Forest banking and forest landowners forgoing management rights for guaranteed financial returns

Forest banking provides a new tool for forest conservation in which a landowner cedes development rights on their forested property in exchange for an annual payment, based on the assessed value of the timber. The Nature Conservancy is in the process of establishing a Forest Bank in Virginia, Indiana, and possibly elsewhere in the US to protect water quality and imperiled species. This study examines monetary willingness to accept payments for enrollment in the Forest Bank through a referendum-type survey of forest landowners in Southwestern Virginia. A logistic regression model that predicts the probability of enrollment is estimated using survey data that includes the landowner acceptance or rejection of a given annual payment level, landowner demographic characteristics, and tract characteristics. Findings suggest that landowners are responsive to annual payment bid levels and that financially viable bid levels (relative to local land prices) may generate reasonable probabilities of Forest Bank enrollment. Further, some tract and landowner characteristics are significant in predicting enrollment probability, including the desire to bequeath land to heirs, which suggests that forest-banking arrangements should take the target owners and properties into account—especially recognizing the potential reluctance to accept perpetual arrangements.