Stewardship or Bureaucrat Incentives Program?

KMorrisD kmorrisd at aol.com
Sun Aug 30 16:27:18 EST 1998


Stewardship Incentives Program?

Or should it really be called the Bureaucrat Incentives Program?  The whole
assumption behind this program is that landowners need incentives to do
management because forestry is so unprofitable.  The answer of course is
cost-shares doled out by generous forestry bureaucrats for various forestry
practices.

This is a myth that has been quite successfully propagated for decades by the
US Forest Service (FS) and all the state forest services for their own benefit
and to the detriment of taxpayers, private landowners and consulting foresters.
 The current Stewardship Incentives Program is the latest and greatest
manifestation of this scam. 

Taxpayers lose first because they fund the FS through Congress' appropriations
of federal taxes to the FS.  They lose again when the FS keeps timber sale
revenues for itself and for the state foresty bureaucracies that it partially
finances, including the state SIP programs.  Taxpayers lose a third time
through state taxes appropriated to state forestry bureaucracies, including
their SIP programs.  

Landowners lose because of the lower appraised value of their managed forest
lands.  To get an idea of how much, just compare the present value of a bond
growing at 4% with one growing at 12%.  The FS says your forest grows at a rate
of 3-5%, whereas in reality it's more like 10-15% with good management.  (These
numbers apply for most of the Northeast and North Central states.  Higher
numbers would apply for the South and Pacific Northwest.) 

Consulting foresters lose because they are grossly undervalued for their
contributions in helping create this kind of value.  How much would a sensible
investor pay someone who is earning him 3-5% compared to one who is earning him
10-15%?  Right, consultants are getting paid loser rates when they should be
getting paid winner rates. 

Evidence that forestry is indeed profitable may be found by making some simple
spreadsheets that show how tree volume changes over time, how log grade value
changes with increases in size and amount of clear wood, and how market values
have changed over time.  Such spreadsheet analyses typically show rates of
value growth 3-4 times what FS bureaucrats say it is.

Further evidence may be found by looking at the brochures of forest investment
partnerships or mutual and pension funds that invest in timberland.  The John
Hancock Company is an especially good example of this type of company.  They
cite value growth rates 3-4 times FS cited rates.  

Evidence of how well the forestry bureaucrats are doing at this scam may be
found by simply looking at their budgets.  In the case of SIP budgets, they are
typically equal to or greater than the amount of money doled out by the
bureaucrats.  After all, it takes a lot of time going to all those bureaucrat
meetings, plus working up all those fancy brochures for other bureaucrats, plus
doing the bookkeeping on all that money.

Evidence of how the FS and state forest services continue to actively work to
promote ignorance of tree value growth may be found in any of their computer
growth and treatment simulators.  Only one of them, NETWIGS, allows for
projections of tree grade increases, and this program is virtually unusable. 
None of  the other programs even consider this, the most important factor in
tree value growth.  

Furthermore, the treatment of market value increase typically does not allow
for its separation from inflation by subtracting producer price inflation in FS
simulators.  Real market value increase is becoming an increasingly important
factor in forest investment analysis as demand increases for certain species
and products.

The only two computer simulators on the market that allow for accurate
evaluation of volume, grade value and market value increases were developed by
the Tennessee Valley Authority.  They are called INFORM (for DOS) and WINYIELD
(for Windows).  The TVA department which developed these programs has recently
been defunded and technical support will no longer be available for these
programs.  Coincidence?

In conclusion, it seems that Stewardship Incentives Program really is a
misnomer.  It should be called the Bureaucrat Incentives Program, or perhaps
the Stewardship Disincentives Program.  The latter would be fitting because
many landowners, when they hear from the bureaucrats how fast their trees are
growing, just make the common sense decision to high-grade or clearcut and put
the money in the stockmarket.

Next thing you know, they'll be coming up with a special program for restoring
high-graded woodlots.  Perhaps a combination of cull removal and tree planting,
complete with three color brochures, workshops for consulting forester and 75%
cost-shares.  Sounds good doesn't it?  

Karl Davies





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