An economic analysis of land use alternatives on CRP land trees after the CRP contracts expire in east Texas

Abstract

Landowners who have planted trees on CRP land must decide whether to retain the trees or divert land to others uses after the contracts expire. An economic tool is developed to assist landowners in making the most profitable choice between retaining trees to produce sawlogs or pulpwood and reverting land to crops, corn, cotton, sorghum and wheat. A generic theoretical framework is formulated to compare various land use alternatives. Several scenarios are formulated to incorporate the changing patterns of variables and to examine the sensitivity of the outcome to these changes. The influence of implementing the conservation compliance plan (CCP) is also examined. The time frame of the analysis is determined by the financially optimal. single rotation length of the tree stand. The real discounted revenues of the land use alternatives, based in 1993, are compared on a per-acre basis. The results indicate that retaining trees on post-CRP land is a better option than reverting land to corn, cotton without a CCP, sorghum, or wheat under all scenarios. However, when compared with reverting land to cotton with a CCP, retaining trees does not seem to be a profitable land use alternative under several of the scenarios. Given that a large proportion of the land going into CRP in east Texas is wheat acres, it seems likely that majority of the CRP land in trees is going to be retained in trees upon expiration of contracts.