Effects of Wood Products Markets and Forest Policies on

I model decisions by landowners to convert forests to other uses or to establish new forests in the US South, the region with the most active forest investment in the nation, with the largest global production and consumption of wood products (Wear et al. [...] Option values are defined for the option of converting from the current land use i to the other land use j (𝑂𝑂𝑉𝑉𝑖𝑖𝑖𝑖), which is forgone with land use conversion, and the option value of converting back to land use i 𝑂𝑂𝑉𝑉𝑖𝑖𝑖𝑖, which is obtained with the land use conversion. [...] To address the heteroscedasticity that arises from the bounded nature of the dependent variable, regressions are weighted by the land area of the initial use in each equation. [...] I posit that the wetness of land conditions will be directly proportional to the costs of converting from forest to agriculture and use the proportion of each county’s Resources for the Future 9 nonfederal NRI plots in a wetland classification as a proxy for conversion costs. [...] For afforestation outcomes, the effects of prices and planting costs on land use change, as expected, are smaller than the effect of changes in forest land rent, and all indicate an inelastic response (consistent with prices and planting cost being components of the rent estimates).