This thesis provides empirical evidence to assess the long term contribution of the B.C. forest industry to the provincial economy. Estimates of resource rent are constructed to measure the direct contribution of the resource to provincial income and growth. Measures of rent are constructed for a firm level sample (1906-76) and at an industry level (1918-92). The figures for rent are used to generate estimates of the share of provincial income measures directly attributable to the industrial exploitation of the province's forests. While there were periods during which the direct contribution to provincial income and its growth was nontrivial, in general the growth of forest industry rent did not drive overall economic growth but rather lagged behind. Rent was low on average and volatile during the years before W.W.II, rose rapidly from roughly 1940-51, then declined unevenly. To investigate the forces which underlie both the broad trends and the variability in rent, a stylized model of the forest industry is applied in an empirical analysis. Broad changes in aggregate rent were the result of changes in rent per unit of B.C. timber. The rapid increase in rent coincided with a marked rise in the price of forest products. The secular decline resulted from the combination of a falling output price and rising costs. An investigation of real harvesting costs indicates that depletion played a role in this increase. The variability of rent is also explored and found to be most strongly influenced by factors reflecting market risk which the B.C. industry could not diversity away from. The rent measures may not capture the full impact of the forest industry, so the industry's potential role as a leading export sector is also examined. The possibility of a stable long term link between forest exports and provincial income is investigated using cointegration tests. B.C. forest exports and G.D.P. are not cointegrated; their levels axe not linked in a deterministic way in the long run. A bivariate VAR, is used to examine the short run interaction between the growth of forest exports and provincial G.D.P. The results do not strongly support the view that the forest industry acts as a leading export sector in the provincial economy.

This thesis provides empirical evidence to assess the long term contribution of the B.C. forest industry to the provincial economy. Estimates of resource rent are constructed to measure the direct contribution of the resource to provincial income and growth. Measures of rent are constructed for a firm level sample (1906-76) and at an industry level (1918-92). The figures for rent are used to generate estimates of the share of provincial income measures directly attributable to the industrial exploitation of the province's forests. While there were periods during which the direct contribution to provincial income and its growth was nontrivial, in general the growth of forest industry rent did not drive overall economic growth but rather lagged behind. Rent was low on average and volatile during the years before W.W.II, rose rapidly from roughly 1940-51, then declined unevenly. To investigate the forces which underlie both the broad trends and the variability in rent, a stylized model of the forest industry is applied in an empirical analysis. Broad changes in aggregate rent were the result of changes in rent per unit of B.C. timber. The rapid increase in rent coincided with a marked rise in the price of forest products. The secular decline resulted from the combination of a falling output price and rising costs. An investigation of real harvesting costs indicates that depletion played a role in this increase. The variability of rent is also explored and found to be most strongly influenced by factors reflecting market risk which the B.C. industry could not diversity away from. The rent measures may not capture the full impact of the forest industry, so the industry's potential role as a leading export sector is also examined. The possibility of a stable long term link between forest exports and provincial income is investigated using cointegration tests. B.C. forest exports and G.D.P. are not cointegrated; their levels axe not linked in a deterministic way in the long run. A bivariate VAR, is used to examine the short run interaction between the growth of forest exports and provincial G.D.P. The results do not strongly support the view that the forest industry acts as a leading export sector in the provincial economy. / Arts, Faculty of / Vancouver School of Economics / Graduate

M.S.

This thesis provides a survey of the procedures used throughout the 50 United States for assessing forest properties for general property tax purposes. A similar survey was completed in 1966. However, state guides for assessing forest properties have changed considerably since then and these developments have been analyzed. As a result of this analysis three points stand out: (l) States are assuming a greater role in guiding the assessment of forest lands. (2) The more recent guides that provide detailed instructions are designed to determine forest property values based on productivity. (3) The newer guides are designed for greater ease of administration and uniformity. / Master of Science

Generally, death taxes are a social instrument used to break up large quantities of wealth in this country. They are intended to act as a pressure relief valve and prevent wealth concentration in the hands of a small number of individuals. Because the objectives and goals of individuals may be quite different from society, forest landowners are one group who face potentially serious problems due to death taxes. Illiquidity, low cash flows and credit problems can cause difficulties for heirs of forest land. Death taxes are examined from a historical, legal and economic perspective. Specifically, this study focuses on the implications of both federal and state death taxes on private forest landowners. Particular attention is paid to changes which have occurred because of the 1981 Economic Recovery Tax Act (ERTA). Provisions which are designed to give estate tax relief to nonindustrial private forest landowners are also examined. Study results show that federal death taxes are not reducing wealth concentration. It is also shown that through proper planning, estate taxes at the federal level can be eliminated. The state death tax burden can be substantial however, and must still be considered, even though many states have substantially eased their laws following ERTA. Proper planning, particularly when forest land is involved, should include both spouses. Finally, note that special provisions designed to give estate tax relief to farm and woodland owners have fallen short of this goal, primarily because of the complex regulations which are involved. / M.S.

State income tax laws and their relationship to the federal income tax were surveyed and changes affecting forest landowners since similar research on this subject (1981-82) are discussed. Several previously favorable provisions were eliminated at the federal level. Although the economic situation and research assumptions have changed, the general indications are that many states have implemented provisions which may be considered generally unfavorable to forest landowners. The 1988 federal and state income tax liabilities for hypothetical forest landowners at three personal income levels, each with and without timber sale revenue, were calculated for 41 states in the U.S. which impose a comprehensive income tax. In the South, the state percentage of the total income tax liability for the hypothetical landowners who sell timber ranged from 9 to 21, 7 to 17, and 6 to 15 percent for the low, medium and high income levels, respectively. The state percentage ranged from 10 to 31, 9 to 20, and 7 to 16 percent for the low, medium and high income levels, respectively for landowners who did not sell timber. Louisiana was the lowest and North Carolina was the highest for all hypothetical cases. In the West, the state percentage ranged from 13 to 25, 12 to 25, and 10 to 19 percent, for the low, medium and high income levels, respectively, for landowners who sold timber. The state percentage for landowners who did not sell timber ranged from 10 to 34, 15 to 25, and from 12 to 20 percent the low, medium and high income levels, respectively. Arizona and Colorado consistently were among the lowest and Hawaii was the highest for all the hypothetical cases / Master of Science

The principle objective of this study was to determine whether the Virginia property tax, as it is applied to forest lands, may have harmful effects on forest management in Virginia. In order to accomplish this objective, an investigation was made of the theoretical aspects of the general property tax as applied to forest land, including a definition of tax equity as applied to forest taxation, Next, the property tax situation in Virginia, specifically as related to forest lands, was investigated. The usual situation of the general property tax as applied to forest lands was found to produce two serious equity faults, deferred yield bias and parcel bias, which could be harmful to forest management. It was also inferred that the general property tax is a variable cost as applied to forestry, and as such, influences management decisions. When the Virginia property tax situation was compared to the general case, it was found that the situations were not substantially different. Alternatives to the general property tax on forest land were discussed, It was decided that only the productivity tax meets the defined standard of equity. It was concluded that the forest tax situation in Virginia will allow the faults which are found in the general property tax situation to occur in Virginia. The effects of the presence of these faults in the Virginia situation and the magnitude of these effects were two subjects which were left for future study. It was felt that a firm understanding of the nature of these faults in the general property tax was prerequisite for further studies. Thus, in order to determine the actual effects of the Virginia real estate tax on forest management decisions future intensive study is necessary. / Master of Science

The purpose of this study is to examine the impacts of state income taxes on returns to investments in forest management on private nonindustrial (PNIF) lands. It contains a review of major federal income tax provisions which directly affect timber investments. Income tax laws are described for individuals in the 50 states, with emphasis on those directly applicable to forestry. Two separate analyses are performed to examine the combined effects of federal and state income taxes on typical nonindustrial private forestry investments. In the first, the combined federal-state income tax liability is computed for hypothetical PNIF owners in the year of a timber sale. State income taxes for medium income landowners who manage their forest range from 4 percent of the total tax liability in Louisiana to 40 percent in Wisconsin. In the second analysis, after-tax returns are computed for a hypothetical forest management investment. The net present value of the investment for a landowner in the 33 percent federal and 10 percent state marginal tax brackets, ranges from $479 per acre in Wisconsin to $551 per acre in Oregon. The results show that provisions for long-term capital gains treatment, amortization of reforestation costs, and the deduction of annual operating expenses can be an effective means for reducing the impacts of federal and state income taxes on PNIF investment returns. North Carolina, California, and Oregon have special provisions for reporting forestry management cash flows which help reduce state taxes. It is important for investors to keep complete and accurate records in order to take full advantage of federal and state tax saving provisions. / Master of Science