Economic Impacts of Timber Harvest Regulations in the Lower Wisconsin State Riverway

In 1989 the State of Wisconsin created the Lower Wisconsin State Riverway, a new and unique institution to preserve and protect the aesthetic and environmental quality of the Riverway corridor. Performance standards that were developed for the Riverway include restrictions on timber harvesting. The debate over this intrusion into the management decisions of private forestland owners has sparked controversy and calls for compensation. We examined the range and severity of the economic impact of the harvest regulations on forestland owners by simulating several restricted and unrestricted timber management scenarios. What one considers a "cost" of the regulations depends critically upon what it is assumed landowners would do in the absence of the regulations. We estimated these costs by measuring returns from regulated management against returns from two possible "benchmarks," one involving a diameter limit harvest and the other a selectively marked thinning. The economic impact is greater for the diameter limit alternative, and greater in the Bluff Zone along the ridge line where visual impacts are more easily seen from the river, than along the hillsides. The impact typically fell below the threshold of 20% of property value that is incorporated into most compensation proposals currently being debated in the state and federal legislatures. Two timber harvests that were exempt from the regulations came very close to meeting the performance standards. While the focus has been on the issue of compensation, the controversy basically is rooted in the deeper underlying differences in philosophy about where the balance lies between actions to promote the public interest and the rights of property owners to pursue their own interests. Measures of the cost of regulations cannot be expected to resolve these fundamental differences. North. J. Appl. For. 14(3):126-134.