Public Policy and Forest Stand Management

Management of public lands to mitigate weather risk also is likely to differ from the profit-maximizing forest industry case. Wilson and Baker (2001) argue that managing stands to allow greater future flexibility may be more important in the case of public lands than in that of private lands because objectives of public land management are more likely to change over time with shifting political pressures. It is important to develop stands that are capable of producing multiple outputs, from timber to older forest habitat, when future objectives are uncertain. Like NIPF landowners, public land managers are likely to consider aesthetics, wildlife, recreation, and other nontimber products in determining optimal forest management strategies.

In addition, the presence of endogenous forest risk and the extensive losses that could result from a major event could lead public agencies to become involved in providing incentives for improved private forest management, especially to avoid secondary impacts such as insect and disease infestations that may negatively affect neighbors. Private landowners will not fully account for the damages that may result on neighbors’ lands and may underinvest in storm damage mitigation relatively to the socially optimal level. This negative externality may be an argument for government intervention to correct this market failure through subsidies of mitigation practices, by establishing penalties for not following recommended practices, or by establishing regulations requiring specific practices. However, it is important to construct such programs with care to ensure that they result in net increases in forest investment and improvements in forest health and do not simply offset private investment that would occur in the absence of the policy.

In Switzerland, short-term damage resulting from storm Lothar was similar across cantons (states) even though different cantons employed significantly different forest protection measures (Bisang and Zimmerman 2006). More expensive measures adopted in some cantons were not much more effective in preserving forests and preventing forest damages than much less expensive options. In addition, forest owners’ salvage decisions appeared to be independent of the financial incentives provided by cantons. Forest owners spent more of their private resources in cantons that provided minimal financial support, and their marketing of salvaged timber was less successful in these cantons than in those that provided greater public resources. Thus, the varying strategies for public involvement in providing financial incentives for forest management had important distributional effects for forest owners and government spending but not for forest health (Bisang and Zimmerman 2006).