Analyzing State Regulatory Impact on Small Forestland Owners
NRSIG Budget: $489,000
Project Budget: $489,000
Sponsors: WA Leg
Timeline: July 2019 through June 2021
Partners: WA DNR, WA Leg

Background

The Forest and Fish Report was issued in 1999 and contained recommendations for developing and implementing rules and programs designed to improve and protect riparian habitat on non-federal forestlands in Washington. The rules proposed in the report were designed to provide compliance with the federal Endangered Species Act, restore and maintain minimum riparian habitat to support a harvestable supply of fish, meet Clean Water Act standards, and keep the timber industry economically viable.

The Legislature adopted the Forests and Fish Law in response to the Forest and Fish Report. The law directed the Forest Practices Board to adopt emergency rules implementing the recommendations of the Forest and Fish Report. Among other things, the Forests and Fish Law created the Small Forest Landowner's Office (SFLO) in the Department of Natural Resources, the Forestry Riparian Easement Program, and directed developing alternate management plans or harvest restrictions.

In the 2019 Washington State legislative session the house and senate natural resources committees passed a bill that directed the School of Environmental and Forest Sciences within the College of the Environment at the University of Washington to complete a trends analysis.

ENGROSSED SUBSTITUTE SENATE BILL 5330

Our Work

Our research group completed a trends analysis that examined whether the number of small forestland owners increased or decreased, whether the acreage held by small forestland owners increased or decreased, and if certain forestlands previously held by small forestland owners have been converted to other uses.

We collaborated with other researchers in the University of Washington School of Environmental and Forest Sciences (researchers listed below) who determined which factors contributed to small forestland owners selling their land and recommend actions the Legislature can take to keep forestland working. In addition, their analysis reviewed the effectiveness of the Small Forest Landowner Office, the Forestry Riparian Easement Program, and the use of alternate harvest management plans. The report also includes recommendations to improve mitigation measures for small forestland owners and improve retention of working forestland held by small forestland owners.

Research Team

Sergey Rabotyagov, Ph.D.	Principal Investigator, Associate Professor
Luke Rogers	Principal Investigator, Research Scientist
Brian Danley, Ph. D.	Assistant Professor
Jeffrey Comnick	Research Scientist
Andrew Cooke	Research Scientist
Alec Solemslie	Graduate student, SEFS/Public Administration
Pranab K. Roy Chowdhury, Ph.D.	Postdoctoral Scholar
David Diaz	Predoctoral Scholar
Rachel Neroutsos	Undergraduate Research Assistant

Results

1.1 Trends Highlights

In 2007, there were 19.64 million acres of forest in Washington State. Forest acres declined by 394,000 acres (or 2%) by 2019.
Small forest landowners (SFLO) account for 15% of forest acres. SFLO forest acres declined from 2.99 million acres in 2007 to 2.88 million acres in 2019 (a 3.7% decline). Total parcel acreage owned by SFLO declined from 5.04 million acres to 4.84 million acres (a 4% decline). The number of small forest landowners increased from 201,000 in 2007 to 218,000 in 2019 (or 8.5%). The number of SFLO parcels increased from 256,500 to 261,800 (or 2.1%).
Seventy-seven percent of SFLO owned less than 20 acres in 2007 and accounted for 22% of forest acres. Small forest landowners who owned between 100 and 1000 acres accounted for the largest percent of forestland acreage (36%), followed by SFLO who owned between 20 and 100 acres (30%).
Between 2007 and 2019, SFLO forest acres in the three smallest size classes (<20 acres, 20-100 acres, 100-1000 acres) declined by 117,000 acres while the two largest size classes (1000-5000 acres, 5000+ acres) increased by 13,500 acres.
The number of owners increased across all size classes, with the largest increase in the 20-100 acres class (+9,700).
Seventy-one percent of SFLO forest acres in 2007 were in the forestry or natural land use classes[1], followed by Residential (18%) and Agriculture (10%). By 2019, SFLO forest acres in forestry or natural land uses declined by 121,500 acres (or 5.7%) while Residential increased by 48,600 acres (or 9%).
Parcels transitioned both out of and into the SFLO owner class. Between 2007 and 2019, approximately 450,000 acres (or 15%) left the SFLO class while 238,000 acres (an equivalent of 8% of 2007 area) transitioned into small forest landownership.
Of the 67% of acres moving out of SFLO that remained forested, Private Industry (107,000 acres) was the largest destination owner class, followed by Private Other (60,000 acres), Tribal (50,000 acres), and Private Conservation (25,000 acres).
The plurality of acres transitioning into SFLO were Private Industry in 2007 (92,000 acres).

1.2 Heterogeneous Small Forest Landowners

Somewhere between 25,000 and 50,000 small forest landowners are likely anticipating selling all or some of their forest land in the coming 10 years. Somewhat fewer than 1 in 10 current SFLOs have likely ever sold or given away some, but not all, of their forest land.
The most important aspects of ownership for SFLOs, on average, are beauty and scenery, provision of wildlife habitat and environmental benefits, and privacy and personal attachment. “The protection of water resources” ranks highly as an ownership objective among Washington State SFLOs.
SFLOs who have a sole focus on income and investment from their forests may constitute a minority of ownerships, but they tend to own disproportionately more of the state’s Small Forest Land. Conversely, owners who tend to value their forest lands primarily for Family and Privacy purposes represent a substantial number of owners, but a very small amount of Small Forest Land. Many SFLOs who give low priority to timber harvesting still perform some kind of forest management in the course of their forest ownership.

1.3 SFLOs and Riparian Regulations

A minority of surveyed SFLOs say the riparian regulations have had a negative impact on their forest ownership. However, the SFLOs who say the riparian regulations have had a negative impact on their ownership own a majority of the land represented in the survey. In other words, the SFLOs who said the riparian regulations have had a negative financial impact on their ownership tend to own more forest land than the SFLOs who have a non-negative evaluation of the regulations (see Figure 16 and Table 23).
SFLOs overwhelmingly wish there were substantially more salmon in Washington streams and rivers. Respondents tend to disagree or be neutral on whether riparian regulations are fairly applied to SFLOs relative to other land uses.
Compared to SFLOs with riparian forests on the west side of the state, SFLOs with riparian forests on the east side of the state overwhelmingly tend to think their forests are less relevant to fish habitat, have given less thought to the regulations, and do not necessarily think active management in buffers will be benign to riparian functions. Respondents who think their lands are not relevant to fish habitat and that the regulations are not fairly applied to them tend to be, but are not exclusively, SFLOs in western Washington with less than 200 forest acres.

1.4 SFLO Forest Land Sales and Land Use Change

Across the State, more heavily forested parcels that are a part of a larger tract, and those owned by SFLOs with larger forest holdings, were less likely to be sold.
At the same time, more actively managed parcels (evidenced by the extent of the road network and the existence of a harvest forest practices application) were more likely to be sold.
Small Forest Land with riparian buffers were not sold more frequently compared to other Small Forest Land, with such parcels on the east side of the State being sold less frequently.
Presence of riparian buffers was positively associated with land conversion to agricultural uses but not residential or other developed land use types.
SFLOs with more acres of forest in riparian buffers (or a higher proportion of total forested acres in riparian buffers) had higher generalized regulatory concern, but only when they had forest lands in the western half of the state.
There is, however, no significant association between general regulatory concern and past reported forestland sales. Stronger assessment of perceived challenges to “Ownership in the Future” (lack of a willing heir and development pressure) is associated with actual future (residential) conversion.
We also find that landowners valuing their land as a place of residence is associated with actual future (residential) conversion.
Sales of SFLO parcels are associated with subsequent transition to residential land uses on both East and West sides of the state.
Parcels with more forest cover and parcels that are connected to larger tracts of forest are less often converted away from resource or open space uses.
Westside SFLOs who manage larger forest holdings both sell and convert their lands less frequently than SFLOs with forest holdings on the east side of the State as well as Westside owners with smaller holdings.
At the ownership-level, evidence suggests personal and family financial needs may be the most salient triggering events for land sales that subsequently put Small Forest Lands at risk for development.
SFLOs generally do not plan on selling or transferring their forests as they approach old age, instead preferring to retain ownership for as long as possible.
Projections based on existing trends suggest continued statewide conversion of SFLO forests into other uses.

1.5 Policies and Programs for SFLOs

The SFLO Office does not have adequate funding and staffing to fulfill its legislative mandates.
Despite substantial decreases in funding and personnel, the SFLO Office is evaluated positively by many stakeholders and survey respondents.
Survey evidence suggests that paying for all outstanding Forestry Riparian Easement Program (FREP) easements would help mitigate the perceived negative impact of riparian regulations in general.
In a counterfactual sense, the lack of FREP funding has not likely resulted in the loss of riparian habitat. However, in the counterfactual sense, the program does help retain lands in forestry and open space uses.
Among survey respondents, more Alternate Plan applicants thought the process and outcomes were reasonable than applicants who thought the process and outcomes were not reasonable.
The most common criticisms of Alternate Plans was that they are complicated and difficult and, at the end of the process, SFLOs don’t get to harvest much more than existing regulations allow.
Survey evidence suggests that SFLOs who are knowledgeable about Alternate Plans are among the SFLOs who feel they have been most negatively impacted by the State’s riparian regulations; however, only 1 in 5 such respondents have a negative overall evaluation of their experience with Alternate Plans themselves.
The Family Forest Fish Passage Program (FFFPP) is well reviewed by most landowners and stakeholders, with the most common survey comment being that the program is a good use of public funds on Small Forest Land.

1.6 Recommendations

1.6.1 A-level: unqualified recommendations with strong qualitative and quantitative support

Provide additional and secure funding for the SFLO Office as well as other public organizations offering outreach, education, and technical assistance to SFLOs. In addition to existing focuses on forest health and timber production, include assistance with Alternate Plans, forest succession and legacy planning, and non-timber management objectives in outreach and education topics.
Support policies that increase forest cover and forest connectivity in a way that is consistent with forest health.
Expand Designated Forest Land taxation rules to include non-harvesting objectives.
Discourage additional development near existing small forest land.
Provide additional funding for the Family Forest Fish Passage Program.
Provide stable support for ongoing SFLO spatial and survey data collection and research collaborations.

1.6.2 B-level: recommendations with strong qualitative and quantitative support that depend on State policy objectives

Assuming continuation of the current Adaptive Management Program for riparian regulations, additional funding for FREP will help retain land in forest and open space use as well as mitigate the perceived negative impacts of riparian regulations for affected SFLOs. Alternatively, the creation of riparian regulations specific to SFLOs, that allow for more harvesting relative to status quo regulations, will alleviate the need for additional FREP funding.
We find about half of surveyed SFLOs express interest in conservation easements. If the State of Washington is willing to use public funds to increase permanently conserved forest land by financially compensating SFLOs, a voluntary cost-effective conservation easement program based on the principles of competitive reverse auctions can be appropriate.

1.6.3 C-level: recommendations with somewhat less qualitative and quantitative support that warrant consideration

Implementations of Washington’s Forest Practices regulations are perhaps the most common point of contact between SFLOs and State agencies and should be considered as opportunities to facilitate continued stewardship of the State’s Small Forest Land.
The State might consider supporting a peer-to-peer service that can match existing SFLOs with new SFLOs and seek to link potential SFLO mentors with relatively new SFLOs who would benefit from peer-to-peer learning. Consider other “outside the box” initiatives of this sort for SFLOs that are not necessarily typical state-administered programs.
Tax the conversion of forest and open space land to non-resource uses using appropriate social cost of carbon estimates.
Consider a variety of alternatives the State can pursue to support carbon benefits on Small Forest Lands. Ultimately, the current high fixed costs for participating in a carbon offset program will likely exclude the vast majority of Washington State SFLOs from existing voluntary and compliance carbon offsetting programs for the time being. However, offset markets are only one way to pay SFLOs for the carbon value of their lands.
The State of Washington could consider taking a stronger leadership role in supporting the existing Transfer of Development Rights (TDR) marketplace. At a minimum, the State should consider expanding the regional TDR programs to include other counties with high conversion rates.

[1] See Appendix D – Land Use Code Aggregation Scheme Used in the Report

Deliverables

Report

Data

Extracts from the 2007 and 2019 Washington State Forestland Database that were used to generate the charts and tables used in this report can be downloaded using the links below.