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Notes: Impact of Cost-Share Programs on Private Reforestation Investment

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Government reforestation cost-share programs, such as the Forestry Incentives Program and Agricultural Conservation Payments Program, have been criticized on the basis that the government payments simply substitute for private investment capital. To provide insight into this problem, an econometric model of reforestation investment behavior was developed to separate the effect of the cost-share programs from market responses. The analysis indicated that government-induced investment has not replaced autonomous investment. Thus, capital substitution does not seem to be a valid criticism of these programs. The difficulties of investment behavior modeling are discussed. Forest Sci. 30:697-704.

Keywords: Capital substitution; distributed lags; incentives; interest rates; stumpage prices

Document Type: Miscellaneous

Affiliations: Research forester, USDA Forest Service, Southeastern Forest Experiment Station, North Carolina State University, Raleigh, NC 27695

Publication date: September 1, 1984

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