A forest that historically lost money but could significantly boost revenues would also gain under pilot 3. In actual practice, of course, both budgets and receipts will be much more fluid. Many forests may be able to streamline their budgets without significantly reducing public services. Forests funded out of their receipts will be likely to shift budget emphases to those programs that can produce more receipts. Public discussions of the draft Second Century report suggests that many people remain confused about the distinction between net and gross receipts and why it is important.
Net receipts are equal to gross receipts minus costs.
A forest that is funded out of 100 percent of its net receipts will tend to set its costs equal to its net. Since net plus costs equal gross, if costs equal net then costs will tend to be about half of gross. Yet funding out of net produces very different incentives than funding out of half of gross. The Oregon Department of Forestry is funded out of 36 percent of its gross receipts, while the Washington Department of Natural Resources is funded out of 25 percent of its gross. To the extent that all resources are priced in the market place, the answer is yes.