114 



THE OUTLOOK FOR TIMBER IN THE UNITED STATES 



Saw-log values in the oak-hickory study ranged 

 from $6 to $160 per thousand board feet. Typical 

 examples of how prices varied by diameter, 

 stocking class, and site index are as follows: 



Dollars per 



thousand 



Diameter Species ' Site index board feet 



12 A 55 15 



16 B 65 27 



18 C 75 35 



20 A 80+ 95 



24 B 55 74 



28 C 65 92 



1 A = Yellow-poplar and black walnut 

 B = Red oak and ash 

 C = Other species. 



An alternative value assumption was also 

 employed in evaluating the economic feasibilit}' of 

 intensified management. Cord wood prices were 

 raised $5.00 per cord and saw-log prices were 

 raised 75 percent. This adjustment roughly cor- 

 responded to a 30-percent increase in final product 

 prices. 



Increases in timber values from management 

 intensification included both the value of increased 

 intermediate thinnings and increased values of 

 residual stands at the end of 50 years. The total 

 increases in value were compared with costs of 

 intensified management in evaluating the economic 

 potentials for intensification. 



Economic evaluation of intensification. — The eco- 

 nomic feasibility of undertaking intensified man- 

 agement was evaluated using present net worth 

 and benefit/cost calculations, both of which gave 

 the same results. Benefits and cost schedules over 

 time were discounted at 5 percent. Any oppor- 

 tunity which had a positive present net worth 

 thus had an internal rate of return in excess 

 of 5 percent and a benefit/cost ratio in excess of 

 1.0. The 5 percent rate provides comparability 

 between this and other case studies. This is not 

 implied that 5 percent is necessarily the most 

 appropriate selection-rejection level. 



Opportunities with 1970 stumpage prices. — Under 

 the 1970 price assumption, investments in 9 of 

 the 23 management classes for intensified manage- 

 ment would return over 5 percent. Six of these 

 entailed treatments starting with immediate stand 

 replacement. Three involved initial improvement 

 cutting to change stand composition. 



The increase in present net worth per acre due 

 to intensification averaged $34.14 for the regenera- 

 tion treatment on 219,000 acres in the pilot area, 

 at an average cost of $27.32 per acre. For the stand 

 ihiprovement opportunities, the average increase 

 in present net worth was $12.56 on 168,000 acres. 

 The average cost was $17.22 per acre. 



Opportunities with the higher price assumption. — 

 Use of higher price levels resulted in the addition 

 of only two management classes, both entailing 

 regeneration treatments. Use of the higher price 

 levels raised the acreage economically treatable 



in the pilot area by 37 percent, or 145 thousand 

 acres. 



Present net worth per acre was more sensitive 

 to price changes. With the higher price assumption, 

 present net worth for regeneration treatments 

 was $62.91 per acre, or 84 percent higher than 

 with 1970 prices. The average increase in present 

 net worth from stand improvement treatment 

 was $31.84 per acre, or 153 percent higher than 

 with 1970 prices. 



Regional Expansion of the Oak-Hickory Pilot Study 



The results of the southeastern Ohio case 

 study were expanded to the Northeast region 

 by the ratio between the oak-hickory acreage 

 in the pilot area (2.3 million acres) and the oak- 

 hickory acreage in the region (35.3 million acres). 

 Such extrapolations must be used with caution, 

 however, because they assume costs, prices, 

 yield increases, and other factors applying in the 

 pilot areas are also applicable regionwide. They 

 also assume that the region contains the same 

 proportions of area in the various "management 

 classes" found in the pilot area. It is believed, 

 however, that they provide a reasonable initial 

 indication of management opportunities. 



Opportunities with 1970 stumpage prices. — 

 Accomplishment of intensified management in 

 oak-hickory types in the Northeast, including 

 opportunities that return 5 percent or more at 

 1970 prices, would cover roughly 6.0 million 

 acres at a cost of $165 million, or $27.40 per 

 acre (table 93). This intensification would lower 

 timber inventories at the beginning of the sixth 

 decade by 36 million cords, or 4 percent, below 

 the inventory expected with current management 

 as shown in table 92. The stumpage value of this 

 residual inventory would be increased a sub- 

 stantial 34 percent through management inten- 

 sification by concentrating growth on larger and 

 higher quality trees of desirable species. 



Projected decadal growth with intensified man- 

 agement fluctuates about the current growth 

 level. In the fourth decade projected growth is 

 27 percent lower than with current management, 

 but in the fifth decade is 40 percent higher. 



Increases in timber removals over the five 

 decade period due to intensification total 56.3 

 million cords, or 10 percent more than expected 

 with current management. Just as with inventory 

 estimates, however, a greater impact registers 

 in the value of removals, which would be $991 

 million, or 20 percent higher under intensified 

 management. Physical volumes are increased 

 by intensification but an even greater effect 

 arises from harvesting of larger and higher quality 

 trees. 



Opportunities with higher stumpage price as- 

 sumptions.— Similar results occur when oppor- 

 tunities are undertaken which return 5 percent 

 under the assumed higher price levels. Intensified 



