Milton Friedman once quipped, "One of the great mistakes is to judge policies and programs by their intentions rather than their results." In this spirit, PERC scholars prepared a policy brief for the Forest Landowners Foundation explaining how sustainability certification and renewable fuels mandates could accelerate the development of non-industrial private forests.
Nonindustrial private forests cover about 360 million acres in the United States, or roughly one-half of the nation’s total forested acres. These forests produce more than 60 percent of the nation’s annual wood harvest; and, in several regions of the country, they are the primary source of pulp, lumber, plywood, and other wood products. Nonindustrial private forests also generate a host of non-timber benefits such as water purification, carbon sequestration, wildlife habitat, and open space – usually at no cost to surrounding communities.
Despite their economic and environmental output, nonindustrial private forests are in jeopardy. Since the 1990s, the conversion of forestland to developed uses has exceeded one million acres per year. Driving much of this conversion is the demand for residential housing and, more precisely, the disparity in profits between developing forested land versus keeping it in timber production. Ironically, recent initiatives aimed at rewarding environmental stewardship on private forests could accelerate forest conversion.
This report evaluates the impact of two such policies: sustainability certification and renewable biomass mandates. The report provides a background on nonindustrial private forests and outlines the economics drivers of private forest conversion. It then explores how sustainability certification and the renewable fuel standard could reduce the environmental productivity of nonindustrial private forests by reducing their economic profitability.