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Forest valuation under the generalized Faustmann formula with taxation

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  • Chang, Sun Joseph

Abstract

This article presents the second part of a two-part series on forest taxation and valuation. In this second part, I derive the forest valuation formulas under the generalized Faustmann formula with five types of forest property tax. They are the unmodified property tax, the site value tax, the flat property tax, as well as the gross and net forest productivity taxes. Under the assumption of backward tax shifting, all of the taxes result in lower land expectation values. If the tax does not affect the optimal harvest age empirically, then the value of the standing timber remains the same with or without taxation. When a forest property tax, such as an unmodified property tax, shortens the optimal harvest age, it will also affect the value of the standing timber.

Suggested Citation

  • Chang, Sun Joseph, 2018. "Forest valuation under the generalized Faustmann formula with taxation," Forest Policy and Economics, Elsevier, vol. 88(C), pages 46-51.
    • Handle: RePEc:eee:forpol:v:88:y:2018:i:c:p:46-51
    DOI: 10.1016/j.forpol.2017.12.007
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    References listed on IDEAS

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    1. Chang, Sun Joseph, 2018. "Forest property taxation under the generalized Faustmann formula," Forest Policy and Economics, Elsevier, vol. 88(C), pages 38-45.
    2. Sun Joseph Chang, 1982. "An Economic Analysis of Forest Taxation's Impact on Optimal Rotation Age," Land Economics, University of Wisconsin Press, vol. 58(3), pages 310-323.
    3. Pasour Jr., E.C., 1973. "Real Property Taxes And Farm Real Estate Values In North Carolina," Department of Economics and Business - Archive 259738, North Carolina State University, Department of Economics.
    4. E. C. Pasour, 1973. "Real Property Taxes and Farm Real Estate Values: Incidence and Implications," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 55(4_Part_1), pages 549-556.
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    Cited by:

    1. Chang, Sun Joseph, 2020. "Twenty one years after the publication of the generalized Faustmann formula," Forest Policy and Economics, Elsevier, vol. 118(C).
    2. Daigneault, Adam J. & Sohngen, Brent L. & Sedjo, Roger, 2020. "Carbon and market effects of U.S. forest taxation policy," Ecological Economics, Elsevier, vol. 178(C).
    3. Gong, Peichen & Susaeta, Andres, 2020. "Impacts of forest tax under timber price uncertainty," Forest Policy and Economics, Elsevier, vol. 111(C).

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