Notes: A Re-Evaluation of the Site Burden Concept When Forest Land Value is Maximized

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Abstract:

Comparative statics of the Faustmann (1849) forest land value model are used to analyze the site burden measure of forest tax incidence. The analysis focuses on the importance of allowing management variables to respond to forest taxation, and the results are obtained within the context of land value maximization. General results are derived by applying the Envelope Theorem and ancillary comparative statics to the Faustmann formulation. The paper defines a site burden error term that is shown to increase at an increasing rate with respect to tax rates when management decisions are assumed fixed. Graphical analysis of the timber yield tax is performed, and a specific empirical example of the yield tax, using planting density and rotation age as management variables, demonstrates that site burden error is not necessarily trivial. Forest Sci. 32:511-516.

Keywords: Faustmann formulation; taxation; timber yield tax

Document Type: Miscellaneous

Affiliations: Principal Economist, Rocky Mountain Forest and Range Experiment Station, USDA Forest Service, Fort Collins, CO 80523

Publication date: June 1, 1986

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