Regional Cost Information 

for Private Timberland 

Conversion and Management

Lucas S. Bair and Ralph J. Alig

United States 

Department of 

Agriculture

Forest Service

Pacific Northwest 

Research Station

General Technical 

Report

PNW-GTR-684

September 2006
The Forest Service of the U.S. Department of Agriculture is dedicated to the principle of 

multiple use management of the Nation’s forest resources for sustained yields of wood, 

water, forage, wildlife, and recreation. Through forestry research, cooperation with the 

States and private forest owners, and management of the National Forests and National 

Grasslands, it strives—as directed by Congress—to provide increasingly greater service 

to a growing Nation.

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opportunity provider and employer.

Authors 

Lucas S. Bair was an economist and Ralph J. Alig is a research forester, 

Forestry Sciences Laboratory, 3200 SW Jefferson Way, Corvallis, OR 97331. 

Bair is currently located at CH2M HILL, 2485 Natomas Park Drive, Suite 

600, Sacramento, CA 95833.
Abstract

Bair, Lucas S.; Alig, Ralph J. 2006. Regional cost information for private 

timberland conversion and management. Gen. Tech. Rep. PNW-GTR-684. 

Portland, OR: U.S. Department of Agriculture, Forest Service, Pacific 

Northwest Research Station. 26 p.

Costs of private timber management practices in the contiguous United States are 

identified, and their relationship to timber production in general is highlighted. 

Costs across timber-producing regions and forest types are identified by forest type 

and timber management practices historically applied in each region. This includes 

cost estimates for activities such as forest establishment practices such as reforestation and afforestation on crop and pastureland. Establishment costs for reforestation 

in the Southern United States are less than in other regions, although regional 

differences in establishment costs are less evident in hardwood than in softwood 

stands. Also, included in the list of timber management costs are the intermediate 

management treatments of precommercial thinning, herbicide, and fertilizer application. Intermediate management treatments are less costly in the Southern United 

States than in other regions. Trends in timber management costs are reported as 

part of the timber management cost reporting. 

Keywords: Timberland, costs, production, timber management, intermediate 

treatment.
Contents

1 Introduction 

1 Review of Cost Estimation

2 Timberland Production Costs

6 Timber Management Intensity and Yields 

8 Identifying Timberland Management Costs 

11 Timberland Management Costs

11 Establishment Costs

14 Intermediate Management Costs

16 Timber Cost Trends

21 Discussion 

23 Research Needs

23 Acknowledgments

23 Metric Equivalents

24 References
Regional Cost Information for Private Timberland Conversion and Management

Introduction 

Private timberland management costs are an important factor in timber production 

decisions and land use research. For example, not only do timber management 

costs play a significant role in informing the decisions of private landowners but 

also are essential elements in regional and national forest resource supply analyses. 

This analysis may include the use of timber management cost data for models of 

timber production and identification of carbon sequestration opportunities (Adams 

et al. 1996, Alig et al. 1994). The economic and environmental variation across the 

United States, leading to differences in timberland production characteristics, can 

cause significant regional disparities in timber establishment and management costs 

incurred by private land managers. Unfortunately, even in relatively active timber 

producing regions, comprehensive estimates for public and private timberland 

management costs are relatively uncommon (Arno et al. 2002, Gebert et al. 1999). 

In this study, we identify the costs of private timber management practices in 

the contiguous United States and highlight their relationship to timber production 

in general. Most management practices are observed to differ across regions and 

forest types and have significant influence on timber yields. The costs of these 

management practices influence how forests are managed and thereby affect future 

timber supply. We highlight costs across timber-producing regions and forest types 

by identifying the forest type and set of timber management practices applied 

historically in each region. This includes cost estimates for activities such as forest 

establishment practices like reforestation and afforestation on crop and pastureland. 

Also, included in the list of timber management costs are intermediate management 

treatments. These intermediate treatments are precommercial thinning along with 

herbicide and fertilizer application. 

Identifying trends in timber management costs is also part of timber management cost reporting. Changes in input costs as a result of fluctuating labor or fuel 

costs and increased demand for forest wood products influence management decisions made by private landowners, and consequently timber supply in the United 

States. Observing past trends, specifically in the Southern regions of the United 

States, provides insight into what future costs may be in view of assumptions 

about related production variables. 

Review of Cost Estimation

Three primary approaches to estimating timber management costs are survey, 

engineering, and statistical (Alig et al. 1984). The survey method uses direct 

inquiry of timber operators to obtain management cost estimates. This method, 

although relatively easy to undertake, has several limitations (Alig et al. 1984). 

Three primary 

approaches to 

estimating timber 

management 

costs are survey, 

engineering, and 

statistical.


GENERAL TECHNICAL REPORT PNW-GTR-684 

It is difficult to separate survey costs into fixed and variable costs, let alone 

individual management treatments. When using the survey method, it is also 

difficult to identify individual factors influencing cost, such as economies of 

scale and changing technologies or management practices. 

The engineering approach is based on an understanding of inputs and outputs 

and their relationships. In this approach, analysis begins with an “engineering 

production function,” where optimal input combinations for producing a given level 

of production are identified (Alig et al. 1984). Cost can be obtained by multiplying 

each level of input usage by the current price of the input and summing over the 

inputs. One limitation is that cost estimates are often made based on pilot operations, not actual production. The engineering approach is commonly used in natural 

resource management studies and other areas where there are gaps in information. 

This is a significant advantage to the engineering approach. 

The statistical approach uses quantitative methods to estimate timber 

management costs. This requires either cross sectional or time series data, or 

a combination of both. Although this method is able to account for variation 

in specific treatment costs across time, holding constant other conditions (e.g., 

technology, environmental conditions, etc.) the sample does need to be of sufficient 

size to carry out the analysis. This constraint based on data quantity, and also 

quality, is the most significant limitation to the statistical approach. 

The timber management cost information contained in this report relies 

heavily on studies that used the survey approach. For example, Dubois et al. 

(2003) used surveys of private landowners and forest professionals to estimate 

timber management costs in the South. In Dubois et al. (2003) and other 

publications, such as Moulton and Richards (1990), expert opinion of professional foresters either supplemented or took the place of survey data estimates. 

Timberland Production Costs

For practical decisionmaking purposes in forest management, it is helpful to obtain 

estimates of production and cost functions. The transformation of inputs, such as 

timber management practices, into timber yields or outputs can be characterized 

in a production function. This is expressed mathematically as: 

Y = f ( X1, X2, X3............Xn), 

where 

Y = yield

Xn = inputs. 

The transformation 

of inputs, such as 

timber management 

practices, into timber 

yields or outputs can 

be characterized 

in a production 

function.
Regional Cost Information for Private Timberland Conversion and Management

In most cases, inputs consist of land, labor, and capital. In the timberland 

example, time is often an input representing opportunity cost of the timber investment (Rideout and Hesseln 1997). The classic timber growth function is depicted 

as the input of time, measured against output or yield (fig. 1). Other examples of 

inputs in timber management may include such activities as precommercial thinning, fertilization, and herbicide application. When evaluating one of these inputs, 

all other inputs are held fixed. This makes it possible to identify the individual 

influence that each input has on the yield function.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0 5 10 15 20 25 30 35 40 45 50

Input (years)

Output (cubic feet per acre)

Figure 1—Production function for planted pine, South-Central Region, forest industry, high site 

class, high management intensity (Source: Mills 2003).

There is an extensive literature concerning timber yield simulators (Ritchie 

1999). With these tools, future timber stand conditions can be estimated, and various aspects of a production function can be determined. These include such items 

as rates of transformation, inflection points, marginal costs, etc. 

When reviewing the illustration of a production function, one important aspect 

in the relationship between inputs (i.e., costs) and output (i.e., yield) is the concept 

of returns to scale. In the traditional yield function, initial growth increases at an 

increasing rate for each additional unit of input. This is considered the first stage 

of the production function. Once an inflection point is reached on the function, and 

the curve changes from convex to concave, each additional unit of input increases 

output at a decreasing rate. This is the second stage of the production function. 

Output in timber yield production functions will also begin to decrease once time 
GENERAL TECHNICAL REPORT PNW-GTR-684 

or management treatments become excessive enough to act as a detriment to 

growth. This result indicates that yields from various timber management practices (i.e., costs) are not linear. For example, initial applications of fertilizer to 

timberland will increase the level of growth. An additional treatment of fertilizer, 

within the same period, may not be as beneficial. It may increase growth, but not 

to the extent the initial application did. A third application of fertilization may be 

excessive and actually cause damage to the timber, indicating the third stage of 

the production function, decreasing growth projections. This is due to biological 

limitations of the forest, considering that only a given level of nutrients can be 

utilized over a period and excess amounts of fertilizer can cause physical damage. 

Another important production function characteristic is the idea of various 

levels of multiple inputs producing a fixed level of output. This relationship 

between inputs and output is called the technical rate of substitution. This 

relationship between two inputs is illustrated by using a production possibility 

frontier (fig. 2). One example is between the inputs, land and capital (Wear 

1993). In any region in the United States, a reduction in the forest land base, and 

subsequently the aggregate forest volume, could be compensated for by increasing 

the management intensity across the remaining area of forest land. A higher 

level of management intensity (input) would increase volumes (output) across the 

region, potentially equal to what was lost in aggregate volumes to land conversion. 

However, the theme of diminishing returns still applies in this case. Increasing 

management activities on forest land can only compensate for a reduction in the 

land base to a certain extent. After a point, increased timber management would 

not supplant a loss in forest area. 

The relationship between inputs and outputs in a production function is 

the initial step in developing information for timber management decisions. 

Assigning costs to inputs and values to output is the next step. This process links 

the economic and physical dimensions of timber management. Estimating cost 

functions relies on the production function information and valuation of inputs. 

In economics, it is usually hard to perform controlled laboratory experiments 

with which to estimate costs, so actual operating data are used with some 

statistical procedures to derive these estimates. 

Cost data for variable inputs are used to develop information sought by 

analysts. Variable costs, such as planting or precommercial thinning, influence 

the output and allow landowners to make efficient choices based on the output 

price they are observing. This efficient choice is where the landowner’s profit is 

maximized. This occurs when the marginal cost, the cost for an additional unit 

The relationship 

between inputs and 

outputs in a production 

function is the initial 

step in developing 

information for 

timber management 

decisions. Assigning 

costs to inputs and 

values to output is 

the next step.
Regional Cost Information for Private Timberland Conversion and Management



of production, is equal to the marginal benefit, the revenue received for an additional unit of output. Even with positive returns, landowners may not benefit from 

lengthening rotation ages when marginal costs are greater than marginal returns. 

However, this point in time where the marginal benefit is equated to marginal 

costs is not always explicit. Variations in forest type, growing conditions, the 

market, etc., create a level of uncertainty for a landowner. Detailing the variable 

costs improves a landowner’s level of information and the ability to make efficient 

management decisions. 

In a perfectly competitive market, in the short run, the revenue received for 

each unit of output is fixed. Large numbers of producers in the timber industry 

create a situation where no individual producer has the ability to influence timber 

price.1 This is why marginal cost is important to analysts. Landowners have control over the incremental level of resources allocated to inputs, or marginal cost, 

unlike the revenue they will receive for their output. Variable input costs give the 

producer the ability to determine the quantity and type of product for the market. 

Other costs, such as fixed costs, are independent of the production function. 

These may be costs such as property taxes or nontimber capital costs, which do 

not directly influence the output level. It may be relatively easy to estimate the 

use of labor in production, but to estimate capital usage can be very difficult. 

Figure 2—Example of timber yield production possibility frontier with various levels of two 

inputs producing a fixed level of output.

Input X (e.g., level of management intensity)

Input Y (e.g., land)

1 Perfect competition in the softwood products market is not always the case. This is made 

explicit by the recent controversy between the United States and Canada over softwood 

lumber markets. 
GENERAL TECHNICAL REPORT PNW-GTR-684 

Fixed and quasi-fixed (i.e., fixed costs that increase or decrease once a specified 

threshold is reached) capital costs may be hard to separate from variable capital 

costs. In this report, we focused our attention on variable timber management costs. 

Also included in the data reporting are aggregated fixed decadal management costs 

including items such as boundary maintenance and management plan development. 

Timber Management Intensity and Yields 

Forest practices used by private landowners differ across forest type and region. 

The regional variability in management intensity is evident in the Aggregated 

Timberland Assessment System (ATLAS) area allocated by management intensity 

in the Southern and Pacific Northwest West regions (table 1) (Mills 2003). Planted 

stands in the Pacific Northwest West, South-Central, and Southeast regions 

comprise tens of millions of acres. Most of these planted stands receive some form 

of intermediate treatment (e.g., fertilization or precommercial thinning) to improve 

growth. Regions outside the three most productive timber-producing regions are 

only assigned to low management intensity, with no explicit intermediate treatments 

in the ATLAS model. 

Table 1—Timberland area of ATLAS-designated management intensity in the contiguous United States 

Pacific Northwest West	 South Central	 Southeast

Forest Nonindustrial Forest Nonindustrial Forest Nonindustrial

Management intensity industry private forest industry private forest industry private forest

Thousands of acres

Natural regeneration:

Even-age 3,454 3,357 8,398 16,894 4,577 35,611

Uneven-age 814 10 6,367 55,801 1,705 10,582

Planted:

Without intermediate treatments 1,353 639 761 411 1,142 1,080

With intermediate treatments— 1,696 139 6,241 4,962 6,239 7,074

 Precommercial thinning 1,696 139 5,914 4,962 5,325 7,074

 Fertilization 1,696 139 4,519 1,449 4,272 2,241

 Herbicide 0 0 985 0 835 0

Planted stands in the South Central and Southeast regions are planted pine.

Source: Mills 2003.

Management intensity is an important factor in the total timber yield by the end 

of a rotation and in the growth characteristics of that yield throughout the rotation. 

Growth in planted stands occurs at a more rapid rate than it does for naturally 

regenerated stands, although the longer the timeframe evaluated, the closer the total 

volumes become (fig. 3). However, landowners may choose to harvest at financially 

optimal rotation lengths reached before the two sets of yields come close to merging. 

Management intensity 

is an important factor 

in the total timber yield 

by the end of a rotation 

and in the growth 

characteristics of that 

yield throughout the 

rotation. 
Regional Cost Information for Private Timberland Conversion and Management

Figure 3—Planted and naturally regenerated timber yield estimates for pine, South-Central 

Region, nonindustrial private forest, high site class (Source: Mills 2003).

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

0 5 10 15 20 25 30 35 40 45 50

Input (years)

Output (cubic feet per acre)

Planted without treatments

Naturally regenerated

Intermediate treatments also can influence output to a significant extent. Up to 

2,000 cubic feet of difference in production is possible in the South between planted 

pine with no and high levels of intermediate treatment (Mills 2003) (fig. 4). Similar 

findings are reported by Wear and Greis (2002), who estimated that intensive 

planted pine technology in the South nearly doubles timber yields. Understanding 

the output levels associated with intermediate treatments and their associated costs 

is essential to determine the level of timber management to undertake. 

Figure 4—Timber yield estimates for planted pine, Southeast Region, forest industry, high site class under three different 

management regimes (Source: Mills 2003).

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

0 5 10 15 20 25 30 35 40 45 50

Input (years)

Output (cubic feet per acre)

With precommercial thin 

and fertilization

With precommercial thin 

or equivalent treatment 

(e.g., fertilization)

Without treatments
GENERAL TECHNICAL REPORT PNW-GTR-684 

Identifying Timberland Management Costs 

Cost estimates at a regional level for land use conversion and timber management 

practices are available through various sources. Most literature pertaining to 

private timberland management cost is based on direct correspondence with state 

forest officials and private owners. However, this type of information gathered by 

using survey techniques tends to be limited temporally and spatially. 

The bulk of documented timberland management cost information is available 

from publications representing the Southern United States. For example, the only 

comprehensive study for forest practices in the South and the contiguous United 

States is “Costs and Cost Trends for Forestry Practices in the South,” which has 

been published on a periodic basis, 16 versions in total, for several decades and 

provides the most complete regional information (Dubois et al. 2003, Floyd and 

Kutshcha 2000). This series of biannual publications encompasses a variety of 

timberland treatment costs. Cost estimates from the survey used to collect the 

information were obtained from private firms and public agencies in 12 Southern 

States. This would include the area south and east of the fall line, the boundary 

between the coastal plain and the Piedmont, and the upland area east from Alabama into Arkansas. Additional sources were used to support “Costs and Cost 

Trends for Forestry Practices in the South” and estimate costs for various activities throughout the South (Huang et al. 2004, McKee 1987, Vasievich 1983, Wear 

and Greis 2002). These publications provided additional cost estimates for the 

12-state area reported in Dubois et al. (2003) and for eastern Texas and Oklahoma. 

This additional timber management cost information is also obtained from 

surveys of state foresters, private forest owners, and forestry consultants. 

Cost information pertaining to timberlands outside the South was available 

through documented survey information, although on a much more limited basis 

than for the South. According to Floyd and Kutshcha (2000), “Growing costs 

are surveyed in the South, but no comparable survey is conducted in the West.” 

Limited region-specific information was obtained for the Pacific Northwest West 

from a survey of professional foresters in Oregon (Cathcart 2003), and other earlier comprehensive references using similar methods were used to estimate costs 

for the remaining regions (Moulton and Richards 1990, Vasievich 1983). 

To format input cost information in a useful way, estimates of land use conversion and timber management costs corresponded with the framework for the 

Forest and Agricultural Sector Optimization Model (FASOM) (e.g., Adams et al. 

1996). For forestry, the FASOM regions are similar to those used in modeling with 

the ATLAS (Mills and Kincaid 1992) model used in the Resource Planning Act 
Regional Cost Information for Private Timberland Conversion and Management

(RPA) Assessments. The ATLAS model is an area-based model (Mills and Kincaid 

1992), with the contiguous 48 U.S. states divided into broad timber-producing 

regions of different importance. For our use, we grouped the ATLAS regions into 

nine regions with significant timber production (Adams et al. 1996). These include 

two Eastern regions, three in the Midwest, and four in the Western United States 

(fig. 5). This allows greater compatibility with future studies that use ATLAS data 

or other research with similar regional and resource classification divisions. 

Figure 5—Timber-producing regions in the conterminous United States (Source: Adams et al. 1996).

To further detail timberland management costs in a region, estimates were 

delineated by RPA forest type where applicable (e.g., Alig and Butler 2004). For 

example, in the South, it was deemed important to include management cost 

information for bottomland hardwood afforestation owing to an increased interest in bottomland restoration because of the potential capture of future carbon 

credits and other environmental benefits (Amacher at al. 1997, Huang et al. 2004, 

Shabman et al. 2000, Stranturf et al. 2000). The distribution of forest type across 

regions is detailed in table 2. 

Timberland management costs are also arranged by activity. The two broad 

timber management categories are forest establishment and intermediate management costs. The establishment costs account for naturally regenerated and planted 

Pacific

Northwest

Pacific

Southwest

Rocky

Mountain

Northern

Plains

(agriculture

only)

Southern Plains

(agriculture only) South Central

Southeast

Northeast

Lake States

Corn Belt

West East

In the South, it was 

deemed important to 

include management 

cost information for 

bottomland hardwood 

afforestation because 

of the potential capture 

of future carbon 

credits and other 

environmental benefits.
10

GENERAL TECHNICAL REPORT PNW-GTR-684 

Table 2—Timberland area of ATLAS-designated forest type in nine selected 

regions within the contiguous United States 

Forest industry Nonindustrial private

Region Hardwood Softwood Hardwood Softwood

Thousands of acres

Corn Belt 377 50 25,502 1,614

Lake States 2,396 972 22,953 4,013

Northeast 7,041 3,955 45,009 13,315

Pacific Northwest East 0 2,879 119 2,953

Pacific Northwest West 923 6,236 1,277 2,826

Pacific Southwest 826 2,156 1,748 2,707

Rocky Mountain 8 2,918 2,680 12,457

South Central 7,434 15,095 52,435 29,814

Southeast 4,193 10,315 30,945 29,977

Source: Mills 2003.

timberland on reforested or afforested land. The intermediate treatment costs 

are also delineated by management intensity and whether naturally regenerated 

or planted, and additional costs are identified, such as herbicide, fertilizer, and 

precommercial thinning, which landowners may use under high management 

intensity. This suite of additional high-management-intensity treatment costs 

was chosen because of their importance in the ATLAS model in defining various 

management intensities (Mills 2003). The following tabulation illustrates the 

identified management intensities: 

Natural regeneration management practices:

Even-age management

Uneven-age management

Planted management practices:

Without intermediate treatments

With intermediate treatments

 Precommercial thinning

 Fertilization

 Herbicides

Costs that possibly would occur as fixed over limited periods are not included 

in the estimated forest establishment and intermediate treatment costs. For example, we assumed that before reforestation or afforestation activities take place, 

landowners have a clear definition of their boundaries (e.g., historical fencing, fire 

breaks, etc.) and reasonable access to their land (e.g., established roads, drainage, 

etc.). Based on this assumption, these infrequent but significant infrastructure 

costs typically incurred by landowners were not included in the cost estimates. 
Regional Cost Information for Private Timberland Conversion and Management

11

Timberland Management Costs

Establishment Costs

Deciding which establishment activities are necessary for desired stand growth is 

one of the first input choices a landowner can make. We assumed that naturally 

regenerated stands, with reasonable levels of stocking during establishment, require 

minimal intervention. This includes such activities as site preparation, but they are 

significantly less intense than for planted stands. Site preparation for planted stands 

includes manipulation of existing logging residue and seedbed preparation (Dubois 

et al. 2003). Beyond this level of management, during establishment a landowner 

has the option to plant softwood or hardwood types on reforested or afforested 

stands. 

Naturally regenerated stands occupy much more area on private land than do 

areas of higher management intensity (Smith et al. 2004). Even on Southern forest 

industry land, naturally regenerated forest area is over half of the total timberland 

area. The cost of establishing these naturally regenerated stands differs by forest 

type and region (fig. 6). Establishing naturally regenerated softwood stands is 

more problematic than establishing hardwood owing to seed source issues (Fowells 

1965). This difference is reflected in the establishment costs. In several regions, 

Figure 6—Stand establishment costs for naturally regenerated stands, 2002 dollars (Source: Adams 

et al. 1996).

0

10

20

30

40

50

60

70

80

90

100

Region

Establishment cost (dollars per acre) 

Softwoods

Hardwood

Southeast

South Central

Pacific Northwest West

Pacific Northwest East

Corn Belt

Northeast

Lake States

Rocky Mountain

Pacific Southwest

Naturally regenerated 

stands occupy much 

more area on private 

land than do areas of 

higher management 

intensity.
12

GENERAL TECHNICAL REPORT PNW-GTR-684 

low-management-intensity establishment costs of natural regeneration are at least 

$10 per acre more for softwood stands than for hardwood stands, and in some 

cases, such as the Northeast and Rocky Mountain, are $50 more per acre. 

Regional differences in establishment costs are less evident in hardwood than 

in softwood stands. This difference may be due to different establishment requirements for hardwood and softwood during natural regeneration. It is quite possible 

that hardwood stands are influenced less by regional environmental factors given 

their hardy regeneration. For example, the Southern regions have the lowest overall 

establishment cost for naturally regenerated softwood stands. The favorable 

geography and climate in the region may decrease the ratio in establishment cost 

between hardwoods and softwoods, compared to other regions with much more 

varied landscapes and harsher climates, such as the Rocky Mountain and Northeast Regions. Establishment costs for softwood stands in the Rocky Mountain and 

Northeast Regions are twice the costs in the South. 

Although regional environmental conditions influence establishment costs, 

current levels of timber supply and general activity levels in the forest sector (e.g., 

availability of factors of production such as seedlings or forestry machinery) 

can also influence management costs. Economies of scale can decrease timber 

management costs across a region. Gerbert et al. (1999) found lower unit costs for 

timber management activities in areas with a larger timberland base. Regions such 

as the South, with relatively extensive planted timberland, have a management cost 

advantage when compared to other regions with less intensively managed timberland area. It is possible this is reflected to a certain extent in the lower establishment costs of the Southern regions. 

Landowners who are interested in more intensive timber management activities may reforest or afforest an area to accelerate the establishment of timberland. 

Site preparation for reforestation costs on average approximately $80 per acre 

more than natural regeneration (table 3). Stands with advanced regeneration would 

be less costly to establish after harvest. 

Seedlings can be planted mechanically or by hand. Private landowners are 

likely to evaluate costs such as labor, and to a lesser extent fuel, when making 

a decision between the two. Landowners in locales with less expensive labor or 

varied topography may choose to hand plant, whereas landowners with access to 

relatively inexpensive fuel or geography favorable for mechanical planting may 

forego the hand planting for mechanical stand establishment. 

For reforested stands in high-production regions, hardwood (e.g., bottomland 

hardwoods in the South) and softwood (e.g., Douglas-fir (Pseudotsuga menziesii

(Mirb.) Franco) in the Pacific Northwest West and planted pine (Pinus spp.) in the 
Regional Cost Information for Private Timberland Conversion and Management

13

Table 3—Per-acre site preparation and planting costs for highmanagement-intensity stands (i.e., planted) in the three most 

productive regions in the United States, 2002 dollars

Site preparation costs Planting costs

Region Softwood Hardwood Softwood Hardwood

Dollars per acre

Southeast 124.86 156.08 67.45 135.42

South Central 146.58 183.22 79.17 158.97

Pacific Northwest West 160.79 200.99 119.70 179.70

Softwood includes planted pines in the South and Douglas-fir in the Pacific Northwest West.

Hardwood establishment costs in the South are for bottomland hardwood.

Planting costs include seedling costs.

Source: Dubois et al. 2003, Moulton and Richards 1990.

South) site preparation and planting costs exhibit the opposite relationship from 

what was observed in establishment of naturally regenerated stands. Hardwoods are 

much more costly in both the site preparation and planting phases (table 3). The site 

preparation is approximately $30 to $40 higher across regions, and the seedling and 

planting costs are almost double that of softwoods, specifically in the South. This 

cost disparity indicates several potential differences between softwood and hardwood seedlings. These differences could be biological (e.g., seedling survival rates) 

or economic (e.g., economies of scale). 

2 From a regional perspective, the Pacific Northwest West’s crop, pasture, and forest 

lands are considered to be in equilibrium, and little to no conversion is projected to occur 

(Lettman 2002). 

Reforestation cost differences across regions follow patterns similar to the 

establishment costs for naturally regenerated stands. Establishment costs for reforestation in the Southern regions are less than in other regions, potentially owing to 

the same factors influencing naturally regenerated stands. Geography and climate 

may play important roles when comparing such regions as the Pacific Northwest 

West and the South. The Pacific Northwest West has greater variation in geography 

than the South and less favorable climate, possibly increasing the cost for highmanagement-intensity reforestation activities in the region. Costs in the Southern 

regions are very similar to each other. 

Active afforestation is another investment option for landowners interested in 

timberland establishment. In our estimation, afforestation takes place on crop or 

pastureland that is suitable for use as timberland. Some regions have no available 

crop and pastureland for afforestation, and because of this we detail afforestation 

in the Southern regions and Corn Belt only.2
14

GENERAL TECHNICAL REPORT PNW-GTR-684 

Site establishment for afforested land is less costly than site preparation on 

reforested land (table 4) (Moulton and Richards 1990). This results from favorable 

conditions for tree planting on crop and pastureland. The absence of logging residue on cropland makes the transition from agriculture to forest less expensive than 

reforestation on timberland. Additionally, cropland is more suitable to afforestation than pastureland owing to site characteristics (Moulton and Richards 1990). 

Beyond the reduced site preparation costs, afforested stands follow cost patterns 

similar to those for reforested establishment practices (table 4). Hardwoods are 

more expensive than softwoods to establish through afforestation across regions. 

This is the case on both crop and pastureland. Afforestation in the Corn Belt is 

more expensive than in the Southern regions. Planting costs are estimated to be 

the same in the two Southern regions. 

Table 4—Per-acre site preparation and afforestation costs for the three regions 

with afforestation activity, 2002 dollars

Southeast South Central Corn Belt

Management activity Crop Pasture Crop Pasture Crop Pasture

Dollars per acre

Planted pine site preparation 64.92 82.41 73.29 80.62 114.36 157.07

Bottomland hardwood 81.16 103.01 91.61 100.77 142.95 196.34

site preparation

Source: Adams et al. 1996, Amacher et al. 1997, Dubois et al. 2003, Huang et al. 2004, Moulton and 

Richards 1990, Shabman and Zepp 2000, Stranturf et al. 2000.

Intermediate Management Costs

After stand establishment, landowners can choose between various intermediate 

treatments for the upkeep and productivity of timberland. Periodic maintenance 

may include activities such as management plans, boundary maintenance, survey and cruising, and fire protection. Costs for these management practices are 

combined and estimated for a 10-year period (fig. 7). The cost estimates across 

regions are arrived at by using a combination of past prices found in the literature 

and current prices for factors of production, such as labor and fuel (Adams et al. 

1996, Mouton and Richards 1990, US DOE 2005, Wilson 2002). As was the case 

for establishment costs, intermediate management cost estimates are influenced 

by forest type characteristics and regional differences. Costs are $10 per acre less 

for periodic management in regions with favorable timber management conditions, 

such as the South, than in high-cost regions like the Pacific Northwest West. Across 

forest types, periodic timber management costs for hardwood stands peak in the 

Corn Belt, Lake States, and Rocky Mountain Regions, costing approximately an 

Site establishment 

for afforested land 

is less costly than 

site preparation on 

reforested land.
Regional Cost Information for Private Timberland Conversion and Management

15

additional $5 to $9 per acre over a 10-year period. The remaining regions’ hardwood and softwood costs are similar to one another. 

Stands that are established through planting are assumed to have higher 

periodic management treatment costs than naturally regenerated stands (Arno 

et al. 2002). The treatments are not assumed to change, only the intensity with 

which they are implemented; for example, logging residue manipulation and site 

preparation. In the regions evaluated, decadal management costs are an estimated $10 to $20 per acre more for planted than for naturally regenerated stands. 

Although the costs are greater for periodic maintenance on high-managementintensity stands than on naturally regenerated stands, the relative cost differences 

across region and forest types are the same. 

Landowners who are managing timberland under higher management intensity employ the use of additional intermediate treatments. Intermediate treatments 

release a stand from competition and provide additional resources for growth. 

These treatments include precommercial thinning, fertilization, and herbicide 

treatment (table 5). The costs of implementing these management practices differ 

across treatment, region, and forest type. For example, costs can range from 

0

5

10

15

20

25

30

Region

Management cost (d

ollars per acre)

Softwoods

Hardwood

Southeast

South Central

Pacific Northwest East

Pacific Northwest West

Corn Belt

Northeast

Lake States

Rocky Mountain

Pacific Southwest

Figure 7—Decadal management costs for naturally regenerated stands, 2002 dollars (Source: 

Adams et al. 1996).

Intermediate 

treatments release a 

stand from competition 

and provide additional 

resources for growth. 

These treatments 

include precommercial 

thinning, fertilization, 

and herbicide 

treatment.
16

GENERAL TECHNICAL REPORT PNW-GTR-684 

approximately $15 per acre for bottomland hardwood fertilization in the Southern 

regions to almost $100 per acre for precommercial thinning softwood stands in 

the Pacific Northwest Westside. This difference is mostly likely due to different 

characteristics in forest type and region. As was illustrated in the timber yield 

curve of high-management-intensity planted pine, these additional treatments can 

increase total output by 2,000 cubic feet per acre at the end of a rotation (fig. 4). 

Timber Cost Trends

Trends in total timber management costs are influenced by factors such as input 

costs and demand for wood products. In the Southern regions, trends for real 

timber management costs have slightly increased over the last several decades 

(fig. 8) (Dubois et al. 2003). Fertilization and herbicide treatment costs have 

remained relatively constant, but there has been an increase in site preparation 

and precommercial thinning costs. These upward trends in timber management 

costs reflect the increasing demand for wood products and increasing labor and 

capital costs (Dubois et al. 2003, Wilson 2002). 

Table 5—Per-acre decadal and intermediate 

management costs for high-management-intensity 

stands (i.e., planted) in the four regions with planting 

in the contiguous United States, 2002 dollars

Region Softwoods Hardwood

Dollars per acre

Pacific Northwest West:

Decadal management 39.00 35.46

Precommercial thin 95.55 N/A

Fertilizer 44.67 N/A

Southeast:

Decadal management 21.50 16.71

Precommercial thin 65.11 N/A

Fertilizer 50.76 14.82

Herbicide 58.48 58.48

South Central:

Decadal management 21.61 16.80

Precommercial thin 65.11 N/A

Fertilizer 50.76 14.82

Herbicide 58.48 58.48

Corn Belt:

Decadal management 24.49 37.70

Softwood includes planted pines in the South and Douglas-fir in the 

Pacific Northwest West.

Hardwood establishment costs in the South are for bottomland hardwood.

Source: Adams et al. 1996, Amacher et al. 1997, Dubois et al. 2003, 

Huang et al. 2004, Shabman and Zepp 2000, Stranturf et al. 2000. 
Regional Cost Information for Private Timberland Conversion and Management

17

Figure 8—Trends in Southern intermediate treatment costs in timber management, 1982–2002, 

2002 dollars (Source: Dubois et al. 2003).

0

20

40

60

80

100

120

140

160

180

1982

19841986

1988

1990

1992

1994

1996

1998

2000

2002

Year

Management cost (d

ollars per acre)

*No site preparation data for 1984

Site preparation*

Herbicide

Precommercial thin

Fertilization

Costs for labor-intensive timber management treatments are influenced by any 

change in regional labor costs. Unit labor costs in real terms have increased in both 

of the Southern regions, although less so in the Southeast region (fig. 9) (Wilson 

2002). The increase in private timber management costs across the two Southern 

regions may be partially due to the increase in unit labor costs. The Rocky Mountain 

and Pacific Southwest regions are the only timber-producing areas where unit 

labor costs have declined over the past decade. This trend would decrease private 

timber management costs in the area. An actual decline in timber management 

expenditures in these areas would also depend on regional demand and capital costs. 

The costs of energy-intensive timber management practices, such as site 

preparation, also are influenced by energy costs. In real terms, fuel price trends 

have fallen from 1980 to 2000 (fig. 10) (US DEO 2005). Although there was a spike 

in fuel prices in 1999 and 2000, the overall trend in fuel price has been downward 

sloping.3 This has occurred across regions, where fuel price declines are similar in 

magnitude and variability. Although fuel prices have trended downward over the 

last decade, other factors have increased energy-intensive timber management costs. 

Dubois et al. (2003) cited the increasing use of relatively expensive machinery in 

3Even though data up to 2000 indicates a downward trend in real gasoline prices, recent 

spikes in real price may alter long-term trends.

The costs of 

energy-intensive 

timber management 

practices, such as 

site preparation, also 

are influenced by 

energy costs.
18

GENERAL TECHNICAL REPORT PNW-GTR-684 

Figure 10—Gasoline fuel price by region, 1980–2001, 2002 dollars (Source: US DOE 2005).

8

9

10

11

12

13

14

15

16

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

Year

Price of gasoline (dollars per BTU)

Pacific Southwest

Northeast

Lake States

Southeast

Pacific Northwest West

Rocky Mountain

Corn Belt

South Central

Figure 9—Regional labor cost index by region, 1990–2000, where 100 = 1992 (Source: Wilson 2002).

85

87

89

91

93

95

97

99

101

103

105

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Year

Cost index

Pacific Southwest

Northeast

Lake States

Southeast

Pacific Northwest West

Rocky Mountain

Corn Belt

South Central
Regional Cost Information for Private Timberland Conversion and Management

19

site preparation activities as an offset to moderating fuel prices. Other factors such 

as increasing demand for intensive treatment practices have led to an increase in 

energy-intensive timber management costs. 

The extent to which landowners invest in their timberland, as outlined in the 

production function discussion, can be thought of as forest capital, which can also 

influence trends in costs. Capital can be an improvement in timberland through 

direct investment, timber management activities, and appreciation or growth of 

timberland over time. An increase in timberland capital can add to the economies 

of scale of a region (Phillips 1993). This in turn can reduce the per acre timber 

management costs for site preparation, precommercial thinning, etc. Wear (1993) 

developed a capital index to track the changes in forest capital from 1952 to 1992 

in the Southern regions. Over the period, forest industry’s capital index increased, 

although nonindustrial private forest’s capital index decreased. The result is a 

slightly declining or flat total private forest capital index. This indicates that for 

Southern forests, capital investment was not substantial for the period, and any 

gains from economies of scale were not realized. Other regions with increasing 

investment in forest capital could benefit from the increased emphasis on timberland investment and the resulting economies of scale. This is especially true 

in regions with relatively small areas of timberland, where initial gains would be 

relatively large. Timberland productivity began to plateau in the 1990s, including 

private timberland (Smith et al. 2004). 

Another factor that influences trends in timberland management activities is the 

demand for wood products (Dubois et al. 2003). The United States has increased 

its consumption of softwood lumber in recent years and is expected to continue to 

do so over a 50-year projection period (Haynes 2003). The domestic supply used 

to meet the increase in demand will be met mostly by the Southern regions (fig. 

11). The Pacific Northwest West region is the only one that has seen large declines 

in harvest since 1952, although declines in softwood timber harvest after 1997 

are predicted to be no more dramatic than in the other regions, with relatively 

static harvest activity. The increase in harvested timber will push private timber 

management costs up. 

Technology is another factor that can influence timber management costs. 

Timber management practices (e.g., site preparation, planting, thinning, etc.) that 

use new technology can be more cost-effective but can also be more costly (Wear 

and Greis 2002). The benefit of increased cost-effectiveness must outweigh the 

increase in cost for a new technology to be used. 

Technology is 

another factor that 

can influence timber 

management costs. 

Timber management 

practices (e.g., site 

preparation, planting, 

thinning, etc.) that use 

new technology can 

be more cost-effective 

but can also be more 

costly.
20

GENERAL TECHNICAL REPORT PNW-GTR-684 

One example of new technology is the use of site preparation technology. 

Labor costs in the major production regions have increased over the past decade 

(Wilson 2002). This increase has led to a substitution of mechanical site preparation methods for labor. The net effect has been increased per-acre site preparation 

costs in these regions (Dubois et al. 2003). However, because mechanical site 

preparation is more productive, and machinery is taking on multiple roles in the 

reforestation process, the total cost in relation to output may be more favorable 

(Dubois et al. 2003). Therefore, even though costs for individual management 

practices are rising owing to technology usage, the multiuse aspect of many of the 

technologies and advantages from economies of scale are encouraging the adoption of new technologies. 

Agricultural production costs are another way to identify trends in inputs 

that are used across the forest and agricultural sector. Fertilizer, fuel, and labor 

are three of the agricultural production costs reported by the USDA Economic 

Research Service (ERS) that are applicable to forest production activities (US ERS 

2005) (fig. 12). Although results from the ERS are not directly comparable to the 

previous examination of fuel and labor costs (Wilson 2002 and US DOE 2005), 

Figure 11—Softwood timber harvest by region, 1952–2050 (Source: Haynes 2003).

0

1

2

3

4

5

6

1952

1962

1970

1976

1986

1991

1997

2010

2020

2030

2040

2050

Year

Timber harvest (billion cubic feet)

Pacific Southwest

Northeast

North Central

Southeast

Pacific Northwest West

Rocky Mountain

Pacific Northwest East

South Central
Regional Cost Information for Private Timberland Conversion and Management

21

Figure 12—Average production costs (i.e., fuel and labor) of barley and oats in the United States, 

1975–2003, 2002 dollars (Source: US ERS 2005).

0

2

4

6

8

10

12

14

16

18

20

Production cost (dollars per acre)

Fuel

Labor

1975

1977

1979

1981

1983

1985

1987

19891991

1993

19951997

1999

2001

2003

Year

the relative change in costs are very similar. Agricultural input cost trends may 

be a better comparison to forestry operations than other industries, because of the 

similar industrial organization. Although, in this case, fuel and labor costs are not 

much different from industry-wide variations. 

In the Southern States, per-acre production costs for soybeans and cotton 

indicate that between 1997 and 2003, labor was more costly per acre than fuel in 

2 out of 7 years (ERS 2005). The converse is true for fuel and labor costs for the 

overall United States for wheat production. Although direct comparison to forestry 

operations is not appropriate, this does give an indication of the relationship 

between labor and fuel in the South and the possible impact they have on choices 

in production technology. Current prices would also indicate future trends in 

production technology and costs, such as site preparation. 

Discussion 

Increasing demand for wood products and changes in timber supply on public 

lands in the West has focused more attention on timber supply from private 

timberland in the Southern States. Softwood production is projected to increase 

over the next 50 years in the South, supplying the Nation with a large portion of its 

softwood (Haynes 2003). The lower than average establishment and intermediate 

treatment costs in the Southern States provide a comparative advantage for timber 
22

GENERAL TECHNICAL REPORT PNW-GTR-684 

production in this region. This advantage is evident in timber establishment and 

afforestation costs. Such an advantage is likely to persist, given the relatively large 

timberland base and the increased production in the area providing for potential 

economies of scale.

Trends in timber management costs in the South, and presumably in the other 

regions, have increased on average just over 20 percent, in real terms, in the last 

decade. This increase is due to rising input costs influenced by increasing labor and 

capital costs. This change in input costs will discourage investment in timberland, 

although rising output prices may compensate for a portion of this (Haynes 2003). 

Without significant government assistance programs, investment such as planting 

is expected to decrease on nonindustrial private forests in the Southern States, 

although the opposite is expected on forest industry land (Alig and Butler 2004, 

Kline et al. 2002). Although timberland management intensity and demand are 

changing throughout the contiguous United States, the many factors that sometimes 

work in opposition continue to promote the relatively productive regions like the 

Southern States and the Pacific Northwest West as the major timber producing 

regions. 

Cost information for timber management is not only important for efficient 

timber-production decisions, but also in the production of various other goods and 

services derived from timberlands. These might include such activities as wildlife 

habitat restoration, aesthetic enhancement, carbon sequestration, reduction of wildfire danger, and other goods and services. Each one of these management objectives 

is obtainable through application of various timber management practices—often 

the same type of management actions taken to improve financial return in a stand 

of timber. For example, precommercial thinning may be used to decrease stand density to improve wildlife habitat, reduce fuel loading, or increase growth to sequester 

carbon or produce high-quality timber. 

Production decisions are not always made with the single goal of producing 

one type of output. Several complementary goods or services are derived from a 

forest stand. For example, increasing the timberland productivity of an area, while 

also improving habitat for wildlife, can be complementary management objectives. 

Rohweder et al. (2000) determined that competitive and complementary relationships are common between multiple objectives. The joint objectives can often be 

commodity and noncommodity goods derived from the forest. Rohweder and others 

(2000) also concluded that the feasibility of the various management options in 

the production of joint products is influenced significantly by the costs of management activities. This increases the value of timber management cost information in 

natural resource analyses. 

Cost information for 

timber management 

is not only important 

for efficient timberproduction decisions, 

but also in the 

production of various 

other goods and 

services derived from 

timberlands. 
Regional Cost Information for Private Timberland Conversion and Management

23

Research Needs

Although timber management costs in the Southern regions are detailed in 

Dubois et al. (2003), few survey results are widely distributed for the remaining timber-producing regions in the contiguous United States. Detailed cost 

estimates for establishment and intermediate treatments for regions outside the 

South would improve the accuracy of such estimates. Ideally, estimates for states 

or smaller areas would supplant the current regional cost figures. Obtaining 

timberland management costs by physiographic zone would reduce some of the 

homogenization that is currently taking place when estimating costs by regions. 

Increasing the detail of private timberland management costs would make 

a significant difference in the quality of cost estimates. For example, separate 

cost estimates for nonindustrial private forest and forest industry lands by site 

class would improve modeling capabilities. However, to obtain such detail would 

be time intensive and most likely would require extensive survey work, given 

that most cost estimates are obtained from surveys of landowners and forestry 

professionals. One possibility is to develop a database that would coordinate 

various survey results across regions and agencies, to which individual actors 

could contribute. This would provide a forum for periodic and well-known data 

sources, such as Dubois et al. (2003), to be combined with infrequent state or 

county surveys. Such information updated periodically would improve the ability 

to make comparisons across regions, ownerships, forest types, and possibly other 

attributes of interest. This would also provide detailed information from which to 

identify trends in timber management costs outside the Southern States. 

Acknowledgments

The authors acknowledge John Mills for the ATLAS yield output and Andrew 

Yost for Forest Vegetation Simulator (FVS) yield output. Research was funded by 

the U.S. Environmental Protection Agency, Office of Atmospheric Programs.

Metric Equivalents

When you know:	 Multiply by:	 To find:

Acres (ac) 0.405 Hectares

Cubic feet (ft3) .0283 Cubic meters

Obtaining timberland 

management costs by 

physiographic zone 

would reduce some of 

the homogenization 

that is currently taking 

place when estimating 

costs by regions.
24

GENERAL TECHNICAL REPORT PNW-GTR-684 

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