A framework for designing forest subsidies: Linking landowner and regionalimpacts in the Mississippi Delta

We examine the economic impacts of land use shifts from agricultural to for estry production in the Mississippi Delta at both landowner and regional ec onomy levels, The economic impacts that we consider include net revenues to farmers who convert Delta soybean lands to forest, and the changes employm ent, income, value added, industry output, and taxes that we expect to occu r across a three state regional economy. We develop a framework that links these landowner and regional impacts in order to compare economic impacts o f land use changes at landowner and regional levels, and to investigate the self-financing potential of subsidies. Results at the landowner level indi cate that conversion may provide positive returns on better soils for some tree species. Results at the regional economy level indicate that the impac ts would be generally negative, although landowner subsidies are computed t hat could equalize the regional impacts of forestry and soybean production. Further, for limited combinations of tree species and soil type, landowner subsidies could be self-financing, providing tax revenues that could offse t government outlays. Our results imply that if subsidies were adopted, the y should target species and site conditions.