A unit of Lasting Forests evolving since March 30, 1999
A Total Forest Management Plan and Wildland Management Decision Support System
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Profits and Forest Size

Faunal system managers relate forest tract size to individual species suitability. For some species, the size seems unrelated to presence or abundance. For others, there are very close correlations, some apparently determining relations. Debates about fragmentation or tract size and its effects on species and nominal communities still go on. For some species, tract size is a poor substitute for edge volume in relation to effects of vegetation and ecological conditions on animals. The more circular the forest tract of a given size, the smaller will be the edge length. Edge can become very long with an irregular edge. The maximum edge (for any given acreage) is gained when areas are very long and very thin.

We have seen economic analyses of forest operations that suggest the only real difference between profitable and unprofitable operations is the leadership of the crew. Tom Walbridge reported a poor study suggesting that the only differences are "crew agressiveness." Discount the truck size, education, quality of saws, arrangement of equipment, and distance to landing ... the answer is in the leader and the workers. We recognize these great differences in the local operation. Weather, bad luck, change in interest rates, age of equipment, replacement-part sources, the mix of available in-woods equipment, tree age, size, and percent-cull, and soils are a few of the factors that are variable and that cause variations in estimates of costs of operations and likely returns. We can use computers and use information and make best estimates but we know we will be wasting money on trying to get precise cost values for our computer models. Best estimates from experienced people (and whatever research results that are available) must suffice.

We use a beta approach when making estimates. This fundamentally means to use estimates of the median. Supplemental studies of "range" will be helpful.

It is irrational to go after precise data (for the above-listed variables) when one of the major factors affecting logging profits is the tract size. Forestry is now very capital intensive and this increases the influence of tract size. Average costs of forestry operations (regeneration as well as harvesting and timber stand improvement work) decrease as tract size increases. There are high move and set-up costs for mechanized activities. Better utilization of technology and mechanization, specialization of workers, and equipment, and reduction of resource "indivisibilities" create economies for the larg tracts. The initial fixed costs (capitalization and transportation of machinery) are spread over a large wood-unit output.

To achieve a desireable "economy of size" for timber tract harvesting means to select a tract size that achieves the lowest possible average total cost per unit of wood. The estimates must include aggregates of many tracts over many years. The curves from these additions is "L-shaped", costs declining as size increases ... but only to some lower level. Finding the beginning of that level is" the trick," then looking for necessary tradeoffs and recognizing constraints that may cause diseconomies in other enterprises that operate on the same land.

There have been few studies of the economies that can be gained from increasing the size of tracts on which operations are conducted. Limits on the size of clearcuts may mediate against such studies. Of the studies reviewed by Cubbage, it can be said that increasing tract size can diminish costs by a factor from 0.25 to 5 times (a magnitude of uncertainty wiping out reasonable and usually highly costly efforts to gain precision elsewhere within the forestry system.) Based on the work to date, it can be claimed that for operations with The Trevey, costs per acre decrease significantly after tracts excede 50 acres. Cubbage (1982) said that tracts of less size are likely to receive such a penalty in harvesting costs alone that they would not be very economic.We do accounting on the basis of cubic feet of wood that is output per operating hour (not scheduled hour).

The Trevey as part of Rural System or some other group process seems to offer a solution to:

This is the crux of the economies of size issue in forestry. If loggers mechanize to achieve high production and concomitant low average harvest costs, small acreages become uneconomical to harvest at equilibrium prices. Cubbage:1982:19

We offer the potentials for a composite strategy: (1) aggregating ownerships (thus "tract size"); (2) group marketing of products(increasing wood price received); (3) making intermediate technology available; (4) reducing regeneration and TSI costs; (5) developing alternative profitable uses of the small, uneconomical tracts.

References

Cubbage, F. 1982. Economies of forest tract size in Southern pine harvesting. USDA Forest Service, Southern Forest Exp. Sta., New Orleans, La, Research Paper SO-184 27 p.

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This Web site is maintained by R. H. Giles, Jr.
Last revision January 17, 2000.