The effectiveness of state preferential property tax programs in conserving forests: Comparisons, measurements, and challenges

Forest property taxes have been identified as one of the major driving forces behind forest loss and parcelization. Among various policy alternatives for reducing the burden of forest property taxes on landowners, preferential property tax programs have been widely used across states. Existing research has mostly focused on individual property tax programs, particularly those based on current use valuation, while little has been done to document, analyze and compare programs across states. By examining survey data from state preferential property tax program administrators across the United States, this paper describes the commonalities and differences among states regarding their preferential property tax programs, provides a preliminary understanding of the relationship between state preferential property tax policy and trends in private forest conditions, and identifies issues related to the effectiveness of state preferential property tax programs and private forest land management and conservation. Our analysis revealed three fundamental disconnects: (1) Program attributes that were previously considered to be important for preferential property tax programs to be effective in retaining forest land and fostering management did not consistently correlate with program effectiveness as viewed by the administrators of these programs; (2) These program attributes did not consistently correlate with actual program effectiveness as measured at the state level by forest trend indicators used in this study (i.e., change in private forest land cover, change in average size of private forest holdings, extent to which private forest land is being actively managed); and (3) The self-assessed program effectiveness did not consistently correlate with actual program effectiveness, either. The various ways in which the effectiveness of preferential property tax programs is defined and measured contribute to explaining these disconnects. It is particularly important for researchers and policy makers to be explicit about how they define and measure effectiveness and the scale on which they conduct their analysis before assessing and comparing programs or suggesting improvement strategies.