1. Longleaf Economics Workshop Longleaf Partnership Council April 8, 2014 Biloxi, MS © Richard T. Bryant

2. Overview NFWF interested in exploring longleaf economics Collaboration between NFWF, Jones Center and Larson & McGowin “Longleaf economics” is a very broad topic – Decided to narrow focus to explore perspectives of large- acreage landowners/managers on longleaf economics – Decided to restrict focus to economic returns currently available to landowners; did not include: Carbon Water Other ecosystem services © Richard T. Bryant

3. Why large acreage landowners? – Historic emphasis on smaller-acreage NIPF owners – Larger acreage gains for longleaf restoration per individual land owner/manager decision – we need all players at the table to reach 8 million acres – Typically there is existing capacity for reforestation, ongoing forest management, prescribed fire, etc. – Larger tracts provide less fragmented patterns of LLP restoration, enhanced wildlife values – Larger tracts typically have lower rates of parcelization, professional management plans and forest operations are more economically viable Overview © Richard T. Bryant

4. Project Components Steering committee Literature survey Workshop Summary Report © Richard T. Bryant

5. Literature Survey Grey Literature – Conference proceedings – Tech transfer “white papers” – Brochures Peer-reviewed literature Three general approaches to economic analyses – Longleaf performance – Longleaf vs. loblolly – Economics and Wildlife © Richard T. Bryant

6. Literature Survey Longleaf performance – Early phase of modern economic analyses, 1980s – LLP can provide respectable economic returns Longleaf vs. loblolly – Timber returns from LLP are generally inferior to loblolly – LLP can be more competitive on lower site indices, sandy soils – LLP can be comparable with longer rotations – LLP competitive if straw harvest included No comparisons between species with straw harvest for both Longleaf economics and wildlife habitat – RCW presents largest opportunity cost – General wildlife habitat involves some opportunity cost, but less than RCW © Richard T. Bryant

7. Time value of money: Discounting 1 (1 + i)ª i = Interest Rate a = Years Discounts value of money into the future based on current and projected cost of capital © Richard T. Bryant

8. Workshop Eleven large landowner representatives – TIMOs – Integrated sawmill landowners – Bank trust lands – Large family ownerships – Forest investment analysts – Consulting firms Eleven LLP conservation community representatives – NFWF, USFS, USFWS, NRCS, TNC, TCF, DOD, LLA, SGSF, SEAFWA © Richard T. Bryant

9. Workshop Pre readings, exploratory questions Background presentations – Welcome, workshop purpose, NFWF overview – ALRI background – Incentive program overview Longleaf economics overview – Macro overview – Barrett McCall L&M General market trends – Micro overview – Barry Shiver New analysis Field Tour Facilitated discussions © Richard T. Bryant

10. Workshop Summary Markets – Premium for quality LLP varies geographically – Design value changes should improve market for higher quality MSR dimensional lumber – Reduced Canadian imports (MPB) should improve market – Information gaps on quantitative differences b/t LLP and other species Age? Will quicker growing containerized LLP have same quality? – Opportunities for cultivating markets Need to educate mills, wholesale/retail, and general public – Better development of value added markets Higher quality of LLP straw Could develop premium wood flooring market if there was dependable supply © Richard T. Bryant

11. Workshop Summary Research and Development – Need better growth and yield Particularly important for more investment-oriented interests Loblolly and slash had decades of research, e.g. industry/university coops Need rangewide model for containerized seedlings, modern establishment techniques – Need tree improvement program Loblolly and slash had decades of research, e.g. industry/university coops Still using open-pollinated, “wild” growing stock Tree improvement likely major factor for inferior performance LLP Improvement for both wood quality and growth © Richard T. Bryant

12. Workshop Summary Incentives – Broader accessibility for large landowners Cropping history restrictions AGI, acreage caps – Higher establishment cost major barrier – Ongoing Rx fire costs are barrier – need support – Need to better link incentives to desired results Current incentives target establishment – hope of desired results Need incentives for extended rotations, lower stocking © Richard T. Bryant

13. Workshop Summary Motivations; Economic Barriers and Opportunities – Some interests (TIMOs, trusts) have fiduciary responsibility, i.e. investors must be made “whole” – Others have more flexibility based on clients’ wishes, acceptance of lower financial returns – Some landowners afraid of TES issues USFWS stated willingness to work with people, range of tools to improve regulatory predictability – Fire aspect of LLP can be opportunity (reduced risk from catastrophic loss), but fire also a barrier (ongoing cost) – Growing acceptance of LLP economic viability on certain soils, sites More detailed, nuanced assessment of land portfolios © Richard T. Bryant

14. Workshop Summary Next steps – LLA, Barry Shiver to explore setting up G & Y working group Explore unused data, ability to incorporate Outline Phase 2, new data collection, modeling cooperative – Explore nascent tree improvement efforts IFCO, NCSU Tree Improvement Program – Explore developing and enhancing market premiums U.S. Endowment for Forestry and Communities starting work Focus conservation investments in strong LLP markets? – Incentives feedback presented to FCC – Need to be thoughtful about fostering paradigm shift in forestry re LLP Historically thought of as categorically inferior Actually has both advantages and disadvantages, need to cultivate more objective assessments © Richard T. Bryant

15. Workshop Summary Ancillary Benefits – Exposed new audience to rangewide LLP efforts – Built relationships – Better understanding of large landowner perspectives by LLP conservation community – Refined information needs © Richard T. Bryant