71 



Moro regulation !• almost cortalnly attended bjr more bureaucracy and 

 there may bo unanticipated and undefined coats and other unintended and 

 undesirable consequences ofsuch changes. For example, moro restrictive 

 regulations in Calirornla may only succeed in "exporting" environmental 

 problems to other regions that will bo tapped as alternative sources of 

 wood supply to meet the high levels of demand for forest products In 

 California. 



Forest policy governing privoto land management has been subject to 

 policy failures that have poorly served thoir stated purposes. Ono example 

 is confiscatory property tax policies during the I930's, intended to raise 

 revenues, that instead led to extensive land abandonment and removal of 

 forest lands from tax rolls. These events are now largely forgotten, 

 especially by the general public, and tax reforms have apparently cor- 

 rected errant tax-policy failures. But this lesson is worth reviewing in the 

 dclibcrnlionorcnvironmontalrcgulotions currently being propoeod because 

 these regulations may have similar results. Indeed, abandonment of 

 private forest lands to public ownership may well be a central objective of 

 the political opponents of logging. David Pesonen, the Director of the 

 CaliforninDcpartmcntofForcstry in Governor Jerry Drown's administra- 

 tion made this point explicit during a symposium at Humboldt State 

 University in 1979. Ono can well wonder whether things have change. 



Timber production requires the maintenance of investments in large, 

 fixed capital assets. Trees take a long time to reach horvcstable age. 

 Consequently, tax burdens or elevated costs of environmental regulations 

 might make private ownership impractical and uneconomical. Elevated 

 costs may be tolerable until harvest if stands are already well-established. 

 But it may bo the case that even mature timber would bo obandoncd if tho 

 combination of outright cutting bans, higher logging costs, tho costs of 

 immediate reforestation required by law that may well occur naturally 

 given a longer period of time, and timber taxes, result in zero or negative 

 asset values. I 



An illustration of what might happen in this respect is tho recent i 

 proposal by State Senator Barry Kcene to place a bond measure on the [ 

 ballot to purchoso the headwaters forest. While he declared that the 

 purchase price would probably bo in tho hundreds of millions of dollars, he | 

 also stated: 



"Putting a price tag on Headwaters is tricky business, 

 because tho traditional measure of a forest's value is the lumber it can 

 produce. If political, public and regulatory forces combine to prevent PL 

 (Pocific Lumber Company) from logging Headwaters, the forest has no 

 value as lumt>cr." (Eureka Timcs-Stondord, February 4, 1991.) 



In other words, ond followed to its logical conclusion. Senator Kcono Is 

 saying that the state may not be obliged to pny anything for ossuming fee 

 title in the land by the power of eminent domain because it has already 

 conflBcated the land through regulations without paying a ccnti Ho goes 

 on to propose the negotiation of a selling prico with PL omdals presumably 

 on some other, lesser basis for evaluation, perhaps offering token compen- 

 sation. 



Regulations which in tho short run do not appear to have strongly 

 adverse effects may in the long run prove to have serious consequences for 

 the viability of private timber production. Short-run impacts on employ- 

 ment, income, wealth and tax revenues would thereforo prove to bo much 

 larger over the long run. 



Private timbcrlands that ore rendered valueless for wood production 

 by high-cost regulations will grodually revert to public ownership for 

 reasons of tax delinquency. (The ad-valorem "baro-lond-voluo tox" is 

 sufficient to induce this effect.) lliis means Ihot the collectivized, con- 

 trally-plannod sector of forest-based economies will grow. Evidence from 



