Non-Industrial Private ForestsNon-Industrial Private ForestsNon-Industrial Private ForestsNon-Industrial Private Forests

Karen Potter-WitterDepartment of Forestry

MichiganMichiganMichiganMichigan

• 19.2 million acres of forestland

• 18.6 million acres of timberland

• ~ ___% of Michigan?

Percent forestland by countyPercent forestland by countyPercent forestland by countyPercent forestland by county

Timberland by forest typeTimberland by forest typeTimberland by forest typeTimberland by forest typepine

spruce-fir

n. white cedar

hemlock

other softwoods

sugar maple

soft maple

aspen

red oak

ash

basswood

paper birch

white oak

yellow birch

beech

elm

other hardwoods

Timberland area by regionTimberland area by regionTimberland area by regionTimberland area by region

UP NLP SLP0

2,000

4,000

6,000

8,000

10,000

Thou

sand

Acr

es

UP NLP SLP

1938 1955 1966 1980 1993

Timberland ownership, 1955-93Timberland ownership, 1955-93Timberland ownership, 1955-93Timberland ownership, 1955-93

1955 1966 1980 19930

2,000

4,000

6,000

8,000

10,000

12,000

Tho

usan

d A

cres

1955 1966 1980 1993

Local govt. Federal Forest Industry State Private Non-industrial

BackgroundBackgroundBackgroundBackground

• 312,000 NIPF owners in Michigan

• own 54% - 8.6 million acres of forest

• 40 % of ownerships are 1-9 acres

• 32% acquired from 1970-1979

FragmentationFragmentationFragmentationFragmentation

8 counties with >15% growth and 50% forest area

Chippewa 19%

Crawford 30%

Grand Traverse 17%

Kalkaska 23%

Missaukee 21%

Montmorency 19%

Otsego 20%

Roscommon 21%

TrendsTrendsTrendsTrends

• More demand for recreation use and amenities from forests

• More objection to timber harvests

• More reliance on private lands for timber

• More fragmentation and accompanying ecosystem challenges

Why have private lands policy?Why have private lands policy?Why have private lands policy?Why have private lands policy?

to promote sustainability

to encourage investment

to increase production

to minimize negative impacts 

Major instrumentsMajor instrumentsMajor instrumentsMajor instruments

Financial IncentivesTaxesCost sharing

Technical AssistanceIn the field Educational programsApplied research

Income taxIncome taxIncome taxIncome tax

Major elements:

 

$ income

 

$ expenses

 

$ reforestation

Federal Income TaxFederal Income TaxFederal Income TaxFederal Income Tax

 $ Income - Capital Gains

$ maximum tax rate lower than for other income

  $Expenses 

$ reduces the net cost to the taxpayer

Reforestation Amortization & Reforestation Amortization & Tax CreditTax CreditReforestation Amortization & Reforestation Amortization & Tax CreditTax Credit

 

reduces the net cost of tree planting

for timber through deduction, plus:

 

an investment tax credit

Property taxesProperty taxesProperty taxesProperty taxes

 

• Reduction in mileage rate, special classification or separate from ad valorem

• Ad valorem - most non-industrial

Commercial Forest ProgramCommercial Forest ProgramCommercial Forest ProgramCommercial Forest Program

 

$1.10/acre per year

public access for hunting and fishing required

minimum of 40 acres

 

Private Forest Reserve ProgramPrivate Forest Reserve ProgramPrivate Forest Reserve ProgramPrivate Forest Reserve Program

• a few farm woodlots

• 160 acres or less

• ½ in active agriculture

• up to 40 acres can be in PFR

• assessed at $1 per acre

• 5% yield tax

Technical assistance – Technical assistance – federal+state+local+privatefederal+state+local+privateTechnical assistance – Technical assistance – federal+state+local+privatefederal+state+local+private

DNR or other foresters and resource professionalsCooperative Forest Management in MIA few Soil Conservation District Foresters leftCounty foresters in some states (e.g. Minnesota)Industry foresters

Land Grant UniversitiesLand Grant UniversitiesLand Grant UniversitiesLand Grant Universities

• Extension

• Education

• Training

• Applied research

Regulation – federal, state, Regulation – federal, state, locallocalRegulation – federal, state, Regulation – federal, state, locallocal

 

ESA

Clean Water Act

BMPs

Zoning

Cost sharing – federal+stateCost sharing – federal+stateCost sharing – federal+stateCost sharing – federal+state

• ACP – Agricultural Conservation Program

• CRP – Conservation Reserve Program

• FLEP - Forest Land Enhancement Program

• Forest Stewardship Program

• Many others – Wildlife (WHIP), T&E species

ResourcesResourcesResourcesResources

www.timbertax.org/

forestry.msu.edu/extension/

www.reeusda.gov/nre/forestry/

www.na.fs.fed.us/