Private Timberlands

Timberlands in Washington state, Oregon, and California are owned by the federal government, state and local governments, and the forest products industry or other private parties. Timber harvest volumes from all these sources have decreased during the past five years. Most notable, however, is the drop on federal lands, mainly as a result of efforts to protect the habitats of threatened or endangered species. This report discusses (1) trend data on private timberland acreage and on volumes of timber harvested; (2) requirements for reforestation and the use of active timber management practices, such as fertilization or thinning, on private timberlands; (3) incentive programs to encourage private landowners to actively manage their timberlands and other factors that influence their land management decisions; and (4) federal tax provision that affect timber management decisions, including the changes that occurred in the 1986 Tax Reform Act.

GAO found that: (1) from 1952 through 1992, private timberland acreage in the three states decreased from 31 to 23 percent; (2) most of the acreage decrease resulted from the conversion of timber land to agriculture, urban areas, or other nontimber uses; (3) between 1989 and 1993, Oregon's and Washington's combined timber harvests from private timberlands decreased from 2.5-billion to 2.3-billion board feet; (4) since 1970, state laws have guided private timberland operations and required private landowners to reforest harvested timberlands unless the land is converted to other uses; (5) although federal and state programs offer technical, educational, and financial assistance to encourage private landowners to actively manage timberlands for long-term production, these programs do not provide assurances that these landowners will do so; (6) landowners' timber management and harvesting decisions are affected by federal and state tax provisions, future land use restrictions, and current timber market prices; (7) historically, the federal tax code has benefited private timberland owners by lowering their tax rates on capital gains and providing tax credits and deductions for reforestation costs when timber is cut and sold; and (8) although the Tax Reform Act maintained the timber capital gains classification and the reforestation tax credit, it reduced the tax rate differential between capital gains and ordinary income and limited landowners' deductions unless they are actively involved in timber operations.