United States

Department of

Agriculture

Forest Service

Southern Forest

Experiment Station

New Orleans,

Louisiana

Research Paper

so-295

September 1995

Federal and State Forestry Cost-Share

Assistance Programs: Structure,

Accomplishments, and Future Outlook

Terry Haines
SUMMARY

Cost-share assistance programs have been an effective policy mechanism for increasing

productivity on nonindustrial private forest (NIPF) lands. In light of reduced harvests from

Federal lands, timber productivity on these lands has become increasingly important to ensure

sufticient timber supplies in the future. Productivity of other forest resources has also been

enhanced through these programs.

Four Federal programs, the Forestry Incentives Program, the Agricultural Conservation

Program, 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 on

NIPF lands. These programs contributed payments for tree planting projects on over 150,000

acres in 1993. Programs are concentrated in 10 States in the southern pine belt and 6 in the

Midwest. Programs have also been established in California, Hawaii, and Oregon. The first

State program was implemented in 1970 in Virginia in response to forest inventory statistics

indicating a lack of investment in forest productivity on NlPF lands. Similar concerns, coupled

with the lack of sufficient Federal funding for incentive payments, prompted a number

of States to establish cost-share assistance programs in the 1970’s and 1980’s. In

addition to timber-oriented progmms, several States initiated cost-share assistance programs

that focus on the protection and enhancement of wildlife habitats, wetlands and riparian

areas, 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, funding

levels, accomplishments, and outlook for continuation or expansion, were examined. Federal

programs were reviewed as well, with respect to their interaction with State-level

programs. 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) landowners

play a vital role in sustaining forest resources.

Nearly 60 percent of the commercial forest land in the

United States is held by NIPF landowners; these lands

provide about half of the timber harvested nationwide.

As timber harvests from Federal lands have been

reduced in recent years, the supply of timber from

NIPF lands has become more crucial.

Two important barriers to NIPF landowner

investments to optimize forest productivity are the

lack of “up-li-ont” capital and low expected rates of

return. In response, cost-share assistance programs

have been implemented to help stimulate NIPF

investment by reducing landowners’ initial costs for

reforestation and improving rates of return.

Several studies have shown that cost-share

assistance programs are effective in terms of increased

productivity on NIPF lands (Mills 1976, Risbrudt and

Ellefson 1983, Royer and Moulton 1987). Tree planting

statistics indicate that these programs have been

influential in promoting NIPF forestry investments

(table 1). Federal programs provided cost-share

assistance for tree planting projects on 467,102 acres

and timber stand improvement practices on 113,608

acres in 1993. These acreages represent 47 percent of

the total tree planting and 20 percent of the timber stand

improvement accomplished in 1993 (Nisley 1994).

In addition to projects for tree planting and timber

stand improvement, Federal and State cost-share

assistance programs, to varying degrees, provide

assistance for the preparation of management plans and

for projects that focus on soil conservation, water

quality, wetlands, and fish and wildlife habitat

improvement.

To date, most studies of cost-share programs

have focused on Federal incentive programs. Less work

has been done to evaluate State cost-share programs that

provide direct monetary incentives for reforestation and

stand improvement. In the most recent nationwide

study on this topic, a brief summary of the features of

each of the existing State programs as of 1988 is

presented (Bullard and Straka 1988). A brief summary

of the features of the incentive programs of the

Southern States is also presented in Harrell(l989).

A current, more expanded view of State cost-share

programs is provided in this report, including analyses

of new programs that have been implemented since

1988. Program features, funding mechanisms, and

accomplishments are reviewed as well as problems

that have been encountered. The likelihood of

continuation or expansion of State-level incentive

programs is also addressed. Federal programs

providing cost-share payments to NIPF landowners

are reviewed as well, with respect to their

interaction with State-funded programs.

FEDERAL COST-SHARE

ASSISTANCE PROGRAMS

Cost-share assistance programs of the U.S.

Department of Agriculture (USDA) that are available to

NIPF landowners include the Forestry Incentive Program

(FIP), the Agricultural Conservation Program (ACP),

the Stewardship Incentives Program (SIP), the

Conservation Reserve Program (CRP), and the Wetlands

Reserve Program (WRP). Funding and administration of

FIP and WRP is through the USDA Natural Resource

Conservation Service; the ACP and CRP are

administered by the USDA Consolidated Farm Service

Agency, and the USDA Forest Service administers

SIP. Technical forestry aspects are handled by the

Forest Service with cooperation from the State forestry

agencies. The continuation of the FIP and CRP

programs will likely be decided in the 104th Congress

through the 1995 Farm Bill legislation. Authority for

these programs expires in 1995 in accordance with the

1990 Farm Bill.

Although the legislative intent and goals for each

of these programs differ, forestry practices generally

authorized in these programs are site preparation, tree

planting, and timber stand improvement. In

addition, NIPF landowners may receive cost-share

assistance 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, LA

70113.

1
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?

Total

Federal 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 personal

communication with State forestry agency officials.

‘CRP=Conservation Reserve Program, FIP=Forestry Incentives Program, ACP=Agricultural Conservation Program, and

SlP=Stewardsbip Incentives Program.

multi-resource planning, wildlife and fish habitat

improvement, and tree planting to protect riparian

areas and wetlands. State program committees are

authorized to establish cost-share rates up to the

Federal maximum and may set practice priorities

or other restrictions. The CRP, ACP, and FIP

programs require a practice plan for the acreage

treated. However, SIP requires a more comprehensive

multi-resource evaluation for contiguous forested acres

within the ownership. Landowners may do the work

themselves or contract the work to others. Upon

completion, landowners receive the cost-share

payments, provided the work is done to standards.

Furthermore, landowners must maintain the practices

for a set period, typically 10 years. A summarized

description of the Federal cost-share assistance

programs is given in Moulton (1994) and more

indepth information is presented in the annual

USDA Program Accomplishment Reports for ACP,

FIP, CRP, and SIP, which are published by the

Agricultural Stabilization and Conservation Service.

STATE FORESTRY COST-SHARE

ASSISTANCE PROGRAMS

Increased awareness and concern regarding the

low level of investment in the reforestation of NIPF

lands after harvest prompted a number of States

to establish forestry cost-share programs in the

1970’s and 1980’s (tables 2 and 3). Funding for these

programs increased over 60 percent between 198 1 and

1985 (Bullard and Starka 1988). Federal cost-share

funding was insufficient to meet the needs of NIPF

landowners in many States. In more recent years, new

State cost-share programs have generally focused on

a broader range of resource goals and have addressed

specific resource protection needs or land-use

priorities.

The largest State programs in terms of

cost-share payments and acreage treated are in the

South. Forest industries are a leading sector of the

industrial base of many States across the South.

In 1982, forest industry contributions in wages and

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

Program features for determing project eligibility

State program Cost-share Maximum

rate payment

Site

productivity

ranking

Ownership

limits

Project

limits

Practice

retention

Alabama Agricultural

and Conservation

Developement Program

California Forest

Improvement Program

Florida Plant a Tree

Trust Fund Program

Illinois Forestry

Development Program

Iowa Resource

Enhancement and

Protection Program

Maqland Woodland

Incentives Program

Minnesota Forestry

Improvement Program

Mississippi Forest

Resources Development

Program

North Carolina Forest

Development Program

Oregon Forest

Resource Trust

South Carolina Forest

Renewal Act

Texas Reforestation

Foundation Program

Virginia Reforestation

Timberlands Act

Percent Dollars

60 3,500lyear

75-90t ____

50 10,000

80 ___-

75 365lacre

50

50-65’

5 ,OOO/year

15 ,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*

lnlininlnrn

100 maximum

100 maximnm++

lominimum

1-5 minimnm*

5OOmaximum

Years

10*

10

2

10

20

1 5

10

10

____

Commercial

harvest

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.

5Contiguous acres in tract.

l *Rate of replanting CRP plantations.

t tlO-acre minimum for mechanical site preparation.
Table 3.-Funding and accomplishments of State forestry cost-share programs to improve timber production

State program and

date implemented Source of funding

Annual cost-share payments

for reforestation and timber

stand improvement

Annual Accomplishments,

reforestation and timber

stand improvement

Trends in

funding

Dollars Acres

Interest from oil and 348,913 10,949

gas trust fund

Alabama Agricultural

and Conservation Develop

ment Program, 1985

California Forest

Improvement Program,

1980

Florida Plant a Tree Trust

Fund Program, 1995

Illinois Forestry Development Program, 1983

Iowa Resource Enhancement and Protection

Program, 1989

Maryland Woodland

Incentives Program,

1986 -

Minnesota Forestry

Improvement Program,

1989

Mississippi Forest

Resource Development

Program, 1974

North Carolina Forest

Development Program,

1978

Oregon Forest Resource

Trust, 1993

South Carolina Forest

Renewal Act, 1981

Texas Reforestation

Foundation Program,

1981

Virginia Reforestation

of Timberlands Acts,

1970

Timber harvest

receipts from State

lands

Voluntary contributions from Sunshine

Gas Pipeline Company

Primarily through

timber harvest tax

Lottery revenues and

State 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 on

agricultural lands

converted to other uses

State general funds 42235+ 1,944+ Not funded

1993-94

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

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

State general funds (50%)

New

5,904

6,096

Lottery revenues and New

PacitiCorp contributions

Timber harvest tax (80%),

State general funds (20%)

Vohmtav forest industty

assessment on primary

products

State general funds (50%),

harvest tax (50%)

New

515,736

280,839

Stable

Increasing

State funds

decreasing,

severance

tax funds

increasing

1,014,331 40,393

1

Acreage and payment figures are averages of program years.

t Reforestation practices only.

4
salaries ranked fourth or higher among major

industries-and ranked first in Arkansas, Alabama, and

Mississippi. Furthermore, in 1982, employment, wages,

value of shipments, and value, added by manufacturing

for all forest industries in the region represented

roughly one-third of forest industry activities

nationwide (USDA FS 1988).

Cost-share assistance programs promoting

timber production are concentrated in the southern

pine belt States of Alabama, Florida, Maryland,

Mississippi, North Carolina, South Carolina, Texas,

and Virginia (fig. 1). The Louisiana Forestry

Association is currently developing a proposal to

establish a program in Louisiana. Outside the South,

cost-share assistance programs for timber production

have been established in California, Illinois, Iowa,

Minnesota, and Oregon.

The implementation of cost-share assistance

programs for forest land management that do not

include timber production as a primary goal has

expanded greatly over the past 10 to 15 years. Increased

awareness of the importance of the non-timber forest

resources, in particular water quality and wetlands,

has been important in this trend. The focus of these

programs include: (1) retention of agricultural and

forestry land uses, (2) protection and enhancement of

riparian areas and wetlands, (3) enhancement of

wildlife habitats, and (4) water quality protection

and soil conservation. Programs for these purposes

have been established in Hawaii, Kentucky, Maryland,

Minnesota, Missouri, Nebraska, New Jersey, North

Carolina, Tennessee, and Virginia. With the exception

of Nebraska, these programs were initiated after

1980, four after 1990.

The total contribution of State cost-share

assistance programs for tree planting was over

150,000 acres in 1993. The leading programs in

terms of reforestation projects were Mississippi and

North Carolina, with contributions of 58,768 and

41,060 acres, respectively, in 1993 (table 1). These

accomplishments represented roughly two-thirds of

the total acreage of all State cost-share assisted

plantings across the Nation in 1993.

Most State cost-share assistance programs are

patterned after the Federal FIP, ACP, or SIP (table 2).

However, specific program features vary greatly

among the States.

Program funding is generally from State

revenues, most commonly from timber harvest taxes

and general State appropriations (table 3). Other State

sources of funding include: (1) lottery revenues to

establish the Oregon Forest Resource Trust Fund,

(2) oil and gas windfall revenues to stablish a trust to

finance the Alabama Agricultural and Conservation

Development Commission Program, (3) real

State transfer tax revenues to fund the Maryland

Figure l.atate-level cost-share assistanceprograms topromote conservation, improve timberproductivity and enhance other resource

values on non-industrial private forest lands.
Woodland Incentives Program and the Tennessee

Agricultural Non-Point Source Program, and (4) a

portion of hunting and fishing license fees to

finance the Missouri Streams for the Future Program.

A variety of private sources have contributed

to funding in several States (table 3). The Texas

cost-share assistance program is unique in that it is

funded entirely by a voluntary, self-assessed tax on

forest industries. Funding for the Oregon Forest

Resource Trust Fund was established in part

with contributions from PacifiCorp, a private utility

company. Initial funding for the Florida Plant a

Tree Trust Fund Program was contributed by the

Sunshine Gas Pipeline Company, and the discontinued

program for reimbursement to NIPF landowners for

costs of pine seedlings in Florida was funded by

voluntary contributions from forest industry and other

private donors in the State. The Virginia Agricultural

Best Management Practices (BMP) Cost-Share

Program is funded in part by contributions from a

private organization, the Alliance for the Chesapeake

Bay.

Program features that are used to define

eligibility-vary among the States but generally include

one or more of the following criteria: (1) minimum

or maximum ownership or project size limitations,

(2) site productivity ranking, and (3) priority ranking

of projects according to State resource goals (table

2). All programs focus primarily on NIPF lands;

however, other ownerships are eligible in some

States. Corporate and industrial ownerships are

eligible for cost-sharing in Alabama, Illinois, North

Carolina, South Carolina, and Virginia. The South

Carolina program specifically excludes wood

processing industries; in contrast, the Illinois, North

Carolina, and Virginia programs include forest

industries as eligible ownerships. Public ownerships

are eligible in some States as well; these include

non-federal publicly owned lands in Alabama,

Mississippi, and New Jersey and municipal

holdings in Illinois.

Most programs do not permit landowners to

receive concurrent Federal and State cost-share

assistance for the same project. However, the

programs in Illinois, Iowa, and New Jersey permit

State payments to supplement Federal cost-share

payments to cover landowner’s costs up to 100

percent, 50 percent, and 75 percent, respectively.

Eligible forestry practices generally include tree

planting, site preparation for natural and artificial

regeneration, timber stand improvement practices, and

prescribed burning. Other activities that may be eligible

include management plan development, fencing, soil

and water quality protection practices, insect and

disease control, fish and wildlife habitat improvement,

and windbreak construction, among others.

Maximum cost-share payment rates in 1993

ranged from 40 percent in North Carolina and

Virginia to 80 percent in Illinois and up to 90

percent in California; most commonly, rates are

around 50 percent. Cost-share rates vary according to

purpose in some States. In California, higher rates

are available on projects to restore substantially

damaged lands; the Mississippi program offers

higher rates (75 percent rather than 50 percent) for

direct seeding and mixed stand regeneration; and

in 1993, North Carolina began offering a higher

cost-share rate (60 percent rather than 40 percent) for

planting hardwoods and longleaf pine and for tree

planting projects in wetlands. The Oregon cost-share

program is unique; under a contractual agreement with

the landowner, the State pays 100 percent of the

tree planting costs of landowners. In exchange, the

State is reimbursed with a portion of the proceeds

of timber sales at harvest.

All State programs require landowners to develop

a management plan and, with the exception of North

Carolina, require that practices be retained for a set

period, most often, 10 years (table 2).

Summaries of the individual State programs

follow. Information was obtained through contact with

oficials of State forestry agencies, and also, from State

agency reports and bulletins.

Alabama

The Alabama Agricultural and Conservation

Development Commission Program was enacted in

1985 in response to cutbacks in funding for

federal conservation and reforestation cost-share

programs. The program is administered by the Alabama

Agriculture and Conservation Commission, with the

Alabama Forestry Commission providing technical

support for forestry practices. Cost-share funding is

provided through interest earned on a trust fund

established with oil and gas windfall moneys.

Eligible lands include private, State, and other

non-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 stand

improvement, prescribed burning, permanent fire

lane construction, and some soil and water quality

6
protection practices. In the future, beaver control

measures and fencing may be included. The

cost-share rate is up to 60 percent, with a maximum

payment of $3,500 per year. Most practices

must be maintained for 10 years, 5 years for timber

stand improvement. The program is not available

for projects funded with Federal cost-share dollars.

Practice priorities are determined by the local Soil

and Water Conservation Districts.

In the 1993-94 program year, disbursements

totaling $348,913 were made for reforestation and

timber stand improvement practices on 10,949 acres

(table 3). Funding has been stable since the program

was established in 1985 .I

The Alabama Forestry Commission also

administers the Southern Pine Beetle Contract

Program to offset part of the losses incurred by

landowners due to southern pine beetle attack and to

encourage prompt control of infestations.

Financial support for the program, which has

been available since the mid-1980’s, is provided jointly

through the State’s emergency insect and disease fund

(59 percent) and the USDA Forest Service’s southern

pine beetle suppression fund (41 percent). Incentive

contracts &e available for salvage, cut-and-leave, and

premerchantable harvest operations. For salvage cuts,

incentive payments of $10 per cord and $30 per

thousand board feet, up to a maximum of $350 per

contract, 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 of

premerchantable timber, the program offers $1 per

tree up to a maximum of $500 per contract. With

the exception of cut-and-leave contracts, infested

trees must be removed and green tree buffer strips

established within 30 days of the contract date.

Commercial salvage operations are not eligible as

determined by the evaluation of an agent of the

Alabama Forestry Commission. Program funding

has been sufficient to meet landowners’ needs.*

conservation, and fish and wildlife habitat. The

program is funded by timber sale revenues from

State lands and is administered by the Department

of Forestry and Fire Protection. Private ownerships

of between 20 and 5,000 acres are eligible (table

2). A minimum project area of 5 acres is required

for all practices, with the exception of conservation

projects that have no minimum acreage requirement.

Landowners must submit a management plan certified

by a registered forester and adhere to a lo-year

forest land use agreement. Cost-share rates range

from 75 to 90 percent, with the higher rates offered

for projects located on substantially damaged lands.

There is no maximum project allotment. Ranking

by site productivity is used to prioritize projects;

however, this practice is modified to ensure

availability of the program to regions of the State

where overall site productivity is low.

Cost-share payments are available for the

development of forest management plans; site

preparation and tree planting; timber stand

improvement, including hazard reduction; conservation

practices; fish and wildlife habitat improvement;

and insect, disease, and rodent control. Practices

required to meet standards under the California

Forest Practices Act are not eligible.

From the program’s inception in 1980 through

1992, over 21 million dollars were allocated for 2,00 1

projects covering 45,030 acres of planted trees

and 37,180 acres of timber stand improvement. In

addition, 1,086 management plans were developed

for 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 decreasing

stumpage prices and reduced harvesting to protect

the habitats of endangered species. However, there

is great demand for the program; over 900,000

acres of private commercial forest land and 6

million acres of non-commercial forest land are in

need of improvement projects3

California

Florida

The California Forest Improvement Program was

implemented in 1980 to encourage forestry practices

for the enhancement of forest productivity, land

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

Communication.

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

Communication.

The Florida Reforestation Incentives Program

was established through a joint agreement between

the Florida Division of Forestry and the Florida

Forestry Association in 198 1 to encourage

3Carter, John. 1993. California Department of Forestry and Fire

Protection. Personal Communication.
reforestation on private lands by providing

reimbursement for seedling costs. The program was

discontinued in 1993 due to budget cuts at the Division

of Forestry and the resulting closure of all but one

State tree nursery. In addition, administrative problems

were occurring as a result of requests by some

companies that their contributions be earmarked for

planting projects in counties close to their mills. The

program was administered by the Florida Forestry

Association and funded, through voluntary

contributions from forest industry and other private

donors. Technical assistance and the processing of

seedlings were handled by the Division of Forestry.

To be eligible, landowners were required to own a

minimum of 10 acres of forest land. There was no

maximum acreage limitation; however, a maximum

reimbursement for 60,000 seedlings was specified,

The Florida Plant a Tree Trust Fund Program

was established in 1991 to increase urban tree planting

and rural reforestation and is administered by the

Florida Division of Forestry. Funding began in

1995 with a contribution of $70,000 from the

Sunshine Gas Pipeline Company, a natural gas

transmission company utilizing right-of-ways in the

State. Eligible applicants include local governments,

nonprofit organizations, and private landowners (with

the exception of corporations whose stocks are publicly

traded) owning or controlling parcels of at least 10

and no more than 1,000 acres (table 2). Requests for

funding must be for no less than $1,000 and no more

than $10,000. A reforestation plan is required for

rural plantings, and projects must be maintained for at

least 2 years. Eligible practices include site preparation

and 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 of

500 bare-root seedlings or 400 tubelings per acre.

Proposed rural projects are prioritized based on

several criteria, including contribution to an existing

forest management plan, number and size of trees,

cost effectiveness, environmental enhancement, and

wildlife habitat improvement, among others.

Additional funding sources are being pursued.4

Hawaii

The Hawaii Forest Stewardship Program was

enacted in 1991 to encourage private landowners of

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

Communication.

forest land or formerly forested land to make

long-term commitments to protect, maintain, and

restore important watersheds, timber resources, fish

and wildlife habitats, endangered plants, and native

vegetation. The program is administered through the

Department of Land and Natural Resources and is

funded through general State revenues dedicated on a

biennial basis. Outlays were $50,000 in 1992 and

$200,000 in 1994. To be eligible, the parcel must not

be recognized as a potential natural reserve area5 or be

managed under other financial assistance programs

and must be a minimum of 5 acres in size. In

addition to a stewardship plan, landowners must

submit annual progress reports for each year they

receive support under the program and must agree

to maintain practices for a minimum of 10 years. The

maximum cost-share rate is 50 percent. There are no

maximum ownership size or cost-share limits, and

unlike most cost-share programs, if indicated by the

plan, payments may be made to the landowner for

up to 10 years.

Most projects have been established to control

insects and competing vegetation in native stands

and to convert degraded pasture to trees. Currently,

owners of lands formerly in sugarcane production are

being encouraged to plant commercial tropical hardwood

species. Several projects have been cost-shared as

pilot projects for this purpose. Other projects include

the planting of native tree species to maintain a gene

pool for the future.6

Illinois

The Illinois Forestry Development Program was

enacted in 1983 to improve management of timber

and other resources on NIPF, corporate, industrial

(including forest industries), and municipal holdings of

at least 5 acres in size (table 2). The program is

administered by the Illinois Department of

Conservation @DC), Division of Forest Resources,

on a first-come, first-serve basis and is funded by

a 4-percent harvest fee that is deducted from timber

sales. Funding has increased each year since inception

of the program, inception from $24,079 in 1985 to

$532,309 in 1992. Landowners participating in the

program are eligible to receive a 50-percent rebate on

harvest fees.

‘Potential natural reserve areas are land or water areas within a

protective subzone of a conservation district.

6Ayers, Nelson. 1995. Hawaii Department of Land and Natural

Resources. Personal Communication.

8
Cost-share payments are available for up to 80

percent of expenses incurred in carrying out practices

specified in an IDC approved lo-year management

plan. Maximum dollar limits are set for the various

practices. Eligible activities include the preparation

of management plans, site preparation for natural

regeneration, tree planting, timber stand improvement,

livestock exclusion, and firebreak construction.

Additional practices are approved for wildlife

management, recreation, soil and water conservation,

and other resource activities. In addition, seedlings

are available free of charge to landowners who have

an approved reforestation plan. Participation in the

program also ensures forest use valuation for

property tax purposes.

Illinois is one of the few States that permit

the concurrent use of State and Federal cost-share

funds. Federal payments are made first, providing

reimbursement for up to 65 percent of incurred

expenses; State funds further supplement the landowner

for up to 100 percent of expenditures. However,

maximum dollar limits set for various practices are

applicable. The rationale behind the generous package

offered is to induce landowners to manage for timber

production, despite the long-term investment required

for hardwood species and the increasing pressure for

urban and suburban uses of rural lands. In addition,

compliance with the high standards of the Division

of Forest Resources for tree planting operations can

be quite costly.

Program accomplishments include the

development of 3,036 management plans for practices

on 145,487 acres and cost-share payments of

$2,761,800 from 1985 through 1992. Although district

foresters will provide a management plan free of

charge, the IDC’s resources are limited, resulting in an

extensive backlog of interested landowners needing a

management plan. Cost-share payments are being

utilized by some landowners to pay consultant fees

for plan development.’

Iowa

The Iowa Resource Enhancement and Protection

Program (REAP) was passed in 1989 as a broad

range approach to protect Iowa’s natural resources.

The goal of the forestry component of the program

is to increase the economic viability of private

woodlands and to maintain forest cover for

environmental protection. The program is funded

by general revenue and lottery funds and is

administered through the Iowa Department of

Agriculture. Disbursement of funds for forestry is

at the discretion of the individual conservation districts.

The cost-share rate is 75 percent, with

maximum limits set for specific practices (table

2). For participation in the program, a comprehensive

stewardship plan is required. Eligible forest

practices include: (1) site preparation for natural

regeneration and tree planting on a minimum of 3

acres, (2) timber stand improvement on a minimum

of 5 acres, and (3) related activities such as

improvement in the habitats of wildlife and endangered

species, fencing, and establishment or restoration of

windbreaks. Forest practices must be maintained for

at least 20 years.

The program does not prohibit concurrent use

of Federal and State funds. However, unlike the

Illinois program where it is feasible to be

reimbursed up to 100 percent of costs incurred, REAP

limits total combined cost-share payments to 75 percent.

Federal programs must provide the initial funding.

Funding for REAP has decreased since the

program was initiated in 1989 due to budgetary

problems. Funding for 1993 was set at $7 million, a

sizeable decrease from appropriations of $16 million

in 1989 and $20 million in 1990 through 1992. In

1993, $500,000 was earmarked for forestry

practices. In 1994, the outlay for forestry was

reduced to $220,000. In the 1992-93 planting season,

$135,880 were expended on reforestation projects

on 1,100 acres. As of 1993, a $250,000 backlog of

forestry projects was awaiting inclusion into the

program.*

Kentucky

The Kentucky Soil and Water Quality

Cost-Share Program was initiated in 1994 to promote

agricultural conservation practices. Initial funding of

$500,000 was from an increase in the State pesticide

registration fee. other sources of additional funding

are being explored. Practices are prioritized with

funds allocated to the conservation districts accordingly.

Currently, agricultural waste control practices are

given 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 first

signup, requesting approximately $11,000. Two of the

projects will likely be funded for about $5,000. In

addition, 15 percent of the initial program funding is

reserved for cost-sharing water quality protection

measures where recommended BMP’s are determined

insufficient for compliance with the Kentucky

Agricultural Water Quality Act.g

Maryland

The Maryland Woodland Incentives Program was

established in 1986 to encourage the development,

management, and protection of nonindustrial woodlands

for sustained production of timber resources essential

to commerce and industry in the State. The program is

funded through an agricultural transfer tax assessed on

lands converted from woodlands to non-agricultural

uses and is administered by the Maryland Department of

Natural Resources. Eligible practices include site

preparation, tree planting, crop tree release, prescribed

burning, thinning, pruning, and herbicide treatments.

The cost-share rate is 50 percent up to a set maximum

limit per practice (table 2). Total State assistance is

limited to $5,000 per year per landowner unless a

3-year plan has been approved, in which case the

landowner may receive up to $15,000 per year.

Potential project areas are NIPF lands between 10

and 500 acres is size that are capable of producing at

least 20 cubic feet of wood per year. Applicants are

prioritized based on site index, size of parcel and

treatment area, and species composition. Landowners

must submit a forest management plan approved by a

licensed forester along with a signed. Statement agreeing

to the following stipulations: (1) to use the cost-share

funds for the growth of harvestable forest products on

a long-term basis, (2) to not receive Federal and

State cost-share assistance concurrently, (3) to

permit inspections by the Department of Natural

Resources, and (4) to maintain the projects for 15 years.

Funding is limited to $200,000 per year by the

enabling legislation and is expected to remain stable in

the future. Since inception of the program, 883

acres have been planted, and 1,774 acres have been

improved. Funding has been sufficient to meet

landowners’ needs. lo

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

Communication.

“Van Hassant, Donald. 1994. Maryland Department of Natural

Resources, Public Lands and Forestry. Personal Communication.

The Maryland Buffer Incentives Program was

established in 1992 to encourage the planting and

maintenance of forested buffers in proximity of the

Chesapeake Bay and its tributaries. The program is

administered by the Maryland Resource Conservation

Service. Funding, which is allocated from general State

appropriations, was $150,000 in 1993 and $111,000

in 1994.

Eligible lands are pasture, cropland, or otherwise

bare land between 1 and 50 acres in size that are

located within 300 feet of open water or lands classified

as wetlands by the State. Other critical areas outside the

300-foot limitation may be eligible under certain

conditions. Practices must be maintained for at

least 10 years, and inspections must be agreed to by the

landowner. After successful establishment of a

buffer is verified, a $500-per -acre payment is made

by the State to the landowner. In 1993,300 acres were

planted. Funding level has been sufficient to meet

landowners’ needs.”

Minnesota

The Minnesota Forestry Improvement Program

was enacted in 1989 to provide incentives for forestry

practices not available or inadequately funded under

Federal programs. The program is administered by

the Board of Water and Soil Resources and the Division

of Forestry. Technical assistance and a management

plan for landowners participating in the program

are provided by the Division of Forestry. Eligible

practices include woodland fencing, firebreaks and

fire lane construction, pocket gopher control, and other

approved special practices. Road construction is also

eligible when needed to access areas for management

purposes that are not economically viable, such as

non-commercial salvage operations. The minimum

contract amount is $100, and practices must be

retained for at least 10 years (table 2).

Cost-share funds are available for 65 percent of

landowners’ expenses, with the exception of road

construction, which is eligible for 50 percent, and some

special practices that may receive up to 75 percent. For

tree planting, funds have been available only for

restocking CRP plantations with less than 50-percent

survival resulting from drought conditions. The rate

is $25 per acre for a minimum of 11 acres; funding

is not available for the first 10 acres. The demand for

“Van Hassant, Donald. 1994. Maryland Department of Natural

Resources, Public Lands and Forestry. Personal Communication.

10
replanting drought-stricken CRP plantations has been

satisfied.‘*

Program accomplishments in 1991 included

$70,000 in cost-share assistance, of which $42,435

was dedicated to replanting 1,944 acres and $20,475

to install or repair roads. The program is funded

through general appropriations and grew from

$50,000 per year in 1986 to $120,000 in 1992. The

program was not funded in 1993 and 1994 due to State

budget cuts, and the prospect for future funding is

uncertain. However, funding may be appropriated in

the future for planting hybrid poplar in riparian areas

for nutrient and sediment control.13

The Minnesota Forest Wildlife Habitat

Improvement Program was initiated in 198 8 to provide

cost-share assistance for forest management practices

that are beneficial to wildlife and not eligible for funding

through more traditional forestry cost-share programs.

Approved timber management operations are for the

regeneration of non-merchantable tree species to

enhance wildlife habitat and stand diversity. Eligible

practices include tree planting, prescribed burning, and

mechanical and chemical treatments. The cost-share

rate is 75 percent, with payments limited to $150 per

acre. A written plan is required, and practices must

be maintained for at least 10 years.

The program is funded through general

appropriations associated with the 1987 Reinvest in

Minnesota legislation. Funding was $70,000 per year

initially; however, the program has not been funded

since 1992 due to State budget problems. From

1988 to 1992, a total of 572 agreements were

funded through the programs at a cost of $3 16,058.

Approximately $20,000 of funding was used for tree

planting and timber management on 150 acres, with

the bulk of funding being used to improve brushland

wildlife habitat. Public interest in cost-share funds for

wildlife habitat projects remains high.13

Mississippi

The Mississippi Forest Resource Development

Program was authorized in 1974 in response to

concerns regarding the future availability of softwood

timber supplies; a prime concern in a State where the

manufacturing of forest products is the leading industry

*%imanga, Larry. 1994. Minnesota Department of Natural

Resources. 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 80

percent of timber severance tax collections and is

administered by the Mississippi Forestry Commission.

Assistance is available on a first-come, first-serve basis

to NIPF and non-Federal public landowners. No

minimum ownership acreage or treatment area is

stipulated. Landowners are required to submit a

management 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 tree

planting, site preparation, prescribed burning, firebreak

construction, and timber stand improvement and is

75 percent for direct-seeding and mixed-stand

regeneration. Payments are limited to a total of $8,000

per year. The program is not available as a supplement

for treatments performed using Federal cost-share

funds.

Since the State program was established in

1974, expenditures have totaled $32,932,948 for tree

planting on 585,676 acres and release treatments on

8 1,646 acres. Funding in the future is expected to

remain stable.14

Missouri

The Missouri Soil and Water Conservation

Program was enacted in 1985 to provide an

incentive for the conversion of arginal soils to less

intensive uses. The program is administered by the

Department of Conservation and is funded through

retail sales tax revenues,

Up to 75 percent in cost-share assistance is

available to private landowners with approved

conservation plans for site preparation, seeding or

planting, fencing for livestock exclusion, establishing

windbreaks, and installing drip irrigation systems.

Eligibility is limited to areas susceptible to excessive

erosion and to stream floodplains and upland soils with

a slope exceeding 10 percent. Practices must be

maintained for 10 years.

The program does not permit the concurrent

use of State and Federal cost-share payments. State

funding has been sufficient to satisfy demand; however,

landowner participation has been low. Appropriations

for the program have been stable and are expected

to continue at the current level.15

14Romedy, Randall. 1995. Mississippi Forestry Commission.

Personal Communication.

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

Personal Communication.

11
The Missouri Streams for the Future Program,

initiated in 1992, was established as a pilot program in

six counties to encourage a number of conservation

practices in stream corridors. The program is

administered by the Department of Conservation and

provides reimbursement for up to 75 percent of

expenses for tree planting in stream corridors. Funding

for the program has been $300,000 annually and is

appropriated from revenues allotted the Department

from the sale of hunting and fishing licenses and

l/8 of 1 percent of sales tax revenues. The

program has been well received by landowners.16

The Missouri Wildlife Habitat Improvement

Program, established in the early 1950’s and

administered by the Department of Conservation,

provides 25 percent cost-share payments in addition

to the 50 percent available through CRP for tree

planting projects that enhance wildlife habitat. About

$300,000 of the Department’s funds are allotted for the

program annually. In the past, about 500,000 trees per

year were distributed. However, in recent years, forestry

practices have been deemphasized. ’ 6

Nebraska

The Nebraska Natural Resource District

Program, implemented in 1972, established 23

Natural Resource Districts (NRD’s) to administer a

variety of conservation programs that address local

natural resource concerns. Funding is primarily

provided through general obligated funds and is

supplemented by revenues raised through the taxing

authority of each NRD. All NRD’s have made

cost-share funds available for tree planting in varying

amounts from year to year. In eastern Nebraska, most

funds are used for black walnut, oak, and hickory

plantings. In the western part of the State, funds are

primarily used for field windbreak and farm

shelterbelt plantings.

New Jersey

The New Jersey Farmland Preservation

Program was established in 1981 to encourage

retention of agricultural lands in the State. The

program is administered through the Soil Conservation

Districts, with the New Jersey Bureau of Forest

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

Personal Communication.

Management establishing standards and specifications

to be followed for forestry operations. Revenues from

three bond issues, in 1981, 1989, and 1992 for $50

million each, have funded the program. The program

provides funding for the purchase of agricultural

easements, as well as 50-percent cost-share payments

for conservation projects including forestry practices.

Funding may be available in some instances to public

entities. Concurrent Federal and State cost-share

payments are permitted; however, State payments must

be supplemental to Federal payments, and total

reimbursement is limited to 50 percent of landowners’

costs. Eligible forestry activities on a minimum of

1 acre include: (1) thinning, pruning, and release

treatments, and (2) site preparation for natural

regeneration and tree planting for plantation

establishment. Practices must be maintained for at

least 8-years. Cost-share payments are based on

ownership size and range from $400 per acre for

parcels up to 50 acres in size to $60 per acre for

parcels greater than 100 and less than 5 16 acres in

size. No additional funding is available to the

landowner for parcels over 5 16 acres. The cost-share

payments are limited to $50,000 over an 8 year period.

To date, no applications for forest practices have been

received; forest management is not prevalent in the

State.”

North Carolina

The North Carolina Forest Development

Program was implemented in 1978 to increase forest

productivity on private forest lands in the State

while protecting soil, air, and water resources. The

program is available to industrial (including forest

industries) as well as nonindustrial owners. Funding

is provided through a combination of State general

funds of $700,000 per year and revenues of about

$1.5 million annually from a tax assessed on primary

forest products.

A forest management plan, with provisions for

assuring forest productivity and environmental

protection, must be approved by the Division of

Forest Resources. Approved practices on a minimum

of 1 acre (table 2) include site preparation, silvicultural

clearcutting, tree planting or seeding, and timber

stand improvement (with the exception of fertilization

and pre-commercial thinning).

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

Personal Communication.

12
The cost-share rate is 40 percent for most

practices; however, in 1993, the rate of 60 percent was

offered for planting hardwoods and longleaf pine

and for planting trees in wetlands. There has been

substantial interest and response to the incentive to

plant longleaf pine.

Program eligibility limitations are: (1) landowners

are restricted to a maximum of 100 acres per practice

each year, (2) landowners cannot receive State funding

for the same acres funded through other State and

Federal cost-share programs during the same year,

and (3) landowner projects must be initiated within

1 year and completed within 2 years after funding

approval. In addition, projects not conducted in

accordance with State best management practices

may not be funded and may be subject to penalties

under the State’s Sedimentation and Pollution

Control Law. In contrast to most State cost-share

programs, the North Carolina program does not

contain a practice retention provision. In a few

instances, landowners have received cost-share

payments for practices that were not maintained over

a reasonable period of time.

Program accomplishments include assistance

to over 11,000 landowners for tree planting on more

than 361,000 acres between 1978 and 1992. In 1993,

1,4 12 landowners received assistance on 40,240 acres

for planting projects. The program enjoys broad

support, and funding is expected to remain stable

in the future.”

The North Carolina Agricultural Cost-Share

Program for Non-Point Source Pollution Control

was established in 1985 to encourage conservation

practices, including tree planting on erodible soils

where water quality is being impaired. The program

is administered by the North Carolina Department of

Environment, Health, and Natural Resources, Division

of Soil and Water Conservation, and is funded through

State general appropriations. The cost-share rate for

tree planting is 75 percent of the average cost of

establishing fescue up to a maximum of $15,000

per year. Since the program was initiated in 1985

through 1993, $1,662,164 was allocated for cost-share

payments on 19,503 acres for the conversion of

agricultural lands to trees. In 1993, 820 acres were

planted.1g

“Sanderford, Eldora. 1994. North Carolina Department of Natural

Resources and Community Development, Division of Forest

Resources. Personal Communication.

lgMoore, Bobbie Joe. 1994. North Carolina Department of

Environment, Health, and Natural Resources. Personal

Communication.

Oregon

The Oregon Forest Resource Trust, enacted in

1993, was established to provide funds for financial

and technical assistance to NIPF landowners for stand

establishment and improvement practices to enhance

timber productivity and other resource values. The

Trust, which was legislatively established with $3.5

million from State lottery revenues for funding, is

administered by the Oregon Department of Forestry.

In addition, $75,000 was contributed by PacifiCorp in

exchange for carbon credits as a means of offsetting

carbon dioxide emissions produced in its coal-burning

plants. A primary goal of the program is to reforest and

restore productivity on 250,000 acres of NIPF

lands by the year 20 10.

In contrast to true cost-share programs, the

Trust is a venture capital program where the State

and private landowners share the risks and benefits

of forest investments. The State provides up to 100

percent of the initial costs of reforestation or

restoration up to a maximum of $100,000 over a

2-year period (table 2). In exchange, the landowner

a grees to reimburse the State when timber from

assisted acreage is harvested. Reimbursement is based

on a predetermined percentage of after-tax harvest

revenues ranging from 10 to 25 percent. The formula

includes factors such as reforestation costs, future

timber prices, a set rate of return, and inherent worth of

the site. The payback obligation is binding up on

new owners. However, a “buyout option” is included

in the program whereby owners may terminate

the contract at anytime during the first 25 years

by repaying all trust funds with interest. All

underproductive and understocked nonindustrial private

forest ownerships of 10 to 5,000 acres in size

located outside designated urban growth boundaries

are eligible. However, priority is given to lands with

the greatest potential for success in reforestation and

to environmental restoration in areas of

environmental concern. Priority may be given to

projects approved for funding from other forestry

incentive or loan programs. The Oregon Department of

Forestry provides technical assistance for development

of a required comprehensive project plan. Funding to

fulfill minimum reforestation requirements of the

Oregon Forest Practices Act is not available through

the Trust unless landowners’ revenues from harvest

are insufficient to establish a new stand. However,

reimbursement for stocking in excess of the minimum

stocking standards may be available. Thus far,

landowner response has been low. To date, about

1,000 acres have been reforested. Factors that have

13
contributed to the slow start are the complexity of

the contractual agreement and the requirement that

a lien on the property be retained by the State.”

On average, 5,500 acres of cutover woodlands are

reforested each year under the program.21

Tennessee

South Carolina

The South Carolina Forest Renewal Act was

enacted in 1981 to provide incentive payments to

private forest landowners to increase the productivity

of their forest land and to ensure a continuing and

adequate flow of wood products in the State. At that

time, some 2 million acres of poorly stocked or idle

nonindustrial private lands were in need of

reforestation (Izlar 1983).

The Act directs the South Carolina Forestry

Commission to administer the program and to ensure

that forest operations are conducted in such a

manner as to protect the State’s soil, air, and water

resources.

The program is funded through a combination of

State appropriations and a severance tax on primary

forest products. Assessment rates are established by

the State Forester and are suspended in any year that

State general appropriations are not made. Since the

programs inception in 198 1, the General Assembly

has appropriated $100,000 annually, and the forest

industry has provided four times this amount for a

total outlay of $500,000 per year. Funding in the

future is expected to remain at this level.

All private nonindustrial lands capable of

producing at least 50 cubic feet of industrial wood per

acre per year are eligible for cost-share assistance. The

program requires a minimum treatment area of 10 acres

for mechanical site preparation; otherwise, there are no

minimum acreage limitations (table 2). A forest

management plan must be approved by the Forestry

Commission, and the project area must be maintained

in a forest condition for at least 10 years. The program

does not permit both Federal and State cost-share

assistance on the same acreage in the same year.

Approved practices include natural and artificial

regeneration, timber stand improvement, and prescribed

burning. The average cost-share rate is 50 percent, with

reimbursements limited to the amount needed to

complete the project on 100 acres. For artificial

regeneration, the program requires that all merchantable

timber be removed before applications are accepted.

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

Communication.

The Agricultural Non-Point Source Pollution

Program, initiated in 1993, provides cost-share

assistance for soil and water improvement and riparian

zone protection practices on private agricultural

lands, including nonindustrial forest lands. The program

is administered by the State Department of Agriculture

through the county Soil Conservation Districts.

Technical support for forestry projects is provided by

the Tennessee Division of Forestry. An annual budget

of $100,000 has been allocated for forestry projects.

The program is funded in part by a 3-year grant

from the Environmental Protection Agency (EPA).

Additional funding is from the State Agricultural

Non-Point Source Pollution Program Fund, which

has been established with a portion of real estate

transfer tax receipts. The first landowner signup for

the program was held in July 1993. Continuing

EPA grants are anticipated, and State funding is

expected to be stable in the future. A stewardship plan,

modeled after the Federal stewardship program plan, is

required. The cost-share rate is 75 percent for best

management practices, such as the treatment of

logging roads, skid trails, firebreaks, and log landings,

and for the improvement, protection, and restoration of

streamside areas. Annual cost-share payments are

limited to $5,000 per landowner.22

Texas

The Texas Reforestation Foundation Program

(Tre) was chartered and funded in 1981 by forest

products companies in an effort to increase the

productivity of private nonindustrial woodlands and

thereby ensure future timber supplies. The program

is administered by the Texas Forestry Association,

with technical assistance being provided by the Texas

Forest Service.

To apply for TRe funds, a landowner must submit

a 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.

14
counties in east Texas. The cost-share rate is 50

percent for land clearing, site preparation, tree

planting, and timber stand improvement practices on

10 or more acres (table 2). Applicants are prioritized

by the Texas Forestry Association Board of Directors

and Texas Forest Service foresters based on

estimated planting costs and site index. The program

requires practices to be maintained for 10 years.

All of the major forest products companies in

Texas, as well as a few in Arkansas and Louisiana

receiving wood from Texas, provide financial support

through a voluntary assessment, on primary forest

products. A number of smaller companies also

participate. In addition, private landowners are

encouraged to contribute 1 percent of timber sale

proceeds and home builders $70.00 per home

constructed to the program. The TRe has approved

$450,000 for cost-share payments in 1994. From

the program’s inception in 1981 through 1993,

cost-share payments have totaled $4,088,040 for

reforestation on 83,572 acres. Funding has increased

in recent years; however, demand has not been

satisfied.23

Virginia

The Virginia Reforestation of Timberlands Act

(RT) was established in 1970 to maintain a viable

pine industry in light of forest inventory statistics

of the USDA Forest Service for 1966 indicating

softwood removals exceeding growth by 15 percent

(Mar-cum 1993). The program is administered by the

Virginia Department of Forestry and is financed

through an assessment on primary forest products

and matching State funds. Funding from the

industry tax was $800,000 initially, with increases

up to $1 million per year. Matching State funds

have not been consistently appropriated in recent

years due to budgetary constraints. In the past 3 years

since 1995, annual appropriations have been

$700,000. Dollars are distributed to six regions of

the State based on previous demand.

All private landowners are eligible, including

industrial forest landowners. Reimbursements are

available for 40 percent of the cost of site preparation,

tree planting, and brush control in pine stands up to a

maximum of $75 per acre (table 2). However, lands

requiring reforestation under the State seed tree law

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

Communication.

are not eligible for the RT program, except where

more than 75 percent of the stand is infested by the

southern pine bark beetle. However, the Federal

FIP is used for reforesting harvested lands. The

minimum project size is 5 acres, unless planting is

done without site preparation, in which case the

minimum is 1 acre. The maximum project size is 500

acres. The program requires the use of BMP’s

within project boundaries and a lo-year commitment

to maintain practices. Since the program was

funded in 1972 through 1992, 393,971 acres have

been reforested. In 1993, more than 50 percent of

cost-share assistance dollars were used for timber

stand improvement, primarily for herbicide

application, which has been promoted by the

Virginia Department of Forestry. The State portion

of funding may be further reduced in the future.24

The Virginia Agricultural BMP Cost-Share

Program was established in 1984 as part of a

multi-State effort to protect water quality in the

Chesapeake Bay watershed. The development of a

stewardship plan and compliance with BMP’s is

encouraged, but not mandatory. The program offers

a $75 payment per acre for tree planting on

erodible crop or pasture land in addition to cost-share

payments from other programs. Cost-share assistance

is also available for stabilizing abandoned logging roads

and planting streamside buffer strips. The program

is administered by the Soil and Water Conservation

Districts. Funding for the program includes Federal

outlays, State revenues, and contributions from

private organizations such as the Alliance for the

Chesapeake Bay. Funding for forestry has been

around $600,000 per year and is expected to

increase in the future.

DISCUSSION

The long-term nature of forestry investments,

coupled with the up-front capital required to establish

regeneration and perceived low rates of return,

are major disincentives to some NIPF landowners.

Cost-share payments offset landowners’ initial costs

for site preparation, tree planting, and forest stand

improvement and increase profits at harvest.

Economic opportunities for yields of at least 4 percent

were identified on over 50 million acres of NIPF

land in the South that were not producing to maximum

24Grimm Phil.

Commutkation.

1993. Virginia Department of Forestry. Personal

1 5
potential (USDA FS 1988). Cost-share payments were

found to increase the internal rate of return (IRR) from

over 2 to 5 percent for chemical site preparation and

release treatments on sites analyzed in southern

Georgia (Busby and Haines 1994). Risbrudt and

Ellefson (1983) reported an average IRR of 10.9

percent for landowners’ investments in forest

practices cost-shared through FIP in 1979.

Of particular importance to enhanced timber

production are the NIPF lands in the South that

accounted for 53 percent of the softwood removals

and 59 percent of the hardwood removals

nationwide in 1991 (Powell and others 1993).

Softwood harvests on NIPF lands is projected to

increase from 4.4 billion cubic feet in 1991 to 5.9

billion cubic feet by 2040 in response to reduced

harvests on national forests and other Federal lands.

Most of the increase in supply is projected to come

from pine plantations in the South (Haynes and others

1993). If these plantations are not established, timber

availability could be a problem in some areas.

In addition to improving timber productivity,

cost-share assistance programs are an important

policy mechanism for achieving soil, water quality,

wetland, and wildlife habitat protection. These

programs provide payments to offset costs of

protection and enhancement measures that NIPF

landowners may be unwilling or financially unable

to bear. The Federal ACP, CRP, SIP, and WRP,

plus numerous State programs, foster improved

stewardship on NIPF lands and a means to protect

ecosystems of special concern. These types of programs

could be incentive options to complement the

Endangered Species Act and the wetlands provisions

of the Clean Water Act, especially in light of the

ongoing private property rights and takings debates.

Other policy mechanisms to improve timber

productivity include mandatory reforestation

regulations, tax credits and other preferential tax

treatments for timber investments, and greater

emphasis on education, technology transfer, and

technical assistance.

Programs that do not directly address timber

productivity but that may expand the available

timberland base include easements on non-forested

private lands for wetlands restoration, for wildlife

habitat establishment, or for conversion of agricultural

or urban tiinge lands to forest. Additional afforestation

opportunities include tree planting programs

established to offset environmental degradation such

as pollutants emitted from coal-fired plants or to

sequester carbon from other sources (Moulton 1994).

The effect of Federal, State, and local

regulation of private forest land management

activities has been dichotomous. Environmental

regulation may discourage forestry investments

through the direct and indirect costs of compliance

or because of the uncertainty of reaping full harvest

benefits, thus increasing the need for incentive

programs. Conversely, mandatory reforestation

requirements may enhance timber productivity. A

combination of mandatory reforestation regulations

and availability of State forestry cost-share assistance

programs for improving productivity on lands not

subject to the reforestation regulations has been very

effective in Virginia. Harvested pine lands must be

reforested under the State seed tree law and are not

eligible for the State cost-share assistance program.

Thus, more cost-share dollars are available for

intermediate treatments and for plantings to convert

open lands to forests or to increase productivity on

understocked stands. The effect of the interaction

of these programs increased the land base in pine

type by 20 percent between 1972 and 1977 (Flick

and Horton 198 1). The policy structures of

California and Oregon are similar-both utilize

regulatory reforestation laws and State cost-share

assistance programs.

The tax treatment of cost-share payments

has been favorable for landowners. Under Section

126 of the Internal Revenue Code, all or a part of

cost-share payments for reforestation and some other

practices may be excludable from the landowners’

taxable income (Hoover 1989).

Cost-share payments from Federal programs

that have been approved for exclusion for

Federal income tax purposes include FIP, SIP, and

ACP. To date (1995), CRP and WRP cost-share

payments have not been ruled excludable. Cost-share

payments from the following State programs have

been approved for exclusion: (1) the North Carolina

Forest Development Program, (2) the Virginia

Reforestation of Timberlands Act Program and

Cost-Share Program, (3) the Maryland Agricultural

Cost-Share Program, (4) the Mississippi Forest

Resource Development Program, (5) the California

Forest Improvement Program, (6) the South Carolina

Forest Renewal Act Program, (7) the Illinois Forestry

Development Program, and (8) the New Jersey

Farmland Preservation Prograrn2’

2sBishop, Larry. 1995. USDA Forest Service. State and Private

Forestry. Cooperative Forestry. Atlanta, GA. Personal

Communication.

16
CONCLUSIONS

The unmet potential of nonindustrial forest

lands for timber production will become increasingly

important in the future if anticipated demand and

reduced harvests on public lands is realized. State

forestry cost-share programs have proven to be an

effective policy tool for stimulating private

investments in forest management. The expanded

use of these programs could be a means of increasing

timber productivity and also of achieving public

environmental goals on private forest lands. However,

the outlook for Federal funding for cost-share

assistance programs is uncertain. The future of the

FIP and CRP programs is still undecided, with

Congress yet to act on 1995 Farm Bill legislation.

State programs, however, appear to be stable or are

expanding, with the exception of those in California,

Iowa, and Minnesota.

There has been some debate regarding the best

mechanism for allocating Federal cost-share funds

to NIPF landowners. Possible scenarios include

expanding the SIP to replace FIP or funneling Federal

dollars directly to State cost-share programs. State

forestry officials in California have requested

$600,000 in Federal funds to help offset reductions

in State outlays for the California Forest Improvement

Program.26 Also, Federal funding of $750,000 has

been committed to the Texas Tre program for

cost-share funding in 1996.27

There has been considerable debate regarding

the social and economic efficiency of financial

incentive programs for private forest investments.

One hypothesis has been that these programs

substitute government payments for private capital

investments. Studies exploring this issue have had

conflicting findings. Lee and others (1992) and

de Stieger (1984) did not substantiate capital

substitution for forestry investments. However,

Cohen (1983) suggested that up to 50 percent of

the NIPF acres planted with cost-share assistance

would have occurred without these payments. Some

surveys of landowners have lent some credence to

this fmding (Bliss and Martin 1990, Gregerson and

Walker 1985). Another suggested shortcoming of

these programs is that landowners may delay investing

in reforestation when incentive payments are not

readily available.

%alifornia Department of Forestry and Fire Protection. 1995.

Personal Communication.

“Texas Forestry. May 1995. Texas Forestry Association.

Improvements in the efficiency of the programs

might include lowering cost-share rates, particularly

in times of increasing stumpage prices. Another would

be to some way identify landowners without harvest

revenues available to establish plantations, as opposed

to those who likely would have planted without

cost-share assistance.

Comprehensive analysis of the various

cost-share assistance, tax incentive, and technical

assistance programs is needed to determine the most

effective policy options in terms of the economic

environment for forestry investments, individual

landowner’s goals, and future benefits for society

overall. A comparison of the cumulative effectsof an

individual State’s institutional mechanisms-tax

policies, cost-share assistance programs, and regulatory

programs on forestry investments and forest resource

protection-should be assessed as well.

LITERATURE CITED

Bliss, John C.; Martin, A.J. 1990. How tree farmers

view management incentives. Journal of Forestry.

88(8): 23-29,42.

Bullard, S.H.; Straka, T.J. 1988. Structure and funding

of State-level forestry cost-share programs. Northern

Journal of Applied Forestry. 5: 132-135.

Busby, Rodney; Haines, Terry. 1994. Chemical control

and cost-share programs profitable for southern

forestry investments. In: Proceedings, 47th annual

meeting 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 programs

and private investment in forestry in the South. In:

Royer, Jack P.; Risbrudt, Christopher D., eds. In:

Proceedings, nonindustrial private forests: a review

of economic and policy studies; [dates unknown];

[location unknown]. Durham, NC: Duke University:

181-188.

de Steiger, J.E. 1984. Impact of cost-share programs

on private reforestation investment. Forest Science.

30(3): 679-704.

Flick, Warren A.; Horton, Donald A. 1981. Virginia’s

reforestation of timberlands program: an economic

analysis of the first six years. Southern Journal of

Applied Forestry. 5(4): 195-200.

Gregerson, Hans; Walker, B. 1985. Forestry incentive

payment recipients ten years later: a Minnesota

case study. Agric. Exp. Stn. Bull. AD-SB-2529.

St. Paul, MN: University of Minnesota. 25 p.

17
Harrell, James B. 1989. Federal and State cost-share

programs 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 Experiment

Station. 66 p.

Hoover, William L.; Siegel, William C.; Myles,

George A.; Haney, Harry L. 1989. Forest owner’s

guide to timber investments, the federal income

tax, 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: American

Pulpwood Association. 2 p.

Lee, Karen J.; Kaiser, Fred; Alig, Ralph. 1992.

Substitution of public funding in planting southern

pine. Southern Journal of Applied Forestry. 16:

204-208.

Marcum, Gary F. 1993. Forest practices and water

quality in Virginia. Tech. Rel. 93-P-l 1. Washington,

DC: American Pulpwood Association. 9 p.

Mills, Thomas J. 1976. Cost effectiveness of the 1974

forestry incentives program. Res. Pap. RM-175.

Fort Collins, CO: U.S. Department of Agriculture,

Forest Service, Rocky Mountain Forest and Range

Experiment Station. 23 p.

Nisley, Rebecca, tech. ed. 1994. Tree planting in

the United States-1993. Washington DC: U.S.

Department of Agriculture, Forest Service, State

and Private Forestry, Cooperative Forestry. 17 p.

Moulton, Robert J. 1994. Sorting through cost-share

assistance programs. Tree Farmer. Nov./Dee.:

24-26.

Powell, Douglas S.; Faulkner, Joanne, L.; Darr,

David R. [and others]. 1993. Forest resources of

the United States 1992. Gen. Tech. Rep. RM-234.

Fort Collins, CO: U.S. Department of Agriculture,

Forest Service, Rocky Mountain Forest and Range

Experiment Station. 132 p.+ map.

Risbrudt, Christopher D.; Ellefson, Paul V. 1983. An

economic evaluation of the 1979 forestry incentives

program. Stn. Bull. 550. St. Paul, MN: University

o f Minnesota Agricultural Experiment Station:

1-13.

Roycr, Jack P.; Moulton, Robert J. 1987. Reforestation

incentives-tax incentives and cost sharing in the

South. 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.

18
Haines, Terry. 1995. Federal and state forestry cost-share

assistance programs: structure, accomplishments, and future

outlook. Res. Pap. SO-295. New Orleans, LA: U.S. Department

of Agriculture, Forest Service, Southern Forest Experiment

Station. 18 p.

Reviews the features of Federal and State forestry cost-share

programs including statutory provisions, funding levels,

accomplishments, and future outlook for continuation or

expansion.

Keywords: Incentive programs, nonindustrial private forest

landowners, reforestation, timber productivity, tree planting.
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