investments is 4 percent, net of inflation or deflation. 
This approximates the longrun average rate of re- 
turn on capital in the private sector. The bulk of the 
investments would yield more than 4 percent. Near- 
ly half would yield 10 percent or more and some 
would yield real rates of return on investment above 
15 percent. These rates are very attractive when 
compared with most other investment opportuni- 
ties. In addition, the real property nature of these 
investments offers protection from inflation. 
About $500 million would be needed to plant 
pine on marginal cropland and pasture. Average 
rates of returns on these investments are about 11 
to 15 percent above inflation on higher sites, 8 to 12 
percent on medium sites, and 5 to 9 percent on low 
sites. 
The capital investments needed to plant pine on 
the highly erodible cropland would total about $700 
million. The financial returns on these investments 
would range from 11 to 15 percent across the 
South. These rates do not reflect the added benefits 
of cost-share payments if the lands were to be put 
under the Conservation Reserve Program. 
The investment opportunities to increase timber 
supplies are attractive in their own right. The bulk of 
these investments must come from the private sec- 
tor. In reality, only a small fraction can come from the 
Federal Government. Federal contributions under 
the Forestry Incentives Program have averaged $9 
million a year in the South; that is only 2/10 of 1 
percent of what is needed. State and industry incen- 
tives have been rising in recent years and will likely 
contribute substantially in the future, but invest- 
ments by private individuals must be relied upon for 
the bulk of the capital needed. 
Potential for Nonindustrial Private Lands 
To Respond to the Challenge 
Approximately 122 million acres, or about two- 
thirds of the timberland in the South, is owned by 
private individuals or firms other than the forest in- 
dustries. Nearly three-quarters of the economic op- 
portunities to increase timber growth are on these 
nonindustrial ownerships. Nearly half of the eco- 
nomic opportunities on these private forestlands 
are for pine stand regeneration following harvest. 
Most of the owners do not manage their harvested 
lands effectively for pine regeneration. They gener- 
ally accept whatever species nature provides, to 
their economic detriment and that of the South. 
Generally the natural succession of existing stands 
of pine or of mixed pine and hardwoods advances 
to pure hardwoods following pine harvest. This nat- 
ural succession process is one of the major causes 
of the decline in net annual softwood growth. In 
addition to regeneration following harvest, there are 
substantial opportunities to increase timber growth 
on these nonindustrial private ownerships by re- 
leasing adequately stocked stands that have com- 
peting vegetation and by clearing low-grade hard- 
wood stands and planting to pine. 
There have been many conferences and forums 
and much handwringing about what needs to be 
done to improve the management of nonindustrial 
private lands. In typical bureaucratic fashion, these 
landowners have even been given their own 
acronym--"NIPF*--which stands for "nonindustrial 
private forest" landowners. 
The barriers usually cited as to why it is so 
difficult to address this class are several: 
1. A large number of people with diverse owner- 
ship objectives. 
2. A low level of technical expertise among 
landowners. 
3. Apparent low interest or even noninterest of 
many landowners in managing lands for timber pro- 
duction. 
4. Absentee landownership problems. 
5. Problems associated with attracting capital for 
forestry investments. 
There is no doubt that improving management 
of these lands will be associated with many prob- 
lems. But the picture may not be quite as bleak as 
it is sometimes portrayed. 
Let's take a closer look at the data on these 
nonindustrial landowners in the South. As | have 
already mentioned, these ownerships offer three- 
quarters of the total economic opportunities for 
forest-management investment in the region. In 
1978 there were some 3.5 million private owners of 
timberland in the South. Of these owners, 92 per- 
cent own less than 100 acres of timberland. Only 8 
percent, or 276,000 owners, hold tracts large than 
100 acres. But collectively, these larger timberland 
owners hold 73 percent of all the nonindustrial tim- 
berlands in the South. So 8 percent of the landown- 
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