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Determinants of Forestry Investment and Extent of Forestry Expansion by Smallholders in New Zealand

Author

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  • Dhakal, Bhubaneswor
  • Bigsby, Hugh R.
  • Cullen, Ross

Abstract

While there has been a large increase in investment in plantation forestry in New Zealand by smallholders during the past decade, there are still many smallholders who have chosen not to become involved in this land use or who are using only a portion of their potentially planted land for forestry. To understand why this is the case, this paper studies two issues, the differences between those who have and have not established plantation forests, and the factors that explain the proportion of land used in forestry by small landholders who have identified that they have potentially plantable land. Land used for forest plantations is treated as a two-step decision process, where first a landowner must decide whether they would consider planting trees at all and then secondly how much land would be planted in trees. With this approach, a double hurdle model is used to study planting decisions. Using survey data obtained from 344 landholders in four South Island districts, the results indicate that property-specific factors, such as property size, years of ownership, and ownership being part of a partnership, as well as landowner characteristics such as perceptions of tax policies being favourable for forestry, off farm income level and expectations of increasing log prices were correlated with the decision whether to establish a plantation forest. The factors determining the extent of land identified as being potentially profitable in forestry actually being used for plantation forestry include forestry tax policy, expectations of increasing log prices, regional location of a property, owner’s annual income, and area used in sheep and beef production.

Suggested Citation

  • Dhakal, Bhubaneswor & Bigsby, Hugh R. & Cullen, Ross, 2008. "Determinants of Forestry Investment and Extent of Forestry Expansion by Smallholders in New Zealand," Review of Applied Economics, Review of Applied Economics, vol. 4(1-2).
  • Handle: RePEc:ags:reapec:50016
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    File URL: http://purl.umn.edu/50016
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    References listed on IDEAS

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    1. Shapiro, Barry Ira & Brorsen, B. Wade & Doster, D. Howard, 1992. "Adoption Of Double-Cropping Soybeans And Wheat," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 24(02), December.
    2. Ephraim Nkonya & Ted Schroeder & David Norman, 1997. "Factors Affecting Adoption Of Improved Maize Seed And Fertiliser In Northern Tanzania," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1-3), pages 1-12.
    3. Reynolds, Anderson, 1990. "Analyzing Fresh Vegetable Consumption From Household Survey Data," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 22(02), December.
    4. Kimhi, Ayal, 1999. "Double-Hurdle and Purchase-Infrequency Demand Analysis: A Feasible Integrated Approach," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(4), pages 425-442, December.
    5. Gregory, S. Amacher & Christine Conway, M. & Sullivan, Jay & Gregory, S. Amacher, 2003. "Econometric analyses of nonindustrial forest landowners: Is there anything left to study?," Journal of Forest Economics, Elsevier, vol. 9(2), pages 137-164.
    6. Reynolds, Anderson, 1990. "Analyzing Fresh Vegetable Consumption From Household Survey Data," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 22(02), pages 31-38, December.
    7. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-298, January.
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    Cited by:

    1. Evison, David, 2010. "Comparing the profitability of farming and forestry," 2010 Conference, August 26-27, 2010, Nelson, New Zealand 99682, New Zealand Agricultural and Resource Economics Society.

    More about this item

    Keywords

    forestry investment; land use change; non-industrial forests; double hurdle model; Land Economics/Use; Q15; Q23;

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry

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