consultants--to provide the highest qualified assis- 
tance to every potential timberland investor. We 
must find better mechanisms to deliver the mes- 
sage that forest management and timber invest- 
ment can be profitable. The effectiveness of techni- 
cal contacts to influence landowners is well 
documented. Landowners receiving technical as- 
sistance get better prices for their timber and man- 
age their forests more effectively. We must develop 
better ways to deliver technical assistance to 
landowners through State and private channels. Be- 
cause the average acre changes hands every 7 to 
10 years, we have a constantly changing crop of 
landowners to inform and assist. 
Tax Policies 
The Nation needs tax policies that encourage 
the formation and maintenance of timber capital. 
The loss of capital gains taxation for timber is devas- 
tating. | have heard of landowners who have virtually 
withdrawn from active forest management primarily 
because of the recent Federal tax changes. Further- 
more, Federal tax reform has significantly compli- 
cated the picture for many landowners. Nothing is 
yet clear about who is active or passive and what 
the differences are between trade or business and 
investment. The uncertainty surrounding tax reform 
is already clouding the picture for forest owners. At 
least for small, nonindustrial owners, the 7-year 
amortization provisions and reforestation tax credit 
have not been eliminated. 
We must be certain that current use taxation is 
available to all landowners to avoid unnecessary 
speculative clearing of timberlands. Also, we should 
make the case for favorable State income tax treat- 
ment where long-term benefits result. 
In another form, positive laws to tie financial 
incentives, such as preferential tax treatment, to for- 
est management goals are possible and would be 
effective. 
The financial community must have help to un- 
derstand the value of forest assets. Few financiers 
fully understand the value of forests, and many 
refuse to help landowners put money into timber. 
We must make certain that bankers know that 
forests can be valued and that risks are not unbear- 
able. Foresters well versed in the financial jargon 
must do this selling job. Long-term interest rates do 
not always favor long-term timber investments, but 
when rates are low enough, the financial markets 
30 
should not discriminate against forestry because 
bankers lack experience in this area. 
In my opinion, one of the greatest tragedies is 
that the financial lending mechanisms that work so 
well to change cash-flows from less desirable to 
more desirable patterns are not applied in forestry. 
Private timber stands are often cut when people 
need money, rather than when stands are financial- 
ly mature. If only we can develop the methods to use 
timber regularly as collateral, we can avoid forcing 
some landowners to cut timber stands before their 
time. 
On the other hand, timberland owners some- 
times hold stands much longer than they should for 
financial reasons. | do not dispute the many valid 
nontimber reasons for doing this. Nevertheless, we 
fail when landowners hold overmature stands sim- 
ply because they do not realize they are losing mon- 
ey by not harvesting. 
We must tell the story of forestry as an invest- 
ment in our future. We can no longer be complacent 
and expect private landowners to reforest their land 
because it is the right thing to do. They must gain 
from their actions, and professional foresters must 
be able to show them just how much they gain. | 
believe that many foresters out there contacting 
landowners need to know more about economics. 
Programs of investment on State lands are an- 
other way to enhance our forest future. Some State 
lands are not managed as economically as they 
could be. There are many noneconomic objectives 
for public lands, but forest management on most 
State lands is sorely underfunded by legislatures. 
States and their taxpayers may needlessly suffer a 
low return on their assets. Often, this occurs be- 
cause we have not been as effective at promoting 
the economic and social gains to be made from 
programs of accelerated investment in these lands. 
| challenge each of my counterparts in other States 
to examine the potential gains from increased in- 
vestment in State-owned timberlands. 
Forest protection is a major concern of State 
foresters and timberland owners alike. We have 
made great strides in protection over the years, but 
we still have problems. Although average losses are 
modest for whole States, we still have hotspots of 
fire, insects, or diseases. Better identification of 
high-risk areas and limitation of these losses is our 
primary concern. This will take research, money, 
and innovative approaches. 
Selling legislators annually on budget increases 
is neither easy nor always the most effective method 
of gaining resources for needed investment pro- 
