Factors Influencing Forest Plantation Development

As mentioned earlier, rising timber prices, caused by timber scarcity, lead to forest plantation development. Thus, timber prices are the primary factor that influences forest plantation development. Holding everything else constant, whenever a country or a region experiences a long period of rising timber prices, forest plantations would develop quickly.

Tree planting also requires land, labor, and capital. The cost of these production factors thus influence forest plantation development. Further, high timber prices, high land costs, and high labor costs force innovation in tree-growing technologies in conventional silvicultural treatments and biotechnologies. A recent report shows that the growth rate of pine plantations in Alabama, a southern state in the US increased about 25% in a decade (from 8.20% in the period from 1982 to 1990, to 10.17% in the period of 1990-2000). This increase in growth rate is attributed to advancement in tree-growing technologies as well as an increase in management intensity.

Government policies influence forest plantation developments as well. Taxes on land and forest-related income, cash subsidies to plant trees, regulations on land use and labor, and free education and extension services to forest farmers all have an impact, positively or negatively, on tree planting. In general, the primary motivation for the private sector to plant trees is to generate financial (or other)

benefits from their investment. In some cases, government policies (positive or pervasive incentives in taxes, subsidies) provide or take away a significant proportion of the financial benefits from forest plantation development. Where governments own land, they could conduct afforestation and reforestation activities directly, for purely financial reasons or for social and environmental benefits or both.

The US South is perhaps an important region in timber supply as it produces some 18% of the world's industrial round wood with just 2% of the world's forestlands and 2% of the world's forest inventory. Some 90% of forest lands in the southern US are owned by nonin-dustrial private and industrial owners, and timber markets are competitive. A study of tree planting showed that tree planting by both forest industry and nonindustrial private landowners was positively related to the availability (measured as previous-year harvest) and the price of land. Planting by forest industry and nonindustrial private landowners was responsive to market signals, positively to softwood pulpwood prices and negatively to planting costs and interest rates. Finally, government subsidy programs, which increase the total plantation area, might have substitution effects on nonindustrial private tree planting. The federal income tax break for reforestation expenses promoted reforestation in the southern US.

Since forests often have a long production cycle, perhaps the most important government policy in promoting forest plantation development is to provide long-term and secure property rights (private property or land tenure) to private landowners or forest farmers. Many theoretical and empirical studies substantiate that long-term and secure property rights promote tree planting activities in both developed and developing countries. For example, in British Columbia, Canada tree planting was done more often and more promptly following harvest when forest property rights were secure. In Ghana, reforestation was significantly influenced by the form of forest tenure, and more intensive resource management was fostered by more secure forms of tenure.

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