Impacts of the Small-Tract Forestland Tax Program on Forestland Use in Oregon

Preferential tax programs for forest landowners are used to achieve land use–related environmental and social objectives. Nonindustrial landowners are likely to own forests near development boundaries, which may lead to a higher likelihood of land conversion from forests to alternative uses. This article answers the question of how preferential tax programs for small-tract forestland (STF) owners have influenced the conversion of forested lands in Oregon since 2005. We find that a 10% increase in STF program participation within a county (as measured by acreage enrolled) can lead to a conversion of 127 ac from wildland forest to mixed forest/agriculture since the prior forest inventory period. Compared with the default “Forestland” tax program, participation in the alternative STF tax program has had a smaller and statistically weaker effect on the number of acres converted to low-density residential use. However, hypothetical elimination of the STF tax program would increase enrollment in the default Forestland tax program, which was measured to have a greater effect on the conversion of wildland forest to low-density residential land. Hence, the results overall provide evidence that the STF program has achieved its objective of mitigating development pressures and reducing conversion of forestland to nonforest uses. Study Implications: Forest landowners enrolled in preferential forest property tax programs pay lower property taxes. One objective of these programs is to reduce conversion of forests to other, nonforested land uses. We estimate the impact of such a tax program on land conversion in Oregon and find that participation rates do not contribute to land conversion towards low-density residential uses. However, enrollment in the alternative tax program does contribute to such conversion.