Turning Farmers Into Foresters Via Market Liberalisation

Reform of the Common Agricultural Policy and public concern over the environment have brought woodland into the public eye as an environment‐friendly alternative land use in British agriculture. Survey evidence indicates that whilst it is the inadequacy of the returns from woodland that acts as the principal deterrent to planting, there are also a number of other factors that discourage woodland adoption. Of these, the perceived lack of flexibility that is associated with woodland figures highly. In part, loss of flexibility occurs due to the strength of controls such as felling licences and Tree Preservation Orders that restrict the conversion of woodland back to agricultural land. This paper develops a simple comparative static model of the way in which such restrictions impact on the allocation and price of woodland vis‐à‐vis agricultural land. Where felling controls are in operation they may reduce as well as preserve the area of woodland, and retard the efficacy of financial incentives. In this light, policymakers may do well to abolish felling restrictions on new woodland (possibly in conjunction with enhanced woodland incentives generally) if expansion of the wooded area is an explicit objective of future agricultural policy.