Biodiversity conservation incentive programs for privately owned forests

environmental science & policy 9 (2006) 614–625

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Biodiversity conservation incentive programs for privately owned forests Audrey L. Mayer a,*, Pa¨ivi M. Tikka b a

US Environmental Protection Agency, Office of Research and Development, National Risk Management Research Laboratory, 26 W. Martin Luther King Drive, MS498, Cincinnati, OH 45268, USA b University of Helsinki, Department of Biological and Environmental Sciences, P.O. Box 27, 00014 University of Helsinki, Finland

article info

abstract

Published on line 20 October 2006

In many countries, a large proportion of forest biodiversity exists on private land. Legal restrictions are often inadequate to prevent loss of habitat and encourage forest owners to

Keywords:

manage areas for biodiversity, especially when these management actions require time,

Biodiversity

money, and other resources. Environmental programs encouraging these actions through

Conservation efficiency

economic incentives can be used instead of additional legal restrictions, although to be

Incentives

efficient and successful, an incentive program must be thoughtfully developed and its

Voluntary participation

conservation goals must be clear. In addition to being economically efficient, programs must

Non-industrial private forests (NIPF)

be acceptable to landowners and ecologically appropriate, especially with respect to the case-specific objectives and the ecosystems in question. We introduce a sample of voluntary incentive programs for private forests in Europe and North America. We briefly describe the economic, social, and ecological characteristics of the programs and the forests they aim to conserve, and evaluate the success of these programs with respect to their explicitly stated goals and the ecological status of the forests in that country or state. Important factors contributing to program success include an allowance for some economic productivity in enrolled forests, a long period since time of program inception, and little interference from other incentive programs. # 2006 Elsevier Ltd. All rights reserved.

1.

Introduction

Deforestation (and habitat destruction in general) is one of the primary causes of biodiversity loss, whether through urban sprawl, conversion to agricultural production, or the overharvesting of natural resources (Singh et al., 2001; Dirzo and Raven, 2003; Millennium Ecosystem Assessment, 2005). Forests represent about 30% of terrestrial habitats, and support an exceptional number of species, especially in tropical forests (Myers et al., 2000; FAO, 2003). Beyond wood products, forests also provide economically important products and services (Myers, 1997; Michie et al., 1999; Mather,

1999; Pearce, 2001); small, isolated forest fragments are typically less able to provide these goods and services, or support a full complement of native species (Millennium Ecosystem Assessment, 2005). Therefore, policies which successfully preserve both forest biodiversity and the economic productivity of forests are of importance to both ecological and socioeconomic sustainability goals. In many industrialized countries, forests are predominantly supported on private property, particularly in the United States (Siry et al., 2005). Preserving adequate forest area to protect biodiversity can be problematic, especially with respect to private property rights. Governments find it difficult

* Corresponding author at: University of Tampere, Research Centre Synergos, Yliopistonkatu 54, 33100 Tampere, Finland. Tel.: +358 33551 8380; fax: +358 33551 8537. E-mail addresses: [email protected] (A.L. Mayer), [email protected] (P.M. Tikka). 1462-9011/$ – see front matter # 2006 Elsevier Ltd. All rights reserved. doi:10.1016/j.envsci.2006.07.004

environmental science & policy 9 (2006) 614–625

to force mandatory actions on private property to protect biodiversity, and have encountered resistance when expropriating land use rights, especially those which affect the market value of the property or products harvested (Miller, 1999; Hiedanpa¨a¨, 2002; Shogren et al., 2003; Sullivan and Napier, 2005). Therefore, many governments use voluntary participation programs to purchase these rights, while leaving the land in private ownership. These programs typically use economic incentives to purchase rights such as clearcutting or other extractive activities, which are understood to alter the quality or character of the forest. Some programs may offer additional incentives for activities, which enhance or restore forest quality or particular characteristics, such as critical habitat for certain species. Voluntary programs are usually more socially acceptable and may also be less expensive (but see Michael, 2003; Wa¨tzold and Schwerdtner, 2005), considering the costs that legal challenges can incur to governments. However, most critical is the ecological effectiveness of these programs. Without adequate monitoring and explicit benchmarks or goals, demonstrating the ecological benefits of these programs is problematic (Merenlender et al., 2004; Saterson et al., 2004). Nevertheless, the lack of monitoring and goals is an all too common problem (Singh and Volonte, 2001; Wilcove and Lee, 2003). In a review of biodiversity protection projects targeting forests, funded by the Global Environmental Facility, Singh and Volonte (2001) found that successful projects developed sustainable forest product harvesting alongside strict forest preserves, maintaining a ‘‘productive landscape’’. While not focused on forests specifically, the Defenders of Wildlife (2002) conducted a survey of habitat conservation programs for privately-owned land at the state level in the U.S. In this study, successful programs were those with a reliable and adequate funding source, with well-developed monitoring plans allowing administrators to demonstrate the success of the program, and therefore the justification for further funding. Also for the US (and not specific to forests), Noah and Zhang (2001) studied 60 incentive programs for biodiversity conservation on private land across 29 states. This review found that successful programs (as defined by the programmatic goals) were those with diverse funding sources, and active landowner participation in developing management and protection plans. All three of these reviews found that a lack of funding impeded the success (however defined) of the programs, and a lack of baseline data impeded even the evaluation of success or failure of the programs. Given the importance of forest conservation and the high percentage of privately owned forest in the US and Europe, a better understanding of forest conservation incentive programs is critical, particularly the characteristics which can serve as good indicators of programmatic and ecological success (Best and Wayburn, 2001). Here, we conduct an in-depth evaluation of six voluntary economic incentive programs from Europe and North America, highlighting a combination of economic, social, and ecological program characteristics. We determine the degree to which program success is dependent upon a match between policy goals and the prevailing ecological and socioeconomic conditions, and a balance between biodiversity protection and economic productivity of forests. We also

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identify major limitations that may serve as impediments to programmatic and ecological success. This is not meant to be an exhaustive review of voluntary incentive programs, but rather an in-depth evaluation of selected case studies (for broad reviews of large numbers of programs, see e.g., Noah and Zhang, 2001; Singh and Volonte, 2001; Defenders of Wildlife, 2002). The programs reviewed here represent a diversity of funding and contract strategies at the state level in the United States, and the national level in Europe.

2.

Characteristics of incentive programs

A wide variety of voluntary incentive programs have been devised and implemented; see Defenders of Wildlife (2002) and Doremus (2003) for excellent overviews of the variety of program characteristics that could be considered. We avoid duplicating these efforts, and instead focus on characteristics, which may be more informative about the ecological success of a program. Our choices were also influenced by the availability of information on the programs; in some cases, not even the program administrator had what might seem to be important information (e.g., average size of forest parcels enrolled, number of participants withdrawn or disqualified from the program). Below we describe the characteristics on which we focused in this study, and why they are likely to influence program success.

2.1.

Economic characteristics

The reliability of funding and the size or regularity of paid incentives, in relation to income from harvesting, can have a large effect on the attractiveness of a program and the commitment of forest owners to adhere to program conditions (Best and Wayburn, 2001). Voluntary programs are typically funded through one of three sources:  Programs can be funded by general public revenues, either through annual budget allocations or through tax abatement. Tax relief mechanisms may be more stable as they are not subject to politically determined budget allocation decisions. However, they decrease the incentive for governments to advocate for the programs since high participation rates result in lost revenues (Cathcart, 2000).  Programs can be funded by those who are interested in conservation, through sources such as specialty automobile license tags or collectable stamps, or donations to conservation organizations, which preserve land on their behalf. Conservation easements allow landowners to donate the rights to extractive use of their land so that the land can be used for conservation purposes, often in exchange for tax relief.  Those benefiting from forest destruction can fund programs, through stumpage fees, taxes on land use at market value and development permits. The amount of incentives, and the schedule upon which they are paid out to forest owners, may also determine the attractiveness of the program. Payment quantity can be determined by:

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 Competitive price formation, for which landowners are asked to offer sites for conservation and to declare their request of acceptable price. Sites are then selected on the basis of both their price and biological quality (e.g., Finnish Government, 2002).  Standard price, for which incentives are calculated on the basis of the value of growing stock or current market price of most likely alternative land uses (e.g., agriculture, residential development, etc.) (Best and Wayburn, 2001).  Incentive price formation, wherein higher economic payout is provided for higher quality forests, larger forest parcels, higher connectivity to other forests or proximity to large protected areas (e.g., Parkhurst et al., 2002). To some extent, this information can also influence competitive price formation. Incentives can be remitted as a lump sum payment or in several instalments; discount rates and fluctuating market values of forest products influence the relative benefit of these payment methods and therefore the attractiveness to the participant. Contract conditions and economic penalties for violating these conditions can influence the degree to which the contracts are appealing to private landowners. Short contracts with little or no penalty for violation are likely to be more popular, however programs using these contracts may have higher turnover of participants, increasing administrative costs and lowering ecological benefits. Contracts, which require a long-term relationship between the landowner and the government, and entail a stiff penalty for breaching contract conditions, may have lower turnover and higher ecological benefit but also lower participation rates.

2.2.

Social characteristics

As these programs use contracts or agreements between a governmental organization and a private landowner, the programs must be acceptable to both parties. While some research has been conducted on the attractiveness of voluntary incentive programs to program administrators (e.g., Doremus, 2003) and private landowners (e.g., Kline et al., 2000; Noah and Zhang, 2001), these studies remain rare relative to the diversity of programs. The percent or number of participating private forest owners can be used to gauge the acceptability of these programs to landowners, although this metric is also influenced by the familiarity of landowners with the program. Indeed, the method of outreach and education for the program can directly impact the participation rate. These methods can include general (untargeted) public announcements, direct contacts, or negotiations with interest groups serving as intermediaries between the government agency and the private forest owners.

2.3.

Ecological characteristics

Ecological attributes that are most important to the biodiversity and functionality of forests are forest quantity, quality, diversity, and location in the landscape. Programs which explicitly calculate incentives based on one or more of these characteristics are more likely to be ecologically effective (Best and Wayburn, 2001). Forest quantity is addressed through an

emphasis on total number of hectares enrolled in the policy, while quality can be addressed through the degree to which extractive activities are restricted or restoration is encouraged. While all programs address economic activities that destroy the inherent nature of a forest (i.e., harvest the trees), programs differ on other restricted activities, such as harvest of non-wood species (fungi, plants, animals), non-destructive harvest of tree products (sap), or recreational activities. If economic incentives are based solely on the size of the forest plot, the program will address forest quantity; if the rarity or species richness of the forest community type determines the incentive value, then the program can also address forest quality or diversity. Finally, programs can speak to landscape and ecosystem scale forest issues through an emphasis on both the overall amount of forest cover relative to historic conditions, and on creating larger or better connected forest fragments in the jurisdiction, such as through ‘‘agglomeration bonuses’’ for groups of adjacent landowners enrolling simultaneously (Parkhurst et al., 2002). While it may seem self-evident that programs can only be proved ecologically successful if ecological data are collected, the degree to which monitoring schedules (both at the property and program area scales) are implemented varies considerably (Noah and Zhang, 2001; Defenders of Wildlife, 2002). While some programs may include only one initial survey visit to assure that the property meets minimum requirements, most programs involve periodic monitoring to at least ensure that contract conditions are being met. Few take a broader approach, collecting periodic survey data to document species richness or other ecological variables, or combine data from all enrolled properties to determine if the program benefits biodiversity (or forest productivity) at larger scales.

3.

Methods

As mentioned, previous reviews have looked at a large number of incentive conservation programs, using a small number of variables or characteristics to see broad trends of success across many types of programs. Here, we have narrowed our focus to programs which target forests explicitly with economic incentives for private forest owners, and have biodiversity conservation as a primary or secondary (indirect) goal, either through increasing or maintaining the overall proportion of forest in the target area, or increasing or maintaining specific forest communities. We did not include those programs, which preserve or restore riparian buffers; although they can increase diversity, the primary focus for riparian buffer policies is usually water quality and watershed conditions. If the program included benefits in addition to economic incentives, such as administrative or educational assistance, we disregarded these characteristics of the policies. Finally, we did not include national-level programs (those funded and/or administered by the federal government) in the United States, so we could make comparisons with European countries more directly (in terms of land area and population). To estimate the success of each program, we used the number or percent of private forest owners enrolled

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(acceptability to landowners), percent of eligible forest enrolled or increase in forest area in proportion to total forest area (ecological effectiveness), and adequacy of funding in terms of goal attainment or inclusion of all interested landowners (economic feasibility). If data were available, we also assessed the degree to which the program has met its goals (if they exist), the number of participants that have withdrawn or been disqualified (due to violation of a contract), as well as the major limitations of the program (e.g., lack of funding, lack of interest among landowners, or lack of eligible forest). The cases are introduced below, and their features and achievements are summarized in Tables 1–3. For each case study description, we include the following: the amount and characteristics of the forests in the program area; a description of the program including eligibility and goals; funding source(s); how payments are distributed to forest owners; legal implications of enrollment; monitoring procedures (if any); progress that has been made towards meeting the programmatic goals; and any major limitations or obstacles the program has encountered. With the exception of Southern Finland’s program, all data reported in the case studies and tables represent the latest cumulative data since each program’s inception.

4.

Case studies

4.1. Southern Finland: Natural Values Trading within ‘‘Metso-programme’’ Boreal forests cover two-thirds of Finland, with large stateowned forests in the north, and predominantly privately owned, smaller forests supporting more biodiversity in the south (Mayer et al., 2006). Due to this north to south biodiversity gradient, conservation efforts are now more focused on southern Finland, which is 72% forested (Table 1). On the basis of studies on species richness in fragmented landscapes (e.g., Siitonen et al., 2001) and the concepts of extinction thresholds and extinction debt, Hanski (2004) has argued that at least 10% of forests in southern

Finland should be protected to adequately preserve forest biodiversity in the country. The Forest Biodiversity Programme for Southern Finland (‘‘Metso-programme’’; Finnish Government, 2002) is a toolbox of several types of government-financed conservation programs that are being tested from 2003 to 2007 (Table 2). The overall goal of the program is extensive but unspecified: ‘‘improved protection for habitats and structural features which are crucial for forested landscapes and threatened species’’ (Finnish Government, 2002, p. 1). Since experience on the majority of tools is still scarce, we use the ‘‘Natural Values Trading’’ as an example, and focus on participation during the first 3 years of the program (Gustafsson and Nummi, 2003, 2004; Gustafsson et al., 2005). Natural Values Trading targets private forests in which forest legislation or forestry recommendations cannot adequately ensure the preservation of biodiversity. It is coordinated by forestry and environmental officials that call for offers through information campaigns. Natural Values Trading is being systematically tested in Satakunta and Varsinais-Suomi counties in southwestern Finland, and therefore we concentrate on this region. Funding is derived through the national budget. The yearly allocation in Satakunta and Varsinais-Suomi has been s400,000 (US$ 520,000). Interested landowners offer sites that they consider worth conserving, and fixed-term contracts (usually for 10 years) are signed for the most suitable sites as determined by governmental officials. The incentive price is based on a formula that combines the value of growing stock with conservation biological criteria, such as dead or burned trees, threatened species, and distance to existing nature reserves (Ministry of the Environment, 2003). Hence, forests supporting higher ecological quality may be offered higher incentives from officials. Landowners may negotiate this offered price, although in practice most incentive amounts have settled close to the initial offer (Gustafsson and Nummi, 2003, 2004; Gustafsson et al., 2005). The contract can be cancelled if ecological features of the site change substantially due to disturbance, or if continuing the contract becomes economically prohibitive. Economic activities are prohibited at most sites during the contract period, and some contracts

Table 1 – Information on forests in case study areas Case Total percent of land area forested (as of 2005) Percent of total forest cover privately owned (NIPF) Percent of forest area already protected for biodiversity a

Southern Finland

Austria

Sweden

Vermont, USA

Indiana, USA

Oregon, USA

72

47

55

78

17

50

75

80

57

80a

81a

42a

1.2b

0.2c

7.2c

14.4d

3.5e

31f

Source for US states: http://www.privateforests.org. Finnish Forest Research Institute (2005). 1.2% is the combined ha of statutory strict nature reserves, national parks, mire conservation areas, protected herb-rich forests and old-growth forests and wilderness areas on public forestry land (i.e., forest land, scrub land and waste land). c MCPFE (2003). The percentages include public and private forests in MCPFE classes 1.1. and 1.2.: main management objective is biodiversity, ‘‘no active intervention’’ or ‘‘minimum intervention’’. d Vermont Agency of Natural Resources (1999). 14.4% is the combined ha of public and private forests that are protected from economic harvesting. Privately-owned conservation forests represent 3.3% of the total forest area in the state. e Flaspohler (2004). f Oregon Department of Forestry (2005b). Thirty-one percent is the combined ha of public and private forests that are in the ‘‘Reserved’’ category, which are not open for timber production. b

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a No minimum contract period exists for the Indiana program, and no maximum exists for either program. For both programs, far more forests are enrolled annually than withdrawn; in Indiana, some forests enrolled at the start of the program are still enrolled (Jack Nelson, pers. comm.; Brian Stone, pers. comm.). b Contracts can be bought out up to 25 years after enrollment, and afterwards a percentage of proceeds can end contract up to 200 years (after which the contract is voided and no money is owed). c Mikael Nore´n (pers. comm.). d Naturva˚rdsverket (2003, 2004).

Maximum US$ 100,000/ project every 2 years, reimbursement (lump sum) Depends on market value + bonus, annual payments

National 10/13

Source of program funding Minimum/maximum length of contract (years) Size of economic incentive offers and method of payment

Year program implemented Periodicity of monitoring, who monitors

Mean payment US$ 1790 ha 1, lump sum

Approximately US$ 1300 ha 1, tax relief Depends on market value, tax relief Mean payment US$ 1260 ha 1,c lump sum or several paymentsd

State, private 25/200b County, municipality None/?a State 10/?a National 30/50

Productive forests and biodiversity 1993 Annually/every 5 years, state foresters Productive forests and biodiversity 1921 Every 5 years, district forester Productive forests, biodiversity secondary 1980 Every 5 years, county forester Biodiversity conservation, productive forests secondary 1994 Every 4–5 years, professional foresters

Biodiversity conservation 1995 Continuous, professional foresters National 20 (fixed) Biodiversity conservation 2003 No systematic monitoring Primary focus of program

Table 2 – Characteristics of incentive program

Austria Southern Finland Case

Indiana, USA Vermont, USA Sweden

Oregon, USA

environmental science & policy 9 (2006) 614–625

have included a commitment to carry out restorative management practices. In a few cases landowners are allowed to carefully harvest some wood for household use (Gustafsson and Nummi, 2004). The landowner must return the payment if the contract is violated. After the contract expires, landowners may freely decide the use of the forest. No official monitoring program has been established. However, since 2004 thorough field inventories of several taxa have been carried out by university researchers on a sample of contract sites, to evaluate their ecological quality in comparison to other forests in the region (e.g., Ha¨ma¨la¨inen, 2006). In 2003–2005, a total of 104 sites were enrolled, covering 871 ha (Table 3). So far, the majority of enrolled sites have been coniferous forests with large amounts of dead wood, and requests for offers for other habitat types, such as spruce mires, groves and esker forests, have not been met. Since no quantitative goals for the Natural Values Trading program were established, programmatic success will be impossible to measure. After only 3 years of Natural Values Trading, its ecological effects are also difficult to determine, and there are no plans or funding for a monitoring program until the program’s pilot phase in Satakunta and Varsinais-Suomi is completed. Forest owners have already shown great interest towards the program (Juutinen et al., 2005), and therefore the program has the potential to help meet the 10% target set out by Hanski (2004). To date, no contract cancellation has occurred (Jarmo Uimonen, pers. comm.).

4.2.

Austria: Natural Forest Reserves Programme

Twelve percent of Austrian forests have been left untouched for the last 100–200 years due to difficulties in harvesting on the steep slopes of the Alps. However, these alpine forests are not legally protected, and are not representative of the wide variety of forest types that occur throughout the country which remain unprotected (Frank and Mu¨ller, 2003) (Table 1). The Natural Forest Reserves Programme was launched in 1995 to systematically develop a network of forest reserves which would maintain the biodiversity and special characteristics of different forested ecological communities (Table 2). The goal of the program is to include at least one representative of each forest type within each of the 22 forest geographic areas in Austria (Frank and Mu¨ller, 2003). All information on the program is based on Frank and Mu¨ller (2003), Austrian Federal Office and Research Centre for Forests (2003) and Frank et al. (2005). As 80% of Austrian forests are privately owned (Table 1; MCPFE, 2003) any forest conservation program must be acceptable to landowners. Forest owners offer their land to the program, often after the advice of professional foresters. State foresters evaluate and select the offered sites according to ecological criteria, such as naturalness of the vegetation and rareness of the forest community type, although ecological features are not taken into account in price formation. The republic of Austria pays for the reserves, which are enrolled for 20 years. An annual compensation payment is calculated using the economic value of growing stock plus a bonus. Total compensation thus exceeds the sum that the forest owner would earn through wood harvests. No harvesting actions are allowed during the contract period. After the 20-year contract

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Table 3 – Current status and achievements of incentive programs Case

Southern Finland

Rate of forest increase/decrease since policies implemented Number of sites enrolled (Europe)/ percent of private owners participating (USA)c as of 2005 Ha of forest enrolled as of 2005 Percent of eligible (NIPF) forest enrolled Percent of forest goal enrolled

Austria a

Sweden b

Vermont, USA

Indiana, USA

Oregon, USA

NA

+0.9%

+0.6%

+1.4%

+12%

None

104

180

2240

17%

5%

0.002%

871 0.01% 0.08%d

8272 0.3%a 60%

24,570 0.2% 49%

601,257 46.4% No goal

183,323 12.4% 90%

377 0.02% 0.4%

a

Calculated on the basis of Bundesamt fu¨r Wald (2004a,b). Calculated on the basis of National Board of Forestry (2000, 2005). c Since one owner may enroll several sites, and some sites are public or owned by private societies, the number of sites rather than owners is a more relevant measure in the European cases. d Percentage of the total forest goal for Finland (10%, Hanski, 2004); quantitative goals for the Southern Finland case were lacking. b

period, the republic of Austria has the option to renew the contract. Under certain circumstances both contracting parties have the right to cancel the contract without penalty, however the government can reclaim the paid compensation if the contract is violated. Within each forest, a permanent sampling grid is established for surveying stand structure and vegetation, and is used at the beginning of the contract and for continued monitoring. As of 2005, about 60% of the reserve network has been met, with 180 enrolled reserves encompassing 8272 ha (Table 3). However, additions to the network have not occurred during recent years due to inadequate funding (Herfried Steiner, pers. comm.). The average forest area per private owner in Austria is as low as 17 ha, and to enroll larger parcels in the reserve network, Austrian federal forests and other public forests have been included. Almost one third of the selected reserves are publicly owned, covering 51% (4217 ha) of the total area enrolled in the program (Frank et al., 2005). Therefore, the extent to which this program can be considered one using incentives directed at privately owned forests is questionable.

4.3.

Sweden: Nature Conservation Agreements

Roughly 55% of Sweden is forested, and 7.2% of Sweden’s forests are already explicitly reserved for biodiversity protection (Table 1; MCPFE, 2003). Over half of Sweden’s forests are privately owned (non-industrial owners), and these forests produce 60% of the country’s timber supply (van Kooten et al., 1999). Nature Conservation Agreements are contracts between a landowner and the Swedish Forest Agency (previously the ‘‘National Board of Forestry’’, Skogva˚rdsstyrelsen), and are intended to maintain or restore ecologically valuable forest habitats. The first agreements were signed in 1994 (Skogsstyrelsen, 2006). Nature Conservation Agreements are financed by the Swedish government (Table 2), which has substantially increased its total investments in this program from 3 million Swedish crowns (US$ 420,000) in 1994 to 40 million crowns (US$ 5,600,000) in 2003 (Skogsstyrelsen, 2006). The incentive compensation amount is specific to each case, but is not intended to cover the true costs of the foregone economic values due to the contract. The contract may be cancelled only with approval of both contracting parties; a landowner violating the contract should return the payment

for the remaining contract period. Professional foresters suggest candidates for protection based on the identification of high quality habitats during the national inventory of important forest habitats (key habitats), and landowners then decide whether to enroll their forest (Mikael Nore´n, pers. comm.). The maximum 50-year contract is transferable, and therefore binds new owners if the land is sold or inherited (Mikael Nore´n, pers. comm.). Agreements may involve management actions to maintain or improve the state of habitats (Skogsstyrelsen, 2006). Although at the initiation of the program no explicit goals were set, in 1999 the Swedish Parliament set 15 nationwide environmental quality objectives, and included the Nature Conservation Agreements program in the achievement of these objectives. The ‘‘sustainable forests’’ objective aims to safeguard biological diversity and cultural heritage while maintaining the value of forest land for biological production. In particular, the objective set a goal of excluding 900,000 ha of high conservation value forests from wood harvesting by 2010 (The Environmental Objectives Council, 2004). This goal was meant to be achieved through a combination of voluntary protection without reward (500,000 ha), establishing nature reserves and habitat protection areas on either public or private land (350,000 ha), and Nature Conservation Agreements for privately owned forests (50,000 ha). Of these programs, only Nature Conservation Agreements are both voluntary and provide incentives for forest conservation. By 2004, Nature Conservation Agreements included 2240 sites with a total area of 24,570 ha (Table 3; National Board of Forestry, 2005). The most common habitat types currently protected by agreements are ‘‘areas similar to post-fire deciduous forests’’ with the largest total area, and ‘‘natural or near natural coniferous forests’’ with the highest total number. In addition to specific habitat types, areas serving as buffer zones or corridors have also been included (National Board of Forestry, 2005). In 2004, a monitoring project was started to control the use and state of enrolled sites, with sites checked every 4–5 years (Table 2; Mikael Nore´n, pers. comm.). Thus far, no violations have occurred (Mikael Nore´n, pers. comm.). According to The Environmental Objectives Council (2004), the present budget funding is probably inadequate to meet the 50,000 ha goal by 2010, and the program competes for funding and popularity with the similar programs described

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above. Over 500,000 ha of forests are already protected voluntarily, mainly through the FSC-certification system, which necessitates the exclusion of 5% of forest land from forestry practices (FSC-Sweden, 2005). The 350,000 ha goal for nature reserves and habitat protection areas is also unlikely to be met (The Environmental Objectives Council, 2004).

4.4.

Vermont, USA: Use Value Appraisal Program

Prior to European settlement, forests covered about 95% of the state, but were reduced to less than 25% cover around 150 years ago (Vermont Agency of Natural Resources, 1999; Smith et al., 2002). As the ‘‘frontier’’ of the United States moved west, forests in Vermont and the rest of the northeast gradually recovered; Vermont now has 78% forest cover (Table 1). The Use Value Appraisal program started in 1980 to achieve several goals: to slow or prevent the conversion of privately owned forests to residential or commercial development; to maintain the continuity and amount of forest cover in the state; to improve private forest management practices; and to encourage forest owners to harvest economically valuable products and support the forest economic sector (Vermont Statute 32(124) §3751; Brian Stone, pers. comm.). The program does not have a specific goal in terms of proportion of forest or forest owners enrolled (Table 2). Forests must be at least 10.125 ha (25 acres) in size to be enrolled in the program, and have a forest management plan approved by the state. Management plans emphasize timber harvest, although non-commercial harvest of non-wood products can be included; rents from recreational uses are prohibited. The program allows the forestry department to monitor and guide the management of a large proportion of the state’s forests. Environmental and biodiversity concerns can be addressed through well-written and enforced management plans. Once a forest is enrolled, a lien is put on the property in the amount of the penalty for withdrawing the property from the program. The calculation of the lien penalty is either 10% or 20% of the fair market value, depending upon whether the land was enrolled for up to 10 years (20%) or more than 10 years (10%) (Vermont Statute 32(124) §3751; Vermont Agency of Natural Resources, 2005). In the case of contract violations, the lien must be paid on the portion of the land for which the contract was violated; the remaining hectares are removed from the program but not included in the economic penalty. None of the land can be re-enrolled for 5 years. Information about the program is included in annual tax bills to all property owners, and therefore knowledge of the program among forest owners is very high. Landowners with enrolled forests pay taxes on the use value, typically around US$ 450 per ha, instead of the fair market value (on which the lien is based), which in areas at risk of development can average over US$ 40,000 per ha for residential or commercial development (Brian Stone, pers. comm.). The state reimburses the municipalities in proportion to the amount of forest enrolled in each, shifting the loss in tax revenue directly to the state; in 2004, this amounted to roughly US$ 15 million. In this way, local governments do not lose tax revenue from the program, and ‘‘city dwellers’’ share the economic support for forest conservation with rural residents. However, forest owners who live out-of-state may disproportionately benefit

from the program (as they do not contribute to the general fund to the same degree that Vermont residents do). Although the program has always used tax adjustments as an incentive to landowners for enrolling forests, originally the reimbursement (to compensate for lost tax revenue from enrolled forests) from the state to towns and municipalities was a stand-alone budget item. However, funding for the reimbursements was dependent upon state-level political budgetary decisions, which were highly variable year to year, and so in 1997 the program was tied to school taxes. As of March 2005, 10,105 parcels of forest were enrolled in the program, totaling 601,257 ha (Table 3; Brian Stone, pers. comm.). Enrollment is continuous until the property is withdrawn from the program or the management plan is abandoned, and the financial incentive for remaining in the program has resulted in a very high proportion of continued enrollment once forests are enrolled. No data were available for the number of participants who have withdrawn or been disqualified, however the number is likely to be less than 10 participants per year (Brian Stone, pers. comm.).

4.5.

Indiana, USA: Indiana Classified Forest Program

About 85% of Indiana was forested prior to large-scale agricultural activity in the early 1800s (Smith et al., 2002). At the inception of the Indiana Classified Forest Program in 1921, forest cover had been reduced to less than 17% of the state (Table 1). Prior to the program, all land was taxed at the same rate regardless of zoning, so landowners had an incentive to use all of their land for economic production (predominantly in row-crop agriculture). This program is the oldest incentive program for privately owned forests in the US, and uses property tax relief as an incentive to encourage forest owners to manage or restore their forests to a ‘‘healthy’’ condition. However, the monetary incentive received for each forest enrolled is independent of its value for biodiversity conservation. The goal of program was to have 202,500 ha (500,000 acres) enrolled by 2005. Landowners typically save over 99% in property taxes when enrolling their forests; they pay about $ 6.17 ha 1 in taxes, as opposed to roughly $ 1310 ha 1 for agricultural, commercial, or residential-zoned land (Table 2; Jack Nelson, pers. comm.; Bennett et al., 1995). Forest owners can enroll as much or as little forest area as they want above a 4.05 ha (10 acres) threshold. As there are no fixed-term contracts, forest owners can withdraw any or all of their forests from the program, however they must then pay back taxes at the economic land use zoning rate plus a 10% interest charge (Bennett et al., 1995). It costs the state roughly $ 300,000 per year to run the program, not including the foregone taxes to counties and municipalities (Jack Nelson, pers. comm.). If forest owners violate the contract (most often through a failure to follow the management plan), they must also pay back taxes plus interest. Enrolled forest owners fill out a report each year (assuring that the forests are still forests), and each enrolled forest is surveyed by a district forester every 5 years. Some timber harvest in enrolled forests (followed by reforestation) can occur, especially if it is deemed beneficial to maintain or improve forest health, however no buildings or structures are allowed on the area. No explicitly ecological criteria influence

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either the economic incentive received or the eligibility of a forest for the program, although management plans typically include wildlife habitat or biodiversity criteria and goals. As of March 2005, over 7000 landowners enrolled a total of 183,323 ha in the program, roughly 12% of all private forests in the state (Table 3; Jack Nelson, pers. comm.). The program was on track to reach the 202,500 ha target in 2005. No data were available on the number of participants that have withdrawn or been disqualified. The high enrollment rate is likely due to the extremely long existence of the program and the cumulative nature of the program, given the high economic penalty for withdrawing forest. Bennett et al. (1995) found that knowledge of the program was low among forest owners, possibly because forest owners only learn of the program through the state forestry department’s literature or webpage, or through other landowners; forest owners must contact state foresters if they are interested. Local governments lose tax revenue when forest owners enroll, and therefore have little incentive to encourage forest owners in their jurisdiction to participate.

4.6.

Oregon, USA: Oregon Forest Resource Trust

Unlike states east of the Mississippi River, Oregon has maintained a roughly 50% forest cover since prior to European settlement (Table 1), although the ecological composition (especially with respect to age classes) has changed (Alig et al., 2000). The Oregon Forest Resource Trust was established in 1993 to improve forest management for timber and nontimber purposes, including wildlife habitat (Table 2; Oregon Revised Statutes 526.700–526.775). The Trust was initially supported by state funding (lottery proceeds), with the option to accept funding from private sources as well. The first program enacted under the Trust, the Stand Establishment Program, reimburses contractors hired by landowners for reforesting ‘‘unproductive’’ land covered by abandoned agricultural fields and other non-forested cover (land recently logged is not eligible; Oregon Department of Forestry, 2005a). In 1994, PacifiCorp (a utility) made a small investment in the program, as administrative procedures promoted carbon offsets for reforestation as a potential funding source (Cathcart, 2000). Since 1995, when the state removed public funding for the program, the Trust has relied solely on private funding sources, primarily through the carbon offset vehicle. However, this funding method allows those benefiting from environmental damage (production of carbon dioxide) and those interested in conservation to invest in carbon offset credits and fund further reforestation. The goal of the Trust program is to reforest 101,250 ha (250,000 acres) by 2010 (Oregon Revised Statutes 526.705). Eligible landowners must have at least 4.05 ha (10 acres) of ‘‘unproductive’’ forestland zoned for forestry or agriculture available to reforest, but cannot own more than 2025 ha (5000 acres) of total forestland, which restricts the program to nonindustrial owners (Vickerman, 1998). The Trust pays up to 100% of the cost of reforestation, and assumes the financial risk in case of insect outbreak or wildfire that diminishes or destroys the forest stand. However, participants are limited to US$ 100,000 of reforestation funding every 2 years, and given average reforestation costs (seedlings plus maintenance to get

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forests to the ‘‘free-to-grow’’ stage), this has resulted in reforestation projects of about 40 ha (100–125 acres) each (Jim Cathcart, pers. comm.). Landowners have three options to end a contract (Cathcart, 2000). Within the first 25 years, the landowner can use the ‘‘buyout’’ option, which requires the landowner to repay all of the costs incurred for reforestation, plus 6.8% interest (this is also required for landowners that breach the terms of the contract). The second option is the ‘‘growout’’ option, which requires landowners to share a certain percentage of the timber profits on the land with the trust, based on a formula, which includes the stumpage value, reforestation costs, and the expected (forecasted) rate of return on a timber harvest at 50 years (Oregon Administrative Rules 629-022-0030 through 629-022-0700). The landowner can either harvest this amount in one cut and pay the Trust back as a lump sum, or selectively harvest and pay the Trust back gradually. After the harvest volume requirement is met, profits from all future harvests belong to the landowner. If the forest produces greater than the forecasted harvest volume, the landowner retains the difference. The third option is to continue the contract for 200 years. If no harvesting has occurred within this period, no money is owed the Trust. Since a lien is placed on the forest harvest for the amount of the harvested volume target, the contract remains in force even if the property is sold. After the Trust pays for the reforestation costs, the state Board of Forestry then retires all of the carbon credits created by the reforestation if these credits are used as mitigation for carbon releases by power plants. To date, the only carbon offset contribution to the Trust was a 1999 purchase of an estimated 1.16 million metric tons of carbon credits by the Klamath Cogeneration Project, worth US$ 1.5 million in 1999 (Cathcart, 2000). However, due to higher than estimated reforestation and maintenance costs, the actual tonnage of carbon offsets is likely to be roughly 500,000 metric tons (Jim Cathcart, pers. comm.; Trexler Climate + Energy Services Inc., 2004). The program acts to increase forested area in the state. Landowners interested in biodiversity or creating more oldgrowth forest have the option not to harvest; in fact, the program provides an economic incentive not to harvest as then no repayment is required. The landowners’ long term plans for the property and the abiotic characteristics of the site drive the choice of tree species that are planted. Enrolled land is checked annually by state foresters until the ‘‘free-to-grow’’ stage, and every 5 years afterwards to assure that the contract is followed and to measure accumulating ‘‘carbon credits’’ (i.e., wood biomass). As of 2004, there were only 29 participants enrolling 377 ha in the program, most of which have been reforested with economically valuable Douglas fir (Pseudotsuga menziesii) (Table 3; Oregon Department of Forestry, 2005a). No participants have withdrawn or been disqualified. Lack of interest on the part of landowners, rather than lack of funding or administrative resources, is the likely reason for low participation in the program (Jim Cathcart, pers. comm.). The Trust program involves a relatively complex contract procedure requiring a long-term state interest in the land, and therefore competes poorly with less complicated state- and federal-level reforestation programs.

622 5.

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Results and discussion

Based on the percentage of eligible participants enrolled in each program, Vermont appears to be the most acceptable to landowners, with 17% of all private non-industrial forest owners enrolled (owning almost half of all eligible forests; Table 3). The Swedish program has also enrolled a large number of forest owners relative to the time since the program’s initiation. For both cases, knowledge of the program is not a barrier to enrollment. Forest owners in Vermont are likely to know about the program through literature in their tax statements, whereas forest owners in the Swedish program are encouraged to participate through personal contacts by the government. Economic profitability of enrollment may not be an important factor for all programs, since the Swedish program does not fully compensate the forgone income from wood harvests. The length of contract period also seems to have little effect on program success; the Indiana and Oregon policies both have added incentives for enrolling forests for decades or centuries, yet they differ widely on the number of participants and hectares enrolled (Tables 2 and 3). Vermont also has by far the most eligible hectares of forest enrolled (over 600,000 ha; Table 3), although in contrast with the other programs, timber harvest is required on enrolled hectares. Therefore, this program, unlike the others, does not primarily focus on biodiversity. Since the start of Indiana’s program, forest cover in the state has increased by 12%, and in this sense the program is tremendously successful (even if number of hectares, and not overall forest cover, was the explicit goal of the program). When specific types of forests are targeted for enrollment however, success seems to be more elusive. Only a few enrolled sites support rare forest types in the Finnish program; since economic incentive value is weighted by growing stock, sites supporting low stock of a rare forest type may not receive a higher incentive than sites supporting higher stock of a more common forest type. Inadequate funding from state budgets has been a problem for the Austrian and Swedish programs. In Austria, there is currently no funding for additional, willing landowners, and in Sweden, the current annual funding level is inadequate to meet the program’s goals by the original deadlines, however these goals may be met in the future assuming the funding level stays constant. In contrast, the Vermont and Indiana programs pay incentives to landowners through adjusted tax burdens, and therefore incentives are paid irrespective of budgetary decisions (although Vermont’s program does reimburse local governments for lost tax revenue from the state budget). The Oregon Forest Resource Trust has combined a carbon offset program with state funding. Judging by the large number of enrolled hectares in the Vermont and Indiana programs, tax relief programs seem to have considerable benefits in such countries/states where forest taxation is based on the area of forest and market values (but see York et al., 2006). However, in such areas where taxes are paid on the basis of timber sales instead of forest ownership (e.g., Finland from 2006 onwards) different approaches are needed. Of those programs which had explicit goals, the programs in Indiana and Austria were closest to meeting their targets, although as mentioned Austria’s program includes publicly

owned forests and therefore is not entirely equivalent to the other programs. While Sweden has attained 49% of its goal, total goal attainment will likely be delayed unless funding issues are resolved. Although beneficial for tracking the ‘‘success’’ of a program, explicitly stated goals may not be consistent with ecological realities. For example, while Oregon’s program does help convert abandoned fields (which were once forests) back into forests, and provides ample incentive to allow these replanted forests to become oldgrowth, the program is not focused on one of the main causes of forest biodiversity endangerment in the state. Throughout the Pacific Northwest, biodiversity is threatened by the conversion of natural and old-growth forests to planted forests, dominated by species with higher economic value and lower biodiversity (Alig et al., 2000). Were this type of program to be implemented in Indiana, however, it may be much more successful, especially if targeted to marginal agricultural land. If prices for carbon credits were high enough, some farmers may switch from growing soybean and corn on marginal land to ‘‘growing’’ carbon credits through reforestation, which would increase forest cover in the state. Indeed, despite the impressive enrollment history of the Indiana program, the total cover of forest in the state still remains extremely low when compared to historical cover. An interesting difference emerged in the principal goals between our European and American cases. In the United States, deforestation has historically been a serious problem, and the cases reviewed here were committed to increasing forest cover. On the contrary, in the European countries discussed here the total forest area or cover per se was not the main concern (major deforestation having occurred centuries earlier). The European incentive policies rather focused on the amount of protected forests with specifically defined ecological features, such as rareness of the forest community within the country or the amount of decaying wood in the forest parcel. Although the American programs were concerned with total forest cover, they did not take into account the amount of forest cover that was already protected or sustainably managed. And unlike their European counterparts, the state-level programs do not have any goals that are derived from ecological theory, such as the 10% target for Finland by Hanski (2004) or 15–30% of each ecoregion in the US by Scheffer et al. (2001), nor do they give special protection to at-risk or poorly represented forest types. Broadly speaking, European programs seem to focus on forest quality and diversity, while US programs emphasize forest quantity and (in some cases, such as Vermont) landscape features. There are many programs at the federal and state level in the US which focus on wildlife habitat conservation on private land (some specifically target rare habitat types), and thus landowners can choose programs based on whether they view biodiversity or economic productivity as a priority (York et al., 2006). One of the most obvious suggestions to improve forest policy is to first review the existing policy environment before spending the time and resources adding new programs (Best and Wayburn, 2001; Doremus, 2003). Potential or actual competition with other forest programs was common to all of our case studies. In Sweden, Nature Conservation Agreements compete primarily with FSC certification requirements,

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and to some degree may compete with forest reserve setasides. The Nature Values Trading program in Finland is just one of over a dozen new programs for forest protection, some of which are also targeted at private forest owners (Finnish Government, 2002). In the United States, the Federal Forest Stewardship Program provides (highly variable) annual funding to state foresters to help private forest owners manage their forests (including for biodiversity benefits), and statelevel programs need to be less complicated and better funded if they are to succeed. The Indiana and Vermont programs do compete well, while Oregon’s does not (Jim Cathcart, pers. comm.). Once a policy deficiency is identified, ecological goals must be made explicit for the new program, and baseline data collection should occur prior to program implementation. With respect to forests, the current amount and distribution of forested ecological communities needs to be quantified at both the state and national level, and research must demonstrate how the current forest distribution must change to benefit forest-dependent species; not all species may respond similarly to overall increases in forest cover (Mo¨nkko¨nen and Welsh, 1994; van der Horst and Gimona, 2005). Likewise, economic conditions must be assessed, including forest owner preferences (e.g., York et al., 2006). Quantifiable economic goals should be made explicit, and those forest owners who prioritize economic productivity over biodiversity conservation should be identified and targeted. This process will lead to more informed policy goals; programs with explicit benchmarks for success are more likely to receive adequate, stable funding, as they are more able to demonstrate success.

Acknowledgements We would like to thank Jim Cathcart at the Oregon Department of Forestry, Jack Nelson at the Indiana Department of Natural Resources (Division of Forestry), and Brian Stone at the Vermont Agency of Natural Resources (Forest Resource Management Section), for updated and detailed information on the state programs. We are also thankful to Jarmo Uimonen and Tapio Nummi from the Regional Forest Centre of SouthWest Finland, to Herfried Steiner and Georg Frank from the Austrian Federal Office and Research Centre for Forests, and to Mikael Nore´n from the National Board of Forestry of Sweden for information on our European cases. Two anonymous reviewers and Brian Stone greatly improved the manuscript through their thoughtful comments. Pa¨ivi Tikka was supported by a grant from the Marjatta and Eino Kolli Foundation. A grant to Professor Pekka E. Kauppi, University of Helsinki, from Metsa¨miesten sa¨a¨tio¨ made early discussions on this subject possible. Contents of this paper represent the opinions of the authors, not necessarily those of the US Environmental Protection Agency.

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