Changing Patterns in
Forestland Ownership and Use
By
Warren A. Flick
Retired Person of Leisure
and
Thomas G. Harris, Jr.
Professor of Forestry
University of Georgia
Presented to the Second Butler/Cunningham Conference on Agriculture and the
Environment, Trends and Opportunities for Rural Land Use, November 3 and 4,
2003, Embassy Suites, Montgomery, Alabama.
Economic Context of Land Changes
Rapidly growing wealth in the South (and U.S.) in
1990s, followed by the stock market collapse and
recession.
Recent changes were very rapid—better
communications technology. Almost no one saw
them coming.
The role of land is changing
People used to own land to make a living. The living
(from land-based products: agriculture and timber)
was typically modest, and land values were low.
Now it seems, people make a living to
own land. We live well, push extra
money back into the land, and land
values are up.
Take a road trip.
 Tour
around Atlanta and other large urban areas.
 Land appears well kept: fences are mended, barns
and homes are spruced up, trash is at a minimum.
 New homes abound.
 The old dilapidated buildings, run down fences,
and generally trashy look is getting harder and
harder to find near the cities.
Some Data—Land Values-1
Retail v. Wholesale land values: about 5,000 acres.
Retail (smaller tracts) values are typically higher.
Retail land values (small tracts) are exceeding
$1,000 per acre, and often rising to $3,000, $4,000
or more. (Source: discussions with realtors, newspaper ads in Alabama and
Georgia)
5
Data—Land Values-2
$800/acre
2002, South, mostly pine plantations,
wholesale tracts,
$1,016/acre
2001, U.S.-wide, wholesale tracts, 6.4 mm
acres,
1995-2000, U.S.-wide, wholesale tracts,
totaling 15 mm acres.
$750/acre
Source: Pulp and Paper North American Fact Book, 2002. San Francisco:
Paperloop.com, 2003.
6
Data—Land Values-3
$700-800/acre 2002, South, wholesale tracts, Timber MartSouth, Market Newsletter, Q1, 2003.
$812/acre
$880/acre
$630/acre
2002, South, wholesale tracts, Timberland
Markets, Feb. 2003. (6,200 – 300,000 ac.
Tracts).
Through mid-2003, South, wholesale tracts,
Timberland Markets, August 2003.
2002, Southeast, Bare Land Values, F & W
Forestry (May be a mix of retail/wholesale).
7
Recreation Participation Rates-1
Activity
Bicycling
1960
13 mm
1994%
1995 Increase
63.3mm 387%
Horseback Riding 11.7
16.2
38
Camping
13
58.5
350
Hunting
20.9
20.6
-1
Source: Cordell, H. Ken, et. Outdoor Recreation Participation Trends, 1999.
8
Recreation Participation Rates-2
Activity
1960
Fishing
43.1mm
19941995
63.3mm
%
Increase
47%
Canoeing/Kayaking
2.6
17.5
573
Sailing
3.9
10.6
172
Swimming
61.3
118.0
92
Snow Skiing
2.6
26.2
908
Source: Cordell, H. Ken, et. Outdoor Recreation Participation Trends. Chapter
V, Cordell, H. Ken; Betz, Carter ; Bowker, J.M.; and others. Outdoor recreation
in American life: a national assessment of demand and supply trends.
Champaign, IL: Sagamore Publishing: 219-321, 1999.
9
Recreation-3
 There
are more detailed data starting in surveys
from the 1980s, and the general picture is the
same:
AN EXPLOSION IN RECREATIONAL
USE OF LAND AND WATER.
 Personal
trip in 1969 out west; then again in 2003.
10
Wildlife Data -1
 Wildlife
conservation has grown vigorously in the
60 years from 1930 to 1990, and it’s been
successful.
 U.S. Wild Turkey populations have increased
perhaps 20 to 30 times.
 U.S. Whitetail Deer populations have increased
perhaps 10 times.
 Perhaps 9 times for Elk, and perhaps 50 or more
times for Pronghorn.
Source: MacCleery, Douglas W. American Forests, a history of resiliency
and recovery, 3rd Printing. Durham, N.C.: Forest History Society, 1994, p. 34.
11
Wildlife Data -2
 The
small game story is not so dramatically
positive.
 Squirrel and Cottontail populations have been
roughly constant since 1975 in the South.
 Bobwhite Quail and Grouse populations have been
declining since 1975, nationally and in the South.
Flather, Curtis H.; Brady, Stephen J.; Knowles, Michael S. 1999. Wildlife resource
trends in the United States: A technical document supporting the 2000 RPA
Assessment. Gen. Tech. Rep. RMRS-GTR-33. Fort Collins, CO: U.S. Department
of Agriculture, Forest Service, Rocky Mountain Research Station. 79 p.
12
Wildlife Data -3
 From
1965 to 1995, duck populations have
increased through the 1970s, decreased through the
1980s, and increased again through the 1990s, both
nationally and in the South.
 Canada Goose populations have been generally
rising, though the picture is mixed depending on
the population.
Flather, Curtis H.; Brady, Stephen J.; Knowles, Michael S. 1999. Wildlife resource
trends in the United States: A technical document supporting the 2000 RPA
Assessment. Gen. Tech. Rep. RMRS-GTR-33. Fort Collins, CO: U.S. Department of
Agriculture, Forest Service, Rocky Mountain Research Station. 79 p.
13
Wildlife-4
 Great
success with some major game species.
 Opportunities exists especially with migratory
animals and with species of newer interest.
 It’s likely to be a major interest in the future, of
society and private landowners.
14
Timber Data -1
 Look
at Alabama—Forest Service publishes statewide forest statistics. Latest inventory is 2000.
 Timberland area is up 4.5% since 1990, to 22.9mm
acres, or 71% of the State’s land area.
 Even in the face of substantial economic growth,
the area of forest grew significantly in a 10-year
period.
Source: Hartsell, Andrew J. and Mark J. Brown, Forest Statistics for
Alabama, 2000. Resource Bulletin SRS-67. Asheville, NC:USFS Southern
Research Station, 2002.
15
Timber Data-2
 Forest
industry ownership is down to 3.74mm
acres, a 22 percent decline from about 4.8mm
acres in 1990.
 NIPF ownership increased to 18.0mm acres (from
about 16mm acres).
 Of the 18mm, 2.6mm owned by corporate NIPF.
 Of the 18mm, 15.4mm owned by individual NIPFs
 Not too much change in public ownership.
16
Timber Data-3
 Alabama’s
timberland is about 46% hardwood
stands, and about 35% pine stands (abt 19%
mixed).
 Volume of softwood growing stock (commercial
trees) increased 9% between 1990 and 2000.
 Volume of hardwood growing stock increased 17%
between 1990 and 2000.
 Softwood timber harvests increased 24% over the
previous 10-year period, and hardwood timber
harvests increased 10%.
17
Timber Data-4
 Summary:
the area of forest is up, we’ve been
growing more than we’re cutting, in hardwood and
pine, yet timber harvests were up substantially.
 The forest is reasonably balanced between
hardwood, pine, and mixed.
 And the forest is mostly (95%) privately owned.
 Sounds really good to me! Congratulations,
Alabama!
18
Contrast This
“The development of the lumber industry has been
so rapid and so recent that stumps of the longleaf
pines still stand in the main streets of many of the
towns. Many small mills are in operation along
with the large ones. The great increase in the price
of lumber in recent years caused people to go
lumber crazy along the new lines of railroad.
Whoever could buy a portable mill and some
timberland went in the lumber business.”
Foster, J.H. 1909. Preliminary Examination of the Forest Conditions of
Alabama. Typescript, file 1230.7.13, Kaul Lumber Company Records,
Birmingham Public Library, Birmingham, AL.
19
And This
“Washington County now presents a great expanse of cutover land with no large towns and but few scattered
settlements. Like the counties of the Lower Pine Belt,
aside from a few farms, the country was formerly a
wilderness of forests, with longleaf pine extending
unbroken for miles. Turpentining was the first industry
and much of the timber was boxed before lumbering
began. Lumbering followed, but many of the finest stands
of timber were already destroyed. The recent extensive
lumbering and turpentining have given the country a
desolate appearance.”
20
Summary
Land values are up, especially of retail timberland tracts.
Recreational use of forest land has been growing, and the
numbers bear it out.
Wildlife populations, at least those populations traditionally
associated with hunting, have been increasing, but the
picture is mixed for species of smaller animals (and we
don’t have as much historical data on smaller animals).
The forest itself, in Alabama, has been increasing in area and
volume.
It was much different 100 years ago, when the lumbering
21
boom was underway.
Likely Future
22
The role of land is changing
People used to own land to make a living. The living
(from land-based products: agriculture and timber)
was typically modest, and land values were low.
Now it seems, people make a living to
own land. We live well, push extra
money back into the land, and land
values are up.
Old and New
Old land values were
based on the expectation
of future incomes from
farming or timbering
(BLV $100-400)
 Old forestry culture was
based on economics,
especially
microeconomics.

New land values are
related to recreational and
wildlife uses of land.
 New forestry culture is
based on ideas like
sustainability, ecosystem
management, and forest
health.

Old and New-2
Economics emphasizes
outputs and revenues in
relation to costs .
 Major resource issues are
supply and demand.
 Appearance and condition
of the land was not an
independent consideration.

New views focus on the
condition of the forest.
 Appearance and
composition are critical.
 Supply-Demand analysis
isn’t as relevant.
 Look at the Forest
Service’s SFRA.

Market Dynamics
Industry selling land in Alabama and elsewhere.
 “Unprecedented levels of timberland sales between 1995
and 2000 totaled $11.3 billion and involved 15 million
acres …” (P&P NA Fact Book, 2002, pp.62-63).
 RISI (Resource Information Systems, Inc.) 13.3 mm acres
of sales from 2000 through first 3 Q’s of 2003.
 In 2002, an industry newsletter lists over 3mm acres of
sales (Timberland Markets). Same year, RISI estimates
3.2mm acres sold.
 So far in 2003, an estimated 6mm acres are “in play.”
(Timberland Markets). RISI estimates 2.3mm already 26
sold.

Land Sale Summary
 Total
sales since 1995: About 27.8mm acres.
 U.S. Timberland Holdings, major companies,
2001: About 45mm acres.
 U.S.F.S. in 2000 RPA estimates industrial
timberland ownership: 66mm acres.
 Conclusion: ownership is changing fast, and a
significant part of industrial ownership is involved.
27
Why is industry selling land?
 We’ve
learned that timber and land markets work
(now a surplus).
 Increasing global competition in timber growing,
manufacturing, and marketing.
 Environmental and regulatory pressure is raising
costs of land management in the U.S..
 U.S. Tax laws—income and property—
discriminate against corporate ownership. (double
tax, no capital gains, increasing property tax
pressure)
28
Categories of landowners:
the players
 Forest
Industry (own land and manufacturing
facilities)
 Private individuals and groups, including farmers
 Public—local, state, federal
 TIMOs (Timberland Investment Management
Organizations)
TIMOS
 The
TIMOs will hold land for a short period of
time (perhaps 10-15 years), then retail it out to
private owners or sell it to other TIMOs,
government or conservation groups.
 Their interest is financial; they aren’t making
investments in forest research (they are using the
existing store of knowledge developed largely by
industry and some university research).
TIMOS-more
 They
are required by law to attend strictly to the
financial interests of their clients.
 They have no investment in manufacturing and
little commitment to local communities.
 Therefore, if the economics of timberland
ownership (returns to timber growing and
ownership) begin to cloud up, pension funds may
reduce their interest in this asset.
Timber Prices—Hypothesis
 Industrial
ownership is declining (dramatically?),
but overall timber supply is increasing.
 Mills are closing in the U.S.: Between 1989 and
2002, 63 wood-using pulp mills closed in the U.S.,
and 22 of them were in the South.
32
Timber Prices—Hypothesis
 From
the mid 1970s (and before also), through the
1980s, the news in the trade journals was about
mill openings and expansions—pulp and paper as
well as wood products.
 In the 1990s, the news gradually turned to mill
closures and timberland divestments.
Timber Processing, Nov. 1998, “Start it Up,” pp. 27-31, traces much of the news.
33
Timber Prices—Hypothesis
 These
market dynamics we’re reviewing point to
downward pressure on timber prices: demand is
down, monopsony is increasing, and timber supply
is up.
 And globalization is increasing competition on all
fronts: timber growing, manufacturing, and
marketing.
34
TIMOS-yet more
In our perception, TIMOs are increasingly likely to rely on
increases in land values to generate positive returns.
 That tends to increase the speculative element in
forestland investments, which may reduce pension fund
involvement. It isn’t clear that rural land speculation is a
prudent investment.
 Is their long-term future bright? We are skeptical. At least
one pension fund has recently decided against forestry.

Private Landowners’ Role
 What
will that role be in the South? Our view:
paramount.
 In the last year and a half, about 77% of the acres
of timberland transactions have been in the East
and South. (Timberland Markets, 1(4):4 (August 2003).
 Tax efficient (income, property, and [perhaps]
estate).
Private Landowners’ Role
 There
is substantial public support: direct subsidies
and public extension activity.
 Only ownership category ready to absorb and
reflect our changing social interest toward
recreation and wildlife—flexible.
 Often involved with local community.
 Deemed socially healthy, like the family farmer.
Related Points
Landowner 34th Manual Edition,
March/April 2003, documents the costs of forestry
practices. Land management practices.
 During the 1980s through early 1990s, there is a
mixed pattern of costs in relation to wholesale
southern pine lumber prices.
 From mid to late 1990s, with the run-up in lumber
prices, costs lagged way behind.
 Forest
Related Points
 But
since the late 1990s, wholesale lumber prices
have declined, and forestry costs have skyrocketed.
 Timber culture, by itself, is getting harder to
justify, and landowners with money and a variety
of interests are in the best position to do it.
39
Related Points
 Regarding
timberland, the industry has learned that
timber markets work. It doesn’t need to own land.
 Intensive forestry is reducing the need for
industrial timberland.
 The industry is not likely to again become a net
buyer of timberland.
Related Points
 Regarding
manufacturing, the closing of U.S.
facilities is consistent with long-term patterns of
economic development in which regions tend to
move from extractive industries through
manufacturing and into service and information
industries.
 Manufacturing capacity is not likely to grow much
in the South.
41
Summary
Land values are up, new owners are moving in, the rural
landscape is sprucing up, and there is a growing interest in
recreation and wildlife.
 Forest industry landownership is declining.
 TIMOs have grown vigorously in the past 10 years, but
we’re not sure this is a long-term trend.
 The economic prospects for timber growing seem to be
declining at the margin, and these declines do seem to be
long-term.

Conclusion-1
 We’re
talking about the margins of activity, about
the character of growth and change. Traditional
elements of forestry will be here for years to come.
 Without going into detail, let me say that both of
us have sometimes been wrong. We believe what
we’re saying today, but we know the future will
unfold without regard to what we’re saying today.
 Nevertheless:
43
Conclusion-2
 In
the East, there is an enormous entrepreneurial
opportunity to serve landowners interested in
recreation and wildlife.
 New owners have money and are accustomed to
paying for service.
 We may be headed into an age of unbridled
multiple-use forestry, and in the South it will be
mostly on private land.