This is a piece I wrote for my former CEO, W. Henson Moore, back in 2002 on tax policy. It appeared in the Spring 2002 Issue of "Spectrum: The Journal of State Government" under his byline. The target audience was state legislators and governors. The column was well-received and prompted the publication to include sample legislation based on our ideas in the issue.
Forests are the Anti-Sprawl
America’s cities continue to grow outward, straining infrastructure, tax bases, property values, and most of all, the natural environment. Dubbed “sprawl”, the trend of growing sub- and ex-urbs is not new, but neither is it going away. A majority of Americans list it as one of their top quality of life concerns. Mr. Moore feels one solution could be growing right outside your window.
A Swelling Problem
No matter where you are right now, chances are, there is more development around you than there was 20 years ago. By whatever name you call it: “urban expansion”, “urban growth”, “growth”, or the media’s favorite, “sprawl”, this expansion of our cities and suburbs presents today's leaders with real challenges.
As populations continue to swell, so does pressure to develop land to meet the needs of these people. Every day, farm and forest land is bulldozed to make way for housing, schools, shopping centers, roads, prisons, airports, or any other of the countless non-agrarian uses which are the poster children for sprawl. The pace of change is quickening.
A comprehensive land use study released in 2000 by the U.S. Department of Agriculture’s Natural Resources Conservation Service reported forested acres had actually increased by just under one percent nationwide from 1982 to 1997. Somewhat encouraging. Unfortunately, the same report showed the amount of developed land had increased by 34 percent nationwide during the same time. Put in hard numbers, during those 15 years, we gained 3.6 million acres of new forestland. However, we also gained 25 million acres of new development. A sobering trend indeed.
At issue for state and local governments: how do we slow the loss of undeveloped land without infringing on the personal property rights held so dear by so many of us?
There is no simple solution to a complex problem like sprawl. A quick fix, one-size-fits-all, sweeping policy is what got us into this in the first place. There are many moving parts to this puzzle, so which ones do you deal with? Is the issue best handled through transportation policies? Zoning restrictions? Redevelopment plans? By other means? By all of these means?
Deciding on how you deal with the issue is only the beginning, and depending on your governmental philosophy you can attack the problem from different angles. I subscribe to the notion you catch more flies with honey than with vinegar, and as such, believe offering citizens incentives to slow or reverse the effects of sprawl will be more successful than wagging a finger at them and trying to force them to do it.
Identifying the Cause
Too often our society attempts to fix something before gaining a full understanding of why it is broken. Before setting off on a complex solution, it may be helpful to boil it down to its most basic level.
There are two kinds of land: developed and undeveloped. Everything currently developed was at one time undeveloped — and for many parts of North America, that probably means it was forested. At some point, the land owners — whether they were private individuals, trusts, corporations, municipalities, or government entities — decided the land better served their purposes by being developed. It seems to be a simple matter of supply and demand. If the market demands developed land, someone will supply it.
Influencing the Marketplace
So now the question of how to slow the rate of sprawl has become one of influencing the land use markets. Most of this country's land — including forestland — is privately owned. I take it as a basic truism that private land will be put to the use which most benefits the landowner. That’s a cornerstone of the American democratic system. Of capitalism too.
We need to make it worthwhile for forestland owners to keep their forests and not sell their land to developers. This holds especially true for the nine million private, non-industrial forestland owners who alone own 58 percent of the nation’s forests. The quickest way to do this is to support a strong, stable timber market, providing an economic incentive for landowners to grow trees and keep growing trees.
In a guest editorial for the New York Times in March, 2001, President Jimmy Carter, himself a Georgia tree farmer, wrote “…[w]ithout a dependable timber market...many landowners cannot afford to invest in reforestation and forest maintenance, and the consequences will be land that is barren or converted to other uses. The cost to society is great...”.
Money Doesn’t Grow on Trees, But Taxes Do
We were not surprised by a recent Pricewaterhouse Coopers study of corporate tax rates on the forest products industry here and around the world, which concluded the United States has the world's second highest tax rate for our industry. Sadly, similar disparities exist at the state and local level for tree farmers. These policies serve as a disincentive to forestland owners and if not rectified could lead to more sprawl and less forests.
Many states do not assess property taxes for tree farmers on current use, but rather market value. Tree farmers, unlike row crop farmers, must wait years and often decades before realizing profits from their crops, yet they are taxed as if they receive income from the property every year. This backwards policy taxes undeveloped land right into the hands of developers.
The exceptionally long crop rotation of trees should also be considered when establishing amortization of business expenses schedules. In most states, many reforestation expenses are not eligible for consideration as business expenses until the trees are harvested. This means landowners must carry those expenses for an unusually and unfairly long time without relief. Row crop farmers write off these expenses annually.
A major part of being a forestland owner — and one of the most expensive — is reforestation. To offset these costs and encourage reforestation, some states have experimented with special incentives. In 1999, Texas became the first state to provide meaningful reforestation tax credits. That is, the property tax bill of tree farmers was reduced by 50 percent if harvested land was reforested within one year. This innovative tax policy not only provides incentive for landowners to replant trees on their land, ensuring forested acres stay forested, it also provides an incentive for the landowner to do it quickly, thus further minimizing the environmental and aesthetic impacts of a harvesting operation.
Conservation easements are another tax incentive that has had success around the country. These are long term agreements landowners willingly enter into with local, state, regional, or federal conservation authorities, under which the landowner will not develop specified land in exchange for preferential tax status throughout the agreement. We’ve seen this innovative approach to the sprawl issue work wonders in the Lake states, where many rivers and streams had been threatened by over-development.
Helping Private Forestland Owners
I’ve just outlined four ways to promote long-term forest sustainability through positive tax policy — taken together they could have real impact on growth. But our goal should not be just more forests. We should promote healthy, sustainable, and productive forests.
There are many private forest stewardship programs that serve this purpose, educating and assisting landowners, training loggers, and leveraging environmentally-friendly products in the marketplace. Two you have probably heard of are the American Tree Farm System® and our own Sustainable Forestry Initiative® (SFI) program. Both programs complement federal and state laws and regulations to ensure healthy and sustainably managed forests will never be in short supply. At their cores they stress education and outreach for both landowners and loggers. Both programs also encompass and often surpass existing forestry best management practices (BMPs).
Conclusion
This country boasts some of the most productive, ecologically diverse, and economically valuable forestland in the world. We need to take steps to make certain our grandchildren and their grandchildren can continue to make this claim.
To ensure the long-term sustainability of our forests, there must be cooperation between all entities responsible for management or ownership of forestland. I urge you to contact your state legislatures and encourage them to strengthen relationships with existing forest management programs such as Tree Farm or SFI, both of which have long-term sustainability as their overarching goals. Many states should consider joining the 16 state legislatures that have adopted formal resolutions endorsing the SFI program. Also, encourage your state government to commit additional resources to its forestry agencies to further their landowner assistance programs.
States should provide landowners with economic incentives to grow forests. At very least, they should remove disincentives to growing trees. The tax policies I've discussed can go a long way to providing those incentives. In fact, the recently completed US Forest Service’s Southern Forest Resource Assessment concluded incentive programs, reforestation cost sharing programs, and favorable tax treatment for forestland owners have a long and successful history, with the strong likelihood they directly increase forest area and change forest conditions for the better.
America’s cities continue to grow outward, straining infrastructure, tax bases, property values, and most of all, the natural environment. Dubbed “sprawl”, the trend of growing sub- and ex-urbs is not new, but neither is it going away. A majority of Americans list it as one of their top quality of life concerns. Mr. Moore feels one solution could be growing right outside your window.
A Swelling Problem
No matter where you are right now, chances are, there is more development around you than there was 20 years ago. By whatever name you call it: “urban expansion”, “urban growth”, “growth”, or the media’s favorite, “sprawl”, this expansion of our cities and suburbs presents today's leaders with real challenges.
As populations continue to swell, so does pressure to develop land to meet the needs of these people. Every day, farm and forest land is bulldozed to make way for housing, schools, shopping centers, roads, prisons, airports, or any other of the countless non-agrarian uses which are the poster children for sprawl. The pace of change is quickening.
A comprehensive land use study released in 2000 by the U.S. Department of Agriculture’s Natural Resources Conservation Service reported forested acres had actually increased by just under one percent nationwide from 1982 to 1997. Somewhat encouraging. Unfortunately, the same report showed the amount of developed land had increased by 34 percent nationwide during the same time. Put in hard numbers, during those 15 years, we gained 3.6 million acres of new forestland. However, we also gained 25 million acres of new development. A sobering trend indeed.
At issue for state and local governments: how do we slow the loss of undeveloped land without infringing on the personal property rights held so dear by so many of us?
There is no simple solution to a complex problem like sprawl. A quick fix, one-size-fits-all, sweeping policy is what got us into this in the first place. There are many moving parts to this puzzle, so which ones do you deal with? Is the issue best handled through transportation policies? Zoning restrictions? Redevelopment plans? By other means? By all of these means?
Deciding on how you deal with the issue is only the beginning, and depending on your governmental philosophy you can attack the problem from different angles. I subscribe to the notion you catch more flies with honey than with vinegar, and as such, believe offering citizens incentives to slow or reverse the effects of sprawl will be more successful than wagging a finger at them and trying to force them to do it.
Identifying the Cause
Too often our society attempts to fix something before gaining a full understanding of why it is broken. Before setting off on a complex solution, it may be helpful to boil it down to its most basic level.
There are two kinds of land: developed and undeveloped. Everything currently developed was at one time undeveloped — and for many parts of North America, that probably means it was forested. At some point, the land owners — whether they were private individuals, trusts, corporations, municipalities, or government entities — decided the land better served their purposes by being developed. It seems to be a simple matter of supply and demand. If the market demands developed land, someone will supply it.
Influencing the Marketplace
So now the question of how to slow the rate of sprawl has become one of influencing the land use markets. Most of this country's land — including forestland — is privately owned. I take it as a basic truism that private land will be put to the use which most benefits the landowner. That’s a cornerstone of the American democratic system. Of capitalism too.
We need to make it worthwhile for forestland owners to keep their forests and not sell their land to developers. This holds especially true for the nine million private, non-industrial forestland owners who alone own 58 percent of the nation’s forests. The quickest way to do this is to support a strong, stable timber market, providing an economic incentive for landowners to grow trees and keep growing trees.
In a guest editorial for the New York Times in March, 2001, President Jimmy Carter, himself a Georgia tree farmer, wrote “…[w]ithout a dependable timber market...many landowners cannot afford to invest in reforestation and forest maintenance, and the consequences will be land that is barren or converted to other uses. The cost to society is great...”.
Money Doesn’t Grow on Trees, But Taxes Do
We were not surprised by a recent Pricewaterhouse Coopers study of corporate tax rates on the forest products industry here and around the world, which concluded the United States has the world's second highest tax rate for our industry. Sadly, similar disparities exist at the state and local level for tree farmers. These policies serve as a disincentive to forestland owners and if not rectified could lead to more sprawl and less forests.
Many states do not assess property taxes for tree farmers on current use, but rather market value. Tree farmers, unlike row crop farmers, must wait years and often decades before realizing profits from their crops, yet they are taxed as if they receive income from the property every year. This backwards policy taxes undeveloped land right into the hands of developers.
The exceptionally long crop rotation of trees should also be considered when establishing amortization of business expenses schedules. In most states, many reforestation expenses are not eligible for consideration as business expenses until the trees are harvested. This means landowners must carry those expenses for an unusually and unfairly long time without relief. Row crop farmers write off these expenses annually.
A major part of being a forestland owner — and one of the most expensive — is reforestation. To offset these costs and encourage reforestation, some states have experimented with special incentives. In 1999, Texas became the first state to provide meaningful reforestation tax credits. That is, the property tax bill of tree farmers was reduced by 50 percent if harvested land was reforested within one year. This innovative tax policy not only provides incentive for landowners to replant trees on their land, ensuring forested acres stay forested, it also provides an incentive for the landowner to do it quickly, thus further minimizing the environmental and aesthetic impacts of a harvesting operation.
Conservation easements are another tax incentive that has had success around the country. These are long term agreements landowners willingly enter into with local, state, regional, or federal conservation authorities, under which the landowner will not develop specified land in exchange for preferential tax status throughout the agreement. We’ve seen this innovative approach to the sprawl issue work wonders in the Lake states, where many rivers and streams had been threatened by over-development.
Helping Private Forestland Owners
I’ve just outlined four ways to promote long-term forest sustainability through positive tax policy — taken together they could have real impact on growth. But our goal should not be just more forests. We should promote healthy, sustainable, and productive forests.
There are many private forest stewardship programs that serve this purpose, educating and assisting landowners, training loggers, and leveraging environmentally-friendly products in the marketplace. Two you have probably heard of are the American Tree Farm System® and our own Sustainable Forestry Initiative® (SFI) program. Both programs complement federal and state laws and regulations to ensure healthy and sustainably managed forests will never be in short supply. At their cores they stress education and outreach for both landowners and loggers. Both programs also encompass and often surpass existing forestry best management practices (BMPs).
Conclusion
This country boasts some of the most productive, ecologically diverse, and economically valuable forestland in the world. We need to take steps to make certain our grandchildren and their grandchildren can continue to make this claim.
To ensure the long-term sustainability of our forests, there must be cooperation between all entities responsible for management or ownership of forestland. I urge you to contact your state legislatures and encourage them to strengthen relationships with existing forest management programs such as Tree Farm or SFI, both of which have long-term sustainability as their overarching goals. Many states should consider joining the 16 state legislatures that have adopted formal resolutions endorsing the SFI program. Also, encourage your state government to commit additional resources to its forestry agencies to further their landowner assistance programs.
States should provide landowners with economic incentives to grow forests. At very least, they should remove disincentives to growing trees. The tax policies I've discussed can go a long way to providing those incentives. In fact, the recently completed US Forest Service’s Southern Forest Resource Assessment concluded incentive programs, reforestation cost sharing programs, and favorable tax treatment for forestland owners have a long and successful history, with the strong likelihood they directly increase forest area and change forest conditions for the better.
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