Assessing the impacts of forest taxation programs on optimal management of Douglas-fir under adaptive harvest strategies in Western Oregon

This paper investigates the impacts of two taxation programs, the Forestland (FL) program, based on a site value tax, and the Small Tract Forestland (STF) program, based on a combination of a site value tax and a severance tax, on the optimal management of Douglas-fir in Western Oregon amidst timber price uncertainty. The study reveals that the optimal reservation prices are lower under the STF program, making it more advantageous for forest landowners in terms of tax liabilities. Specifically, the STF program leads to significantly lower tax payments ($185.8–$277.4 per acre) and tax burdens (6.0%–5.9%) compared to those of the FL program ($709.2–$1092.5 per acre; 22.9%–23.2%). When factoring in the harvest age, the STF program results in an increased harvest age, whereas the FL program remains fiscally neutral. The FL program exhibits a slightly progressive taxation system, while the SFT program displays a slightly regressive taxation system. Although our findings suggest that the STF program is a better option for landowners, a more detailed analysis regarding the impacts of these taxation programs on the overall welfare of the state’s economy is required.