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Comparative Analysis of Institutions and Policies Influencing Private Forestry in Florida and New Brunswick: Implications for the Canada-U.S. Softwood Lumber Trade Dispute

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Comparative Analysis of Institutions and Policies Influencing Private Forestry in Florida and New Brunswick: Implications for the Canada-U.S. Softwood Lumber Trade Dispute
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Gruby, Rebecca
Alavalapati, Janaki ( Mentor )
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Gainesville, Fla.
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University of Florida
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Comparative Analysis of Institutions and Policies Influencing Private Forestry
in Florida and New Brunswick: Implications for the Canada-U.S.
Softwood Lumber Trade Dispute

Rebecca Gruby, Janaki Alavalapati, and Jagannadha Malta


ABSTRACT


Growing concern for the protection of public forests has prompted the expansion of private forests in the

United States and Canada. Both countries have been implementing a host of regulatory and incentive policies

to ensure sustainable forest management. These policies not only address negative and positive

externalities associated with timber and non-timber products production, but also influence the profitability of

forestry and, thus, the timber supply. A comparative advantage in the form of regulatory or incentive policies

for private forestry would add fuel to the on-going Canada-U.S. softwood lumber trade dispute. In the study

reported here, we conducted a systematic comparative analysis of institutions and policies influencing private

forestry in the U.S. and Canada using case studies from Florida and New Brunswick, two places with

significant private forestry. Our study concluded that, although the regions share a similar burden of regulation,

the marketing services and cost-share programs in New Brunswick are more extensive than those offered in

Florida. The qualitative results of our analysis help reduce the potential for the extension of the current trade

dispute to the private sector.



INTRODUCTION


The past two decades of softwood lumber trade between the United States (U.S.) and Canada have hosted

the longest and largest trade dispute in the countries' histories (Cashore, 1997). The dispute, which is

predominantly localized to the trade of timber harvested on public lands, was catalyzed by Canada's increased

share of the U.S. market due to a reduction in the supply of timber from U.S. public forests (Cashore, 1997).

Some scholars claim that this reduction was caused, in part, by increased environmental regulations in U.S.

forestry (Cashore, 1997). Legislation can similarly lead to a reduction in timber harvests on non-industrial

private forests (NIPF), which are increasingly important suppliers for global timber markets as harvesting on

public lands dwindles (Ellefson & Cheng, 1997; Rosen & Kaiser, 2003). This trend has been widely documented;

in 1996, NIPF owners accounted for 59% of timber harvests in the U.S. while harvests in national forests

constituted just 5%, a full 8% less than their share just 10 years earlier (Rosen & Kaiser, 2003). During the

same time, harvests from forest industry land declined by 6% (Rosen & Kaiser, 2003). The supply of timber

from NIPFs in recent years has become crucial (Haines, 2005).








In the context of the U.S. and Canada's longstanding softwood lumber dispute, the growing dependence on

the products of NIPFs, and the evidence of the potentially significant effects of regulation on wood supply,

a comparative study of the policies affecting private forestry in the two countries is valuable. This paper presents

a case study that outlines and compares the organizations, programs, and policies that affect private forestry

in Florida and New Brunswick, where private forestry is significant. The study's primary purpose is to reduce

the potential for the current trade dispute expanding to the rapidly growing private sector by providing an

improved understanding of the programs and policies in place in both regions. However, it is critical to recognize

that there is remarkable variation between states and regions when it comes to regulatory programs for

forestry (Ellefson & Cheng, 1997). Thus, one must use discretion when extrapolating the findings of this study

to more extensive contexts.



Section 1 focuses on the structure of the forestry communities in both regions. Section 2 details the

support provided to NIPF owners by governmental and non-governmental organizations, Section 3 describes

incentive and assistance programs (including specific tax provisions for NIPFs), and Section 4 discusses

regulatory policies. These four dimensions represent the significant sources of external influence on the

productivity of private forestry; together they provide an excellent base for a holistic comparative analysis.



NIPF DEMOGRAPHICS AND PHYSICAL RESOURCES



To demonstrate the utility of a case study of Florida and New Brunswick, some background information on

the demographics and physical resources of the regions is in order. The most significant information is perhaps

the following: while the proportion of NIPF ownership to total timberland in Florida is the lowest of any southern

state (as of 1995), the percentage of NIPF ownership in New Brunswick (30%) is comparatively high

(private ownership for Canada as a whole is only 6%) (Brown, 1999; CFS, 2005). This case study is thus

not representative of private forestry, in general, in the two countries - today. However, the forecasted growth

of private forestry promises to create an environment in which private forestry is comparably pervasive in the

states and provinces of the U.S. and Canada. Thus, in anticipation, this study compares a state and province

in which the percentage of NIPF ownership to total timberland is similar and in which the acreage of

commercially productive forestland is nearly identical. Some statistics on the characteristics of forestry in the

two countries are provided in Table 1 and Figure 1.



Table 1.

Statistics relating to forestry in Florida and New Brunswick.

Statistic Florida New Brunswick

Forest cover 16.2 mi. ac (47% of land base) 15.4 mi. ac (85% of land base)






Commercially productive 14.74 mi. ac 14.6 mi. ac

forestland

Share of NIPF ownership 53% 30%

(8.59 mi. ac) (4.62 mi. ac.)

Forest employment 132,000 18,000

Softwood share 50% 68%

Avg. annual softwood harvest 199 mi. ft3 74.2 mi. ft3

from NIPFs

Avg. NIPF land size 69% own < 9 ac 100 ac

Value of NIPF timber US$382.4 million (2003) Can$103 mi (2001)


Note. From Carter and Jokela, 2002; NBFPA, 2005; INFOR, 2005.

At the time of this writing, September 2005, 1.00 U.S. dollar= 1.13 Canadian dollars, at an exchange rate of 1.1785 (Bank

of Canada 2005).




New Brunswick Forest Ownership Florida Forest Ownership


1% 11%


I NIPF * NIPF
4%, Industry a Industry
E Provincial 53% o State and Local
13 Federal 0 Federal
27%

21%



Figure 1. Forest ownership by sector, represented as a percentage of the total forestland in

New Brunswick and Florida. Note. From Carter and Jokela, 2002; Hodges, Mulkey, Alavalapati, Carter

& Kiker, 2005; NBFPA, 2005; INFOR, 2005.



Although Florida's total land mass is double the size of New Brunswick's, the regions contain a nearly equal

number of acres of commercially productive forest land; Florida has 14.7 million acres and New Brunswick has

14.6 million acres. However, because of their difference in total landmass, only 42.3% of Florida's land is

productive forestland compared to 80% of New Brunswick's. An obvious conclusion is that the economy of

New Brunswick is vastly more dependent on forestry than is Florida's, where the tourism industry claims to hold

the largest stake (Hodges, Mulkey, Alavalapati, Carter & Kiker, 2005). For example, in New Brunswick,

fourteen communities are entirely dependent on the forest industry for economic survival and approximately

40 others rely greatly on forest-related business; NIPF lands provide 25% of the province's wood

requirements (INFOR, 2005). Although New Brunswick's economy is more closely linked to the forestry industry, it






is important to note that a larger percentage of Florida's forests are privately owned; NIPF owners in Florida own

8.59 million acres of forests, while NIPF owners in New Brunswick own 4.5 million acres.



Organizational Support


The forestry communities of Florida and New Brunswick are equipped with an organizational infrastructure

of governmental and non-governmental institutions. The creation of policy is an essential first step; the job

of ensuring the landowner's awareness of its existence and understanding of its complexities is equally crucial.

We assume that the efficiency and effectiveness with which organizations carry out this task correlates directly

with the level of participation in offered programs and compliance with regulations. However, the nature of the

two communities' organizations differs greatly; these differences may lead to potentially significant impacts on

the institutional capacity to transfer services and information to NIPFs and, subsequently, on the productivity

and profitability of the forestry communities. Thus, it is important to this study to examine the organizations

and their subsequent roles in the operations of NIPFs. Table 2 delineates the most pervasive institutions in

Florida and New Brunswick and briefly defines their roles in providing services to NIPFs in terms of

education, practical management, and marketing assistance.



Table 2.

Summary of the most influential institutions and the services they provide to NIPF owners in

Florida and New Brunswick.


New Brunswick Organizations

Canadian Forest Service

(CFS)










Department of Environment

And Local Government






Forest Products Marketing Boards


Primary Role in Non-Industrial Private Forests

*Federal organization.

*Focuses on broad issues of national and international concern and provides

little direct guidance to NIPF owners.

*As early as 1981, the CFS recognized the lack of attention given to private

woodlots and proposed a more proactive role for the organization in enhancing

the private woodlots' contribution (Reed, 1981).


-Provincial organization.

-Responsible for wetland legislation.

-Source for applications for Watercourse Alteration Permits.

*Authority for enforcing compliance with permit stipulations.


-Seven non-profit, non-governmental organizations

-Seek to guarantee that woodlot owners of varying sizes secure a fair share in

available markets by negotiating prices, contracts and market access for NIPF

owners (INFOR, 2005).






New Brunswick Federation

Of Woodlot Owners




INFOR


-Umbrella organization of the marketing boards.

-Represents the concerns of woodlot owners to government and facilitates

communication between seven marketing boards (INFOR, 2005)


*Private organization- receives funding, in part, from the provincial government

*Provides information, consulting and technical services to NIPF owners.

-Publishes Best Management Practices Manual


Florida Organizations


U.S. Forest Service










Florida Division of Forestry

(FDOF)



















Water Management Districts (WMD)






Florida Forestry Association










University of Florida Cooperative

Extension Service


-Federal organization.

-Main function is forestry research.

-The Forest Service's State and Private Forestry Organization is the self

proclaimed "federal leader" in providing technical and financial assistance to

landowners (U.S. Forest Service, 2005).


-State organization.

-Administers federal cost-share and grant programs, technical services, and

landowner training and educational events.

-FDOF's County Foresters provide assistance to owners of 10 or more acres

of forested land; this includes a forest management plan, information on the

timber market, a timber buyer list, a master logger list, a forest consultant list,

a prescribed fire management plan.

-Monitors compliance of Florida's Best Management Practices; since 1981, the

division has conducted biennial Compliance Surveys (Florida Division of

Forestry [FDOF], 2005).


-Five state organizations

-Serve as the primary regulatory agencies for forestry in Florida.

-Authority for all water-related regulations within their district's jurisdiction.


Non-governmental organization

Provides educational programs for paid members

Authors the "Environmental Law Manual"- a comprehensive catalogue of the

legislation regulating forestry activities

� Lobbies for the interests of NIPF owners


-Outreach arm of the University of Florida

-An extension agent is assigned to each county who conducts educational

programs, answers landowners' questions and distributes forestry publications.

-Provides timber pricing report, Timber Mart South.


Analysis





The NIPFs of both Florida and New Brunswick possess a comprehensive body of public and private

institutions. Forestry activities in both regions are supervised by a federal Forest Service with broad national goals,

a state or provincial body with a largely administrative role, and numerous local institutions equipped with

valuable resources for education and assistance. Though the regions' chief differences in terms of

organizational structure are evidenced in their non-governmental organizations, it is important to note that the

levels of involvement of public agencies in the activities of NIPFs vary significantly. While the USDA Forest

Service has formed a State and Private forestry organization, the Canadian Forest Service has no equivalent.

This trend is similarly apparent in the state and provincial agencies; the Florida Division of Forestry's

mission statement directly instructs the agency to "encourage the active management of Florida's private

non-industrial forest lands" while the New Brunswick Department of Natural Resources' (NBDNR) role in

private forestry is relatively limited (FDOF, 2004). In terms of forestry, this provincial body's primary duty is

to regulate the management of New Brunswick's Crown (public) forests (NBDNR 2005). The duties of the

FDOF, however, are comparable to those of the marketing boards and the New Brunswick Federation of

Woodlot owners, which have no Floridian equivalent.



Marketing Services. Sanctioned by a regulation under the Natural Products Act, New Brunswick's seven

forest product marketing boards are involved most directly and intensively in private forestry operations there.

The Act (1999) orders "[. . .] that a board be established for the purpose of the promotion, control and

regulation [. . .] of the marketing of the farm product," which includes a "product of the forest." The central goal

of the marketing boards is to guarantee that woodlot owners of varying sizes secure a fair share in the

available markets by negotiating prices, contracts, and market access for NIPF owners who market primary

forest products (INFOR, 2004). By setting standards and providing funding, the federal and provincial

governments give agency to the marketing boards to enforce environmental laws and regulate the production

of forest products; the boards present significant interventions to the activities of NIPF owners

(MacNaughton, 1996). The secretary manager of the New Brunswick Federation of Woodlot Owners estimated

that "70% of people who market wood in New Brunswick utilize the services of marketing boards" (K.

Hardie, personal communication, 2005). Since the boards are non-profit, non-governmental organizations,

they cover administration costs by collecting a percentage of levies from the sale of primary forest products

(INFOR, 2005). For example, the Southern New Brunswick Forest Products Marketing Board (SNB) charges

NIPF owners a check-off fee of $.50/cord for softwood/hardwood pulp and studs (SNB, 2005).

Additionally, marketing boards administer the Provincial Silviculture Program and finance several other programs,

as discussed later, which are designed to encourage better management of woodlots.



The marketing services represent the most significant source of disparity between the institutional services

available to NIPF owners in Florida and New Brunswick. Although the county foresters from the FDOF, upon

request, will provide NIPF owners with information regarding the current timber market, a timber buyer list,

and sample contracts, contact between professionals and NIPF owners in the U.S. is extremely limited (Rosen

& Kaiser, 2003). Studies have consistently shown that most NIPF owners do not solicit professional forestry

help when marketing their timber, but instead allow loggers to conduct the entire sale without requiring





any competitive bidding (Rosen & Kaiser, 2003). Dave Conser, Alachua County forester, estimates that 30%

of Florida's NIPF owners hire consulting foresters to market their timber, 30% look to the Division of Forestry

for assistance and the remaining 40% "stumble through the process without any guidance

whatsoever" (personal communication, January 25, 2006). Again, in New Brunswick, an estimated 70% of

NIPF owners allow marketing boards to market their timber. Most notably, Rosen and Kaiser (2003) conclude

that the key reason most NIPF owners in the U.S. do not participate in timber markets is their "lack of

knowledge about how timber markets work." They suggest that there is a vital need in the current market

reporting system to transfer information from forestry professionals to the millions of forest landowners (Rosen

& Kaiser, 2003). Marketing boards fill this void in New Brunswick.



While it is apparent that marketing boards are a source of "valuable services," it is important to consider

the "frustrating constraints" they may provide for NIPF owners and wood producers (MacNaughton,

1996). MacNaughton (1996) contends that the boards' system of issuing delivery tickets to individuals who desire

to sell their wood to a wood processor allows them to determine how much wood will be harvested from the NIPFs

in their region. For example, if a woodlot owner is unable to sell his/her wood without a sales contract negotiated

by a marketing board (this is usually the case despite the prescribed "voluntary" nature of marketing boards),

then the individual is forced to agree to a marketing board's conditions (relating to the volume and species of

timber to be sold) in order receive a delivery ticket (MacNaughton, 1996).



Despite the potentially significant influence that marketing boards exercise over private woodlots through their role

of controlling market access, the benefits of their services significantly outweigh the costs of their absence in

Florida. Conser stressed that the NIPF owners who market their timber without assistance suffer "huge

economic losses" as they "rarely get the full value for their timber" (personal communication January 25,

2006). Thus, it is reasonable to conclude that New Brunswick's forest product marketing boards, which

negotiate prices, contracts, and market access for their constituents for a relatively small price, place

New Brunswick's NIPF owners at a comparative economic advantage to Florida's NIPF owners.



Education. The educational services available to NIPF owners in both regions are appreciable, though it appears

that Florida leads in this area. Florida cooperative extension (FCE)-a "partnership" between the University

of Florida's Institute of Food and Agricultural Sciences, the U.S. Department of Agriculture and Florida's

county governments-is a significant source of "scientific knowledge and expertise" for Florida's NIPF owners

(IFAS, 2006). The FCE administers an online library of publications centering on technical matters of

forest management, sustainable agriculture, competitiveness in world markets, and natural resource

conservation (IFAS, 2006). The FCE has created a website for each county in Florida that directs landowners

to education materials and programs.



Tom Beckely, professor at the University of New Brunswick explains that "untilthe late 1990s, when a

conservative government eliminated it as a cost-cutting measure, New Brunswick had an extension branch as part

of its Department of Natural Resources and Energy (DNRE)" (personal communication, January 20, 2006).





As opposed to the U.S., this was a solely government endeavor with minimal ties to the University (T.

Beckely, personal communication, January 20, 2006). INFOR, a "quasi-private, quasi-public extension service run

on a thin budget, mostly on a fee-for-service basis," now manages the significant extension library

previously amassed by the DNRE's extension service (T. Beckley, personal communication, January 20, 2006).

The organization strives to provide NIPF owners with the information they need, "but is limited in its ability to have

a 'field presence'" (T. Beckley, personal communication, January 20, 2006).



ASSISTANCE PROGRAMS AND TAX INCENTIVES


In order to overcome two main barriers for optimal investments in NIPFs, lack of up-front capital and low

expected rates of return, the governments of the U.S. and Canada have instituted cost-share assistance programs

to help stimulate NIPF investment by reducing landowners' initial costs for reforestation and improving rates of

return (Haines, 1995). Several studies have concluded that cost-share assistance programs have proven to

be effective mechanisms for increasing the productivity of NIPFs (Haines, 1995; Kilgore & Blinn, 2002). In

fact, "technical assistance, educational, and cost-share programs account for 88% of all state and

provincial programs directed at encouraging forest landowners to use the practices suggested in

their guidebooks" (Kilgore & Blinn, 2002). Preferential tax treatment of NIPFs is also an important tool for

influencing management decisions (Hibbard, Kilgore, & Ellefson, 2003). It is critical for this study to examine

the extent of each country's efforts to ease the economic burdens of timber production.



This section focuses on cost-share programs and specific taxation provisions that are directed at enhancing

the productivity, and subsequent profitability of private forestry operations.1 Considering the voluntary nature of
the assistance programs, it is important to note that economic rationality often accompanies mimetic effects,

peer pressures, and sense-making in the decision of landowners to adopt regulatory incentives (Heeks &

Duncombe, 2003). In other words, though cost-share programs may be a practical business decision for many

NIPF owners, the economic viability of a program does not ensure a high participation rate.



Florida: Forest Land Enhancement Program


The Forest Land Enhancement Program (FLEP), implemented by the Florida Division of Forestry, is the only

cost-share assistance program directed at increasing the productivity of NIPFs in Florida. The goal of FLEP is

to "enhance the health and productivity of the non-industrial private forest lands in the United States for

timber, habitat for flora and fauna, soil, water, and air quality, wetlands, and riparian buffers." (FDOF, 2005).

These multiple objectives are evidenced by the types of activities funded by the program, which are listed in Table

3. The federally funded FLEP allocates money to the states, which are given the authority to tailor the program

to address the state's specific needs. In Florida, private landowners with possession of 10 to 10,000 acres of

forested land and a forest management plan are eligible to apply for the program, which covers either 50% or

75% of the cost of specified activities (FDOF, 2005). NIPF owners must agree to partake of these activities for

10 years, may treat up to 1,000 acres of their forestland per year, and may receive no more than $100,000 of






the program's total $100 million in funds for the life of the Farm Bill (USDAFS, 2005; FDOF, 2005).



Table 3.

FLEP and PWSAP cost share rates for corresponding management practices

PWSAP Cost- Share New Brunswick PWSAP FLEP Cost-
Florida FLEP Practice Title
Rate Practice Title Share Rate

80% Pre-commercial thinning Reforestation/Afforestation 75%


80% Mechanical plantation cleaning Forest stand improvement 75%


80% Fill planting Water quality improvement 75%


80% Full planting Fish and wildlife habitat 75%


80% Site Preparation Forest health and protection 50%


80% Plantation and/or natural stand Fires and catastrophic risk reduction 75%

chemical release


80% Woodlot management Fires and catastrophic event 75%

recommendations rehabilitation


Note: From FDOF, 2005 and NBDNR, 2005


New Brunswick: Private Woodlot Silviculture Assistance Program (PWSAP)


Canada's counterpart to America's FLEP is the Private Woodlot Silviculture Assistance Program, which is

administered by Natural Resources Canada and delivered to landowners through the seven forest products

marketing boards. Funding for the program, which comes from both the provincial and federal governments,

has grown dramatically; in 1993, $3 million was spent on the treatment of 5,248 hectares - in 2004, $7.2

million was spent on the treatment of 11,902 hectares of NIPF (NBDNR, 2005). For 2005, the program covered

80% of the estimated total cost of approved activities, which are listed in Table 3; the additional 20% was paid

either by the marketing boards through a check-off fee system, or by the landowners directly (NBDNR, 2005).

In fact, most boards provide additional funding to complement the government program to further reduce

the landowner's out-of-pocket cost (SNB, 2005).



With funding from industry and check-off fees from commercially sold timber, six of the seven marketing boards

also administer a unique set of programs and incentives for the woodlot owners within their jurisdiction. Figure

2 illustrates the opportunities offered to landowners by one marketing board, the Carleton-Victoria Forest

Products Marketing Board.



. Member statistics: Every year, the Carleton-Victoria marketing board markets wood or carries out

forest management activities for over 500 private woodlot owners. Administration costs are covered by a 1.7%

levy that is deducted from all sales of primary forest products from within the CVMB regulated area.






. Harvest bonus: St. Anne-Nackawic Pulp Company Ltd. provides funding each year to the Carleton-Victoria

Forest Management Fund. Part of this fund is used to pay a bonus of $3.50 per ton to wood producers who use

a selection harvest to treat tolerant hardwood stands. This program intends to ensure that quality in these types

of stands is improved and that good quality hardwood stands are treated in a sustainable fashion.

. Management plan: The Forest Management Fund covers 88% of the cost of having a management plan written.

The cost to the woodlot owner is only $1 per acre of land that is or is planned to be put into forest production (i.

e., reforestation of fields).

. Managed woodlot bonus: Woodlot owners are paid $10 per acre on up to 20% of the woodlot area per year

for following the recommendations and timing that is prescribed in their management plans.




Figure 2. Programs offered to NIPF owners by the Carleton-Victoria Forest Products Marketing Board

in New Brunswick. Note: From Carleton-Victoria Marketing Board (CVMB), 2005



Analysis


The impetus for the creation of the PWSAP explains the narrow focus of its approved activities compared with

those of the FLEP, which includes provisions for improving the environmental quality of NIPFs (habitat for flora

and fauna, soil, water, air quality, etc.). In New Brunswick, past harvesting practices, spruce budworm-

related mortality, and industrial expansion led to an unbalanced age-class distribution (particularly for

softwood species) that placed the long-term supply of wood for industry in jeopardy (Macfarlane & Zundel, 1995).

At the time of their research, MacFarlane and Zundel (1995) reported that wood supply forecasts predicted a

shortfall of sawlog quality softwood timber suitable for harvest within 15 to 20 years. The PWSAP was

implemented with the primary goal of increasing the rate of growth of the softwood forest through

silviculture activities in order to ensure the sustainability of the forest sector (Macfarlane & Zundel, 1995). Thus,

all of the activities approved under the PWSAP are directed toward this goal.



The central question remains: which program has the larger impact on the productivity of NIPFs? The answer

is overwhelmingly New Brunswick's PWSAP. The variant goals of the programs are only part of the answer;

an examination of the programs' funding provides the substantial evidence. Of the total $100 million that the U.

S. federal government originally allocated to fund FLEP, $20 million was disbursed to state agencies in 2003,

$40 million was transferred to wild land fire suppression in 2004 and was not repaid, and $20 million was cancelled

in 2005 (USDAFS, 2005). Only $5 million was released into the field in 2004 and $10 million in 2005; $5 million

is available for the program in 2006 (USDAFS, 2005). Unlike New Brunswick's PWSAP, which in 2005

alone, distributed $7.2 million in cost-share assistance exclusively to NIPF owners in the province, FLEP is

a nationwide program, so these funds are divided between all of the states which request them. In 2003,

Florida spent only $573,678 of FLEP funds: 15% on technical assistance, 5% on education, 70% on

financial assistance, and 10% on administration costs (Committee on Agriculture, 2004). In 2004, Florida had





no funding for FLEP and $498,000 was spent in 2005 (K. Boutwell, FLEP Coordinator for FDOF,

personal communication, January 30, 2006).



FLEP's funding problems were vocalized in the FLEP hearing before the Committee on Agriculture in the House

of Representatives in July 2004; Charles W. Stenholm, a representative from Texas lamented that "states are

facing requests for assistance that far exceeded the funding that was available." This concern is consistent

with evidence from Florida: in 2003, 150 of 206 applications for FLEP funding were denied; in 2004 (a small

amount of money was left over from 2003), 231 of 347 applications were denied; and in 2005, 187 of

429 applications were denied (K. Boutwell, FLEP Coordinator for FDOF, personal communication, January 30,

2006). Of the FLEP, Alachua county forester Dave Conser said:




"The federal government took back FLEP's funding and we don't know that there will be any more. The lack

of funding for cost-share assistance is really hurting Florida's NIPF owners. The amount of peninsular lands

planted correlates directly with the cost-share monies available; with assistance, a lot more people would be doing

a lot more planting of pine trees. I used to plant between 1,500 and 2,500 acres each year; now I am down

to between 300 and 500 acres per year." (personal communication, January 25, 2006)



Confirming this same correlation in New Brunswick, MacFarlane and Zundel's (1995) economic analysis of the

impacts of the program concluded that almost two thirds of the owners surveyed said they would not have

conducted silviculture activities without the program's funds. Thus, the impact of PWSAP is appreciable.



It is also important to mention that the harvest, reforestation, and managed woodlot bonuses offered by some

of New Brunswick's marketing boards provide a boost to the profitability of sustainable forest management in

the region. There are no equivalent incentives in Florida.



Florida: Tax provisions. In 2000, each state in the U.S. administered 66 programs which prescribed preferential

tax treatment of forestland (Hibbard, Kilgore, & Ellefson, 2003.) For less productive sites, especially,

forest management practices quickly become economically unviable if the tax rate is increased (Greene, Straka,

& Dee, 2003). In the U.S., the federal income tax has a particularly profound influence on the profitability of

timber management (Greene, Straka, & Dee, 2003). Seven provisions of the federal income tax provide

incentives for NIPF owners to follow sound management and reforestation practices: 1) treatment of

qualifying income as a long-term capital gain, which is taxed at lower rates than ordinary income. 2)

annual deduction of management expenses, 3) depreciation and the Section 179 deduction, which is a large,

one-time deduction for part or all of the cost of qualified depreciable property, 4) deductions for casualty losses

or other involuntary conversions, 5) reforestation tax credit, a 10% investment tax credit on up to $10,000 of

a landowner's investment in planting trees, 6) amortization of reforestation expenses, and 7) the ability to

exclude qualifying reforestation cost-share payments from gross income (FLEP does not qualify) (Greene, Straka,

& Dee, 2003).








In addition to the federal income tax provisions, property taxation is a particularly visible and important tool

for affecting the management of NIPFs (Hibbard, Kilgore, & Ellefson, 2003). Sanctioned by a Florida statute,

Florida's Greenbelt Law established agriculture (the Greenbelt Law's definition of agriculture includes forestry) as

a separate class of property to be taxed on the agricultural value of the land rather than its value for

development (Broward County Property Appraiser [BCPA], 2005). For example, in 2006 in Alachua County,

the assessed value (value of land for tax purposes) of planted pine forests is $90 to $340 an acre, depending on

the land's soil classification (land with poor quality soil is taxed the least), even if the land's market value is

$30,000 an acre (J. Sweirs, Alachua County Property Appraiser, personal communication, January 19, 2006).

The property appraiser essentially "devalues" the forested land for taxation purposes, as the tax rate remains

the same. The exact taxation amount is determined by the property appraiser in each county, but "varies little

from county to county" (J. Sweirs, Alachua County Property Appraiser, personal communication, January 19,

2006). Forested land must meet three requirements before it may be considered for the significantly lower

property tax rate: agricultural use must be the primary activity on the land, the agricultural use must be

commercial, and it must be bona fide (BCPA, 2005). Securing the agricultural classification makes

commercial forestry an attractive option for landowners, as "natural" forestland is taxed at the slightly higher rate

of $110 to $360 an acre.



New Brunswick: Tax provisions. Comparable literature on the federal and provincial taxation of private

woodlots in New Brunswick is unavailable.2



REGULATORY POLICIES


Growing public concern over the integrity of forest and related ecosystem values has been manifested in the U.S.

and Canada in a host of regulatory policies designed to mitigate the negative externalities associated with

timber production (Ellefson & Cheng, 1997). However, the regulation of management practices undeniably

generates significant burdens for private forestland owners (Ellefson & Cheng, 1997). Ensuring compliance

robs landowners of time, energy, and money which they must invest in understanding the laws,

implementing potentially unfamiliar and costly practices, and rounding up required permits.



As the market share of publicly harvested timber shrinks, with NIPFs increasingly taking up the slack, the

potential for NIPF owners in the United States and Canada to compete in a shared market grows

greater. Comparative advantage enjoyed by the NIPF owners who must submit to the least stringent regulations -

or even an impression of inequity - could become a potential source of trade conflict. This section examines

the regulations in the most significant areas of concern for forest management: wetlands/watercourse

protection, endangered species protection, prescribed burning, and pesticide use. Because timber

harvesting practices that affect water quality are the most common component of state and provincial regulations,

we discuss these in the most detail (Kilgore & Blinn, 2002). Legislation relating to endangered species

protection, prescribed burning, and pesticide use is delineated in Table 4.








Water Regulations: Florida


"Of all federal and state regulations, water laws are Floridian foresters' number one concern." (P. Gornicki,

Florida Forestry Association, personal communication, 2005) The regulations governing the harvesting of timber

near a watercourse or wetland in Florida are numerous, complex, and are enforced by both the federal and

state government. While Florida does not have a goal of no net loss of wetland or water surface acreage, the

state does have the goal of sustaining no net loss in wetland or other surface water functions; importantly, this

goal excludes losses resulting from exempted and permitted forestry silviculture activities (Florida Department

of Environmental Protection [FDEP], 2005).



At the federal level, Section 404 of the Clean Water Act regulates the discharge of dredged or fill material in

the waters of the United States - a form of nonpoint source pollution often produced by forestry operations

(FFA, 2004). Section 404 (F) is of particular importance to forestry because it exempts most forestry operations

from obtaining a permit from the Army Corps of Engineers. It is "extremely rare" for a legitimate forestry

operation to have to obtain a permit from the federal government (P. Gornicki, personal communication, 2005).



The regulation of water-related activities is largely the responsibility of state governmental agencies in

Florida. Forestry activities which impede, impound, or divert the flow of water in wetlands or any other

surface waters (i.e., fill road construction, stream crossings, ditches, etc.) are regulated by the

Environmental Resource Permitting Program (ERP), which is administered jointly by the Department of

Environmental Protection and the state's five Water Management Districts (WMD). According to the director

of responsible forestry at the FFA, "99% of what we do in forestry comes under the WMD permitting

system." (P. Gornicki, personal communication, 2005) To obtain a permit to conduct an activity which alters the

flow of water, the WMD requires that specific performance criteria be met, forestry BMPs be applied, and a notice

of intent be provided by the landowner to the appropriate district. Applicants must provide reasonable

assurance that their activities will not adversely affect the wetland or water system before they are issued a

permit (Suwannee River WMD, 2005). One example of a performance criterion from Chapter 40B-4000, F.A.C. of

the Suwannee River WMD ERP rules is that "erosion control measures must be undertaken to limit the transfer

of suspended solids into the receiving waterbody during and after construction" (Suwannee River WMD, 2005).



Before progressing to New Brunswick's water-related regulations, Florida's Best Management Practices warrant

some additional consideration, as they are the primary mechanism used to achieve the minimum standards

for preserving water quality in Florida.3 In 2004, the FDOF established a new voluntary rule, Rule 51-6, to provide
an additional incentive for landowners to follow forestry BMPs (FDOF 2005). The incentive is a "presumption

of compliance" with state water quality standards; this means that if an NIPF owner follows BMPs during

forestry operations, he or she would not be held responsible for a water quality standard violation, should one

occur (FDOF 2005). To comply with this rule, the landowner must submit a "notice of intent" to the FDOF, which

is simply a commitment to follow BMPs during all forestry operations; they must also keep records necessary to






verify BMP compliance (FDOF 2005). Though most counties in Florida deem silviculture BMPs "voluntary" (they

are regulatory in some counties, such as Alachua County), a multitude of legislation-based incentives

effectively motivate most NIPF owners to administer them. Anyone who wishes to conduct silviculture

operations that are not in compliance with the BMP manual must seek and obtain a permit from the

appropriate governmental agency. The ensuing combination of bureaucratic red tape and expenses

(potentially exceeding the cost of implementing BMPs) makes the permitting process a poor choice of action

for landowners, and as Phil Gornicki states, "almost everyone opts to fit the exemption criteria" (which

means adhering to BMPs) (Personal communication, 2005). The Florida DOF has monitored BMP implementation

by conducting a biennial Compliance Survey since 1981; through 2001, the long-term average for BMP compliance

in Florida is 93% (FDOF, 2004).



Water Regulations: New Brunswick


Water-related policies are similarly the forefront of concern for NIPF owners in New Brunswick. The provincial

and federal policies are designed to ensure no loss of Provincially Significant Wetland Habitat and all other

wetlands larger than 1 hectare. There are two specific regulatory mechanisms for managing activities in or

near wetlands and all other water bodies: the Environmental Impact Assessment Regulation (EIAR) under the

Clean Environment Act and the Watercourse and Wetland Alteration Regulation (WWAR) under the Clean Water Act.




? any changes made to existing structures in the watercourse or wetland, whether the water

flow in the watercourse or wetland is altered or not

? operation of machinery on the bed of a watercourse other than at a recognized fording place

? operation of machinery in or on a wetland

? deposit or removal of sand, gravel, rock, topsoil or other material into or from a watercourse

or wetland or within thirty meters of a wetland or the bank of a watercourse

? disturbance of the ground within thirty meters of the bank of a watercourse

? removal of vegetation from the bed or bank of a watercourse, from a wetland, or from within

thirty meters of a wetland

? removal of trees within thirty meters of the bank of a watercourse



Figure 3. Wetland and watercourse alterations requiring Watercourse Alteration Permits under

Canada's Clean Water Act. Note. From New Brunswick Department of Environment and Local

Government (DELG), 2003



The EIRA requires that an environmental impact assessment be conducted for any activity (including

forestry silviculture activities) that affects a wetland greater than 2 hectares (5 acres) (INFOR, 2005). The

WWAR provides more explicit terms of operation for activities near water bodies and makes it illegal to make

or perform any watercourse or wetland alteration (alteration is formally defined as "a temporary or





permanent change made at, near, or to a watercourse or wetland, or to water flow in a watercourse or

wetland") unless authorized to do so by a permit issued by the Minister of the Environment and Local

Government (DELG, 2003). The activities that require a permit are delineated in Figure 2. It was estimated

that permits are awarded to 95% of people who request them (DELG, personal communication, 2005).



When applying for the permits, landowners may be required to provide engineering scale drawings,

dimensioned sketches of the proposed alteration, and a map of the area of the proposed activity (DELG, 2005).

The WWRA allows the minister of the environment and local government to impose any terms and agreements

he/she deems appropriate unto any activity that has the potential to alter a watercourse or fish habitat

(DELG, 2005). These "conditions of approval" appear as riders on the watercourse alteration permits. If convicted

of an offence under the Wetland Alteration Regulation, an individual may be fined up to $50,000 (DELG, 2005).



Table 4.

Legislation in Florida and New Brunswick relating to endangered species protection,

prescribed burning, and pesticide use.

Legislation Florida New Brunswick

Endangered Species Protection -Federal: Endangered Species Act -Federal: Species at Risk Act

(ESA) (SARA)


-State: Florida Endangered and -Provincial: Endangered Species Act

Threatened Species Act and

Threatened Species Protection Act

Prescribed Burning -State: Prescribed Burning Act -Federal: Forest Fires Act

Pesticide Use � Federal: Fungicide and Rodenticide -Federal: Pest Control Act (PCA)

Act & Food Drug and Cosmetic Act
*Provincial: New Brunswick

-State: Florida Pesticide Law Regulation under the PCA


Analysis


The regulations in the aforementioned areas each occupy a space on a "continuum of intensity" based on the

extent to which they restrict the activities of NIPF owners. This study found that in the four areas-

wetlands/watercourse protection, endangered species, prescribed burning, and pesticide use-landowners in

Florida and New Brunswick must submit to a comparably intensive set of regulations. There are, as will be

discussed, perceivable differences in the requirements of the legislation pertaining to watercourse

protection, prescribed burning, and pesticide use. However, our qualitative analysis permits us to conclude that

they are probably not significant enough, economically, to warrant serious attention. When considering the extent

of regulatory regimes, it is important to bear in mind that regulatory frameworks are employed by only 39% of

the states and provinces to implement sustainable timber harvesting practices (Kilgore & Blinn, 2002).






As previously mentioned, water quality regulations are the most common and intensive of all regulations for NIPFs

in Florida and New Brunswick. Florida's detailed BMPs and Environmental Resource Permitting Program appear to

be more restrictive and costly than New Brunswick's rather broad permitting system, which awards permits to 95%

of people who request them. However, it was found that in the southeastern United States, the most

productive timber stands are in plain areas where BMP costs are lowest, meaning that BMP implementation has

the potential to reduce timber harvest volumes only slightly (Lickwar, Hickman, & Cubbage, 1992). It is

also important to consider that New Brunswick's wetland and watercourse alteration permits are loaded with

riders which tailor specific requirements for the permitted activity. There is no way to circumvent the

permitting system in New Brunswick, as following BMPs in Florida allows. In the context of water-related

regulations, a qualitative comparison is somewhat inconclusive-an economic analysis of the costs incurred

while ensuring compliance with these laws would allow us to discuss this with a higher degree of certainty.



Endangered species legislation in both regions is nearly identical in content, intent, and scope of impact.

Both Florida's Endangered Species Act (ESA) and New Brunswick's Species at Risk Act (SARA) were created to

control the rate of human-caused extinctions of flora and fauna. The ESA prohibits private landowners from

"taking" an endangered species, making it illegal to "harass, harm, pursue, hunt, shoot, kill, trap, capture, or

collect" a listed species; harm is defined broadly to include significant habitat modification (FFA, 2004). Likewise,

the provincial Endangered Species Act protects the 16 listed species, their residences, and their critical habitat

by making it illegal to "disturb, harass, or harm" a listed species (NBDNR, 2005). The secretary manager of the

New Brunswick Federation of Woodlot Owners admits that "there isn't any listed species of flora or fauna

that significantly affects private forestry activities in New Brunswick" (K. Hardie, personal communication,

2005). Though the 100 threatened and endangered species listed under the ESA likely occupy Florida's NIPFs "to

a great extent," the ESA similarly affects the management of NIPFs in Florida "very little, because good

forest management does not harm or threaten endangered species or their habitat" (FFA, 2004; D. Conser,

personal communication, January 27, 2006).4 Of all the listed species, the Red-Cockaded Woodpecker and the
Bald Eagle have the largest impact on forest management in Florida (S. Talley, personal communication, January

30, 2006).



In order to conduct a prescribed fire, landowners in both Florida and New Brunswick are required to

obtain appropriate permits. Florida Statute 590.125 requires all prescribed fires to be authorized or permitted by

the FDOF (Long, 1999). The FDOF authorizes an average of 113,000 permits per year to burn approximately

2 million acres of land in Florida (FDOF, 2005). To conduct a prescribed fire in New Brunswick, a pre-inspection

must be conducted and a burn plan and permit must be submitted to the New Brunswick Department of

Natural Resources (NBDNR, 2005). In Florida, NIPFs owners who are not "certified burners" do not have to provide

a burn plan to the country Division of Forestry office to obtain a permit "nor do they really have to have one if

they are not a certified burner" (A. Long, personal communication, 2005). However, the issuance of a permit in

New Brunswick is contingent upon the written burn plan that landowners are required to submit to the NBDNR.

The requirements of the Forest Fires Act reveal that that burn plans are detailed, time consuming, and often

require technical assistance.








The application of insecticides, herbicides, and fungicides (collectively referred to as pesticides) to reduce

the mortality of desired trees, improve overall production, and favor a particular tree species in commercial

forestry operations has been documented to increase yields of forest products (FFA, 2004). The majority of

the pesticide regulations in the two regions are identical; all pesticides must be registered at the federal level,

and they must be used in a manner consistent with its label, which, for example, may indicate maximum rates

of applications. However, there is one major difference. Though some pesticides in Florida require the applicator

to be certified by the Florida Department of Agriculture and Consumer Services, the New Brunswick

Regulation (1996) under the federal Pest Control Act states that "no person shall sell or supply a non-

domestic pesticide to a person who is not the holder of a permit authorizing the person to apply that pesticide,

a vendor's license, a pesticide operator's license or a pesticide applicator's certificate."



CONCLUSION


In the context of timber harvested on public lands, "U.S. lumber companies look north with envy at what

they perceive to be less regulated Canadian competitors" (Cashore, 1997). It appears that this perception is not

yet pervasive in the private sector; based on the findings of this research, it would be largely unjustified.

We contend, with others, that New Brunswick's NIPF owners encounter government legislation "in an almost

infinite number of ways throughout their daily lives" and that this legislation affects decisions relating to

"almost every aspect and component of their woodlots" (MacNaughton, 1996). This paper illustrates that the

same can be said for landowners in Florida.



Though the regions share a similar burden of regulation, it is apparent that the marketing services and cost-

share assistance programs are profoundly more extensive in New Brunswick than in Florida. We speculate that

the extent to which these enhance the profitability and ease of production in New Brunswick is substantial and

thus warrant additional consideration in future research to ensure continued amicable trade of timber from

privately held lands in the U.S. and Canada.



These conclusions meet the rather broad goal of this research: to examine the policies affecting private forestry

in Florida and New Brunswick and draw comparisons on the extent of its influence on NIPF operations. However,

an obvious quantitative question lingers: how much or little do organizational set-up, incentive programs,

and regulations inhibit or enhance the profitability of private forestry in these regions? Such an economical

analysis lies beyond the scope of this research; however, it is recommended for future study.






ACKNOWLEDGEMENTS


This research was supported by a grant from the University of Florida's University Scholars Program. The





authors gratefully acknowledge the assistance of Ken Hardie, New Brunswick Federation of Woodlot owners,

Phil Gornicki, Florida Forestry Association, Dave Conser, Florida Division of Forestry, Chris Demers, University

of Florida Extension Forester, and Wayne Losano, College of Liberal Arts and Sciences.






FOOTNOTES


1. This section does not address the host of programs which primarily seek to promote wildlife, land, and

water conservation. A survey of programs with this goal reveals that they are more prevalent in Florida. The

state-sponsored Landowners Incentives Program, and the 2002 Farm Bill conservation programs such as the

Wildlife Habitat Incentive Program, the Environmental Quality Incentives Program, and the Conservation

Security Program are just a few of the voluntary programs that are designed to improve wildlife conservation

and environmental quality in Florida by providing economic incentives and compensation for conservation

practices on NIPFs. Also, the loss of forest land in the non-industrial private sector of Florida has been offset

by public land purchases by conservation programs (Hodges, Mulkey, Alavalapati, Carter, & Kiker, 2005).

2. Additional work on this issue is critical to improve the quality of comparative analysis as taxation provisions

are extremely influential in Florida.

3. BMPs also define appropriate management practices for forest roads, stream crossings, timber harvesting,

site preparation and planting, firelines, pesticide and fertilizer applications, waste disposal, and wet

weather operations (FDOF, 2004).

4. A similar discussion with Scotland Talley, a wildlife biologist working for the Fish and Wildlife

Conservation Commission, regarding the impact of Endangered Species legislation on the management of

Florida's NIPFs revealed that "there is so little information and so few surveys" documenting the presence

of endangered species on private lands (S. Talley, personal communication, January 30, 2006). Scotland

Talley charges that the Endangered Species legislation motivates landowners "to manage their forests so as to

avoid creating habitat for endangered species" (personal communication, January 30, 2006). Additional research

in this area is highly warranted.






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