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Restoring longleaf pine through silvopasture practices: an economic analysis
Forest Policy and Economics 6 (2004) 371 – 378 www.elsevier.com/locate/forpol
Restoring longleaf pine through silvopasture practices: an economic analysis G. Andrew Stainback a, Janaki R.R. Alavalapati b,* b
a College of Law, Florida State University, Tallahassee, FL, USA School of Forest Resources and Conservation, University of Florida, P.O. Box 110410, Gainesville, FL 32611-0410, USA
Abstract A modified Hartman model was developed to investigate the economic potential of silvopasture as a means of restoring longleaf pine (Pinus palustris) on private land. Specifically, the model was used to investigate the impact of payments to the landowner for sequestering carbon and the effect of lengthening the rotation to produce red-cockaded woodpecker (Picoides borealis) habitat. The results suggested that silvopasture is more profitable than either traditional ranching or traditional forestry. Further, it was found that, carbon payments increased the profitability, optimal rotation age and optimal tree density for both silvopasture and traditional forestry. In addition, extending the rotation to 60 years to produce red-cockaded woodpecker habitat is less costly with silvopasture than with traditional forestry. These results suggest that silvopasture may be an attractive land use option for landowners who desire to restore longleaf pine on their land. D 2004 Elsevier B.V. All rights reserved. Keywords: Carbon sequestration; Hartman model; Land expectation value; Red-cockaded woodpecker
1. Introduction Public preference for native forest ecosystems is on the rise across the world because of their valuable market outputs, i.e. timber and non-timber products and non-market outputs such as biodiversity, ecological services, and aesthetics. As a result, restoration of native forest ecosystems has become an important component of sustainable forest management. Furthermore, there is a perception that longer timber rotation age is desirable in the interest of ecological sustainability. However, extending timber rotation has an opportunity cost for private landowners. In the context * Corresponding author. Tel.: +1-352-846-0899; fax: +1-352846-1277. E-mail address: [email protected] (J.R.R. Alavalapati). 1389-9341/$ - see front matter D 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.forpol.2004.03.012
of private lands, however, restoration of native species and extending rotation age are dependent on the profitability relative to alternative forestry or agricultural practices. Furthermore, the non-market outputs listed above are external to the landowners’ decision-making process. Therefore, exploration of innovative land use options and economic policies that can help restore native forest ecosystems and ensure profitability to landowners is of paramount importance. In this article, an economic analysis was conducted to assess the potential of silvopasture to restore longleaf pine (Pinus palustris), a native species of the southeastern US, in the face of carbon policies.1 1
Silvopasture is defined as an agroforestry practice that combines trees with forage and livestock production (Alavalapati and Nair, 2001).
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Longleaf pine forests are one of the most biologically diverse ecosystems in North America, supporting hundreds of plant and animal species (Landers et al., 1995). When Europeans first colonized North America, forests dominated by longleaf pine covered vast areas of the southeastern coastal plain. Historically, longleaf pine forests may have existed on close to 92 million acres (Landers et al., 1995). Due to landscape changes brought on by colonization, agricultural expansion, and population growth over the last several centuries, longleaf pine today covers only a small fraction of its historical range. The vast majority of longleaf forests are found in the flat costal plain extending from southeast Virginia south through north Florida and west to east Texas. Some longleaf is also found in the piedmont and mountain regions of Georgia, Alabama, and Arkansas. Conversion of longleaf pine forests to fast growing loblolly pine (Pinus taeda) and slash pine (P. elliottii), conversion of forestlands to agriculture, and government policies to exclude fire contributed to longleaf’s decline. Today, virgin longleaf stands exist only in a few isolated areas (Abrahamson and Hartnett, 1990). Over two-thirds of longleaf pine forests in the US occur on private lands with most of this on nonindustrial private land. The only exception is Florida where the majority of longleaf is in public ownership (Kelly and Bechtold, 1989). Most longleaf stands are natural in origin as historically very little was planted on cutover sites. Longleaf forests support a diverse collection of plant and animal species many of which have declined with the loss of their habitat. Over 30 species associated with this forest are listed as endangered or threatened under the Endangered Species Act with the red-cockaded woodpecker (Picoidel borealis) the most notable example. The red-cockaded woodpecker (RCW) requires large tracts of mature pine stands, preferably longleaf, with a relatively open understory free of mid-story vegetation (Landers et al., 1995). Longleaf is generally more resistant to fire, hurricane damage, and pine bark beetle attacks than other common commercial pine species in the region (Alavalapati et al., 2002). Despite these advantages, except for very xeric sites, longleaf has generally proved to be less profitable than other timber species in the region. Although longleaf ecosystems provide many environmental benefits to the society, land-
owners rarely receive any financial compensation for producing them. Therefore, longleaf pine and its associated benefits may be under-produced from a social perspective. Programs and policies such as Habitat Conservation Plans, Safe Harbor Programs, and Transferable Endangered Species Certificates have been suggested to internalize the environmental benefits of longleaf. There have been a number of studies in the past investigating the economics of providing environmental benefits through longleaf pine on private lands (Roise et al., 1990; Landers et al., 1995). Recently, Alavalapati et al. (2002) found that internalizing RCW habitat benefits and carbon sequestration can significantly increase the land value associated with longleaf pine plantations. However, to date there has been no economic investigation of the potential environmental benefits associated with longleaf pine in silvopastural systems. 1.1. Silvopasture as an option to restore longleaf pine There is a renewed interest in silvopasture in the Southeast (Nowak et al., 2002). By producing cattle along with timber landowners can diversify their income, thus reducing their exposure to risk and receiving a steady stream of income between long harvest periods. In addition, cattle grazing will reduce under-story vegetation thereby potentially making the stand more attractive to RCWs. Tree growing on marginal pastureland also sequesters carbon from the atmosphere thus potentially mitigating global warming. There is great interest among private forestland owners, policymakers and environmental organizations in establishing markets for carbon sequestered in forests. Such a market could provide an additional income source for landowners engaged in silvopasture and may be an economically viable way to profitably restore longleaf pine on marginal pastureland in the Southeast. The southeastern US is known as the ‘woodbasket’ of the US because of the high timber productivity of its forests. Furthermore, forests in the region are expanding (Wear and Greis, 2002). Thus, the southeastern US has great potential for forest carbon sequestration. Research focusing on sequestering carbon in a southeastern US pine forest suggested that private landowners could be induced to sequester
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additional carbon for relatively modest prices. Stainback and Alavalapati (2002) investigated how the optimal management of slash pine plantations would change in response to internalizing carbon benefits onto private forest landowners. The results indicated that carbon prices of less than $50 per metric ton can induce landowners to lengthen their rotations to sequester additional carbon. Huang and Kronrad (2001) found that private landowners would be willing to shift from the financially optimal timber rotation to a rotation that maximizes sequestered carbon for prices of carbon less than $70 per metric ton in loblolly pine plantations. Historically, silvopasture was a frequent land use in the southeastern US (Clason, 1995). Today, silvopasture is a minor land use but there is an increasing interest in silvopasture systems from landowners. The benefits of silvopasture most cited by landowners in the southeastern US are economic and include increased financial returns and income diversification (Zinkhan and Mercer, 1997). There is also empirical evidence that silvopasture management techniques can be up to 70% more profitable than pure forestry (Nowak et al., 2002). In addition, Lundgren et al. (1983) found that pine silvopasture systems in the US Southeast could have as much as a 4.5% positive rate of return. Clason (1995) found that silvopasture utilizing loblolly pine in Louisiana could produce greater net returns than either pure pasture systems or pure timber systems and Grado et al. (2001) found that combining beef cattle and pine plantations can be profitable in southern Mississippi. Finally, Stainback et al. (2003) found that when the environmental benefits of silvopasture in south Florida are considered, it can be substantially more profitable than traditional ranching.
2. Methodology In this article, we developed a stand level economic model of a silvopasture system utilizing longleaf pine. We compared the profitability of silvopasture with traditional pasture (no trees) and traditional forestry (only trees). Within the silvopasture and traditional forestry regimes we estimated the initial tree density and rotation age that maximizes land value. We then incorporated carbon benefits into the
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model and investigated how payments to the landowner for sequestering carbon in trees impact the above mentioned parameters. Finally, we estimated the opportunity cost of fixing the rotation age at 60 and 80 years to provide habitat for the RCW for both silvopasture and traditional forestry with and without carbon payments. We developed a growth and yield model for longleaf pine stands using data from Lohrey and Bailey (1977) and Farrar (1985). The following equation was fitted to merchantable volume (v) and basal area (ba) data from Lohrey and Bailey (1977). k v; ba ¼ d 1 e0:05t :
ð1Þ
The parameters d and k were estimated by regressing Eq. (1) to the merchantable volume and basal area data for a site index of 21.3 m at age 50 years for various planting densities. The variable t is the stand age in years. Following Farrar (1985), the proportion of merchantable volume sold as pulpwood or sawtimber was estimated as a function of stand age. This model allowed the prediction of basal area, sawtimber, and pulpwood yield for unthinned even-aged longleaf pine stands at various planting densities as a function of stand age. It was assumed that pine straw will be bailed and sold beginning at stand age 20. A pine straw production function from Roise et al. (1991) was utilized: strwðtÞ ¼ 357:78429 þ 413:1076bðt Þ0:5
ð2Þ
where strw(t) is straw production in kilograms and b(t) is basal area in square meters. One bale is assumed to consist of 28.1 kg of pine straw and to yield a net revenue (after the cost of bailing is subtracted) of $1.55 per bale. Eighty percent of the needles that fall after needle collection begins at stand age 20 was assumed to be baled. It was assumed that silvopasture on native pasture is a management option available to a private landowner. If silvopasture is adopted, a landowner would receive revenue from cattle and timber production. A landowner has the option of planting no trees, which is referred to as the traditional ranching scenario, or adopting various silvopasture scenarios with an initial tree density of 247, 494, 741, 988, 1236, 1485 or 1730 stems per hectare.
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Fig. 1. Relationship between forage production and longleaf pine stand age under a silvopasture system in the southeastern US ‘td’ represents initial tree density.
Forage production is a function of basal area. Following the empirical work of Wolters (1973) the following equation was used to estimate forage produced, for(t), in kilogram of dry biomass per hectare per year: forðt Þ ¼ 2296:5064 177:35135bðt Þ:
ð3Þ
If traditional ranching is followed and no trees are planted, basal area is zero. As illustrated in Fig. 1 forage production declines with tree density and stand age (because of increasing basal area). Above an initial tree density of 494 trees per hectare, forage production reaches zero before the end of the rotation. Forage production is converted to cattle production using standard animal unit months (AUMs). One AUM, commonly defined in the US as the amount of forage required to support one adult cow weighing 454 kg for 1 month, is approximately 353.8 kg (Mikulecky, 2003). The price of an AUM is assumed to be $15 (USDA, 2003). When a landowner is paid for sequestering carbon, payments are assumed to be paid to the landowner as the stand grows. After harvest, the landowner must pay for carbon emissions from the decay of sawtimber, pulpwood, and wood waste left at harvest. Following, Hoen and Solberg (1997) the present value of carbon benefits are estimated as: Z t pvc ¼ pc abvVert dt pdecs pdecp pdecw ð4Þ
total tree volume including roots, branches, bark, and leaves, and a converts cubic meters of tree volume to metric tons of carbon. These parameters are assumed to be 1.682 and 0.0286, respectively, and were obtained from Birdsey (1996) and are specific for southern pines. The variable t is stand age in years and pc is the price of carbon in $ per metric ton. The price of carbon is assumed to vary between $10 and $50 per metric ton (Stainback and Alavalapati, 2002). The present value of the carbon emitted from the decay of sawtimber, pulpwood, and the slash left at harvest are represented by pdecs, pdecp and pdecw, respectively. Non-linear equations were estimated to calculate the carbon emitted from sawtimber and pulpwood over 100 years using data from Birdsey (1996). Any carbon remaining in the product pools after 100 years was assumed to be stored permanently in long-lived products or landfills. This assumption is consistent with empirical evidence that carbon can remain sequestered for very long periods in landfills and finished products (Row and Phelps, 1996). Wood waste left at harvest was assumed to decay immediately afterward. Though harvest waste may not decay immediately, it was decided to err on the side of underestimating the amount of carbon stored. The decay functions were represented by: Z 100 pdecs ¼ pc avðt Þsaw ert /ðk Þsaw erk dk ð5Þ 0
0
where vV is the derivative of the merchantable volume (Eq. (1)), b converts merchantable stem volume into
pdecp ¼ pc avðt Þpulp e
rt
Z 0
100
/ðk Þpulp erk dk
ð6Þ
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pdecw ¼ pc aðbvðt Þ vðt ÞÞert
ð7Þ
Here /(k)saw and /(k)pulp, respectively, are equations representing the proportion of the initial carbon harvested as sawtimber and pulpwood that is emitted to the atmosphere and k is years after harvest. The equations /(k)saw and /(k)pulp are represented as: l /ðk Þsaw ; /ðk Þpulp ¼ q 1 e0:05k ð8Þ The parameters q and l were determined by regressing Eq. (8) on data on carbon emissions from pine sawtimber and pulpwood from Birdsey (1996). The variable k is time after harvest in years. The Land expectation value (LEV) can now be represented by: LEV ¼ t X forðt Þ ps vðt Þsaw ert þ pp vðt Þpulp ert þ pfor 353:8 2 t P ert þ pstrw strwðt Þert þ pvc c 20
ð9Þ
1 ert
where ps ($38.53 per m3), pp ($7.07 per m3), pfor ($15 per AUM) and pstrw ($1.55 per bale) are the prices of sawtimber, pulpwood, AUMs, and pine straw, respectively (Roise et al., 1991; Timber Mart-South, 2003; USDA, 2003). Costs were represented by c, which vary with initial tree density, whether or not grazing occurs and includes planting costs, site preparation, fencing, and pruning (Yin et al., 1998; Grado et al., 2001). The costs vary from $741 to $1483 per hectare. Eq. (9) is maximized to find the rotation age (t) that yields the highest LEV. Grazing was
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assumed to begin at year 2 to prevent damage to the young tree seedlings.
3. Results Silvopasture is more profitable, as evidenced by a higher LEV, than both traditional forestry and traditional pasture with and without carbon payments. These results differed from those found by the current authors when investigating silvopasture in south Florida. There, traditional ranching is more profitable than silvopasture (Stainback et al., 2003). However, higher prices in the longleaf region of the Southeast compared to south Florida and pine straw production make silvopasture in the present model more profitable. Traditional forestry is more profitable than traditional ranching even when the carbon price is $0. However, for all carbon prices investigated in the model silvopasture was more profitable than traditional forestry. Thus, silvopasture may be financially attractive to landowners who want to plant longleaf pine. The LEV results are shown in Table 1. As expected LEVs for silvopasture and traditional forestry increase with increasing carbon prices. The LEV of traditional ranching is unchanged with increasing carbon prices because, without any trees, it was assumed that no carbon was sequestered. The optimal rotation age is shown in Fig. 2. The optimal rotation age for silvopasture is always shorter than the rotation age for traditional forestry. This is expected because as the stand ages and basal area
Table 1 Land expectation values ($/hectare) under different management regimes and carbon prices ($/metric ton) for longleaf pine in the southeastern US* Management regime Carbon price 0 10 20 30 40 50
p
tf
sp
tf (rot=60)
tf (rot=80)
sp (rot=60)
sp (rot=80)
1700.18 1700.18 1700.18 1700.18 1700.18 1700.18
2088.04 3088.81 4151.36 5201.56 6276.47 7376.08
2804.64 3805.42 4843.26 5893.45 6956.01 8055.62
1507.34 2644.02 3756.00 4867.97 5979.94 7116.62
1186.10 2372.21 3558.31 4744.42 5905.81 7091.91
2471.05 3558.31 4695.00 5806.97 6918.94 8043.27
1927.42 3014.68 4200.79 5386.89 6572.99 7882.65
* p, tf and sp represent traditional pasture, traditional forestry and silvopasture, respectively. ‘Rot’ stands for a fixed rotation at either 60 or 80 years.
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Fig. 2. Relationship between optimal rotation age and carbon price for longleaf pine under silvopasture and traditional forestry in the southeastern US.
increase, forage production decreases. Since forage has a value in silvopasture, the optimal rotation age decreases relative to traditional forestry. As the carbon price increases, the optimal rotation increases for both traditional forestry and silvopasture. This result was also expected as lengthening the rotation increases the amount of carbon stored in the stand and also increases the proportion of sawtimber produced which decays slower after harvest. As the carbon price increases, however, the rotation age for both silvopasture and forestry converges because carbon payments play a bigger role. For traditional forestry and silvopasture the optimal initial tree density is 1730 trees per hectare, the maximum allowed by the model, for all carbon prices (including $0). If the price of carbon is $0 and the rotation age were to be fixed to 60 and 80 years, respectively, to create foraging and nesting habitat for RCW, the optimal initial tree density for silvopasture will be 1236 and 988 trees per hectare, respectively. Lengthening the rotation decreases the optimal tree density in silvopasture because, at higher ages, denser stands would result in higher mortality and lower growth rates. Thus, the marginal value of increasing the planting density may be small and will be outweighed by opportunity cost of forage reduction under higher planting density. For traditional forestry, which has no forage production, the optimal tree density is 1730 trees per hectare for both 60 and 80 years rotations. Increasing the rotation ages to create foraging and nesting RCW habitat was found to decrease the LEV
under both traditional forestry and silvopasture. The opportunity cost of extending the rotation for traditional forestry and silvopasture is shown in Fig. 3. The opportunity cost for extending the rotation declines with an increase in carbon price. This is expected because carbon payments generally increase the optimal rotation age as can be seen in Fig. 2. Fixing the rotation to 60 years has a significantly smaller opportunity cost for silvopasture than for traditional forestry. This result occurs because timber is a smaller component of LEV in silvopasture than for forestry. However, if the rotation age is extended to 80 years, the opportunity cost for silvopasture and traditional forestry are approximately the same. There are two aspects of delaying harvest that led to this result. First, delaying harvest reduces income generated from forage less relative to income generated from timber because the forage revenue stream will decrease gradually and annually. The revenue from timber, on the other hand, will be realized only when timber is harvested. Therefore, silvopasture is affected less by extending the rotation than traditional forestry. Second, the revenue from silvopasture is greater than traditional forestry. The opportunity cost of deviation of optimal revenue stream associated with silvopasture will be greater than traditional forestry. When the rotation age is fixed for 60 years the first phenomenon appears to dominate and the opportunity cost associated with extending the rotation age is less for silvopasture than traditional forestry. However, when the rotation age is extended to 80 years the latter phenomenon seems to dominate the
Fig. 3. Opportunity cost of fixing the rotation age at 60 and 80 years under traditional forestry and silvopasture with longleaf pine in the southeastern US.
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first and the opportunity cost are approximately the same.
4. Conclusions Results suggest that silvopasture may be an attractive land use option for landowners wishing to plant longleaf pine on pastureland and participate in a Habitat Conservation Plan or produce Tradable Endangered Species Permits. Furthermore, grazing reduces the understory, a preferred habitat for RCWs. This may be a particularly valuable benefit for landowners living in areas where prescribed burning may be difficult. Conversely, grazing may have the negative effect of reducing biodiversity in the ground cover. However, for many lands, especially marginal pastureland, planting trees, sequestering carbon and potentially providing RCW habitat may be a significant environmental improvement. Factors such as technological improvements in artificial regeneration of longleaf (Demers and Long, 2003), low prices for pulpwood relative to sawnwood, and greater value added opportunities associated with sawtimber might improve the competitiveness of longleaf relative to slash and loblolly pine. The increased interest in developing alternative land management options and harnessing market forces to help solve environmental problems may be particularly useful in the case of longleaf pine. Since the vast majority of potential longleaf pine sites are located on private property traditional command and control mechanisms may not be sufficient for its restoration. With a growing interest in longleaf pine and innovative policy programs being instituted, longleaf may once again be a major component of our southern forest ecosystems.
Acknowledgements We thank the Guest Editor and two anonymous reviewers for providing valuable comments on our manuscript. This research was made possible by the financial support from the USDA (Initiative for Future Agriculture and Food System) and the Florida Agricultural Experiment Station. Florida Agricultural Experiment Station Journal Series R-09978.
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References Alavalapati, J.R.R., Nair, P.K.R., 2001. Socioeconomics and institutional perspectives of Agroforestry. In: Palo, M., Uusivuori, J. (Eds.), World Forests, Society and Environment-Markets and Policies. Kluwer Academic Publishers, Dordrecht, pp. 71 – 81. Alavalapati, J.R.R., Stainback, G.A., Carter, D.R., 2002. Restoration of the longleaf pine ecosystem on private lands in the US South: and ecological economic analysis. Ecological Economics 40, 411 – 419. Abrahamson, W.G., Hartnett, D.C., 1990. Pine flatwoods and dry prairies. In: Myers, R.L., Ewel, J.J. (Eds.), Ecosystems of Florida. University of Central Florida Press, Florida, pp. 103 – 149. Birdsey, R.A., 1996. Carbon storage for major forest types and regions in the conterminous United States. In: Sampson, R.N., Hair, D. (Eds.), Forest and Global Change: Forest Management Opportunities for Mitigating and Adapting to Climate Change, Vol. II. American Forests, Washinton DC, pp. 1 – 25. Clason, T.R., 1995. Economic implications of silvipastures on southern pine plantations. Agroforestry Systems 29, 227 – 238. Demers, C., Long, A., 2003. Longleaf pine regeneration. Retrieved 11 April 2003 from http://edis.ifas.ufl.edu/BODY_FR064. Farrar Jr., R.M., 1985. Volume and Growth Predictions for Thinned Even-Aged Natural Stands in the East Gulf Area. USDA Forest Service Research Paper SO-220, 171 p. Southern. Forest Experiment Station, New Orleans, Louisiana. Grado, S.C., Hovermale, C.H., St.Louis, D.J., 2001. A financial analysis of a silvopasture system in southern Mississippi. Agroforestry Systems 53, 313 – 322. Hoen, H.F., Solberg, B., 1997. CO2-taxing, timber rotations, and market implications. Critical Reviews in Environmental Science and Technology 27 (Special), S151 – S162. Huang, C.H., Kronrad, G.D., 2001. The cost of sequestering carbon on private forest lands. Forest Policy and Economics 2, 133 – 142. Kelly, J.F., Bechtold, W.A., 1989. The longleaf pine resource. In: Farrar, R.M. (Ed.), Proceeding of the Symposium on the Management of Longleaf Pine. Long Beach, Mississippi, pp. 11 – 22 April 4 – 6. Landers, J.L., Van, L., David, H., Boyer, W.D., 1995. The longleaf pine forest of the southeast: requiem or renaissance? Journal of Forestry 93, 39 – 43. Lohrey, R.E., Bailey, R.L., 1977. Yield tables and stand structure for unthinned longleaf pine plantations in Louisiana and Texas. USDA Forest Service Research Paper SO-133, 53 p. Southern. Forest Experiment Station, New Orleans, Louisiana. Lundgren, G.K., Conner, J.R., Pearson, H.A., 1983. An economic analysis of forest grazing on four timber management situation. Southern Journal of Applied Forestry 7, 119 – 124. Mikulecky, G., 2003. Pasture Management Basics. Retrieved 30 December 2003 from http://smallfarm.ifas.ufl.edu/Livestock/ pasturemanage.htm. Nowak, J., Blount, A., Workman, S., 2002. Integrated timber, forage and livestock production—benefits of silvopasture. Florida Cooperative Extension Service, IFAS, University of Florida. Circular 1430. 7p. Roise, J.P., Chung, J., Lancia, R., 1991. Red-cockaded wood-
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pecker habitat management and longleaf pine straw production: an economic analysis. Southern Journal of Applied Forestry 15, 88 – 92. Roise, J, Chung, P., Lancia, R., Lennartz, M., 1990. Red-cockaded woodpecker habitat and timber management possibilities. Southern Journal of Applied Forestry 14, 6 – 12. Row, C., Phelps, R.B., 1996. Wood carbon flows and storage after timber harvest. In: Sampson, R.N., Hair, D. (Eds.), Forest and Global Change: Forest Management Opportunities for Mitigating and Adapting to Climate Change. American Forests, Washington, DC, pp. 27 – 58. Stainback, G.A., Alavalapati, J.R.R., 2002. Economic analysis of slash pine forest carbon sequestration in the southern US. Journal of Forest Economics 8, 105 – 117. Stainback, G.A., Alavalapati, J.R.R., Shrestha, R., Larkin, S., Wong G., 2003. Reducing phosphorus runoff through silvopasture: An
ecological economics approach. Journal of Agricultural and Applied Economics. In Press. Timber Mart-South, 2003. The Norris Foundation. University of Georgia, Athens, GA. USDA, 2003. Management – Price tables: grazing fees. Retrieved 7 August 2003 from http://www.mandan.ars.usda.gov/systems/ mgmtptgf.htm. Wear, D.N., Greis, J.G., 2002. Southern forest resource assessment: summary of findings. Journal of Forestry 100, 6 – 14. Wolters, G.L., 1973. Southern pine overstories influence herbage quality. Journal of Range Management. 26, 423 – 426. Yin, R., Pienaar, L.V., Aronow, M.E., 1998. The productivity and profitability of fiber Farming. Journal of Forestry 96, 13 – 18. Zinkhan, F.C., Mercer, D.E., 1997. An assessment of agroforestry systems in the southern USA. Agroforestry Systems 35, 303 – 321.
Restoring longleaf pine through silvopasture practices: an economic analysis G. Andrew Stainback a, Janaki R.R. Alavalapati b,* b
a College of Law, Florida State University, Tallahassee, FL, USA School of Forest Resources and Conservation, University of Florida, P.O. Box 110410, Gainesville, FL 32611-0410, USA
Abstract A modified Hartman model was developed to investigate the economic potential of silvopasture as a means of restoring longleaf pine (Pinus palustris) on private land. Specifically, the model was used to investigate the impact of payments to the landowner for sequestering carbon and the effect of lengthening the rotation to produce red-cockaded woodpecker (Picoides borealis) habitat. The results suggested that silvopasture is more profitable than either traditional ranching or traditional forestry. Further, it was found that, carbon payments increased the profitability, optimal rotation age and optimal tree density for both silvopasture and traditional forestry. In addition, extending the rotation to 60 years to produce red-cockaded woodpecker habitat is less costly with silvopasture than with traditional forestry. These results suggest that silvopasture may be an attractive land use option for landowners who desire to restore longleaf pine on their land. D 2004 Elsevier B.V. All rights reserved. Keywords: Carbon sequestration; Hartman model; Land expectation value; Red-cockaded woodpecker
1. Introduction Public preference for native forest ecosystems is on the rise across the world because of their valuable market outputs, i.e. timber and non-timber products and non-market outputs such as biodiversity, ecological services, and aesthetics. As a result, restoration of native forest ecosystems has become an important component of sustainable forest management. Furthermore, there is a perception that longer timber rotation age is desirable in the interest of ecological sustainability. However, extending timber rotation has an opportunity cost for private landowners. In the context * Corresponding author. Tel.: +1-352-846-0899; fax: +1-352846-1277. E-mail address: [email protected] (J.R.R. Alavalapati). 1389-9341/$ - see front matter D 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.forpol.2004.03.012
of private lands, however, restoration of native species and extending rotation age are dependent on the profitability relative to alternative forestry or agricultural practices. Furthermore, the non-market outputs listed above are external to the landowners’ decision-making process. Therefore, exploration of innovative land use options and economic policies that can help restore native forest ecosystems and ensure profitability to landowners is of paramount importance. In this article, an economic analysis was conducted to assess the potential of silvopasture to restore longleaf pine (Pinus palustris), a native species of the southeastern US, in the face of carbon policies.1 1
Silvopasture is defined as an agroforestry practice that combines trees with forage and livestock production (Alavalapati and Nair, 2001).
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Longleaf pine forests are one of the most biologically diverse ecosystems in North America, supporting hundreds of plant and animal species (Landers et al., 1995). When Europeans first colonized North America, forests dominated by longleaf pine covered vast areas of the southeastern coastal plain. Historically, longleaf pine forests may have existed on close to 92 million acres (Landers et al., 1995). Due to landscape changes brought on by colonization, agricultural expansion, and population growth over the last several centuries, longleaf pine today covers only a small fraction of its historical range. The vast majority of longleaf forests are found in the flat costal plain extending from southeast Virginia south through north Florida and west to east Texas. Some longleaf is also found in the piedmont and mountain regions of Georgia, Alabama, and Arkansas. Conversion of longleaf pine forests to fast growing loblolly pine (Pinus taeda) and slash pine (P. elliottii), conversion of forestlands to agriculture, and government policies to exclude fire contributed to longleaf’s decline. Today, virgin longleaf stands exist only in a few isolated areas (Abrahamson and Hartnett, 1990). Over two-thirds of longleaf pine forests in the US occur on private lands with most of this on nonindustrial private land. The only exception is Florida where the majority of longleaf is in public ownership (Kelly and Bechtold, 1989). Most longleaf stands are natural in origin as historically very little was planted on cutover sites. Longleaf forests support a diverse collection of plant and animal species many of which have declined with the loss of their habitat. Over 30 species associated with this forest are listed as endangered or threatened under the Endangered Species Act with the red-cockaded woodpecker (Picoidel borealis) the most notable example. The red-cockaded woodpecker (RCW) requires large tracts of mature pine stands, preferably longleaf, with a relatively open understory free of mid-story vegetation (Landers et al., 1995). Longleaf is generally more resistant to fire, hurricane damage, and pine bark beetle attacks than other common commercial pine species in the region (Alavalapati et al., 2002). Despite these advantages, except for very xeric sites, longleaf has generally proved to be less profitable than other timber species in the region. Although longleaf ecosystems provide many environmental benefits to the society, land-
owners rarely receive any financial compensation for producing them. Therefore, longleaf pine and its associated benefits may be under-produced from a social perspective. Programs and policies such as Habitat Conservation Plans, Safe Harbor Programs, and Transferable Endangered Species Certificates have been suggested to internalize the environmental benefits of longleaf. There have been a number of studies in the past investigating the economics of providing environmental benefits through longleaf pine on private lands (Roise et al., 1990; Landers et al., 1995). Recently, Alavalapati et al. (2002) found that internalizing RCW habitat benefits and carbon sequestration can significantly increase the land value associated with longleaf pine plantations. However, to date there has been no economic investigation of the potential environmental benefits associated with longleaf pine in silvopastural systems. 1.1. Silvopasture as an option to restore longleaf pine There is a renewed interest in silvopasture in the Southeast (Nowak et al., 2002). By producing cattle along with timber landowners can diversify their income, thus reducing their exposure to risk and receiving a steady stream of income between long harvest periods. In addition, cattle grazing will reduce under-story vegetation thereby potentially making the stand more attractive to RCWs. Tree growing on marginal pastureland also sequesters carbon from the atmosphere thus potentially mitigating global warming. There is great interest among private forestland owners, policymakers and environmental organizations in establishing markets for carbon sequestered in forests. Such a market could provide an additional income source for landowners engaged in silvopasture and may be an economically viable way to profitably restore longleaf pine on marginal pastureland in the Southeast. The southeastern US is known as the ‘woodbasket’ of the US because of the high timber productivity of its forests. Furthermore, forests in the region are expanding (Wear and Greis, 2002). Thus, the southeastern US has great potential for forest carbon sequestration. Research focusing on sequestering carbon in a southeastern US pine forest suggested that private landowners could be induced to sequester
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additional carbon for relatively modest prices. Stainback and Alavalapati (2002) investigated how the optimal management of slash pine plantations would change in response to internalizing carbon benefits onto private forest landowners. The results indicated that carbon prices of less than $50 per metric ton can induce landowners to lengthen their rotations to sequester additional carbon. Huang and Kronrad (2001) found that private landowners would be willing to shift from the financially optimal timber rotation to a rotation that maximizes sequestered carbon for prices of carbon less than $70 per metric ton in loblolly pine plantations. Historically, silvopasture was a frequent land use in the southeastern US (Clason, 1995). Today, silvopasture is a minor land use but there is an increasing interest in silvopasture systems from landowners. The benefits of silvopasture most cited by landowners in the southeastern US are economic and include increased financial returns and income diversification (Zinkhan and Mercer, 1997). There is also empirical evidence that silvopasture management techniques can be up to 70% more profitable than pure forestry (Nowak et al., 2002). In addition, Lundgren et al. (1983) found that pine silvopasture systems in the US Southeast could have as much as a 4.5% positive rate of return. Clason (1995) found that silvopasture utilizing loblolly pine in Louisiana could produce greater net returns than either pure pasture systems or pure timber systems and Grado et al. (2001) found that combining beef cattle and pine plantations can be profitable in southern Mississippi. Finally, Stainback et al. (2003) found that when the environmental benefits of silvopasture in south Florida are considered, it can be substantially more profitable than traditional ranching.
2. Methodology In this article, we developed a stand level economic model of a silvopasture system utilizing longleaf pine. We compared the profitability of silvopasture with traditional pasture (no trees) and traditional forestry (only trees). Within the silvopasture and traditional forestry regimes we estimated the initial tree density and rotation age that maximizes land value. We then incorporated carbon benefits into the
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model and investigated how payments to the landowner for sequestering carbon in trees impact the above mentioned parameters. Finally, we estimated the opportunity cost of fixing the rotation age at 60 and 80 years to provide habitat for the RCW for both silvopasture and traditional forestry with and without carbon payments. We developed a growth and yield model for longleaf pine stands using data from Lohrey and Bailey (1977) and Farrar (1985). The following equation was fitted to merchantable volume (v) and basal area (ba) data from Lohrey and Bailey (1977). k v; ba ¼ d 1 e0:05t :
ð1Þ
The parameters d and k were estimated by regressing Eq. (1) to the merchantable volume and basal area data for a site index of 21.3 m at age 50 years for various planting densities. The variable t is the stand age in years. Following Farrar (1985), the proportion of merchantable volume sold as pulpwood or sawtimber was estimated as a function of stand age. This model allowed the prediction of basal area, sawtimber, and pulpwood yield for unthinned even-aged longleaf pine stands at various planting densities as a function of stand age. It was assumed that pine straw will be bailed and sold beginning at stand age 20. A pine straw production function from Roise et al. (1991) was utilized: strwðtÞ ¼ 357:78429 þ 413:1076bðt Þ0:5
ð2Þ
where strw(t) is straw production in kilograms and b(t) is basal area in square meters. One bale is assumed to consist of 28.1 kg of pine straw and to yield a net revenue (after the cost of bailing is subtracted) of $1.55 per bale. Eighty percent of the needles that fall after needle collection begins at stand age 20 was assumed to be baled. It was assumed that silvopasture on native pasture is a management option available to a private landowner. If silvopasture is adopted, a landowner would receive revenue from cattle and timber production. A landowner has the option of planting no trees, which is referred to as the traditional ranching scenario, or adopting various silvopasture scenarios with an initial tree density of 247, 494, 741, 988, 1236, 1485 or 1730 stems per hectare.
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Fig. 1. Relationship between forage production and longleaf pine stand age under a silvopasture system in the southeastern US ‘td’ represents initial tree density.
Forage production is a function of basal area. Following the empirical work of Wolters (1973) the following equation was used to estimate forage produced, for(t), in kilogram of dry biomass per hectare per year: forðt Þ ¼ 2296:5064 177:35135bðt Þ:
ð3Þ
If traditional ranching is followed and no trees are planted, basal area is zero. As illustrated in Fig. 1 forage production declines with tree density and stand age (because of increasing basal area). Above an initial tree density of 494 trees per hectare, forage production reaches zero before the end of the rotation. Forage production is converted to cattle production using standard animal unit months (AUMs). One AUM, commonly defined in the US as the amount of forage required to support one adult cow weighing 454 kg for 1 month, is approximately 353.8 kg (Mikulecky, 2003). The price of an AUM is assumed to be $15 (USDA, 2003). When a landowner is paid for sequestering carbon, payments are assumed to be paid to the landowner as the stand grows. After harvest, the landowner must pay for carbon emissions from the decay of sawtimber, pulpwood, and wood waste left at harvest. Following, Hoen and Solberg (1997) the present value of carbon benefits are estimated as: Z t pvc ¼ pc abvVert dt pdecs pdecp pdecw ð4Þ
total tree volume including roots, branches, bark, and leaves, and a converts cubic meters of tree volume to metric tons of carbon. These parameters are assumed to be 1.682 and 0.0286, respectively, and were obtained from Birdsey (1996) and are specific for southern pines. The variable t is stand age in years and pc is the price of carbon in $ per metric ton. The price of carbon is assumed to vary between $10 and $50 per metric ton (Stainback and Alavalapati, 2002). The present value of the carbon emitted from the decay of sawtimber, pulpwood, and the slash left at harvest are represented by pdecs, pdecp and pdecw, respectively. Non-linear equations were estimated to calculate the carbon emitted from sawtimber and pulpwood over 100 years using data from Birdsey (1996). Any carbon remaining in the product pools after 100 years was assumed to be stored permanently in long-lived products or landfills. This assumption is consistent with empirical evidence that carbon can remain sequestered for very long periods in landfills and finished products (Row and Phelps, 1996). Wood waste left at harvest was assumed to decay immediately afterward. Though harvest waste may not decay immediately, it was decided to err on the side of underestimating the amount of carbon stored. The decay functions were represented by: Z 100 pdecs ¼ pc avðt Þsaw ert /ðk Þsaw erk dk ð5Þ 0
0
where vV is the derivative of the merchantable volume (Eq. (1)), b converts merchantable stem volume into
pdecp ¼ pc avðt Þpulp e
rt
Z 0
100
/ðk Þpulp erk dk
ð6Þ
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pdecw ¼ pc aðbvðt Þ vðt ÞÞert
ð7Þ
Here /(k)saw and /(k)pulp, respectively, are equations representing the proportion of the initial carbon harvested as sawtimber and pulpwood that is emitted to the atmosphere and k is years after harvest. The equations /(k)saw and /(k)pulp are represented as: l /ðk Þsaw ; /ðk Þpulp ¼ q 1 e0:05k ð8Þ The parameters q and l were determined by regressing Eq. (8) on data on carbon emissions from pine sawtimber and pulpwood from Birdsey (1996). The variable k is time after harvest in years. The Land expectation value (LEV) can now be represented by: LEV ¼ t X forðt Þ ps vðt Þsaw ert þ pp vðt Þpulp ert þ pfor 353:8 2 t P ert þ pstrw strwðt Þert þ pvc c 20
ð9Þ
1 ert
where ps ($38.53 per m3), pp ($7.07 per m3), pfor ($15 per AUM) and pstrw ($1.55 per bale) are the prices of sawtimber, pulpwood, AUMs, and pine straw, respectively (Roise et al., 1991; Timber Mart-South, 2003; USDA, 2003). Costs were represented by c, which vary with initial tree density, whether or not grazing occurs and includes planting costs, site preparation, fencing, and pruning (Yin et al., 1998; Grado et al., 2001). The costs vary from $741 to $1483 per hectare. Eq. (9) is maximized to find the rotation age (t) that yields the highest LEV. Grazing was
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assumed to begin at year 2 to prevent damage to the young tree seedlings.
3. Results Silvopasture is more profitable, as evidenced by a higher LEV, than both traditional forestry and traditional pasture with and without carbon payments. These results differed from those found by the current authors when investigating silvopasture in south Florida. There, traditional ranching is more profitable than silvopasture (Stainback et al., 2003). However, higher prices in the longleaf region of the Southeast compared to south Florida and pine straw production make silvopasture in the present model more profitable. Traditional forestry is more profitable than traditional ranching even when the carbon price is $0. However, for all carbon prices investigated in the model silvopasture was more profitable than traditional forestry. Thus, silvopasture may be financially attractive to landowners who want to plant longleaf pine. The LEV results are shown in Table 1. As expected LEVs for silvopasture and traditional forestry increase with increasing carbon prices. The LEV of traditional ranching is unchanged with increasing carbon prices because, without any trees, it was assumed that no carbon was sequestered. The optimal rotation age is shown in Fig. 2. The optimal rotation age for silvopasture is always shorter than the rotation age for traditional forestry. This is expected because as the stand ages and basal area
Table 1 Land expectation values ($/hectare) under different management regimes and carbon prices ($/metric ton) for longleaf pine in the southeastern US* Management regime Carbon price 0 10 20 30 40 50
p
tf
sp
tf (rot=60)
tf (rot=80)
sp (rot=60)
sp (rot=80)
1700.18 1700.18 1700.18 1700.18 1700.18 1700.18
2088.04 3088.81 4151.36 5201.56 6276.47 7376.08
2804.64 3805.42 4843.26 5893.45 6956.01 8055.62
1507.34 2644.02 3756.00 4867.97 5979.94 7116.62
1186.10 2372.21 3558.31 4744.42 5905.81 7091.91
2471.05 3558.31 4695.00 5806.97 6918.94 8043.27
1927.42 3014.68 4200.79 5386.89 6572.99 7882.65
* p, tf and sp represent traditional pasture, traditional forestry and silvopasture, respectively. ‘Rot’ stands for a fixed rotation at either 60 or 80 years.
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Fig. 2. Relationship between optimal rotation age and carbon price for longleaf pine under silvopasture and traditional forestry in the southeastern US.
increase, forage production decreases. Since forage has a value in silvopasture, the optimal rotation age decreases relative to traditional forestry. As the carbon price increases, the optimal rotation increases for both traditional forestry and silvopasture. This result was also expected as lengthening the rotation increases the amount of carbon stored in the stand and also increases the proportion of sawtimber produced which decays slower after harvest. As the carbon price increases, however, the rotation age for both silvopasture and forestry converges because carbon payments play a bigger role. For traditional forestry and silvopasture the optimal initial tree density is 1730 trees per hectare, the maximum allowed by the model, for all carbon prices (including $0). If the price of carbon is $0 and the rotation age were to be fixed to 60 and 80 years, respectively, to create foraging and nesting habitat for RCW, the optimal initial tree density for silvopasture will be 1236 and 988 trees per hectare, respectively. Lengthening the rotation decreases the optimal tree density in silvopasture because, at higher ages, denser stands would result in higher mortality and lower growth rates. Thus, the marginal value of increasing the planting density may be small and will be outweighed by opportunity cost of forage reduction under higher planting density. For traditional forestry, which has no forage production, the optimal tree density is 1730 trees per hectare for both 60 and 80 years rotations. Increasing the rotation ages to create foraging and nesting RCW habitat was found to decrease the LEV
under both traditional forestry and silvopasture. The opportunity cost of extending the rotation for traditional forestry and silvopasture is shown in Fig. 3. The opportunity cost for extending the rotation declines with an increase in carbon price. This is expected because carbon payments generally increase the optimal rotation age as can be seen in Fig. 2. Fixing the rotation to 60 years has a significantly smaller opportunity cost for silvopasture than for traditional forestry. This result occurs because timber is a smaller component of LEV in silvopasture than for forestry. However, if the rotation age is extended to 80 years, the opportunity cost for silvopasture and traditional forestry are approximately the same. There are two aspects of delaying harvest that led to this result. First, delaying harvest reduces income generated from forage less relative to income generated from timber because the forage revenue stream will decrease gradually and annually. The revenue from timber, on the other hand, will be realized only when timber is harvested. Therefore, silvopasture is affected less by extending the rotation than traditional forestry. Second, the revenue from silvopasture is greater than traditional forestry. The opportunity cost of deviation of optimal revenue stream associated with silvopasture will be greater than traditional forestry. When the rotation age is fixed for 60 years the first phenomenon appears to dominate and the opportunity cost associated with extending the rotation age is less for silvopasture than traditional forestry. However, when the rotation age is extended to 80 years the latter phenomenon seems to dominate the
Fig. 3. Opportunity cost of fixing the rotation age at 60 and 80 years under traditional forestry and silvopasture with longleaf pine in the southeastern US.
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first and the opportunity cost are approximately the same.
4. Conclusions Results suggest that silvopasture may be an attractive land use option for landowners wishing to plant longleaf pine on pastureland and participate in a Habitat Conservation Plan or produce Tradable Endangered Species Permits. Furthermore, grazing reduces the understory, a preferred habitat for RCWs. This may be a particularly valuable benefit for landowners living in areas where prescribed burning may be difficult. Conversely, grazing may have the negative effect of reducing biodiversity in the ground cover. However, for many lands, especially marginal pastureland, planting trees, sequestering carbon and potentially providing RCW habitat may be a significant environmental improvement. Factors such as technological improvements in artificial regeneration of longleaf (Demers and Long, 2003), low prices for pulpwood relative to sawnwood, and greater value added opportunities associated with sawtimber might improve the competitiveness of longleaf relative to slash and loblolly pine. The increased interest in developing alternative land management options and harnessing market forces to help solve environmental problems may be particularly useful in the case of longleaf pine. Since the vast majority of potential longleaf pine sites are located on private property traditional command and control mechanisms may not be sufficient for its restoration. With a growing interest in longleaf pine and innovative policy programs being instituted, longleaf may once again be a major component of our southern forest ecosystems.
Acknowledgements We thank the Guest Editor and two anonymous reviewers for providing valuable comments on our manuscript. This research was made possible by the financial support from the USDA (Initiative for Future Agriculture and Food System) and the Florida Agricultural Experiment Station. Florida Agricultural Experiment Station Journal Series R-09978.
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