides up to 100percent of the initial costs of reforestation orrestoration up to a maximum of $100,000 over a2-year period (table 2). In exchange, the landownera grees to reimburse the State when timber fromassisted acreage is harvested. Reimbursement is basedon a predetermined percentage of after-tax harvestrevenues ranging from 10 to 25 percent. The formulaincludes factors such as reforestation costs, futuretimber prices, a set rate of return, and inherent worth ofthe site. The payback obligation is binding up onnew owners. However, a “buyout option” is includedin the program whereby owners may terminatethe contract at anytime during the first 25 yearsby repaying all trust funds with interest. Allunderproductive and understocked nonindustrial privateforest ownerships of 10 to 5,000 acres in sizelocated outside designated urban growth boundariesare eligible. However, priority is given to lands withthe greatest potential for success in reforestation andto environmental restoration in areas ofenvironmental concern. Priority may be given toprojects approved for funding from other forestryincentive or loan programs. The Oregon Department ofForestry provides technical assistance for developmentof a required comprehensive project plan. Funding tofulfill minimum reforestation requirements of theOregon Forest Practices Act is not available throughthe Trust unless landowners’ revenues from harvestare insufficient to establish a new stand. However,reimbursement for stocking in excess of the minimumstocking standards may be available. Thus far,landowner response has been low. To date, about1,000 acres have been reforested. Factors that have

13

contributed to the slow start are the complexity ofthe contractual agreement and the requirement thata lien on the property be retained by the State.”

On average, 5,500 acres of cutover woodlands arereforested each year under the program.21

TennesseeSouth Carolina

The South Carolina Forest Renewal Act wasenacted in 1981 to provide incentive payments toprivate forest landowners to increase the productivityof their forest land and to ensure a continuing andadequate flow of wood products in the State. At thattime, some 2 million acres of poorly stocked or idlenonindustrial private lands were in need ofreforestation (Izlar 1983).

The Act directs the South Carolina ForestryCommission to administer the program and to ensurethat forest operations are conducted in such amanner as to protect the State’s soil, air, and waterresources.

The program is funded through a combination ofState appropriations and a severance tax on primaryforest products. Assessment rates are established bythe State Forester and are suspended in any year thatState general appropriations are not made. Since theprograms inception in 198 1, the General Assemblyhas appropriated $100,000 annually, and the forestindustry has provided four times this amount for atotal outlay of $500,000 per year. Funding in thefuture is expected to remain at this level.

All private nonindustrial lands capable ofproducing at least 50 cubic feet of industrial wood peracre per year are eligible for cost-share assistance. Theprogram requires a minimum treatment area of 10 acresfor mechanical site preparation; otherwise, there are nominimum acreage limitations (table 2). A forestmanagement plan must be approved by the ForestryCommission, and the project area must be maintainedin a forest condition for at least 10 years. The programdoes not permit both Federal and State cost-shareassistance on the same acreage in the same year.

Approved practices include natural and artificialregeneration, timber stand improvement, and prescribedburning. The average cost-share rate is 50 percent, withreimbursements limited to the amount needed tocomplete the project on 100 acres. For artificialregeneration, the program requires that all merchantabletimber be removed before applications are accepted.

*Rutledge, Wally. 1994. Oregon Department of Forestry. PersonalCommunication.

The Agricultural Non-Point Source PollutionProgram, initiated in 1993, provides cost-shareassistance for soil and water improvement and riparianzone protection practices on private agriculturallands, including nonindustrial forest lands. The programis administered by the State Department of Agriculturethrough the county Soil Conservation Districts.Technical support for forestry projects is provided bythe Tennessee Division of Forestry. An annual budgetof $100,000 has been allocated for forestry projects.The program is funded in part by a 3-year grantfrom the Environmental Protection Agency (EPA).Additional funding is from the State AgriculturalNon-Point Source Pollution Program Fund, whichhas been established with a portion of real estatetransfer tax receipts. The first landowner signup forthe program was held in July 1993. ContinuingEPA grants are anticipated, and State funding isexpected to be stable in the future. A stewardship plan,modeled after the Federal stewardship program plan, isrequired. The cost-share rate is 75 percent for bestmanagement practices, such as the treatment oflogging roads, skid trails, firebreaks, and log landings,and for the improvement, protection, and restoration ofstreamside areas. Annual cost-share payments arelimited to $5,000 per landowner.22

Texas

The Texas Reforestation Foundation Program(Tre) was chartered and funded in 1981 by forestproducts companies in an effort to increase theproductivity of private nonindustrial woodlands andthereby ensure future timber supplies. The programis administered by the Texas Forestry Association,with technical assistance being provided by the TexasForest Service.

To apply for TRe funds, a landowner must submita forest management plan for projects located in 1 of 42

*‘Rogers, Evonne. 1994. South Carolina Forestry Commission.Personal Communication.

22Applegate, Hart. 1993. Tennessee Department of Agriculture,Division of Forestry. Personal Communication.

1414

counties in east Texas. The cost-share rate is 50percent for land clearing, site preparation, treeplanting, and timber stand improvement practices on10 or more acres (table 2). Applicants are prioritizedby the Texas Forestry Association Board of Directorsand Texas Forest Service foresters based onestimated planting costs and site index. The programrequires practices to be maintained for 10 years.

All of the major forest products companies inTexas, as well as a few in Arkansas and Louisianareceiving wood from Texas, provide financial supportthrough a voluntary assessment, on primary forestproducts. A number of smaller companies alsoparticipate. In addition, private landowners areencouraged to contribute 1 percent of timber saleproceeds and home builders $70.00 per homeconstructed to the program. The TRe has approved$450,000 for cost-share payments in 1994. Fromthe program’s inception in 1981 through 1993,cost-share payments have totaled $4,088,040 forreforestation on 83,572 acres. Funding has increasedin recent years; however, demand has not beensatisfied.23

Virginia

The Virginia Reforestation of Timberlands Act(RT) was established in 1970 to maintain a viablepine industry in light of forest inventory statisticsof the USDA Forest Service for 1966 indicatingsoftwood removals exceeding growth by 15 percent(Mar-cum 1993). The program is administered by theVirginia Department of Forestry and is financedthrough an assessment on primary forest productsand matching State funds. Funding from theindustry tax was $800,000 initially, with increasesup to $1 million per year. Matching State fundshave not been consistently appropriated in recentyears due to budgetary constraints. In the past 3 yearssince 1995, annual appropriations have been$700,000. Dollars are distributed to six regions ofthe State based on previous demand.

All private landowners are eligible, includingindustrial forest landowners. Reimbursements areavailable for 40 percent of the cost of site preparation,tree planting, and brush control in pine stands up to amaximum of $75 per acre (table 2). However, landsrequiring reforestation under the State seed tree law

23Hufford, Ron. 1994. Texas Forestry Association. PersonalCommunication.

are not eligible for the RT program, except wheremore than 75 percent of the stand is infested by thesouthern pine bark beetle. However, the FederalFIP is used for reforesting harvested lands. Theminimum project size is 5 acres, unless planting isdone without site preparation, in which case theminimum is 1 acre. The maximum project size is 500acres. The program requires the use of BMP’swithin project boundaries and a lo-year commitmentto maintain practices. Since the program wasfunded in 1972 through 1992, 393,971 acres havebeen reforested. In 1993, more than 50 percent ofcost-share assistance dollars were used for timberstand improvement, primarily for herbicideapplication, which has been promoted by theVirginia Department of Forestry. The State portionof funding may be further reduced in the future.24

The Virginia Agricultural BMP Cost-ShareProgram was established in 1984 as part of amulti-State effort to protect water quality in theChesapeake Bay watershed. The development of astewardship plan and compliance with BMP’s isencouraged, but not mandatory. The program offersa $75 payment per acre for tree planting onerodible crop or pasture land in addition to cost-sharepayments from other programs. Cost-share assistanceis also available for stabilizing abandoned logging roadsand planting streamside buffer strips. The programis administered by the Soil and Water ConservationDistricts. Funding for the program includes Federaloutlays, State revenues, and contributions fromprivate organizations such as the Alliance for theChesapeake Bay. Funding for forestry has beenaround $600,000 per year and is expected toincrease in the future.

DISCUSSION

The long-term nature of forestry investments,coupled with the up-front capital required to establishregeneration and perceived low rates of return,are major disincentives to some NIPF landowners.Cost-share payments offset landowners’ initial costsfor site preparation, tree planting, and forest standimprovement and increase profits at harvest.Economic opportunities for yields of at least 4 percentwere identified on over 50 million acres of NIPFland in the South that were not producing to maximum

24Grimm Phil.Commutkation.

1993. Virginia Department of Forestry. Personal

15

potential (USDA FS 1988). Cost-share payments werefound to increase the internal rate of return (IRR) fromover 2 to 5 percent for chemical site preparation andrelease treatments on sites analyzed in southernGeorgia (Busby and Haines 1994). Risbrudt andEllefson (1983) reported an average IRR of 10.9percent for landowners’ investments in forestpractices cost-shared through FIP in 1979.

Of particular importance to enhanced timberproduction are the NIPF lands in the South thataccounted for 53 percent of the softwood removalsand 59 percent of the hardwood removalsnationwide in 1991 (Powell and others 1993).Softwood harvests on NIPF lands is projected toincrease from 4.4 billion cubic feet in 1991 to 5.9billion cubic feet by 2040 in response to reducedharvests on national forests and other Federal lands.Most of the increase in supply is projected to comefrom pine plantations in the South (Haynes and others1993). If these plantations are not established, timberavailability could be a problem in some areas.

In addition to improving timber productivity,cost-share assistance programs are an importantpolicy mechanism for achieving soil, water quality,wetland, and wildlife habitat protection. Theseprograms provide payments to offset costs ofprotection and enhancement measures that NIPFlandowners may be unwilling or financially unableto bear. The Federal ACP, CRP, SIP, and WRP,plus numerous State programs, foster improvedstewardship on NIPF lands and a means to protectecosystems of special concern. These types of programscould be incentive options to complement theEndangered Species Act and the wetlands provisionsof the Clean Water Act, especially in light of theongoing private property rights and takings debates.

Other policy mechanisms to improve timberproductivity include mandatory reforestationregulations, tax credits and other preferential taxtreatments for timber investments, and greateremphasis on education, technology transfer, andtechnical assistance.

Programs that do not directly address timberproductivity but that may expand the availabletimberland base include easements on non-forestedprivate lands for wetlands restoration, for wildlifehabitat establishment, or for conversion of agriculturalor urban tiinge lands to forest. Additional afforestationopportunities include tree planting programsestablished to offset environmental degradation suchas pollutants emitted from coal-fired plants or tosequester carbon from other sources (Moulton 1994).

The effect of Federal, State, and localregulation of private forest land managementactivities has been dichotomous. Environmentalregulation may discourage forestry investmentsthrough the direct and indirect costs of complianceor because of the uncertainty of reaping full harvestbenefits, thus increasing the need for incentiveprograms. Conversely, mandatory reforestationrequirements may enhance timber productivity. Acombination of mandatory reforestation regulationsand availability of State forestry cost-share assistanceprograms for improving productivity on lands notsubject to the reforestation regulations has been veryeffective in Virginia. Harvested pine lands must bereforested under the State seed tree law and are noteligible for the State cost-share assistance program.Thus, more cost-share dollars are available forintermediate treatments and for plantings to convertopen lands to forests or to increase productivity onunderstocked stands. The effect of the interactionof these programs increased the land base in pinetype by 20 percent between 1972 and 1977 (Flickand Horton 198 1). The policy structures ofCalifornia and Oregon are similar-both utilizeregulatory reforestation laws and State cost-shareassistance programs.

The tax treatment of cost-share paymentshas been favorable for landowners. Under Section126 of the Internal Revenue Code, all or a part ofcost-share payments for reforestation and some otherpractices may be excludable from the landowners’taxable income (Hoover 1989).

Cost-share payments from Federal programsthat have been approved for exclusion forFederal income tax purposes include FIP, SIP, andACP. To date (1995), CRP and WRP cost-sharepayments have not been ruled excludable. Cost-sharepayments from the following State programs havebeen approved for exclusion: (1) the North CarolinaForest Development Program, (2) the VirginiaReforestation of Timberlands Act Program andCost-Share Program, (3) the Maryland AgriculturalCost-Share Program, (4) the Mississippi ForestResource Development Program, (5) the CaliforniaForest Improvement Program, (6) the South CarolinaForest Renewal Act Program, (7) the Illinois ForestryDevelopment Program, and (8) the New JerseyFarmland Preservation Prograrn2’

2sBishop, Larry. 1995. USDA Forest Service. State and PrivateForestry. Cooperative Forestry. Atlanta, GA. PersonalCommunication.

16

CONCLUSIONS

The unmet potential of nonindustrial forestlands for timber production will become increasinglyimportant in the future if anticipated demand andreduced harvests on public lands is realized. Stateforestry cost-share programs have proven to be aneffective policy tool for stimulating privateinvestments in forest management. The expandeduse of these programs could be a means of increasingtimber productivity and also of achieving publicenvironmental goals on private forest lands. However,the outlook for Federal funding for cost-shareassistance programs is uncertain. The future of theFIP and CRP programs is still undecided, withCongress yet to act on 1995 Farm Bill legislation.State programs, however, appear to be stable or areexpanding, with the exception of those in California,Iowa, and Minnesota.

There has been some debate regarding the bestmechanism for allocating Federal cost-share fundsto NIPF landowners. Possible scenarios includeexpanding the SIP to replace FIP or funneling Federaldollars directly to State cost-share programs. Stateforestry officials in California have requested$600,000 in Federal funds to help offset reductionsin State outlays for the California Forest ImprovementProgram.26 Also, Federal funding of $750,000 hasbeen committed to the Texas Tre program forcost-share funding in 1996.27

There has been considerable debate regardingthe social and economic efficiency of financialincentive programs for private forest investments.One hypothesis has been that these programssubstitute government payments for private capitalinvestments. Studies exploring this issue have hadconflicting findings. Lee and others (1992) andde Stieger (1984) did not substantiate capitalsubstitution for forestry investments. However,Cohen (1983) suggested that up to 50 percent ofthe NIPF acres planted with cost-share assistancewould have occurred without these payments. Somesurveys of landowners have lent some credence tothis fmding (Bliss and Martin 1990, Gregerson andWalker 1985). Another suggested shortcoming ofthese programs is that landowners may delay investingin reforestation when incentive payments are notreadily available.

%alifornia Department of Forestry and Fire Protection. 1995.Personal Communication.

“Texas Forestry. May 1995. Texas Forestry Association.

Improvements in the efficiency of the programsmight include lowering cost-share rates, particularlyin times of increasing stumpage prices. Another wouldbe to some way identify landowners without harvestrevenues available to establish plantations, as opposedto those who likely would have planted withoutcost-share assistance.

Comprehensive analysis of the variouscost-share assistance, tax incentive, and technicalassistance programs is needed to determine the mosteffective policy options in terms of the economicenvironment for forestry investments, individuallandowner’s goals, and future benefits for societyoverall. A comparison of the cumulative effectsof anindividual State’s institutional mechanisms-taxpolicies, cost-share assistance programs, and regulatoryprograms on forestry investments and forest resourceprotection-should be assessed as well.

LITERATURE CITED

Bliss, John C.; Martin, A.J. 1990. How tree farmersview management incentives. Journal of Forestry.88(8): 23-29,42.

Bullard, S.H.; Straka, T.J. 1988. Structure and fundingof State-level forestry cost-share programs. NorthernJournal of Applied Forestry. 5: 132-135.

Busby, Rodney; Haines, Terry. 1994. Chemical controland cost-share programs profitable for southernforestry investments. In: Proceedings, 47th annualmeeting of the Southern Weed Science Society;1994 January 17-19; Dallas, TX. Champaign,IL: Southern Weed Science Society: 127- 13 1.

Cohen, Melinda A. 1983. Public cost-share programsand private investment in forestry in the South. In:Royer, Jack P.; Risbrudt, Christopher D., eds. In:Proceedings, nonindustrial private forests: a reviewof economic and policy studies; [dates unknown];[location unknown]. Durham, NC: Duke University:181-188.

de Steiger, J.E. 1984. Impact of cost-share programson private reforestation investment. Forest Science.30(3): 679-704.

Flick, Warren A.; Horton, Donald A. 1981. Virginia’sreforestation of timberlands program: an economicanalysis of the first six years. Southern Journal ofApplied Forestry. 5(4): 195-200.

Gregerson, Hans; Walker, B. 1985. Forestry incentivepayment recipients ten years later: a Minnesotacase study. Agric. Exp. Stn. Bull. AD-SB-2529.St. Paul, MN: University of Minnesota. 25 p.

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Harrell, James B. 1989. Federal and State cost-shareprograms for forest farmers. Forest Farmer.Nov./Dee.: 20-27.

Haynes, Richard W.; Adams, Darnis M.; Mills, John R.1993. The 1993 RPA timber assessment update.Gen. Tech. Rep. RM-GTR-259. Fort Collins,CO: U.S. Department of Agriculture, Forest Service,Rocky Mountain Forest and Range ExperimentStation. 66 p.

Hoover, William L.; Siegel, William C.; Myles,George A.; Haney, Harry L. 1989. Forest owner’sguide to timber investments, the federal incometax, and tax recordkeeping. Agric. Handb. 681.Washington, DC: U.S. Department of Agriculture.104 p.

Izlar, Bob. 1983. South Carolina’s forest renewal act.Tech. Rel. 83-R-26. Washington, DC: AmericanPulpwood Association. 2 p.

Lee, Karen J.; Kaiser, Fred; Alig, Ralph. 1992.Substitution of public funding in planting southernpine. Southern Journal of Applied Forestry. 16:204-208.

Marcum, Gary F. 1993. Forest practices and waterquality in Virginia. Tech. Rel. 93-P-l 1. Washington,DC: American Pulpwood Association. 9 p.

Mills, Thomas J. 1976. Cost effectiveness of the 1974forestry incentives program. Res. Pap. RM-175.Fort Collins, CO: U.S. Department of Agriculture,Forest Service, Rocky Mountain Forest and RangeExperiment Station. 23 p.

Nisley, Rebecca, tech. ed. 1994. Tree planting inthe United States-1993. Washington DC: U.S.Department of Agriculture, Forest Service, Stateand Private Forestry, Cooperative Forestry. 17 p.

Moulton, Robert J. 1994. Sorting through cost-shareassistance programs. Tree Farmer. Nov./Dee.:24-26.

Powell, Douglas S.; Faulkner, Joanne, L.; Darr,David R. [and others]. 1993. Forest resources ofthe United States 1992. Gen. Tech. Rep. RM-234.Fort Collins, CO: U.S. Department of Agriculture,Forest Service, Rocky Mountain Forest and RangeExperiment Station. 132 p.+ map.

Risbrudt, Christopher D.; Ellefson, Paul V. 1983. Aneconomic evaluation of the 1979 forestry incentivesprogram. Stn. Bull. 550. St. Paul, MN: Universityo f Minnesota Agricultural Experiment Station:1-13.

Roycr, Jack P.; Moulton, Robert J. 1987. Reforestationincentives-tax incentives and cost sharing in theSouth. Journal of Forestry. 85: 45-47.

U.S. Department of Agriculture, Forest Service. 1988.The South’s fourth forest: alternatives for the future.For. Res. Rep. 24. Washington, DC: U.S.Department of Agriculture, Forest Service. 5 12 p.

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Haines, Terry. 1995. Federal and state forestry cost-shareassistance programs: structure, accomplishments, and futureoutlook. Res. Pap. SO-295. New Orleans, LA: U.S. Departmentof Agriculture, Forest Service, Southern Forest ExperimentStation. 18 p.

Reviews the features of Federal and State forestry cost-shareprograms including statutory provisions, funding levels,accomplishments, and future outlook for continuation orexpansion.

Keywords: Incentive programs, nonindustrial private forestlandowners, reforestation, timber productivity, tree planting.

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To file a complaint, write the Secretary of Agriculture, U.S. Department ofAgriculture, Washington, DC 20250, or call (202) 720-7327 (voice) or (202)720-1127 (TDD). USDA is an equal employment opportunity employer.

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