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A mom TWUE FOR MEASURENG
AND CQMPARING TH! ECONOMIC IMPORTANCE
C34: TfiMNER AND WHDLANO RECREATION
IN WCHKEAN

11min ku- flu Moo ofPh. D.-
WW STATE UNIVERSITY
Marsha" N. Pafloy
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This is to certify that the

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thesis entitled

A Proposed Technique for Measuring and. Comparing;

the Economic Iwoortance of Timber and Wildland
Recreation in Richijan

presented by

I
In

-.<-7.rshn,ll IT. Palle;r

has been accepted towards fulfillment

of the requirements for

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$33.13. degree m ‘ orxstry

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V Ma for professor

Date 3/1/56

0-169

 

 

 

A PROPOSED TECHN'I QUE FUR Willi-HEM”) AW Cain/32A RING
THE ECONOMIC IWORTMICE OF

TIMBER AND MIDLAND IECREATION IN MIG-IIGAN

By

In
t 04.
Marshall Ni Palley

A THESIS

Submitted to the School of Advanced Graduate Studies of
Michigan State University of Agriculture and Applied Science
in partial fulfillment of the requirements
for the degree of

IDCTOR OF PHILOSOPHY

Department of Forestry

1956

TABIE OF (DNTENTS

Chapter
INTmDUcrIONOOoO00.00000IOOOOOOOOOOOOOOOOOOO000.
I. GOALS AND APPLICATIONS..........................

statemnt or me mblemOOOOOCOOOOOOOCCOO...O.
Applications...00.0.0.0...OIOCOOOOOOOOCOOOOOO.

II. A EVIEH OF THE HTEMTUECOOOOOO000.00.00.00...

Retention.cooeoooooeoooooooooeoeeoooeooeooooo
Hunting and Fishingooeoe00000000000000.0000...

Timer.0.000000000QOOOOOOOOOO00000000000000...

Other Wildland PmdUCtBoooooeoeeoooeoooooooooo
SW1? and Discwsioneeooeoooeooeo00.00.0000.

III. CONCEPTS IN LANDEmNOMISHH.............u..o

land as Habitatoooeoeooeoooeeoooeooooeoeoeoeoo
Land as a Factor of Production................
Money Income vs. Direct Utility...............
Property Rights in Forest Goods and Services..
Economcs Of FONSt Land MCfltiOIl.-...u.u.oo
The comtition or land Uses................oo

IV. mmmm EmNOMY 0F MICHIGANOoeeeoooeoeoooo.
FOI'OBt land omershipOOOOOooooooooooooecoco-o.

Riva“ Fomst landOOOOOOC.OOOOOOOOOOOOOOOOC
Public ForGSt WCOOOOOOOOOOOOOOOOOOOOO0.0.

Forest Goods and Services.....................
wateroQQOQOoeoeoeooooooooooooooeooooooooooo.
Timber Pmducuooecocoa-000.000.000.00...-ao
Recmationfil 0330000000...oeoeoooeeoooeeooee

Economic UnderdeveIOpment.....................

Page

Chapter
V. NATIONAL INCDME AcmmTING..o....................
mcepts in InCOflB and muthOOOOOOOOOOOOOOOOOO

Income and wealth in General................
'll'lc Concept 0f Natiorlal InCOMOoQOOooeeoooeoo

National Income Measurement by the Department
of alumnae-000.000.000.00.ooooooooeoeeoooeoeo

Structure of the Accounts....................
Tm‘fimed AccomuD0.00000000000000000C0.0...
sowcos or Pamnto00.00.0000...0000.00.00...

Distribution Of Incomoo0.0000000000000000...
NonfaCtvOI' Pawn“.00000000000000.0000000000.

VI. BUILDINGAFWM FOR WWToeooooooooooo
mall-”mt Conceptoeooeeooeooooo00000000000000
Economic IJIpOI‘tmOOuuuu...Hanan"...

PO11!“ Of Viawooeeooooeeooeoeoeggooooggooooogo
Secondary Economic Effects...................

mammnt mcmeOOOOOOOOOOOOOOOOOOOOOO...

Timber..uuuu..uu..............u.o...o.

Estimation-00.0.0...ooeoooooo00.00.000.000...
VII. SIMMOOOOOOQOOQO00000000000000.0000000000000000

Measuring Economic Importance..................
Related Research “eedSOeooooooooo00.000.00.000.

”ENDIX.QOOOOOOO.0.0.0.0.0000...OOOOOOOOOOOOOOOO

BIBLIOGWOOOOOOOOOOOOOOOO0.0.0.0...0.0.0.0....

Page
6h
6h
6h
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73
7h
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37
9h

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105
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A f‘mPOSPIE ETERNIQUE FOR MEASURING AND COMPARING
THE ECONOMICIDHKHMMNCE OF
TIMBER AND WILDLAND ECIEATION IN MICHIGAN

By

Marshall N . Palley

AN ABSTRACT

Submitted to the School of Advanced Graduate Studies of
Michigan State University of Agriculture and Applied Science
in partial fulfillment of the requirements
for the degree of

{UCPOR OF PHIIDSOPHY

Department of Forestry

1956

V

Approved j¢flw -

Marshall N. Pulley

The important uses of wildland in Michigan are forestry and
recreation. Demand for both timber products and recreational
opportunities is on the increase. This enlarged demand fbr ferest
goods and services underlines the need for establishing priorities
in forest land use, particularly in connection with the large area
of publicly owned forest land.

One approach to setting up the needed priorities of use would
be in terms of an economic comparison of forestry and ferest.recrea-
tion. The fact that the economic benefits resulting from each of these
uses accrue not simply to the land owner but are widely diffused
occupationally and geographically adds to the complexity of the pro-
blem of economic comparison. This study therefbre has for its aim
formulating a means of measuring and comparing the economic importance
of timber and forest recreation in Michigan. Such a methods study
is held to be a necessary preliminary to making the required economic
comparison.

The problem under investigation has been approached through a
critical review of related studies in the literature, a consideration
and formulation of pertinent portions of economic theory, and an
examination of the current availability of the desired statistical
quantities.

Examination of a number of economic appraisals of the contri-
butions of forest products and services indicated the wide range of
approaches possible. A consideration of pertinent principles in the

economics of land proved helpful in bringing the various services of

Marshall N. Palley

forest land into sharper perspective. A brief survey of the wildland
economy of Michigan served to emphasize the extent, uses, and re-
lationships of the products of Michigan fbrest lands. Of the possible
alternatives for measuring economic importance, the national income
accounting approach of the U. S. Department of Commerce was the one
selected as most serviceable fer the purposes at hand.

The results of this study are of'tuo kinds. An approach to
measuring the economic importance of timber products and of the bundle
of economic consequences of the use of land fbr recreation has been
formulated in such a.uay that it will offer a fair comparison of'these
two alternative uses of forest land within the framework of the economy
of the State of Michigan. This approach involves determining the con-
tributions to the national income originating with each of these
industries in Michigan. To achieve comparability, it has been proposed
that the measurement be carried out at consumer level or at the high-
est level of production attained in Michigan and that measurement be
limited to income accruing to the economy of Michigan.

Other results of this study relate to a test of the feasibility
of the proposed measurement technique. Evidence is presented that the
measurement for timber may be implemented with existing statistics on
national income and the value added in manufacturing and trade. The
state of information on the recreation industry is reviewed and the
less complete and satisfactory portions of the needed infermation
identified. The need for further consumer surveys to supply these

deficiencies is indicated.

ACIQIOWIEDGMENTS

This study was initiated at the suggestion of Dr. Lee M.
James of Michigan State University and carried out under his help-
ful and instructive supervision. The need for making such a study
was formally recognized in the minutes of a June, 1955, nesting of
the Wildland-Use Committee of the Lower Michigan Forest Essearch
Council, of which Dr. James is Co-chairman. In consideration of
his assistance in this undertaking and his guidance in my graduate
program of study, this dissertation is herewith dedicated to
Dr. James.

Special thanks are extended to Drs. Raleigh Barlowe, Denzel
Cline, and Glenn 1.. Johnson of Michigan State University who,
along with Dr. James, deserve much of the credit for what there is
of economic truth in the pages that follow. I

Very material assistance was afforded the writer by Michigan
State University in the form of a Graduate Council Fellowship and
a Graduate Assistantship in the Department of Forestry which are
hereby gratefully acknowledged. It has been a privilege to be
associated with the Head of the Forestry Department, Dr. Terrill
D. Stevens, and to enjoy the benefit of his wise example and
encouragement as a member of my committee.

To my father and mother, Mr. and Mrs. J. Iewis Palley of
Pittsburgh Pennsylvania, who have provided financial md moral
aid \mstintingly to provide yet another installment in their son‘s

formal education, I express a full measure of filial gratitude.
And, to my wife Margaret Knight Palley, I express my affectionate
appreciation for'her shouldering so large a part of'the burdens of
caring fer our children and, with them, afferding me the joys of a
family life which complemented and facilitated the accomplishment
of’my program of graduate study.

Thanks are extended also to the Michigan Department of
Conservation for the use of a table from Michigan Conservation,

and to Mrs. Mary Seaman for typing the manuscript.

IN TROD UCTI CK

A few short years ago, serious land—use problems in the cutover
region of the state of Michigan led to some important changes in the
land-holding pattern in that part of the state. Millions of acres of
land held for farming or for speculation were given up to the State for
non-payment of taxes, or were sold to the Federal Government. In place
of a pattem of isolated forest homesteads on sub-marginal lands in-
capable of supporting a profitable agriculture or a solvent local govern-
ment organization, a new public domain came into being with nearly seven
million acres of land dedicated to forestry and recreation.

A decade and a half of full employment and high level economic
activity have been experienced since that time. The new pattern of
land use has had an opportunity to become stabilized. Reversion of
lands to the State for non-payment of taxes is now practically unknoun.
The holdings of both State and Federal Govemments have leveled off at
a figure not likely to be greatly changed one way or the other in the
near future. The policy of managing for forestry and recreation, of
multiple-use management, has now had a number of years of trial under
Michigan conditions. From the standpoint of using each piece of land
according to its capabilities, substantial gains have been made. At
the same time, the persistence of a low-income problem in northern
Michigan, the failure of this part of the state to share fully in
the gains in living standards and productivity experienced elsewhere

in the State and Nation,have been a source of continuing concern.

The resource base appears to be holding up fairly well under
the demands which are being made upon it for forest products and re-
creational Opportunities. Shrinkage of the supply of old-growth
hardwood timber in the west half of the Upper Peninsula has probably
been counter-balanced by improvements in volume and stocking of large
areas of second-growth forest there and in the Lower Peninsula.
Depletion of natural stands of softwood sawtinber and pulpwood has
been partially offset by the progress of the numerous plantations of
coniferous species of forest trees in the state. Similarly, the
destruction of deer range occasioned by overepopulation of’the deer
herd has been eased by more liberal shooting regulations and com-
pensated for by habitat improvement measures.

The ability of the land resource base to continue to meet the
expected fixture requirements for tisber and recreational opportunities
is open to question. The capacity of existing Michigan pulp mills,
with special reference to their ability to use Michigan-grown woods,
is being considerably enlarged. A new mill is to be constructed at
Alpena which will use 60,000 to 80,000 cords of Michigan aspen per

year for the production of headboard}

There is a striking growth
in the use of wildland for recreation as measured by such indices as
sales of hunting licenses and visits to state parks and national

forests. As with our schools, our roads, our public health services,

—-— ‘—
._ H A “AA ‘ A———

lygod Tgpics, Michigan Conservation Department, July-Dec.

 

1955.

 

the denand for these publicly provided services appears to outrun the
supply. Provision of free government services creates new demnd
before the old can be satisfied. Because some forms of wildland re-
creational use are extensive users of land, the striking growth in use
and the promise of sustained future growth prompts concern about the
effects of increasing recreational use on other forest values. Sons
observers have also seen an important threat to wildlands in the
growing residential use of rural lands by non-farm families. We

have apparently only witnessed the beginning of the growth of the
rural-urban Rings.

The benefits of recreational use have seemed largely to those
people from all parts of the State who have been the enjoyers of the
recreational values -- the sightseers, the campers, the hunters, the
hikers. To a degree, residents of the wildland districts have bene-
fitted frol added employment opportunities. The question which
arises is how far recreational use cm be allowed to go there it
comes into conflict with other wildland uses. Ours is a civilisation
which is .lavish in its use of materials. It may not be too early to
think in terns of a balance between the use of forest land for grow-
ing essential raw materials and the me of forest land for direct
enjoyment.

Beth at the local level and at the state level, priorities in
forest land use must somehow he arrived at. Since such a aisable
M of Michigan's forest land is publicly owned, such priorities in
use out be hamsred out through the democratic process. The ptblic

leads are an important source of the timber and recreational
atmosphere which is available to the people of the State. Policy-
makers should know the optimum combination of uses to bring about
the best returns from the forest lands of Michigan. As a first and
more nodest step in providing guides to proper management objectives,
it seems desirable and worthwhfle te try to find a way of determin-
ing, as of today, what is the relative econouic importance of timber
and forest recreation in the life of the State.

I. GOAIS AND APPLICATIONS
\ Statement of the Problem

This study is concerned with devising a method for reassuring
the relative economic contributions of two of the major uses of forest
land in Michigan. The uses of forest land it is preposed to measure
and compare are timber growing and forest recreation. Timber and
recreation are the main products sought by both public and private
owners of Michigan forest lands. The U. 3. Forest Service is
committed by long-standing policy to ”multiple-use" management of
the lands under its administration. It is the policy of the H1chigan
Department of Conservation to hold lands which I'appear to be needed
by the general public fer hurting, fishing, smoother conservation
and recreational uses."1 the measurement of the contributien of
water, a third major product of forest lands in Michigan, will not
be included within the scepe of the present investigation. Water,
as yet, is in a subordinate position to timber and recreation as an
acknowledged object of forest land management in Michigan. Its
evaluation migrt more appropriately be carried out in a section of
the country more water values are of first importance. Under
Michigan conditions, water might be made the subject of a separate
investigation.

A‘ .—

lniehigan Department of Conservation, Twelfth Biennial
39E“: lghz'hlh p. 550

In the context of the present study the economic returns of
timber and of recreation must not be measured as separate and distinct
mdertakings. that is needed is rather a common framework for the
measurement of each of these two form of land use and their dependent
economic activity. There are two reasons for adapting such a unified
approach to the problem of measurement. The same acre of land often
yields more than one product, making it necessary to allocate the
total returns from that acre of land among several enterprises.
Various complementary and competitive production inter-relations be-
tween uses may need to be sorted out in making a proper allocation
of returns as, for example, between timber production and deer range,
where certain timber cutting operations may be concerned.

But, there is another reason for avoiding the practice of
measuring each of the important forest products and services sepa-
rater and in isolation from the others. that is being sought is a
comparison, a determination of relative importance. Therefore, it
is necessary to find some least eon-Ion Inasure adapted to the diver-
sity of products to be dealt with, despite the loss in suitability
which may apply to particular individual uses. It is desirable that
comparisons with other forms of economic activity be possible, but
this mt remain a secondary consideration.

In the economic measurement of forest land products and
services, the exact point of measurement chosen may have an important
bearing on the resulting dollar values arrived at. It is reasonable
to propose to measure both the value accruing to the land and also
the resulting economic activity dependent on that use of the land.

In a highly interviependent economy, however, where one economic activity
is dependent on nearly every other one, it will be found to be a diffi-
cult matter to distinguish between dependent and non-dependent activities.
Such, nevertheless, will be the lines along ndnich this investigation
will precede.

lhis study seeks to mark out the means by which a comparison of
the economic importance of timber arnd forest recreation in Michigan
can be made. It is an economic comparison not directly obtainable
from the national income and product estimates or the periodic censuses
of business and manufacturing. It is held that a soundly based
measurement scheme is an indispensable preliminary to carrying out the
measurement operation proper. The actual measurement of the magnitudes
involved is regarded as a separate project.

Economic importance will be evaluated in terms of the contri-
bution of a given form of land we to the sun total of goods and
services available to the people of Michigan for their over me or for
exchange with others. ihese goods and services will be measured at
their market price, expressed in dollars, in all those areas in which
market prices are operable. Economic contribution will be measured
in terms of the income produced during a calendar year. Measurement
in terms of an annual flow of goods and services is a good reflection
of the current contribution of particular uses of forest land. It
expresses the valuations of numbers of society acting as consumers in
the market place. But, it is not enough to measure and count the
Current contributions to the income accounts. Some regard must also

be shown the degree of maintenance of productivity of the land-resource

base. Proper allowances must be made for additions to or deductions
from the resource base which are associated in time with the flow of
income from the land.

Applications

fire main justification for making a methods of measurement stuiy
is the value of such an effort for the practical task of carrying out
the messuremnt operation. If in the future a full-scale measurement
project were to be carried out along the lines herein indicated, the
full value of such a preliminary exploration of methods as is here
being made would be realised. 0n the other hand, if only a portion of
the approach here advocated were to be adopted in future pieces of work,
it would still represent a contribution. The main purpose of this.
study then is to provide a framework on nhich a detailed stnriy of the
economic importance of specific wildland products in Michigan could
be hung.

There is a real need for providing such a framework. There is
no lack of authoritative pronouncements on the relative inportance of
the primary wildland uses, but evidence in support of most views which
are put forward is not provided.

Gulick states unqualifiedly that wildlife, recreation and
inspiration come far down the line in importance, compared with
”national survival in tiwer and water."1 On the other side of the

fence is Benson, vino sees the tin coming in Nova Scotia when the
lowest priority forest land will be that vhich is "so far from water,

_ __

1Luther Halsey Gulick, American Forest Polic ; A w of
Government Administration and EEonoEc Control. i's'he or-the
InBEIEuE oWiR‘fa on, cw YorEr Duell, Sloan and

Pierce, 1951)e p. 179s

so lacking in scenic attraction, and so unsuited to wildlife or blue-
berries as to be of value only for the production of trees."1 11..
judgments of knowledgeable individuals are admittedly worth noting.
It should be possible nonetheless to find some sort of objective test
of such judgments.

One reason why measurement in this area has not been more
actively carried on is that one important group of policy makers and
administrators resolutely refuses to acknowledge the existernce of a
conflict. Of those who are more prepared to see the divergences of
interest between uses, many are deterred by what they regard as the
difficulty or the impossibility of measuring some of the important
values. involved. Finally, of the smaller group she have ventured on
to some type of wildlarnd product evaluation, it is difficult to borrow
methods became of differences of points of view and the uniqueness
of certain regional resource-use patterns. Some studies have been
marred by an excess of enthusiasm and a deficiency of economic reason-
ing.

The importance of these comparisons is augmented by the fact
that wildland use planning deals with long-range considerations.
“Decisions made in the present to practice pure-stand forestry, for
example, have important consequences on wildlife production for a
long period to come. Clearing of forest land for agriculture is a
measure which can be reversed only with the passage of a period of
my years. Because of the current needs to make such decisions, the
need for some reliable type of evaluating framework is apparent.

 

1D. A. Benson, ”There is More in the Forest Than Trees,"
522221 2111311312. Vol. 31 (Sept. 1955). p. 235.

10

It is principally as a guide to public policy that the attempt
to refine and extend the economic measurement of the contributions
of wildland is undertaken.

Economic measurement of the current contributions of differing
forms of wildland use would provide guides to policy, to be used
Judiciously in connection with other guides. It would have the sub-
stantial advantage of substituting objective numerical values for
subjective hunches or hastily gotten up quantities. A guide might
be provided to government, for example, in connection with its pro-
notional expenditures for economic development. The desirability of
making funds available for services to new wood-using industries
might be weighed against the expenditure of suns of money to advertise
the tourist attractions of Michigan in the national magazines.

Some wildland products are essential raw materials, like timber
and water. Others touch closely on deeply felt national values, such
as the beauty of the mdisturbed wild environmnt and the right of
access to its enjoyment. um. from their overall importance to on.
things Americans cherish as a people, it is the nature of these wild-
land products matydzynot always respond well to the regulating
influences of the economic market mechanism. is will become clear
in the pages which are to follow, portions of the wildland econonw are
inflame to the influences of the market; other portions respond in
socially undesirable me if the operation of natural economic forces
is allowed to go unchecked. Therefore, in our mixed system, mixed in
the days of Adam Smith and more minced in our om time, a larger element
of intentional control needs to be exercised over the wildland portion

11

of the econonw than over many another portion. more the "invisible
hand" fails to direct the operation of things in a beneficent way,
men must make consciow decisions, based it is to be hoped on the
relevant facts of the case, economic facts among others.

A well-conceived plan for the measurement of wildland values
in Iflchigan may have significance beyond the immediate limits of its
direct implementation in a Michigan setting. Government Operation
characterizes a sizable portion of economic activity. Government
regulation applies to nearly all the rest. Ihe economic evaluation
of the costs and benefits of government operations is a large and
various task on which but little md local progress has been made.
The work in connection with the evaluation of the desirability of
large-scale water projects is among the most detailed which has been
carried out.l However, such work falls far short of meeting the needs
and complexities of other government activities. It migot reasonably
be expected that a well-directed evaluation of forest land resources
in the State of Michigan would have a general significance and appli-
cation to the larger endeavor of measuring economically the effects
of govemment operations. The, there might conceivably be a larger
methodological significance in the present project.

1A good summary of the thinking of the interested federal
agencies is contained in the report of the Subcommittee on Benefits
and Costs to the Federal Interagency River Basin Committee, Pro ed
Practices £95 Economic Analysis 93 River Basin Proiecte (Hashin' Son,

12-

The stuiy which follows seeks to find a means of measuring the
economic importance of the major was of Michigan wildlands to Michigan
people now living, viewing the products of these lands as a flow of
goods and services and of net additions to productive capacity valued
at their present worth. Such an evaluation seeks to discover in real
and effective term how much better off the contemporary generation is
with the benefits of each of these mes as compared with how well off
it would be without such benefits. lhis methodological investigation
is held to be of value and significance, became of its bearing on
general problems of economic measurement and because of the aid it
should render a detailed effort to measure the specific areas of
activity herein dealt with. It should serve the helpful purpose of
clarifying the assmuptions of existing efforts to meas‘n‘e similar
wildland values and should enable improvements to be made in future
work, all directed at providing somder guides to wise public pansy

in land use.

II. A IEVIEH OF 1111?. HERATURE

In building up a system fer measuring the economic importance
of wildland uses, help can be gained in several distinct quarters.
First, there are specific studies of particular wildland uses in
particular localities which may yield interesting methodological ideas.
A second source of guidance is to be fbund in the specialised litera-
ture dealing with national income accounting. Finally, there are the
principles of economic theory, finish should be serviceable here, as
in all other economic contexts. In particular, the theory of the
economics of land should be of especial relevance. It is proposed to
discuss specific land use evaluation studies in the present chapter.
The contribution of land economics forms the subject matter of’the
fbllowing chapter.

Of'the literature which has a bearing on measuring the economic
importance of wildland resources, few works have concerned themselves
specifically with formulating techniques of economic measurement.
More commonly, such studies have relied on systems of measurement
which have tended tO'bO implicit rather than explicit, customary and
expedient rather than novel and analytical. carried out frequently
by such generalists as geographers, or by such technical subject
matter specialists as wildlife biologists, the soundness of the
economics employed in some of these studies is Open to question.

More sophisticated economic analysis and reasoning is to be found in
related works which have been written by economists, fhrest economists,

and agricultural economists.

Regardless of the authorship, a consideration of these economic
studies of wildland resources is an essential step in arriving at a
system of amssuremsnt. These works can be classified usefully in term
of the major use or uses with which they are concerned. The discussion
which follows is accordingly organized under the headings of recreation,
hunting and fishing, timber, and water for forage and livestock. A
general summary of methods and of sources of data then concludes this
review of the literature.

Recreation

For some 25 years, forest recreation has been accorded formal
recognition as a source of wealth and as a form of land use;l men
the agricultural boom in the northern Lake States collapsed shortly
after World War I, the tourist trade appeared as an alternative to
timber and farming. If the plow could not everyvmere follow the are,
then why not the rod and gun and camera? were there were sumaer people
the economic infusion was noticeable and immediate. Income problem,
both individual and governmental, appeared to be greatly diminished.
Northern Michigan had water and greenness and a good location with
respect to the great industrial centers of the north central region.
The onset of the general depression, in 1929. only made worse the
already serious problems of the northern cut-over lands of Hichigm

 

In early reference is K. c. Menurry, ”Use of Land for.
Recreation," Annals of the Association g_f_ American Gem,

 

 

15

and adjoining states. It was at this period that a study of the contri-
bution of recreation to northern residents and govemmntal units was
carried out by Wilbur O. Rodrick at Michigan State (millage.1

‘Ihe contribution of recreation was masured by Hedrick in term
of the assessed valuation in 1931 of recreational properties on the tax
rolls of 189 townships and 2 city government units of the northern part
of the lower Peninsula of Michigan. 'ihe assessed valuation of recreation-
al properties was deteminod for each affected taxing unit and expressed
as a percentage of the total assessed valuation of all property within
the Jurisdiction of that wit. Rodrick fomd a great range in both the
proportions of the tax load borne by recreational properties and in the
absolute else of the tax burden on such properties from place to place.
In as man as 20 of the townships, the major share of all property taxes
was being paid by the recreational properties. A comparison of the
steadiness of tax revenues from recreational tomships compared with
non-recreational townships for the years 1926-1931 showed more cases
of increased assessed valuations among the recreational townships than
among the purely agricultural townships.

0n the descriptive and historical side, Hedrick's bulletin on
recreational use of land in northern Hichigan provided a store of

valuable and interesting information. An interesting classification

IMlbur 0. Rodrick, moreational 1.133 of Northern Hichi
Cut-over Lands, Michigan i—““£'gr1cu1 urn'Tnxpez-‘i'x'v'nnmt Station letin

0. , .

 

16

of the various classes of recreational use was presented. The geographic
distribution of particular types of use, such as the smear resort and
the hunting and fishing club, was clearly marked out in informative maps
and tables. lhe historical background of these land-vase developments
was filled in and considerable detail on the location and size of the
larger individual group undertakings was provided.

Professor Hedrick's approach to evaluating recreational use of
land was from the standpoint of the econoaw of the local community and
the local governmental units. kcreation was treated as a source of
wealth to a commmity, as an industry sustaining or helping to sustain
the econonnc life of the commmity. The recreationist was an outsider
who made his money elsewhere. 'l‘hroug: mrship of local land and
improvements and throng: seasonal residence in the district, he made an
economic contribution to the well-being of the full-time residents.
Rodrick saw this contribution to local economc life expressing itself
mainly in additions to the local property tax base, and in the stimulus
provided to local business and employment. 'lho taxes levied on
recreational properties owned by non-residents were held to be more
than sufficient to offset the added costs of local government resulting
from the needs of servicing these preperties. One important saving
was in connection with schools, since sumer residents helped to
Support them but provided no children during the school year to add to
the costs of building and operating the educational plant.

17

A pair of recent doctoral studies in the Geography Department
at the University of Michigan carried the study of recreation as a local
industry one step further;1 They represented an attempt to estimate the
added income accruing to the local econonw as a result of recreational
use. ‘lhe two studies added to the general body of knowledge of the
impact of recreation on a local cconouw. They applied a cannon approach
to a transitional county in the lower Peninsula in which agriculture was
still the dominant activity and to a wildland county in the Upper
Peninsula in which timber and the forest products indmtries were the
mainstays of local economic life.

Pearson's study may be used to illustrate the method by wish
the economic sigmificance of recreation was measured. Pearson measured
the economic contribution of recreation as the sum of three types of
income, namely, income from retail sales, income from the sale of services,
and income from the property taxes on recreational lands. he concept
of income used in all these three classes of payments was gross receipts.
This method went beyond that of Hedrick by providing an estimate of
business returns as well as government returns occasioned by recreational
activity.

V Pearson's main source of information on business receipts was

government records, rather than the records of either the individual
businessmen or the recreational consumers themselves. Information on

retail sales by month of the year and by class of retail establishment

_‘

lfioss Norton Pearson, “Iboreation and its Significance in the
Econow of Ogemaw County, inchigan," (Unpublished Ph.D. dissertation,
Dept. of Geography, University of Michigan, 1951.) and William R.
Brueckheiner, "The Significance of the Recreation Industry in Alger
County, Michigan," (Unpublished Ph.D. dissertation, Department of
900mm. University of Michigan, 1951;).

18

was available from the Michigan State Sales Tax Commission. Information
on service trades was taken from the 19148 Const- of Business of the
United States Bureau of the Census. its major problem to solve was the
allocation of the correct proportion of retail sales to recreation.
Both Pearson and Brueckheimer plotted curves showing per capita sales
by months in the year. The trend of these curves reflected markedly
the buying of stunner and fall visitors. Similar seasonal curves for
non-recreational counties showed no similar bulges in the vacation
season. It was therefore inferred that the excess of sales in the
summer months in Ogeaaw and Alger Counties over the winter months could
be regarded as the increase of sales attributable to recreation. the
peaks of the seasonal curves were more pronomced for recreation-senstive
lines of business, such as sporting goods establishments, eating and
drinking places, and variety stores than they were for the sales of
general stores and filling stations.

Pearson estimated that the retail sales to recreationists were
10 percent of all retail sales in Ogemaw County in 1950. Brueckheimer
estimated the recreationists' share of retail sales in Alger County
in 1951 to be 16 percent. Pearson's final tabulation of I'Income From
Recreation" came to a total of a little over 1 million dollars, of
which 73 percent was income from retail sales, 22 percent income from
sales of services, and 5 percent receipts of local government units
for property tax or State governmnt payments in lieu of prOperty tax.
Pearson observed that the income from the sales of agricultural products
in Ogenaw County at the farm in 1950 was 1-3/h million dollars, and con-

cluded that recreation was an important but not a leading activity in

19

the county. Brueckheimer similarly was influenced to the view that in
Alger County the shortness of the recreational season and the absence

of full-time employment for any of the individuals who benefitted from

it weighed heavily against regarding it as of primary economic importance.
He was convinced that fltimber cutting and processing remained the basic
industries in the county," although only three wood-using plants remained
open in the county.

ligating and Fishing

 

The economic importance of wildlife, of animals existing in
the wild state, covers a greater range than the economic importance of
wildlife in its recreational aspects. King provided an inclusive list
of the values of wildlife which suggests the difference of the two
concepts.1 On such a broader view, the value of wildlife would include
returns to trappers from the sale of the pelts of wild animals and also
the income from commercial fishing and from fur and game farming. In
addition to these readily appropriable sources of income from wildlife,
there would be such other items as the pollination of clever seed, insect
and rodent control furnished gratuitously by wild creatures, and a wide
and important variety of esthetic, social, recreational and scientific
values, many of which defy an accurate accounting. King listed such
social values as improved mental and physical health, income from other-

wise idle lands, and increased real estate values.

L A A“‘ h“ *‘A‘

1Ralph T. King, "Forest Zoology and Its Relation to a Wildlife
Program as Applied on the Hmtington Forest," Roosevelt Wildlife
Bulletin, Vol. 7 (19141), p. 1:69-

20

Attention in the present study is restricted to the portion of
this spectrum of wildlife values which is colored with a recreational
tinge. Of particular interest in this connection are studies which
have measured the economic importance of game and fish in term of the
money spent by hunters and fishermen. The way in which these expendi-
tures have been estimated is by interviewing a sample of the population
of hunters and fishermen in a state and making the appropriate inferences
as to the behavior of the entire body of anglers and hunters. In mat
of these surveys, fairly refined techniques of questionnaire construction
and random sampling have been employed. Protests have been made of the
schedule of questions and follow-up interviews have been made in the case
of those who failed to respond to the mail qmstionnaire. Weighting -
factors have been employed to make the samples representative.

lire classes of expendith recognized in these studies of the
sportsman as consumer cover a very wide range. They include such item
as nominal payment of a license fee for the privilege of hunting or
fishing, the payment of sporting club dues, and the cost of magazines
dealing with hunting and fishing. The Massachusetts survey included
expenditures for not only the conventional armanents of field and stream
but extended to the supplies for such urbanized or land-intensive pur-
suits as skeet, trap and pistol shooting.1 This study covered clothes

and footwear for land and water, and included means of transportation,

-¥
”Ah ¥ 4“.— A‘AL

1
Lawrence H. Couture, Seventy-four Millig pollars 5 Year, Just
for 212 E12 g_f_ It. Massachusetts Division of Fisheries and Game,
I p. 8.

21

extending all the wq from the boat and outboard to the pedestrian snow-
shoe. It plied the sportsman with questions as to the cost of lodgings
and meals, transportation, and "refreshments." Dogs and their care
were another sizable item covered in the Massachusetts survey.

The Idaho survey covered approximately the same list, with a
somewhat more modest approach.l "Special Fees and Leases" was an item
close to the land use itself; "Cameras and Camera Supplies” was one
which is on the nargin. The North Carolina project supplied the added
category of expenditures for guides. On the investment side, it
brouglt in the payments to farm pond contractors.2

In several of these stats-wide expenditure surveys comparisons
with other forms of economic activity havebeen offered. Such comparisons
tend to eaphasise the significance of the findings provided that they have
been soundly drawn. The North Carolina study compared expenditures in
the pursuit of wildlife with the value of agricultural crops. A can-
parison was also made with the value of timber products delivered to the
processing plants and with the value of mineral production. Wallace
argued in the Hashington state study that the comparison of hunter
expenditures with the value of crops at the farm level was the appre-
priate one because in both cases the value was being measured at the

point at which the product left the land.3 It seems that these comparisons

IVillis c. Royall, Jr. Multilith letter to Mr. Ross Isonard
dated April 11;, 1951;, on Idaho wildlife Resources Survey.

2Howard J. Stains and Frederick S. Barkalow Jr. The Value of
North Carolina's Game and Fish, (North Carolina Hildlif'é‘kso'urce"?
ms sIon, We 1253—1533-—

3Robert F. Wallace. Economic “acts of midlife Resources 3
the State of ton (Pullman, State College of washington Business
5 mama: .. mumm. 1952).

22

are in need of further examination. The fact that two quantities are
expressed in terms of dollars does not so readily make them subject
to a fair comparison as nidxt seem to be the case.

No consumer survey among sportsmen comparable to those described
above has been carried out in Michigan. An attempt at economic evalua-
tion of wildlife benefits is found in the note published each year
jointly by the CoOperative Extension Service and the Game Division or
the Michigan Conservation Department on the valm of the game and fur

1 The fur harvest is valued in terms of the value

cr0p for the year.
of pelts taken and the game crop in term of the estimated value of the
meat in miracle taken by hunters. All game species are valued at 75
cents per pound, with the exception of the rodents from the noodchuck
' dam, which are valued at 25 cents. On this basis, pelts came to 1
million dollars in 1994 and edible neat from same animals and birds to
nearly 8 million dollars.

Oraighead's appraisal of the Jackson Hole elk herd of Wyoming
reflected a similar attempt to measure the economic contribution of
game in terms of the meat on the carcasses of the annual kill. Fallou-
ing this approach, Craighead concluded that a smaller number of elk was
worth nore than a larger number of cattle with when they shared a sumer

range in Jackson Hole.2 He valued the elk at 50 cents per pound heg-

dressed and the cattle at 25 cents per pound alive in the wholesale
Iarkets. The local elk industry was held to be more valuable than

ICharles Shick, "Value of Michigan's l9Sh Game and Fur Crop"
(GO-Operative Extension Service, Michigan State College and Michigan
Conservation Department, Lansing, 1955).

2John J. Craighead, ABiological and Economic Appraisal__ of the

Jackson Hole Elk Herd (New York: New York.- Zoological Society and “the
Conservation Mon, 1952).

23

the cattle industry both in total dollar value and in the nmber of
Jackson Hole residents in whole or in part dependent on it for a
livelihood.

A few investigators, aware of the economic losses attendant on
the maintenance of high populations of game animals in districts with
other inportant resource values, have directed their attention at
measuring the losses occasioned by game animals. Thomas, at Pennsylvania
State, estimated crop losses and other damage by deer and deer hunters
sustained by farmers in two Pennsylvania comties in 1951.1 At the
same time, Thomas gathered intonation from a sample of hunters on
their expenditures for hunting and the upkeep of hunting camps. Fran
a sample of farmers he estimated the benefitsfifbc’eived from hunting and
hunters. In the county in which deer damage to crops was the greatest,
60 percent of all farms had some deluge from deer and the loss in the
damaged portions of fields ammted to over 5 percent of the total fem
value of field cr0ps grow: in the county that year. In Potter County,
damage to crops, fences, and livestock anomted to 811:8,000; gross income
to farmers from hmters for lodging, board, and the like was $16,000,
not counting the farmers' costs of providing such services to hmters.
Farmers also were hunters. One-quarter of then killed a deer for
damaging crops and a larger nutter killed deer for consumption.

In the State of Hisconsin, the effects of deer brouing on

comrcial tree reproduction were surveyedduring the period 19136438

m _

1Dona1d Woods Thomas, "An Economic Analysis of Deer Damage to
Farm Crops, and Income from Deer Hunters, Potter and Monroe Counties,
Pennsylvania, 1951," (unpublished Ph.D. dissertation, Dept. of
Agricultural Economics and Rural Sociology, Pennsylvania State
University, 1951;).

2h

on lands under management for timber production. Measurement was made
in terms of the physical depletion of the stand of reproduction and no
express dollar valuation was attempted. It was found that only one-
helf to three-quarters of the minimum necessary stocking of young growth
remained in good condition after browse injury by deer.1 0n the National
Forests of Wisconsin, it was estimated in 19143 that damage to plantations
md natural reproduction during the preceding 10-year period totaled
$5h7,500.2
1122-2

The literature dealing with the economic contributions of the
timber and timber product industries is less abundant than that con--
corned with evaluating game, fish, and wildlife resources. James has
approached this problem from the standpoint of estimating the income
arising Rom timber cutting and processing for the State of Michigan.3
The total income attributed by James to the timber industry was made up
of both "raw timber products" (whole or slightly modified logs and bolts
before manufacture, plus bark, stumps and crude gum) and ”timber manu-
factures" involving the further processing of raw tinber prodmts not

directly consumed.h Income from raw tinber was reckoned as the total

__

1"Ernest Swift, "Wisconsin's Deer Damage to Forest Reproduction
Survey-~F‘inal Report,” (Madison: Wisconsin Conservation Department
Publication No. 3W. 19113)-

2Ernest Swift, 5 Histeg of Wisconsin Deer, (Madison: Wisconsin
Conservation Department Publication No. 323, 19143), p. 8h.

314cc M. James,"l‘imber Values from Michigan's Forests," r
Bulletin, Michigan Agricultural Experiment Station, Vol. 3h, 1% - ,
Fesrmry 1952e

hIee M. James and James G. Yehc, ”Income from Timber Products
in Ugo-Bullhd States,” Journal of Forestry, Vol. 51, February, 1953,
pp. 3 7e _...._..—- .-

25

value of raw timber less the value of raw timber unsold. Income from
manufactures was regardedfthat part of the value added by manufacture
which covered wages, salaries,and net profits.

The valuation of raw timber products was made at the point of
processing or consumption, before manufacturing, in terms of the total
quantity produced and the average value per unit. The income arising
out of manufacturing was not computed in this way, but instead was
taken largely from the statistical aggregates presented in the Federal
Government Census of Manufactures. ‘lhe industry groups included in
_ manufacturing were those listed by the Census under the following head-
ings: lumber and products (except furniture), paper and allied products,
wood house furniture (except upholstered), wood office furniture, and
gum and wood chemicals. James estimated that the 191:8 money income
attributable to timber products in Michigan was 317 million dollars, of
which 66 million dollars was the value of raw timber products. mess
figures did not include the non-monetary returns of famers for farm-
med fuelwood and posts and custom-sawed lumber not sold, which would
have amounted to another 25 million dollars of valm.

Other Wildland Products

 

The resource-use patterns in different parts of the United States
have their similarities and their differences. It may be well to con-
sider several resource evaluations from sections of the country which
have somewhat different problems from those of Michigan. The methods
used in these studies may have a possible application to Michigan

conditions and resources.

26

Problems of evaluating rural land use patterns in the western
mountainous sections have been receiving attention at the Ihiversity
of California for a number of years.1 Lamnd's recent doctoral dis-
sertation at that institution aimed for depth in the making of wild-
land resource comparisons by limiting the scape of investigation to
measuring the primary income resulting from two competing uses of land

in the mountains of Utah, namely, livestock forage and water.2 "Primary

money income" was measured at the stage where the goods and services
had passed through the first processing enterprise.
The "first processing enterprise" changes the form

of the primary product. Water is changed to farm crops,

livestock forage into ranch products, timber is sawed into

lumber, recreational opportunities are made available to

people the wish to enjoy them and game forage is converted

into seat in the possession of hunters.3
The income which accrued at further stages to suppliers of materials,
transportation firms, processors, wholesalers and retailers was re-
garded as ”secondary income" and was excluded from consideration.
Similarly, “intangibles” which did not lend themselves readily to monetary
measurement, even though they might be of great concern to the local
commity, were excluded from measurement.

Commity income was regarded by Lammi as the sum of incomes to

private individuals, firms, and public agencies. Iami's aim was to

transfer the principles of national income accounting to the commity

 

1David Weeks and H. R. Josephson, "Economic Criteria for
Classifying Non-Urban Land According to Probable Best Use," Journal
a; Farm Economics, Vol. 21 (May, 1939), h19-3h, typifies this fifimst.

ZJoe O. Lam, "Primary Money Income from Range watersheds,”
(unpublished Ph.D. dissertation, Dept. of Agricultural Economics,
University of California, 19511).

31bid., p. 39.

27

level and to make an accounting at the ranch level rather than at
the retail level. Lammi showed how his approach could be made a tool
of analysis for assessing proposed changes in land use. By applying
measurements to three alternative sets of production estimates for a
Utah watershed, he provided a specific illustration of how such a
measurement technique could be made serviceable for specific planning
purposes.

Sumnary and Discussion

 

This brief review of pertinent literature brings out a number
of the possibilities and problem involved in measuring the economic
importance of wildland resources. It provides insight into the differ-
ing economic characteristics of particular forms of wildland use. It
illustrates the effect and importance of the geographical frame of
reference adapted in evaluation. It throws light on the sources and
classes of data which may be dram upon to make the required economic
measurements. And, it provides examples of faulty economic reasoning
and misleading comparisons.

that are some of the main differences among the uses which arise
out of this brief review of the literature? On the recreational side,
a leading feature is the prevalence of goods and services which have
Value but no price, as fleeting as the sunset or a startled door when
one attempts to pin a price tag of some contrived kind upon them.1
It is erroneous to impute a value to wild meat, whether it be to elk
in wyoming or to the wide range of game and fur-bearing animals of

Michigan. The pursuit of game animals is a matter of sport and assumes

lThis point is well put by M. L. Upchurch, "Economic Factors in
Western Range Improvements," Journal 91 Farm Economics, mv (Dec.,
1953), p0 736s

¥

28

the proportions of a subsistence-type activity only in the case of the
local residents of the game-producing sections. Respondents to Lefes'
questionnaire to a large sample of successful deer hunters in two
Pennsylvania counties in 1951 udnisdsed the importance of venison as
a goal in hunting. Over 80 percent of those responding named sport in
hunting as their reason for hunting deer. Only 13 percent acknowledged
that they went deer hunting chiefly to get a deer or use the venison;l
Since under ordinary conditions it is illegal to sell wild meet, there
is no adequate market Opportunity to define what the value of this neat
would be. The successful hunter may Justly claim a visible return from
his recreation, as may the productive home craftsman, but it is wrong to
class such products as income in the sense in which we must necessarily
understand that term.

The measurement studies reviewed differ in the size of the area
to which they are intended to apply. The limits set m be those of a
single watershed (as in Lami's straiy of forage and water in Utah), a
single county (as in the recreational land use studies of Pearson and
Brueckheimer), a state or major portion of a state, or the entire comtry.
The decision as to the size and political and physiographic uniformity
of the area chosen for study may have a very significant influence on
the techniques chosen for making the study.

The size of the area chosen affects the point of view talcsn in
measuring benefits. that may be a benefit from the standpoint of a

Juilliam s. Isfes, "The Sociolog of Deer Hurting in Two
Pennsylvania Counties ," (unpublished Master's thesis, Department of
Agricultural Economics and Rural Sociolog, Pennsylvania State
University, 1953). p. 81.

29

local community may simply represent a transfer payment from other
commities rather than the creation of truly new wealth. looking at
things entirely from the standpoint of the local commity is only one
of the possibilities open to an investigator. In the case of a study
of a larger unit area, such as a state, the stress on purely local
benefits found in the studies of Lammi, Pearson, Brueckheimer, and
others is apt to be misleading.

The treatment of sales at retail is another area where some
straighter thinking is needed. National income originating in whole-
sale and retail trade is only a fraction of the volume of such sales.
Particularly is this true of the sales of a local community or of a
state. Much of the cost of such sales will accrue to prodmers out-
side a commmity or state; in all cases a sizable part of it will take
the part of non-factor payments not to be included in incom, preperly
speaking. It does not lead to a very satisfactory total to add retail
sales to tax levies on resort land and to wages of itinerant carpenters,
as is done by Psarson in his otherwise very estimable study of recreation
in Ogeaaw County. Completely inadmissible is the practice of capitalis-
ing gross retail sales to get the capital value of the recreation
industry.

The treatment of property tax revenues and appreciations in the
clpital value of recreational properties also needs clarifying. In a
statewide framework, greater tax levies in recreational counties do
not necessarily increase income. Income is increased only if government
provides more services than formerly. Otherwise, there has just been

a redistribution of tax burdens. Capital gains which are earned by

30

land investments, like roads and drainage, are counted as income when
the investment is made. It is not correct to count the resultant gains
in property value as well. Unoarned increments proper are not to be
regarded as income either; they represent no current addition to the
stock of valuable things in existence.

This literature review also points to the main sources which
may be dram on in measuring econeaic importance. In general, reliance
aust be placed on government statistics and records, the records of
business enterprises, and the recollections and judgments of individuals.
The most important of these sources are the records of government. Many
of these records are by-products of the taxing activities of government.
Administration of the general property tax requires that land and its
improvements be assessed and listed on the tax rolls. Extensive infor-
mation on retail sales is compiled in connection with the administration
of a retail sales tax law. Payroll taxes levied under the social security
Program provide detailed and current information on the compensation of
employees. Through its periodic censuses of manufacturing, trade,
agriculture, population, and housing, and througr its annual summarise-
tion of the national income and product, the government makes available
information rhich is of great value in assessing econoaic importanco.1

Business records, by comparison with those of government, lack

comprehensiveness, but often provide graphic detail. Thus, Pearson

used the shipments of currency by~ an Ogenaw County bank as a renal index

He drew on the records of the power
The

of the expenditures of tourists.
“many to estimate the number of summer cottages in the comty.

18ee the Appendix for a selected list of sources of data.

31

records of individuals are notoriously sketchy and fallible. However,
the technique of consumer survey on the basis of a stratified, random
sample is relied on quite generally in studies of consumption here
and elsewhere in the econom. This is the method employed in the
studies of the expenditures of sportsmen and vacationists.

Some of the major confusions which arise in seeking to compare
the returns from timber and recreation result from the special character-
istics of land and the part it plays as a limiting and critical factor.
The other source of mcertainty comes non a failure to think clearly
about the real nature of income and wealth. Consideration must,
therefore, be given next to some fundamental concepts in the economics

of land. Principles concerning the measurement of wealth and income

will be dealt with thereafter.

III. (DNCEPI'S IN LAND EmNOMICS

An attempt to measure the economic consequences of alternative
uses of land demands an understanding of the economic characteristics
of land and a knowledge of the nature and measurement of income. It
is well, therefore, to pause at this stage and consider the nature
and economic characteristics of land, one of the great enlarging yet
limiting factors with which man's genius must work. Then, before pre-
paring a means of reassuring the-incomes from land use, it «111 be well
also to describe the wildland scenery of Michigan and to set forth the
principles of modern-day national income accounting as it is employed
in the countries with nature industrialised economies.

Land as Habitat

 

The relationship between man and the land he inhabits is one of
the most fmdamental relationships in life. Whether industrialised or
primitive in his technical attainments, man is bound to the land in a
thomand ways -- biologically, economically, and spiritually. In
con-Ion with all other forms of life, man depends on the land for habitat,
a varying combination of environmental and territorial characteristics
which conform to his biological and cultural needs.

A growing mastery of land and the forces associated with it has
not liberated man from dependence on the land. In some respects it
has increased the extent of his dependence on the land and its resources.
Into the construction of articles of every day use and as part of the
daily bill of fare enter products of the land from every corner of
the earth, products often highly specific and localised in their

33

geographic and climatic origin. Spiritually, also, man is still an
earthbound creature. Love of the land is one of the roads by thich he
may aspire upwards and add leaning and beauty to his daily existence.

Zimermann character-lees human wants as nature wants, on the one
hand, md culture wants on the other.1 Nature wants refer to those
fmdamental needs which all as share with each other and with the rest
of life. Culture wants may be no less intensely felt, but these are
likely to vary from place to place and from time to time. As an individual
or a society grows richer, there is scarcely any limit to the culture
wants which may be elaborated and built into the image of the life which
men deeply long for. Under the conditions of modern life in an indmtrial
society, the fundamental needs for food, clothing, shelter, and living
Space are largely met by the domestic rather than the wildland econom.
Timber seem the most important exception to this statement, inasmuch as
it provides a significant portion of the structural materials for human
habitation. It seems more accurate to class the need industrial man feels
for the wildland environment as a culture want. Perhaps he needs to take
“cover“ to seek shelter from the complexity and strain and monotony of i
the seem situation in thich he lives, but such refuge is a culturally
dictated response to a culturally originating difficulty. 'lhe prairie-
dweller feels no impelling need for forest environmnt or the wild
grandeur of the mountains. Instead, he complains of a shut-in feeling
and longs for his wide-Open spaces which, it must be admitted, have at
times a wonderful quality of wildness of their om.

J‘Erich H. Zimmermann, World Resources and Industries, (Rev. Ed.,
New York: Harper and Bros., 1931’, Ch. 2.

3b

The mastery of man over nature is that of a master who knows

the secret of commanding only the possible. Human life nonetheless
operates within a framework of natural principles which it shares with
the rest of creation. The face of the earth is given to man and there
is little that he can do to alter it with his noblest or ignoblest
works. Each portion of the earth has its own configuration and its own
complement of access to sunshine, rain, and warmth. Venturesoms out-
riders may occupy the South Pole or Everest for intervals; but the
habitable portion of the earth as yet remains restricted. At some point
we know that there be carrying capacity for mankind as well as for
other forms of plant and animal life.

End as a Factor of Production

 

land is an essential ingredient in economic production. It
provides both the material resources which enter into the productive
process and the physical site on which such production may be accomplish-
ed. Along with human effort (in the form of labor and management
services) and with capital (the joint product of past contributions of
man and land), land enters into the production of all new wealth.

The active role of land in production is nowhere so evident as
in the classic case of agriculture. The strategic importance of land
as a factor of production is no less striking in the production of
mineral wealth, localized and concentrated on restricted portions of
the earth's surface. Other forms of production require land as m,
as a place of business, be it factory, store, means of transportation or
communication, or establishment providing meals or lodgings. The

services of land must be secured in all these forms of undertakings.

35

Land differs fmm the other factors of production in its dur-
ability and in its immobility. Because of its fixed and inalterable
position, land is incapable of flowing, as labor and capital may readily
flow to the place where the highest returns for its services can be had.
Instead, all economic activity must adapt itself to the fixed location
factor and economic production is thereby characterized by a further
dimension of space.

The products of land incluie both goods and services. Among the
products of forest lands are such goods as sawlogs, power poles, animal
pelts, and such services as a place to build, a chance to hunt, and
sights to enjoy and be recreated in. The goods are capable of being
severed from the land and tranSported to varying distances for the
satisfaction of their ultimate consumers. Wildland products, like furs
and logs, may, if their value is sufficiently high, be shipped across
the world to form a part of the consumption of peOple who have never seen
the spot wherein the tree grew or the river in which the beaver built his
house. The recreational services of forest land, by contrast, are not
detachable from the land which produces them. To enjoy these services
the consumer must tramport himself to the forest and enjoy them there
in place. Photographs and motion pictures may be made of the wildland
scene, recordings of the notes of songbirds may be made, but the possi-
bilities along these lines are extremely limited. The wildland world
must be entered to be enjoyed. The non-resident enjoyer of forest lands
must become a tourist, with all the accompanying economic effects of

that necessity.

36

Money Income 3s. Direct_Qtility

The forest products which consist of physical goods are commonly
produced for the market and are sold. The products of forest lands which
partake more of the nature of services are sometime sold, as in the case
of sales of shooting rights, leasing of deer camps and the like; but are
more commonly enjoyed directly by their owners and others without being
made the object of a business transaction. The object of ownership is
more commonly enjoyment than cemrce, consumption rather than production.

Modern economic life is characterised by a sharp separation be-
tween producer and consular. A man Operates in the sphere of production
largely to secure money income with which he may then secure the goods
and services to minister to his consumption needs. He produces in order
that he may consume or accumulate wealth. At the same time, he must
strike a balance between production and consumption. The question, there-
fore, arises: How much production and how much consumption? At that
point shall a man cease to use his resources of time, energy, land, and
other forms of capital for the purpose of producing money income and
begin to use these resources directly for his own enjoyment? When shall
a dentist decide to stop filling teeth and take the afternoon off to go
fishing? When shall a farm family purchase a television set instead of
a heifer?

A society faces similar choices in resource use. To what extent
shall it use its resources for commodity production and to what extent
shall it set aside resources for the direct enjoyment of the people?

A city must decide how much of its limited supply of high-value land to

37

devote to parks and playgrounds and how much to comerciel and industrial
purposes. A decision as to whether or not to build the Echo Park Dam
hinges on a choice between scenery and archeology on the one hand and
irrigation water and electric power on the other. In similar fashion,
forest land may be devoted primarily to recreational uses by people or
it may be managed with primary emphasis on the production of commercial
timber. Societies like individuals must strike a balance between work
and leisure, between using resources for income as compared with using ‘
them directly for enjoyment.

But, there is no sharp dividing line between production and con-
sumption, no aura of moral superiority attached to productive as opposed
to direct use of resources. The purpose of production, after all, has
always been for the sake of consumption, sometimes round-about and
deferred, but nevertheless ultimately to serve the needs and ends of
men. men choice timber trees are sawed into lumber which is used to
make fine furniture valued for its elegance of grain and styling, a
wildland resource is being pressed to serve humm enjoyment in a like
manner as when a hardwood grove is preserved for environment in
connection with an imposing rural residence or a scenic motor road
or hiking trail.

Property; Rights in Forest Goods and Services

The degree to which the wildland products and services lend them-
selves to being owned is partly dependent on their intrinsic nature and
Partly dependent on legal arrangements governing their possessien and
use. A portion of the wildland resources is migratory. This is the

case with water and with the forms of animal and bird life which may

38

originate on one unit of wildland but be utilized or enjeyed on another.
The migratory resources are customarily subject to special legal arrange-
ments regarding their ownership. The fixed and non-ndgratory wildland
goods are reduced to ownership in the customary fashion. They are typical
land resources over which control of the earth's surface gives possession.

The use of water is governed by doctrines of rights. No dis-
tinction is made in favor of owners of water-originating lands as com-
pared with owners of water-using lands. Ihder the traditional riparian
doctrine, surface water rights are limited to owners of land which abuts
on the bodies of waters. Use is limited to specified purposes under
the restriction that the flow of water be not thereby diminished in
quantity or quality. In the western states, prior rights to the use of
water are recognized and these rights are inherent in the ownership of
stated parcels of land. These parcels are not, it is to be noted, by
any means the land from which the water arises. 1n. owner of wildland
watershed property may have no valid claim to the water which is pro-
duced by his lard.

Wild animals and birds in a free state belong not to the land-
owner on whose land they happen to be domiciled, but instead are the

Property of the state. The wild creatures are subject to capture in

carefully prescribed ways and no other. Their reduction to individual

possession is on a rationed basis both as to numbers and time of capture.

Here, again, as in the case of water, the nature of the situation and the

impossible for the landowner fully to appro-
my to othen the right

laws which apply make it

Priate the wild product of his lands. He may de

to hunt on his lands or may make a charge for that 1‘19“;- But, he

39

cannot prevent the water or the game from moving off onto another person's
property.

Complete appropriation of the scenic valrres of wildland by individ-
ual owners is similarly difficult of accomplishment. The possibility
always exists that the wildland scene may spread its beneficence someahat
beyond the limits intended by the omer of that beauty, particularly at
the borders of his land. The interior values can be more successfully
preserved inviolate to the enjoyment of the owner if he so desires.
Scenery also is hard to om.

The arguuent for public ownership of portions of the wild lands
gains force from the lack of appropriability of these migratory and
aesthetic resources. Since the benefits are widely diffused throughout
the community, why not vest omership in the community also? The
necessity for public ownership is particularly evident at stages in
econondc development, or at periods of the business cycle when there are
no returns in sight thich make the land of interest or value to private
owners. The public can also provide stability of production from these
lands by a procedure of dedicating them to specified uses and withdraw-
ing them from future disposal. Uses dependent on extensive areas of
contiguous land may be blocked out under the authority and with the
financial means of the state more readily than under the changing
impulsions of private ownership.

Short of ownership by the public, there are other forms of social
control of private wildland preperty which may be invoked to promote
public purposes or to prevent damage to public interests. One important

example of these social controls is land zoning. Zoning regulations in

ho

wildland areas enhance and cmserve wildland values. They direct land
use away from unsomd uses not in keeping with the physical capabilities
of the land. Zoning my be used to discourage disorderly and haphazard
patterns of settlement which would add disproportionately to the costs
of providing roads, schools, and other public services. Zoning forbids
certain uses, but may not require that land be used in any prescribed
way. Within a zoned county, there may be zones where new full-tine
residential use is prohibited, others where forestry use for timber pro-
duction is prohibited because of the priority of recreational values.

Economics ofiorest Land Location

 

Geographic location is an extremely potent economic factor with
a pervasive influence on the distribution of income and wealth within
a nation and among the nations. It has been held to be the dominant-
force in the differential rate of economic develOpment of American
regions.1 A good location can sometimes compensate for the absence of
a host of natural advantages. A poor location is often sufficient to
doom some otherwise very favorable resource situations and combinations
to little or no economic utility.

Industries differ as to their locational requirements and
characteristics. Industries which work with bulky raw materials of low
value in proportion to their weight are tied locationally to the place
where these materials occur. Industries which produce high-value item
with much of the value added in processing are likely to be found in
close proximity to the major marketing centers for the products involved.

1Theodore W. Schultz, ”Reflections on Poverty within Agriculture ,"
m 35 Political Eccnoq, LVIII (Feb., 1950), 1-15.

I

As a generalization, the early stages of production are often oriented
to raw materials; the later stages of production are oriented to the
market; ad the interraediate stages of production tend to be footloose
in their orientation. lhey can go either may.1

'Ihe forest products and services illustrate such a locational
framework. Sawmills are characteristically closely tied to the saw-
timber lands. Veneer mills, working with a higher value material
and product better able to stand transportation, may draw raw materials
from a larger circle than do samills. Pulp mills are ordinarily
located in close proximity to at least a substantial preportion of their
supply of pulpwood. Paper mills, being a step further from the raw
material and a step closer to the market, are much less dependent on
having a location adjacent to the forest raw materials. Paper?
converting plants, finally, are likely to be specifically oriented to
market. Integrated operations, there all these functions are combined
within a single firm and at a single site, occur at a location which
reflects some compromise between the requirements of materials and
market alike.

Geographic location in itself does not exhaust the factors
accounting for the occurrence of industries in the places where they
are found. Besides the transportation costs which result from varying
locations, there are differences of processing costs in different
places which may offset the effect of transfer costs. Skilled and

industrious labor is one such factor, the presence of supporting

M _
A A__._

IEdgar Malone Hoover, 'Ih___e_ location of Economic Activity,
(let Ed., New York: McGraw-Hill ”Book 00., 19%), Ch. 3.

142

indmtries and trades is another; together these factors probably reflect
the advantages of an early start, as in the case of Detroit and automo-
biles, Akron and the tire industry.

If forest industries represent a combination of materials and
market factors, the recreation industry is by contrast 100 percent
materials- or land-oriented. As has been suggested, its products can
not undergo any transportation but must be consumed in place by the
ultimate consumer. In this respect, it is even more restrictive than
the education industry, which can foster off-campus centers and offer
correspondence and television courses; or the Opera industry, which
can make recordings, offer radio memberships, and carry out annual
tours to the hinterlands.

Although forest recreation represents nearly a pure case of an
exclusively materials-oriented industry, this is not to say that there
are not favorable or unfavorable locations, or that proximity to large
concentrations of the concurring public is not of a large and even
decisive importance. In fact, the value of recreational land and the
income it produces and induces is closely connected with its accessi-
bility- Its value reflects both its location and its intrinsic quality.
Such land has value because it produces either money income or direct
satisfactions. The added transportation costs and burdens of remote
land detract from the net income in either money or satisfactions
which the land can produce and therefore reflect unfavorably on its
capital value.

Although land may be looked upon as a free good supplied to man

by a bountiful nature, land which is economically valuable is an

h3

\

investment. It is an investment because it is capable of yielding a

flow of incomes and because it has a capital value. But, it is an invest-
ment also because it has money tied up in its production. The wildest

of land to have value must at least have access provided to it. Not

only natural advantages of fertility and location and terrain contribute
to the value of land. It is in a very real sense a produced good which
has physical develOpment costs incorporated in its value,and also certain
important time costs relating to the time which elapses before the
receipt of income. The development of a summer resort in a forested

area illustrates abundantly that wildland is an investment.

The Competition of Land thee

 

Under conditions of perfect competition the allocation of land,
in common with other resources, is controlled by the pricing system.
Each piece of land is used in such a way that it brings its owner the
optimum return. he use-capacity of particular pieces of land reflects
both their intrinsic quality and suitability for particular uses and
also their locational characteristics. One other factor which works
along with these two is land development. A forest with an access
road serving it and interior logging roads and fire protection improve-
ments in place has more value for forestry use than a similar piece of
land without these improvements. Land around a lake with no road has
only speculative value compared with land around a lake which has access
and other improvements, although its recreational attractions may be no
greater. Such improvements add to the capital value of the land,

Whether their cost is borne by the landowner or not.

The price of land, however, is not synonomous with its cost
of production. Once made, development improvements are smk costs thich
do not of themselves command or Justify a price. Price expresses in-
stead what a willing brwer is willing to pay. There is no standardiza-
tion of land and every piece differs somewhat from every other. In
order to have the services of land for any particular purpose a buyer
mmt pay at least what the land is worth in its highest alternative use.
A family wanting to live in the country on a small holding must pay at
least that the land is worth for agriculture, plus a premium for sub-
dividing, inducing the farmer to make a shift and the like. A hunting
club purchasing a campsite must pay at least what the land is worth
for forestry.

A more realistic approach to the competition of land use must
take account of the indisputable fact that perfect competition does
not prevail in the forest laid market in Michigan. The large share of
government ownership which characterizes the land ownership pattern
has at least two important effects on the land market. Much of the
government-owned land is ”dedicated" to permanent government ownership
and seems to be permanently removed from the market. As a source of
timber, there is a dependability and permanence and continuity 0f pelicy
which offers to wood-using industries some, at least, of the advantages
of ownership. As a source of publicly provided recreational Opportunities,
the presence of this large body of government land obviates the necessity
of ownership on the part of the large body of recreationists. It makes
it difficult, if not impossible, for private owners to make charges for

recreational-use privileges, even were they minded to do so. The

15

government land gives intermingled private recreational ownerships

a surround of wildness which adds to their value and is accordingly
capitalised into it. In the long run, however, and given a rising

tide of recreational use, the existence of so much government land not
on the market has a tendency to increase the price of the rest by keep-
ing. the supply fixed in relation to an increased demand.

More common than the exclusive use of a piece of wildland for a
single product or service is the practice of making the land yield two
or more products and services. Under the well-know but sometimes
ill-defined banner of I'rlulti1.':le--use," many of orn‘ public wildlands
are managed for several concurrent but not always harmonious objectives.
This is at once an economic and a political question. In some of the
instances where emphasis of' a single use would be more economic,
attempts to integrate a number of uses are more expedient, more in
keeping with the spirit of our democratic institutions in the recent

formulation of the Chief of the U. 5. Forest Service.1 Support for

vast public undertakings in wildland is too precious and delicate a
thing to be lost by provoking avoidable conflicts with special interest
groups.

Whether the doctrine of multiple use is carried to the point of
seeking all the uses on every acre or unit of wildland, or whether the
uses are parcelled out among the units of wildland, there remain the
stubborn and underlying use relations which goodwill and aspiration and

generous hope can scarcely alter. These mderlying relationships have

k

littchard E. McArdle, ”Multiple Use - Multiple Benefits,"
M11. 2;, mm. m. 51. (1953), 323-25.

to do with the compatibility of the differing uses at various Lavels of
output. Some of the production relationships between deer and timber
will serve to illustrate a portion of the possible use relations which
occur.

It has been found in certain patchy and scrubby stands of aspen in
Michigan that the removal of the scrub by prescribed burning or by discing
results in a heavy crap of aspen reproduction from root suckers, giving
promise of a better stocked future forest than did the one «rich was
removed. it the same time, browse conditions for deer are improved and
there seem to be enougr new growth to provide added food for deer and
still leave a desirable stand of forest regeneration. If it may be
assumed that browsing is actually beneficial to the new forest stand,
there is complementarity between deer production and tinber production.
One use adds to and completes the other. It is known that logging pro-
duces favorable habitat ccnditions for deer. The large deer populations
of recent years are attributed in large measure to the widespread logging
of a number of years ago and to the general prevalence of fire protection.
Both logging and fire protection conduce to maximum forest production.

On a broad scale, we may therefore reason that there exists a type of
complementarity between logging and deer production, deer being symbolic
in this context of enhanced recreational use values. Cook reports an
interesting instance of receiving help from deer in his efforts to con-
vert cutover hardwood lands in Rensselaer County, New York, to coniferous
forests by planting larch and spruce. The essential operation of clean-
ing the plantations of hardwood sprouts a year or so after planting was

greatly facilitated by the summer browsing deer, whose food preferences

 

 

h?

fitted in admirably with the silvicultural requirements in the situation.1
But, it must not be imagined that deer and timber are always and
everywhere compatible to the extent suggested by these few examples.
The opposite situation is indeed much more the typical one. It is such
conflicts which give rise to the land-use problem with which we are here
concerned. Forests quite readily work themselves into forms which are
favorable for timber production but unfavorable for deer. Graham sees
this situation occurring at the present time in the western part of the
Upper Peninsula of Michigan, in part caused by forest succession and in
part by the overbrowsing of the deer herd itself. In this he sees more
ultimate harm to the deer herd than to the timber forest, since the
abmdmce of hard maple reproduction seems to assure a future forest,
whatever may be the fate of yellow birch and basswood.2 Swift of
Wisconsin is more disquieted by the evidences of overbrowsing of deer
on tree reproduction of the comercial species. He questions the wisdom
of Jeopardizing the future raw material supply of wisconsin's vital
pulp and paper industry for the sake of a few more deer in the
present.3 The deer are as content with planted trees as with the
natural growth. Twenty forest plantations out of 60 examined in
Wisconsin between 1932 and 1938 showed over 25 percent of the trees
destroyed or damaged. In Pennsylvania,forest planting activities at an

earlier period were made practically impossible in certain sections

 

1David B. Cook, "Sumner Browsing by Deer on Cutover Hardwood
Lands," Journal 2.1:. Wildlife Management, Vol. 10, (Jan. , 191,6), 60-63.

25amuel A. Graham, ”Changes in Northern Michigan Forests from
Browsing by Deer," Transactions of the Nineteenth North American

Wildlife Conference, 1935, pp. 75:23:35?-

3Ernost Swift, "Wildlife as a Forest crop in the Lake States,”
Proceedin , Society of American Foresters'Heeting at Minneapolis, 19147,
(Harrington: Society of American Foresters, 19148), p. tee.

 

1:8

by the feeding of an excessive deer herd.

The deer conservation problem is one of a scrupetition between
time periods. Over-population of deer leads to range impoverishment
and destruction and thereby a reduced carrying capacity for deer.
Food plants and cover plants both are needed to provide the nourish-
ment requirements and shelter from the winds of northern Michigan.
The most severely limiting factor appears to be the winter deeryards
where the deer cluster in winters of deep snow in the Upper Peninsula
at the present time, although they are reported to have migrated south-
wards before the advent of highways and railways. Destruction of
winter habitat is one of those critical processes in the conservation
of biological resources which it is hard to reverse economically.

Too many deer now may mean a permanently lowered carrying capacity

for deer in the future.

IV. THE MIDLAND EGJNOMI OF MICHIGAN

Uildland in Michigan can usefully be regarded as all land which
is not in urban areas and which has not been improved for indwtry,
agriculture, or residence, or devoted to transportation and communica-
tion rights-of—way and other service uses.1 Wildland thus comprises
all woodland and all other rural land not suitable for farming,
including marshes, sand dunes, and bare rock. Land contained in
villages under 1,000 in population and other rural built-up areas,
such as schools, institutions, and factories would represent an
additional but difficult to measure source of deduction from the wild-
land side.

Such a definition of wildland is founded on major use and de-
gree of modification of the land involved. In general, residential,
industrial, commercial, agricultural, and service lands and lands
within the bomdaries of urban communities are the tame or cultivated
lands; while lands in forest cover and other unimproved rural lands
represent the wildlands. Land which has been domesticated does not
reverse itself readily to a wildland state. Wildland, on the other
hand, tends to be mcommitted land capable of making the transition
to some more intensive use where physical and economic conditions
permit. 0f the tame land uses, agriculture is the one which is most

likely to lapse and to allow a reversion to the wild state to occur.

A w.‘ # —-— “LA u ---—-—
g _

111.1%. Wooten, Ma____gor Uses of Land in the United States, U. S.

Department of Agriculture Technical Bulletin 1082 (Washington, U. S.
Government Printing Office, 1953).

50

Forest land Ownership

More than half of Michigan's 36.5 million acres of land area
may be regarded as wildland under the above definition. In 1950,
there were 19 million acres of forest lands and 2.7 Idllion acres
of other wildlands in the state. Twenty percent of the forest lands
were in farms. More than half the area in farm woodlands was pastured
by livestock. Forty-four percent of the forest lands were in private
non-farm holdings. The remaining 36 percent of forest land was in
some form of public ownership.1

Private Forest Land

There are 15.3 million acres of non-farm forest lands in the
state of Michigan - 8.1: million acres of private land and 6.9 million
acres of public. In 1950, about two-fifths of the privately owned non-
farm forest lands were contained in 91 holding over 5,000 acres in
sise.2 The remainder was contained in a very much larger number of
smaller ownershipe, averaging h8 acres in size (if the farm woodlot
holdings are also reckoned in). Public ownership of forest lands
involves the State, the Federal Government, and county and municipal
units. In 1950, the State was the largest owner in the public group,
with title to h.3 million acres. Federal omership was exercised in
over 2.5 million acres of forest hnds, while local government units
had 80,000 acres.

13. N. Cunningham, Forest Resources g_f_' the Lake States Regan,

Forest Resource Report No. l, U. S. DepartmentTf Agriculture
(washington, U. 5. Government Printing Office, 1950).

_L.--“ *4 A A

2Michigan Department of Conservation, Forestry Division,
"Michigan Forest Facts," Sept. 15, 1953-

* _,

'51

A knowledge of the reasons for holding forest land and of the
objectives of forest land owners in the state should yield some in-
sight into the workings of the Michigan wildland econonnr. Among the
larger private owners, it is know that the forest industries repre-
sent an important group of owners. These industrial owners are
interested in raw materials for manufacturing in the form of pulpwood,
sawlogs, and veneer bolts. They seek security in forest land and
growing stock capable of producing a supply of needed raw materials
on into the future. Private concerns in such other industries as
mining, railroading, power development, and agricultural development
represent a significant class of private owners. Another important
group of owners may be grouped under the heading of speculation.
Holding land for a rise in price is a hape which the great depression
of the cutover country from the 1920's on has dimmed but not altogether
extinguished. Speculative owners anticipate a rise in land values
bacause of oil discoveries, or the ripening of the land into recreation-
al or other high value use. Ownership for the sake of the direct
enjoyment of land represents a final important objective of ownership
which an be mentioned. In this group may be included the hunting
clubs, private estates, and deer cabin holdings. Related to such
direct consumption objectives in land omership would be private
game farm, privately operated childrena' camps, and other uses
Uroviding a service to the public but operated for profit.

Some light on purposes of ownership is shed by Sturgeon's
study of 20,000 acres of land sold to private owners by the State in
Cheboygan County during the period 1935-19147. Among the major uses

52

to which this land was being put, he found that 26 percent was being
used for pasture, 19 percent for timber growing and harvesting, 15
percent for speculation, 11 percent for hunting, and 9 percent for
farm woodlots.1

Public Forest Land

The objectives of public ownership of forest land in Michigan
cover a variety of purposes, including the function of residual owner-
ship of all lands for which there is no private use or demand. Public
ownership has for its objectives the supply of a continuing flow of
materials and services from the wildland environment; the distribution
of these materials and services in such a ww that they are as widely
available amng the people as possible; and the regulation of land
use to promote wise economic develOpment and maximize permanence and
economy in the provision of local government services, such as roads
and schools. Prominent among the services of wildlands are the
recreational services of such lmds.

Public ownership of forest lands is undertaken and maintained
to secure a level of production, a distribution of the product among
the people, and a retention of the productive power over time which
corresponds more closely with public adshes than it is Judged would
result without such public ownership. in air of permanence is given
to public land omership by a process of dedicating such lands to
specified uses and incorporating them formally within the bomdaries

——-—— _ M A A _-— A;
M

1Edward E. Sturgeon, ”Trends in Land Use and Ownership in
Cheboygan County, Michigan as Affected by Socio-Economic Development
and the Land Disposal Policy of the Michigan Department of Conserva-
tion, with Emphasis on Lands Sold to Private Owners by the State of
Michigan" (unpublished Ph.D. dissertation, Department of Forestry,
University of Michigan, 19510.

53

of land management units. Each state or national forest, park or
game area is placed under custody and administered under established
policies. 'Ihe state lands administered by the Department of Conserva-
tion have nearly all been dedicated for explicit conservation purposes.
Exceptions are made only in the cases of lands outside the boundaries
of state conservation areas. Over 90 percent of the Conservation
Department's dedicated lands are in state forests. The remaining lands
are divided among state parks, park sites and historic sites, state
recreation areas, state game areas, public fishing sites, and the like.
Most federal ownership is concentrated in the National Forests, with
a small representation of Indian lands, National Parks, and rais-
cellaneous other classifications .

Dedication of lands is intended to express permanence of use.
It is well to inquire how definitely comitted to particular uses
particular units and shares of public lands really are. ‘lhe great
bulk of the public forest lands are managed on what has come to be
known as a multiple-use basis. By and large, these lands are operated
on the principle that the same piece of land may be made to yield a
concurrent harvest of timber products, water, and recreational habitat.
Although the emphasis in management m vary from place to place
within the national and state forests, these forests are commonly
Open to timber cutting, Open to picnicking, sightseeing and camping,
and open to hunting, fishing, and trapping.

where exceptions have been made to the policy of multiple—use
of public forest lands, such exceptions have been made in favor of

the dominance of recreation as a primary and exclusive use. Such

Sh

exceptions are most marked in the .case of park and preserve lands, both
state and federal, where all the uses which do violence to land and the
life it supports are excluied, timber harvesting and hunting alike.
The ultimate example in restricting development is found in the wilder-
‘ ness area ideal, which rules out even the provision of roads in the
interest of preserving a bit of nature in an unspoiled form.
Cunningham's estimates of 170,000 acres of reserved forest in federal
ownership md 203,000 acres in state omership gives a fairly good
idea of the amount of land reserved from timber cutting. The federal
share would consist largely in the 13h,000 acres of forest land on Isle
Royals, in Lake Superior, vhich has been constituted as a National
Park. ‘Ihere were 98,000 acres in state parks, park sites, and historic
sites as of J1me 30, 1951;. 'lhere is also privately owned land which
is reserved from timber cutting, 127,000 acres of it in 1950. Added
to the public reserves, this makes 500,000 acres of reserved forest
land--not a large portion of the total available. One other exclusion
which may be mentioned is closure of private lands to public hunting.
Barrett estimated in 1955 that therewere over 1,000,000 acres in the
northern part of the Lower Peninsula posted against public hunting of
a total of 7,000,000 acres of wildland in all omerships in the same
part of the state.1
As residual owner of land ”which nobody wanted," of land whose
timber was ”too poor to steal when the stealing was good," it is

1Paul M. Barrett, "Nmaber 9 Wire - Symbol of a Trend,"

Michigan Conservation, mv (Jan.-Feb., 1955), 19, 20.

 

 

SS

understandable that the public portion of the wildland of Fichigan has
less value relatively than its acreage would suggest.1 In a recent
year, only 15 percent of the total cubic foot volume cut in the state
came from public lands, and Just 5 percent of the cut of sawtimber
came from public lands. In 1950, the public agencies had 10 percent
of the board foot volume and one-third of the pulpwood volume on land
under their control? There is a reasonable presumption, also, that
the best of the hunting lands of the state are under private owner-
ship and control. The "club country" of the northeastern part of the
Lower Peninsula corresponds closely with the best deer country to be
found in the state, both in term of location and quality. The high
value lands which the state owns have been acquired for recreational
purposes and largely devoted to such purposes. Over hh,000 acres of
land in state recreational areas were acquired by purchase between
191415 and 1951; at an average cost of $81; per acre. In the Pontiac
Lake Area, the average cost of purchased land during this period was
$167 per acre.

In 1951;, the Department of Conservation administered h.2
million acres of land. Seventy-nine percent of these lands, 3.3
million acres in all, had been acquired through the process of tax

reversion. These lands were tax delinquent for three years and not

——_
w‘ A A ____. #A- )~ ——- WM A‘.‘

1The quotations are respectively from Harold Titus, The Land
Nobod Wanted: the Sto 9_f_ Michi en's Public Domain, Michigan-State
COIIege, Kgn' cum-1r Experimen ‘ a ion (East-mg, 19115); and

P.S.LoveJoy, "The Worst-First Theory,” Journal 3.1: Forestry, Vol. 214

(1926), 351-570
2R. N. Cunningham, Forest Resources 92 the Lake States, p. 39.

reclaimed by their owners within a year following their sale. Less
than one million acres, therefore, are in the possession of the state
through original land grant, purchase, or gift.1 There are three
sources of funds for the purchase of wildlands by the state for
recreational purposes. One of these is by direct appropriation by the
legislature for specific recreational purposes. The other two have
to do with the use of earmarked portions of sportsmans' license fees
for land purchase. Forty cents of each fishing license fee is set
aside for the purchase of lake and stream frontage for public fishing
access. deeral funds are available for approved land purchase pro-
gram for fishing access and for game areas, projects, ard public
hunting grounds to the extent of 75 percent of the cost of the land
acquired. The federal share of these lend purchases is derived from
the federal excise tax on fishing equipment (Dingell-Johnson Fund)
and from the federal excise tax on firearm and ammunition (Pittman-
Robertson Fmd) .

Forest Goods and Services

 

In today's world, the significant products of Michigan wild-
lands are timber, water, arr] recreational habitat. Such lands are
referred to as wildlands with a steadily decreasing accuracy of
terminology. It is more and more the practice to manage wildlands
for harvests of products which are better than nature unaided would
bring forth in the same period of time. Forest trees have been set
out in plantations for timber production since the early 1900's, first

by public agencies only, more recently by private timberland owners

1Michigan Department of Conservation, Seventggnth Biennial

 

57

as well. Plantations and wild forests alike have been thinned and
wooded to improve the composition and quality of the future forest.
logging operations have been conducted with a view to the regenera-
tion of the forest. A new timber crop has been indirectly encouraged
through scattering of cone-bearing brwh and scarification of the
soil following logging with heavy cutting discs. Nature's abhorrence
of vacancies in the forest canopy has been frustrated by fire and
herbicides, all in the interest of maintaining the dancing-grounds
of sharp-tailed grouse, a bird of very exacting territorial require-
ments in the mating season. he wildland environment has been
manipulated in an effort to make a home for a larger herd of deer
providing larger supplies of palatable brush and browse of the kind
which deer are wont to choose when they are afforded a reasonable
latitude of choice.
Hater

Hater, that most vital of the resources, is produced by wild-
land as it is by tame. Efforts to produce more of it are sometimes
in competition with other objects of wildland use. Despite impressive
evidence of the growing demands of the economr for water and yet more
water, and of serious local shortages in certain Michigan commities,
there does not appear to be a large or concerted effort in the wild-
land sector consciously to manage for water. The one interesting
exception to this is found in the case of watershed management to
luprove trout fishing, as in the Rifle River and other similar develop-
ments. The belief tends to be that what is good for the other forest

objectives is good also for water.

 

58

There is a certain indestructability about water, quantitatively
at least, which seems to render it dependable into the future. This
permanence seems assured under the semi-humid conditions of the Michigan
climate with level topography and an absence of dependence on above-
ground storage reservoirs. The case of the groundwater storage
reservoirs may be a different one of more serious and immediate concern.

There is less reason for ease of mind in connection with tinber
supplies and wildland habitat values. Although these are flow rather
than fund resources and their supply is not fixed and therefore exo‘
haustible, still they exist in a precarious natural balance which is
capable of being upset to the point where they can not readily be I
restored to anything like their former levels of productivity and
serviceability. Herein lies part of the reason for the dedication of
a sizable portion of Michigan wildlands to stated uses under conserva-
tive management.

Timber Products

The major timber products which come from Michigan forest lands
are sawlogs, fuelwood, fence posts, and pulpwood. Of less importance
in volume and value are such secondary products as mine timbers,
chemical wood, and excelsior bolts. The value of all these raw timber
products as they cam from the forest in the year 19148 was 65.7 million
dollars.1 In that same year, 85 percent of the total volume of timber

out came from privately owned lands and 95 percent of all the sawtimber

113° ’5' JWS: W Agricultural Experiment Station Quarter-
31 9.1113222. Vol. 3h, No. 3, 280. ""'""" """"

 

 

59

out came from private lands.1 Farmers out most of the annual harvest
of fuelwood and posts from their own land. However, farmers account for
but a small proportion of the cut of such comercial products as sawlogs
and pulpwood, apparently about 8 percent for these two products in the
last census year.2 Most of Michigan's output of primary forest pro-
ducts is used within the state in raw form or undergoes further manu-
facture in wood-processing plants located in Michigan. Tw0 important
exceptions to this rule are pulpwood and veneer logs and bolts. Net
exports of these two products in raw form amount to about hO percent
of the state's production of pulpwood and about an equal pmportion of
the state's production of veneer logs and bolts.3 James estimated that
in 19148 the work of harvesting primary forest products in Michigan and
hauling them to the point of rail shipment or processing provided the
equivalent of 22,1400 man-years of employment.

Important forest industries in pulp and paper and in furniture
and wood specialties are located in Michigan. These industries owe
their presence in the state to forest resources, past and present. In
1952, Michigan had nearly 1,500 sawmills including the small ones,

11 pulp mills, and an estimated 120 other plants such as veneer, shingle,

and excelsior mills using raw forest products. There were 550 plants

__._

1R. N. Cmmingham, Forest Resources 2.! tbs Lake States Region
(FOrest Resource Report No. 1; Washington, D. 6.: Government Printing
Office, 1950), P0 390

2U. S. Bureau of the Census, U. 5. Census of Agriculture: 1950
(Washington, D. 6.: Government Printing Office, 1952), VII, 7&0.

 

 

‘ 3Arthur G. Horn, "Comodity Drain from Forests of the Lake
States" (Miscellaneous Report No. 18, U. S. Department of Agriculture,
Forest Service, Lake States Forest Experiment o‘tation, St. Paul, 1950),
pp. 19-200

60

which processed not raw forest products in the round but instead the
products of the primary wood-using plants, such as lunber, veneer, and
the like. Eighty percent of the lumber and pulpwood harvested in the
state cane from the Upper Peninsula, but 85 percent of the wood product
plants, exclusive of sawmills, were located in the Lower Peninsula.1
Recreational Use
Statistics on recreational use of forest lands in Michigan are
most plentiful in connection with such well-organized and regulated
activities as hunting, fishing, and camping. In particular, recreation-
81 use records are available for that portion of the forest lands which
are in public ownership. Sales of licenses afford a good estimate of
the number of people who participate in hunting and fishing. Statistics
on the kill of game animals and birds and creel censuses on the take of
fish afford a record of the success of sportsmen. In 1951;, over 700,000
hunting licenses, over 100,000 deer licenses, and nearly 900,000 resident
fishing licenses were sold in Michigan. The State Parks had over 15,000,000
visitors. The population of the state was trending upwards, but at not
nearly so fast a rate as the growth in sales of deer licenses and the
rate of increase in park attendance.2
It was estimated that in 1950 and again in 1951 there were
7,000,000 resident and non-resident ”visitors" in Michigan, including

both weekenders and vacationers. The total expenditures of these visitors

u. L

1John Hanson, ”Wood-using Industries of the Lower Peninsula."

Michigan ginserlatiop xx (Feb. , 1951), 13-

 

ZCharles P. Loomis, "Wildlife and Recreation, the Past and the
Future.” Michigan _C_onservation XXIV (May-June, 1955), P. 6.

 

61

on the basis of an average daily expenditure of 87.50 per motorist and
an average stay of 11 days was estimated to be 560 million dollars.1
It would be a difficult matter to allocate these visitors as between
forest recreationists and other recreationists. The Ebasco group
estimated that the tourist business amounted to 50 million dollars
in the Upper Peninsula in 1950, which would be about 10 percent of the
total.2 Michigan was the fifth most frequently mentioned state as a
vacation destination in the Curtis Publishing Company survey for the
year 1951. One person in 20 in the nationwide sanple mentioned Michigan
as a vacation destination.3

The valued recreational resources arising from northern Michigan
forests and waters are enjoyed mainly by Michigan people. The studies
described in an earlier chapter suggest that tourists aside the local
people and down-state Michiganders have formed the bulk of the recre-
ationists. Thus, Pearson found in a sample of over 5,000 cottage-
renters, out-of—county omers, and sportsmen in Ogemaw County that
70 percent were "from an area extending north towards Ogemaw County
from Detroit, Mt. Clemens, and Ann Arbor." Five percent were from
Monroe County and Ohio. Deasy's findings on the origin of recreation—
ists were similar for Luce County in the Upper Peninsula in 19th.

Of 2149 summer vacationists who used cottages and resorts, 30 percent

*

1American Automobile Association, "Amricans on the Highway.
A Report on Habits and Patterns in Vacation Travel." 1953.

2Ebasco Services Incorporated, Michigan's £2225 rPeninsula: An
En inserin St t,u__dy (Michigan Department of Economic Development, 1953)
p. 11. ....._£

 

BCurtis Publishing Company, "The Vacation Travel Market of the
United States." Nationwide Survey No. 3, 1952, p. 5b-

62

were residents of Luce County and 70 percent were non-residents of the
county. Fifty visitors came from elsewhere on the Upper Peninsula,

while h were from Ohio and Illinois. By comparison, 98 were from south-
eastern Michigan and 28 from southwestern Michigan.1 Such figures
emphasize the naturally prominent part which local people play in
recreational use in the north country, and also the dominance of Michigan
residents in overall recreational use. The local people, being on the
spot, can enjoy more and better recreation for less money. They are
there to take advantage of every turn of the season, whether it be

bird shooting, Indian summer scenery, or winter sports.

Economic Underdevelopment

 

The northern part of Michigan, consisting of the Upper Peninsula
and that part of the lower Peninsula lying north of the Muskegon-Bay City
line, constitutes a close-to-home illustration of the phenomenon of
economic underdeveIOpment. As consumers, people like to live where
living is cheap and agreeable, but as producers they are impelled in
the direction of the superior economic Opportunities. Forest industries
have provided a means of support to many local communities; the tourist
and recreation businesses have provided some added livelihoods and
some seasonal supplementary employment. But, the fact is that northern
Michigan has been falling behind the rest of the state in its rate of
economic growth since early in the pnesent century. Between 1910 and
1950, the population of the state grew by over 20 percent. During that

same 10-year period the population of the Upper Peninsula fell by

__
_ w

1George F. Deasy, "The Tourist Industry in a 'North Woods'
County," Economic Geography, Vbl. 25 (July, 19u9), 2bo-S9.

____._‘

63

6 percent. The population structure of the Upper Peninsula counties
differs markedly from that of the rest of the state. The percent of the
population over 65 is higher than that of‘ the state as a whole, showing
the effect of the out-migration of those in the productive years capable
of responding to better opportunities elsewhere. The proportion of
families with incomes under $2,000 in 1950 was strikingly greater than
elsewhere in the state. Farm level-of-living indexes were lower and
the number of days worked off the farm by farm Operators was relatively
large.1 Thus, there is not one Michigan, but two. Even the benefits
of the native northern resources of timber and minerals are largely

channeled off to the better located southern portions of the state.

1U. 5. bureau of the Census, County and. City Data Book,

(Washington: U. 5. Government Printing Office, 1952).

 

V. NATIONAL INfDME ACGDINTING

In tracing the income flow fmm specific uses of land, it is
advisable to consider the techniques which are in general use for the
measurement of income. Surely, if these techniques can be made to
serve, the resulting measurement scheme will have the widest possible
comparability with other ferns of economic activity. Moreover, a
systematic and tested system for getting full coverage without duplica-
tion will have been utilised. Therefore, it is in order to turn to
the concept of incom and the principles of national incom accounting
and see that help they may give in forwarding this income measurement
endeavor.

Concepts in Income and Wealth
Income and Wealth in General

m. wealth of a commity is dependent on the stock of valuable
things at the disposal of its members at a particular point in time.
The wealth of a society is the sun of the material objects owned by
hush being. These material objects may consist of land with its
associated improvements, of comdities capable of being moved from
one place to another, and in the broad sense of human beings thea-
selvee with their inherent and culturally acquired powers .1

L ___ W

1Irving Fisher, :92. Nature 25 Capital and Income (New York:

Machinan, 1906). Hum beings are material objects owned by
themelves.

65

Income is a flow of additions to the stock of wealth occurring
over a given period of time, such as a year. The creation of this

flow of value or comedity is termed production.1 Reductions in the
amount of stock occurring over a unit of time may be tensed outgo or
consumption. The difference between production and consumption over
the some time period expresses the net accmsulation or investment which
has taken place during that period. Production and consxmption are
to be distinguished from money receipts and expenditures. The latter
nrely represent changes in the form of assets by an owner. Not all '
receipts correspond with production, nor do all expenditures repre-
sent consumption.2
‘lhe Concept of National Income

The national income is the current year's production over the
shale of the national econow. It may be measured from two differing
points of view, namely, as the year's flow of finished or partly
finished products; or alternatively, as the sun of pawments to the
factors of production (including government) which contribute to
making that output possible. The two measurements are of the same
process from two differing points of view. Productive activity brings
into being units of new goods and services which are evaluated in the
market place at the price that bwers are willing to pay. The value
of that is produced is divided among those who have lent their re-
sources to the productive effort. ‘Ihe division is in accordance with

the term on which they have made these resources available.

leer-vice: a well as goods are included in this flow of
comedity.

2The discussion here follows Kenneth E. Boulding, Economic
AnalEis (2d Ed. rev., New York: Harper and Brothers, 191577-5736.

J

Inclusiveness of Income

A number of problem arise as to what item properly belong
within the scope of the national income and product accomts. Incou
in the sense of objects of value as defined above may be prodmed
not only by the business sector of the econoxq, but also by govemuent
agencies and enterprises and also by the unconpansated efforts of
individuals working alone or associated in groups. It has been fomd
advisable to limit the national income seasureaent aleoet entirely to
items which fore part of the eerket econom.

The activities of business lend themselves very readily to an
income accounting of the kind described. The economic contribution
of govemnent includes the purchase of products of the private
econoq vhich have been accounted for there, and may therefore be
measured, net of such purchases, in term of the salaries and wages
paid to the employees of the variou! units of govemnent. The third
great form of social organisation contributing to econoeic welfare
along with business and government is the family.

when a nan paints his house, he is as surely adding to the
economic product of the Nation as when he hires a painter to do the
Job. A group of far-ere who stage a has to help raise a neighbor's
barn roof are contributing to the nation's output of wealth, although
they receive no payment for the work finish they do.1 The largest
item in the family econow is mdoubtedly the mpaid contribution of
housewives and other family aeabers to the everyday operation of the

11: is this absence of compensation which results in the ex-
clusion of such self-help activities free the national income and
product.

6?

nation's households. Yet, the convention which has been adopted in
national-income accounting excludes from consideration these contri-
butions of persmel services in the family. Also excluded in the
main are the items produced by the family and consumed within the
family. he exceptions which are regularly made have to do with '
sizable items which have well-marked comterparts in the market eccneay.
Thus, theservices of owner-occupied dwellings are recomised as a
form of income to their owner. The use by farm families of farm-
raised food and fuel is also evaluated at market price and recognised
as income in kind or imputed income. But, not so with personal ser-
vices within the family circle. A man who marries his housekeeper,

it has been pointed out, thereby diminishes the national product.
lblated lbssures of Productigg

lbs value of a year's production is the value of the year's
output of ultimate products not thenelves med up in further pro-
duction.

The national income may be regarded as both a flow of objects
of wealth and as a flow of income payments to factors of production.
Looked at as a flow of articles of malth, it is clear that a dis-
tinction may be made between items which are used up in further pro-
duction and items which are in their final fans of memlness as
articles of consumption, or as items of capital plant and equipment
for further production.

 

68

Input-Output Analysis

For certain purposes it is not essential that a distinction
be made between final product and intermediate products. ‘lhe input-
output or interindustry stuiies first carried out by Ieoutief at
Harvard and continued for a time after World War II by the Unit“
States Department of labor cutain a vast wealth of information on
the allocation of the products of particular industries and on the
sources of the inputs used in making these products} mm 1- out-
put for one indutry freqmntly becomes input for another industry.
has output of the tire industry, for example, is input for the auto-
mobile indutry. me input-output analysis throws a great deal of
light on indmtrial interrelations. It is not serviceable in measur-
ing national output because of the large measure of double-counting
of product thich it involves. The total output for the 342 industry
classifications for the year 1939 was 270 billion dollars.2 The
U. S. Department of Comoros figure for the goes national pmduct

for that smee year was 91 billion dollars .3

Input-output data for the years 1919, 1929, and 1939 are
sumarized in the tables in the pocket in Hassily U. Ieontief, The

Structure of the American Econo , 1919-19 9' in rical A ll:—
‘Tr—rc. on o rm um T3. arr-:1. . . en ha%; aw 0 films
Wnnfiyml 3 or the year 191.? in w. Duane Evans

med Marvin Hoffenberg, "me Interindustry Relations Stmiy for 19W."

111-. 2113 25 W 93 Statistics, xxnv (Hay, 1952), 97.1“,
2Isontief, Table 2!; in pocket.

3National Incom. 1951; Edition. Office of Business Economics,

U. S. Department of Comrce (Washington: 0. S. Govemment Printing
Office, 1951.). p. 162.

69

Value Added by Manufacture

In the 9.252. of Manufactures carried out periodically by the
U. 8. Bureau of the Census, the output of manufacturing industry is
measured in ten. of the “value added by manufacture." Double-counting
of product 1; avoided by calculating the value net of. the cost of
purchased materials. 'Valtm added by manufacture is calculated by
subtracting the cost or materials, supplies, md containers, n.1,
purchased electric energy, and contract work from the total value of

shipmnts."1 A comprehensive system of incon accemts must go beyond

manufacturing and take in other productive services, such as trans-
portation and trade. It is therefore necessary to go beyond the value
added approach to measure national income in all its misses.

National Income Measurement by the Department of Gamma

The measuremt of income on a systematic basis for modern

nations mith industrialised economies has been greatly extended and
conventionalised in recent years. In the mited States the efforts
of such privately supported research foundations as the National
Bureau of Economic Research and the statistical investigations of the
Office of Business Economics in the Deparhent of Ger-erce have led
to the elaboration of logical and standardised system of mourning
the anneal national product. In Great Britain and other nations, a
similar refinement of the measurement of national income aggregates
has been accomplished. 'Ihe grewth in scope and detail of the periodic

sovemment censuses relating to manufacturing, trade and agriculture,

M

1'11. S. Btu-can of the Censu, Censm of Manufactures: 19W,
vole I, Do 20a

 

70

and the growth in detailed knowledge of economic indicators which has
been a by-product of the growing activities of government in taxation
and social security have all facilitated the comprehensiveness and
accuracy of the masurement of national inseam.
Structure of the Accounts

Final Product

The approach to assuring the national product free of duplica-
tion adopted in the U. S. Departmnt of Comoros national income work
is based on measuring product at its ultimate point in the ecmomic
process. Current production is absorbed by households (in the form of
personal couumption), by buiness, by government,and by foreign
customers. Ono place, therefore, to get an unduplicated measxuemeat
is at these gates where production is absorbed. Housholds tales the
bulk of current production in the form of personal consmptiom. no
part of final production which is taken by business goes into addi-

1 Governmt

tions to inventory or into new plant and equipment.
absorbs a share of current production in furtherance of its far-flung
activities. The only remaining destination for current production
is to customers in other countries and sou-cos of investment abroad.
firgduct of Government

The product of government is reassured in term of the wages and
salaries paid by government. The justification for excluding its.

bought by government is that they are reckoned in as a part of the

1Business also has a few consumption-type expenditures, if
one considers the furnishings of executive offices, company cars of
a ceremonial mature, and the like. '

 

product of the private business which produced them. he services of
government are somewhat arbitrarily regarded as instances of final
product. It can be argued that a government built and operated school
or road is an intermediate step in production. But, the practical way
of handling th'e government account is to regard such facilities as
final product.

Taxes , subsidies, and the interest on government debt all pre-
sent problems in being brought under the framework of national income
accounting. To the extent that government makes a contribution to
current production, the payment it receives for such services, nanely,
taxes, needs to be included in the national product. Payments by
government which are not in return for a current contribution to pro-
duction are excluded from national income. Pansions and social in-
surance payments by government fall within this category. Sinilarly,
interest parents on the national debt are excluied on the grounds
that they largely represent paying for the costs of past wars.

__Ir_§dus trial Classification

'lhe orderly measurement of income requires that income and
product be smriaed by industries and industry groups. The possi-
bilities for industrial classification are numerous. Establishments
and companies m be grouped according to product or major raw material
used, or according to the type of process employed. Service-type
indmtries, such as transportation, communication, finance, and real
estate cut across the regular industrial grouping. To bring about

a measure of uniformity, a cannon scheme of industrial classification

 

72

is employed by United States government statistical agencies.1 Users
of government statistics must therefore adapt themselves to this system
of classification, whether it seem most desirable for their our
purposes or not.

National Income and Related Heasuxes

In producing a year's output of product, some of the equipment
and productive plant of a nation wears out. ‘nre productive output of
the nation without regard to depreciation is measured by the Department
of Comoros I'gross national product" series. The “national income” as
calculated by the government involves the deduction from the gross
national product of the mount of capital consumption incidental to
the year's production; and also_of indirect tans, such as sales taxes,
custom duties, and business property taxes.

But, these tuo measures of national income and product do not by
an seam exhaust the list of standard measures vhich m be appro-
priate and useful for specific purposes. National income measures the
paymnts to the factors of production, including governmnt.2 "Personal
income" differs from national income by the deduction of factor payments
not received by persons, such as social insurance contributions, cor-
poration profits taxes, and undistributed profits; and by the addition
of certain transfer payments which do not fern part of national income.
These included items which do not represent a payment for a contribu-
tion to current production consist of such items as pensions, interest

on the national debt, and the charitable contributions of bminess.

—- ~
- A h—‘AA “w —— A ‘-‘ _..._ n

2'”This classification is contained in the Standard industrial
Classification Code of the Office of Statistical Standards of the
Writ; Budget, 1916.

2"Direct taxes" such as personal and corporate income taxes are
included in national .income.

 

 

~ I

73

The national income measure which measures what individuals have to
spend after paying their income taxes is ”disposable personal income.”
The origin of the national income by states was formerly

mounted by the series ”state income payments." Income parents to
individuals were distribuud muong the states largely on a where-
received basis and have included such item as wages and salaries;
income of proprietors, property income in such forms as dividends,
interest and net rents and royalties; and various forum of government

payments to individuals.1

The state income payment series has now
been replaced by the rneasure “state personal income.” By making a
few relatively minor changes, it has thus been possible to bring the
measurement of income by states into more direct relationship to the

corresponding personal income measure for the Nation as a whole.2

Two-Sided Accounts

The principles of income measuring which have been under dis-
cussion here can best be brought into an orderly scheme by presenting
them in terms of income and product accounts. In this effort, the
two -sided accounting procedure that characterizes the Department of
Consume national income accounts will be followed. The product or
right-hand side of the accomts lists the com-cos of the payments,
namely, personal consumption expenditures, private domestic invest-

ment, purchases by government, and sales to foreign countries. 0f

—— w ‘ ___-_‘A__
— “4‘!“-A A A

1Charles F. Schwartz and R. E. Graham Jr. "State Income Pay-
Icnts in 191:9: Technical Notes." Survey of Current Business, Vol. 30
(August, 1950), 22-2h. "“““"““*"

2Charles F. Schwartz and R. E. Graham, Jr. ”Personal Income

5% itates, 1929-Sh,- Survey of Current Business, Vol. 35 (Sept. 1955),
- 2’ 320 .- ‘

7h

these items, by far the largest is personal consumption expenditures,
which currently accounts for some 75 percent of all the sources of
payments which enter into the national income. fine income or left-
hand side of the accounts shows the allocation of these payments
among the factors of production according to the type of income re-
ceived, calmly, compensation of employees, income of mincorporated
enterprises, corporate profits, net interest and rental income, and
an adjustment for the change in value of inventories. These two sides
of the accounts constitute two views of the same set of transactions
viewed from different sides. To the extent that their calculation
can be carried out independently, an overall strengthening of confi-
dence in the reliability of the totals arrived at is gained.
Sources of Payments

333191“; Constantia: Expenditures

me and of production in our society is the satisfaction of the
wants of individuals. Most of each year's production is therefore
for the consuption of persons. Personal expenditures for consnnption
may be for commodities or for services. For the commodity portion of
consumption, the problem is one of estimating the retail valuation
of such items as the wood turnings, the wooden furniture, the rods
and guns, the gas, oil and tires.

There are three main ways in which the valuation of commodi-
ties may be accomplished.; The first of’thsse uses the periodic

_. _._ — - -

lflational Income, 19st. pp. 103-17.

7S

Censuses of Retail Trade as a starting point, adjmting the sales of
retail establishments downwards for'sales not made to individuals,
and upwards for purchases individuals make which are not made in retail
establishments. A difficulty hers is the problem of sorting out the
components of sales of particular items made by stores in the fairly
broad Census classifications of retail establishaents. What is known,
for example, of’the breakdown of the sales of such a group as "lunber,
building, and hardware?" The second method, uhich is the one chiefly
employed, is the 'conmodity flow" method. In this aethod comdity
production is traced forward iron the producer. ihe portion which is
taken by individual consumers, whether from the manufacturer directly,
at wholesale, or at retail, is identified. The commodity flow method
also serves to identify the part of the production of commodities which
is purchased by business as producers' durable equipment. A third
method of estimating personal consumption expenditures is the “retail
valuation" method, in which estimated quantities purchased are multi-
plied by in estimated average retail price. This nethcd, uhich has
great simplicity to recommend it, is used on the national level to
estimate such item as passenger cars and sales of gas and oil.
Personal consumption expenditures fbr services as Opposed to
commodities cover’such items as cottage rentals, hire of hunting
guides, transportation fares, hunting club dues, and the like.
Estimates of expenditures fur services are taken from a diversity of
sources, public and private. Among the most important are the periodic
Genomes of Population and Housing, aid of Business.

76

Gross Private Domestic Investment

 

Besides the production of goods and services for consumption,
the annual production of durable capital items and the net change in
inventories must be reckoned in the total of the year's production.

We must count as income the portion of production which is destined

to yield a continuing flow of goods and services and partakes of the
character of forms of wealth with a capital value. Private investment
refers to new construction, whether of individuals or bminesses, and
to producers' durable equipment. Here, again, a variety of sources,
such as trade association reports and records of building permits

are relied on to give the required estimates. Timber access roads

on privately outed lands, farm ponds ,Igr hunting cabins may all be
regarded as examples of gross private domestic investment.

Government Purchases of Goods and Services

A further source of payments is the purchase of goods and
services by government. Unlike my of the purchases of bminess,
the purchases of government are not resold and therefore receive no
duplication elsewhere on the product side of the ledger. Government
budgets and the annual reports of government departments seem the
most appropriate place to find the ammts of these items.
gradual Consgnption In Kind

Hell defined item of consumption, thich are not received in
the form of my but directly as goods or services, also fern part of
national income and need expression on the product side. This is
accomplished by regarding the food and lodging furnished to employees
without charge as a sale of these items to the employees at their cost

 

 

u!

 

77

to the employer. Similarly, the owner of a smer cottage who occupies
it himself is considered to be renting it from himself. Fara-cut frml
mod on the fare is counted as though it were a sale by the farmr to
himself at the price the wood would bring if put on the market.1
Distribution of Income

The sources of gross product have now been listed. The dis-
position of this product among the recipient groups and the varying
form in which these shares are allotted is now to be deve10ped to form
the other or left-hand side of the accounts. Each of the components
of the income side will be described and briefly illustrated as was
done in the case of the items making up the sources side. I ‘
Compensation of Employee;

Compensation of employees for the productive services at labor
and management accounts for the largest share of incou receipts,
totaling two-thirds of the national income.2 Host of this compensa-
tion is received in the form of salaries and wages. “Other labor
income“ is that smaller part of compensation of employees which con-
sists of such items as employer contributions for social insumce
and private pension plans, compensation for injuries, and directors'
fees. The chief source for data on payrolls are the records kept in
connection with the Social Security Act. These met be supplemented
by other records for employees of government, households, and industries

not covered by social security. in alternative to the use of such

—___. __._‘_.

1"l'he treatment of income received in kind is discussed are
fillly in National Income: 1951;. P. h6-

2Ibid., p. 160, Table I.

78

publications as 92.1221 Business PatternSnlhich is issued quarterly in
constriction with the administration of the Old Age and Survivors
Insurance plan, would be the use of the periodic ‘Gensuses of Business
and Manufacturing.
lncone_of mincogporated Enterprises

Preprietors of unincorporated businesses receive their earnings
in a form which differs both from the wages and salaries of employees
and from the profits of corporations. Unincorporated enterprises
have an importance in the trade and service industries and also in
logging and milling. Finding the incone of these enterprises is one
of the more difficult and less charted aspects of the work. In
general, the approach of applying a pro fit ratio to the gross receipts
of such enterprises is as good a method as can be fomd. he returns
for agricultural proprietors are best obtained from the work of the
Agricultural Marketing Service of the Department of Agriculture.
3mm Income of {greens

.1his item, as a distributive share of the national income,
refers to the net income of persons (including owner-occupiers of
dwellings) for the rental of pmperty. It does not incluie the net
income arising from rentals paid to landlords who are not persons.
Its estimation is a complex procedure resting on the separate
detemination of rentals for farm, nonfarm, and business and industrial
properties. Income tax returns are one of the primary sources, but
their utilisation presents some considerable difficulties.

79

Corporate Profits

Also arising mainly out of records of the Internal Ravenue
Service are the estimates of corporate profits before tax. Differ-
ences in concept and purpose result‘in a modification of profits as
given by tax returns. For example, capital gains are elininated fron
profits (since they do not relate to current production) and allow-
ances for depletion are added back to profits, since depletion is
not regarded as a form of capital consumption for the sake of the
national income and product accounts.1 Related to corporate profits
(and also te the income of unincorporated enterprises) is the itea
“inventory valuation adjmtment,u which refers to the adjust-ant in
changes in inventories reported by business to bring the treatment of
the valuation of inventories to a con-on basis. his adjust-eat is
not a large item in the thole systen of accounts.
Net Interest

Net interest refers to the portion of interest paid to
individuals exclusive of that paid by governmt (flich is not held
to relate to current production). Monetary interest received by
business and foreigners is the itea deducted froa total interest pay-
ments to secure net payments of interest to individuals. Main sources
for interest payments are Internal Revenue and Department of Agriculture
records.

Nonfactor. Payments
me gross value of a year's production includes an element

which is not received by factors of production for productive services.

1National Income, 1951:. p. 92.

80

It also includes the capital used up in that year's production. In
order to pass from gross national product to national income, it is
therefore necessary to nake allowance for these two classes of items.
The principal items which rust be deducted from the value of the
gross product are capital consunption allowances, indirect business
tax and non-tax liability, and business transfer paynents. National
income was 17 percent less than gross national product in 1951;.1

Capital consumption allowances consist of depreciation,

capitaloutlays which are charged to current expense, and accidental
damage to fixed capital. By far the greater proportion of these
allowances take the form of depreciation, as the term is con-only
mderstood.

Indirect business taxes are defined as all taxes that are
chargeable as business expenses. They comprise mainly excise and
business property tans, including the tax on owner-occupied housing
prOperty. Business transfer pvnents are those panents made by
business which are not in return for a corresponding productive
service. The chief sources of such bminess transfer payments are

business gifts to non-profit institutions and consumer bad debts.

n A A

“H

urvey of Current Business, Vol. 35 (July, 1955), p. 6.

 

VI. BUILDING A FRAMEWORK'FOR'M&MNMEWENT

The foregoing chapters are preliminary to the real object of
this study, which is to find a means of measuring and comparing the
economic importance in Michigan of home-grown timber and home-provided
recreational Opportunities in the forest. The concept towards which
the discussion of economic importance has been tending rust now be
formalized and given sharper outlines. This done, the translation
of this concept into an operational procedure will then be described.
For timber products and for recreation, the range of quantities to
be measured will be indicated, the sources of measurement data
stated, and the means of handling the allocation of items as between
forest land use and the rest of life suggested.

Measurement Concept
Economic Importance

Economic importance will be measured in terms of additions
to stock of goods and services brought about. It will not be main-
tained or implied that economic importance is identical.with impor-
tance in general. Rather, it will be held that an objective concept
of economic importance measurable in dollars may be derived from
income produced, valued in terms of market price. Whether an
activity is trivial or vital, the valuation of the market place
will be accepted as denoting the economic importance of that
activity. To this extent, the concept of economic importance will
he more definite and operational but less cemplete than one which

attempted to encompass the rest ef life, as well as the world of
dollars and cents.

82

Income is preferable as an index of economic importance to
other measures which might be chosen. It is more satisfactory than
wealth, which would necessitate the appraisal of everything of value.
There is no market for many of the things it would be necessary to
evaluate.1 Those capable of evaluation are often valued in terms of
their income—producing power by a process of capitalization. Amount
of employment provided might be another possible criterion on which
economic importance could be based. But to relate economic impor-
tance to quantity of employment afforded would be to restrict the
scope of importance unduly. The war to abundance is via the sub-
otitution of land and capital for labor. An industry with a low
component of labor in relation to other factors of production may
easily be the source of more new wealth than one with a higher

complement of labor, but lower associated inputs of machinery.

lihus, in a recent estimate of the market valm of forest
land in the United States made for a national balance sheet,
market value was based on the immediate sale value of all land
and timber for timber use, omitting public values in water pro-
duction, recreation, and wildlife and also the value of improve-
ments and equipment. This estimate of 8 billion dollars for all
forest land in the United States in l9h6, made by H. R. Josephson,
is contained in L. A. Reuse, uLand Utilization Data as Background
Information for the National Balance sheet and Approximations of
the Value of Forest Lands ," Studies in Income and Health, Vol. 12
(New York: National Bureau of Economic Researchfi9555. P. 233.

8.3

Point of View

The point of view from which economic importance is to be
Judged is that of the State of Michigan as a whole.1 Each use of
forest lands will be Juiged by the effect it has on the sum total
of goods and services available to the people of Michigan. The
benefits of forest resources are widely spread through the entire
state and are not Just confined to the residents of the more heavily
forested districts. The large amomt of land in public ownership
makes the administration of forest policy a matter of political as
well as economic concern to farmers and urban people of southern
Michigan, many of whom are dependent on forest raw materials for
their employment and on northern woods and-waters for their best
loved recreational hours.

The State is a logical unit from the standpoint of the condi-
tion of statistical data. Certain classes of information are made
available for states as a whole which are not compiled for smaller
units. Ihiform patterns of administration, policy, and record-
keepinz over a state help to make it a logical and useful unit of
aggregation from a practical point of view.

Secondary Economic Effects

The most important practical decision to be made relates to

the scope of economic effects to be encompassed by the term timber

production and wildland recreation. Economic effects might be

lane difference between this point of view and that of the
recreational studies of Pearson, Hedrick, and Brueckheimer dis-
cussed in chapter III above is to be emphasised. In all of those
studies, significance was Juiged from the point of view of the
people resident in the forested counties. The approach chosen
here is similar to that of James in his study of income from timber

products in Hichisan, also described in mentor III.

8h

limited to the direct returns to land, or broadened out to include a
wide range of connected economic events. It is not immediately
evident whidi approach is to be preferred. Only by considering the
present purposes of measurement does the right point of view for'
appraisal suggest itself. It must be recalled that these purposes
are reasonableness and comparability, along with the ability to be
put into practice.

The competition of'land uses in the private portion of the
economy is decided in favor of the use which shows the highest
return to land. This return to land, not of the payments to the
other factors of production, is the economic rent earned by the
land. From the standpoint of the individual land owner, this is
the return which is of the greatest importance.

From the standpoint of7commmity, and particularly of so
large a unit as a state, the rent approach would lead to a result
which would be misleading, both by the smallness of’ito size and
the relative returns it showed for the differing uses of the land.
It has already been indicated how hard it is for the private forest
land owner to appropriate some of the recreational returns of’hio
land or secure income from them. Moreover, wealth comes from the
Primary products of the land mainly through their further manufacture
and distribution rather than directly from their much smaller value
as raw products. ‘

One step beyond measuring the incone from direct products of
the land would/:3asuroment of what Lammi called "primary money

income" at the point where goods and services have passed through

 

85

the first processing enterprise.1 The difficulty with such a plan
where timber and recreation are the products being evaluated is that in
the case of recreation the first processing enterprise and the ultimate
consumer are identical. me ultimate consuner and the first process-
ing enterprise may be widely separated in the case of timber products.
0f more general applicability to the present investigation is
I'secondar'y money income" following Inmi's terminology once more,
”accruing to the factors of production beyond the primary stage, in-
cluding, for example, the suppliers of materials, transportation

"2 In the case

firms, processing plants, wholesalers, and retailers.
of the threat products which are physical goods the tracing of this
secondary money income presents no insurmountable theoretical or
practical difficulties. Of none devious origin and composition is
the secondary money income which arises incidentally to the pursuit
of forest recreation.

The basic consideration hero is that the forest recreationist
is characteristically a tourist. He is a man on a pleasure trip of
less than a year's duration, spending his money in the place he
visits without earning it there.3 By his presence and what he does,
he adds to economic product in the place which he visits. more his

activities involve Special clothing and equipment, there are also

“— . . .

Ll'his concept is discussed in Chapter 11 above.

2
p0 10o

J. O. Inlnmi. ”Primary Money Income from Range Watersheds,"

3a.. definition is based on F. w. Ogilvio, 33: Tourist
Movement, in Economic Study (london: P. s. King, 1933).

86

further secondary income effects from his pursuit of recreation. It
may be difficult if not impossible to allocate these effects to specific
units of recreational use of land, but their existence and economic
importance is undeniable.

In view of the foregoing considerations, the economic effects
of timber and recreation will be measured at the point where they
satisfy final demand. 'lhe agents of final demand in the national
income framework are individual consumers, businesses, md govern-
ments. In the case of products which are exported from Michigan,
measurement would apply to the highest form which they reached be-
fore leaving the State. The economic effects erqaressed as new
plant and equipment should be counted, if possible, along with the
economic effects which take the form of consumable products.
Applicable investments by individuals in the form of buildings and
improvements should be counted along with investments by business
for new construction and machinery.1 Applicable government expendi-
tures for both goods and services will also be included.

Some measure closely approximating the national income con-
cept will be sought. This type of measure will provide for depre-
ciation and eliminate the effects of excise taxes and other non-
factor costs. A national income type of measure is a good one for
making general income comparisons among industries. It is a measure

which it will be possible to estimate with some readiness frem

—

lInvestment expenditures may be omitted for both timber and
recreation if it should prove too difficult to gather the needed
information. Quantitatively, they are of minor importance compared
with consmption expenditures.

87

published statistical materials, both for the timber phase of the
evaluation and for a part of the recreational side of the problem.
no alternative choice of valuing in terns of value added by
manufacture for timber products and value added by merchandising for
recreational products is not made for two reasons. First, it would
be too gross a measure of the contribution of each of the two in-
dustries. Secondly, the statistical data are not readily available
that would allow an estimate of the value added by merchandising to
be made.

This, then, is the concept of economic importance for which
it is proposed to suggest specific estimating procedures. The pro-
blem from this point forward is one of finding or indicating the
sources of the data, and suggesting the allocations and adjustments
which must be applied to the data. Such a spelling out of the appro-
priate sources and allocations will constitute a test of the reason-
ableness and practicability of the concept described above.

Measurement Procedur!

 

Timber
Leora
The economic contribution of timber is the value of a year's
output of timber products plus the expenditures of the timber industry
for new plant and equipment not charged to current account plus the
investment expenditures of government and private owners for tinber

production which are not currently expensed. Included in the year's

 

88

output of timber are the value of fuel, posts, and lumber produced
on the farm for home-use and not for sale.1 The value of timber
products in a Michigan context may be reckoned as the sum of three
components, namely, the value of raw timber products, value added
by manufacture, and value added beyond manufacture within the con-
fines of the Michigan econow.

Sources

The value of raw timber products for the btate of Michigan is
computed annually by the U. 5. Forest Service, Division of Forest
Economics, as part of its nationwide statistical compilation ser-
vices. Estimates are made of the quantity of each of the products
turned out during the year and a value estimate computed by apply-
ing an average price to the total production.2 The inclusion of
farm produced timber within these totals takes care of that com-
ponent of raw timber products.

The value of timber manufactures may be taken from the latest
Annual Survey of Manufactures, supplemented for more detailed break-
downs by benchmarks taken from the most recent Census of Manufactures.
The census offers the quantity "Value added by manufacture," which
is the figure desired as a first approximation to the value of pro-

duct of wood-using industry. Value added by manufacture is given by

ISuch a listing is an extension of the item “fuel produced
and consumed on farms ," of the national income accounts, National

Income, 1951;. p. 211;.

2mm: G. Horn, "Commodity Drain from the Forests of the
Lake States ," cited above, is an example of the estinmtes on
valuass cut summarised annually by the Forest Service.

89

state and by industry groups. Also obtainable from the Census of
Manufactures for these industry groups is the quantity ”expendi-
tures for new plant and equipment," as required for the proposed
measurement procedure. The net government investment for timber
production would have to be worked out with reference to the
statements of receipts and expenditures of the concerned federal
and state government agencies and by consultation with the suitable
staff members in these agencies. A similar item for the invest-
ment expenditures in timber production of private owners could be
estimated with the aid of state and federal extension workers and
such industry associations as the American Forest Pmducts
Industries.

An estimate of the value added beyond manufacture in Michigan
must be built up with reference to the various classes of products.
A large bulk of the output of Michigan gram timber goes into con-
struction, railroads and maintenance work.1 or the part which goes
to wood-using industries, some goes into containers and other pro-
ducts thich have no value added beyond manufacturing. That part
which goes into wood furniture and other personal consumption item
is absorbed by a national market. Estimating the Michigan share of
that national market, and the part Michigan produced prod ucts play

in meeting the Michigan share offers a task to test the ingenuity.2

1John Hanson, "weed-using Industries of the Lower Peninsula.”

2A starting point would be the publications of such industry
associations as the Maple Flooring Manufacturers Association, the
National Association of Furniture Manufacturers, and other similar
organizations listed in the comprehensive book by Jay J trikins ,
National Associations of the United States (Hashingtonr U. S.
Department of Ems merce, “1%).

90

Such industries as the Christmas tree and maple syrup industries my
be approached in terms of the marketing studies, which are made
periodically to determine the value and sources of production and
sales.1

Alloc atipns

 

Certain common sense allocations and deductions are needed in
connection with the use and interpretation of statistics from the
above-mentioned sources. There is a need to draw a line between the
timber products whose processing is tied to locally-grown raw
materials and that which is independent largely of Michigan timber.
A recent study of Hanson's covering the year 1950 suggests that some
tinber products are made in Michigan because the market is here,
rather than because of the local supplies of timber.2 Table 1, taken
from Hanson's report, shows that such an industry as the sash and
door industry obtained but one percent of its requirements of 52
million board feet of lunber from Michigan grown wood. The furniture
industry drew 22 million board feet from Michigan forests of the
53 million board feet which it consumed in 1950. Six Lower Peninsula
pulp and paper mills got 53 percent of their wood requirements from
Michigan and the balance from elsewhere.

What seems to be needed is a formula or a Judgment basis for
deciding which industries are dependent on Michigan materials and

which are not. Reference to Table I suggests that a figure of

__ __.A._-

18ee, for example, lee M. Jams and Lester E. Bell, Marketin

Christmas Trees in Michi an, Special Bulletin 393. Michigan State
631133., aflfiamnt Station, East Lansing, June, 1951:.

2John Hanson, "Wood-using Industries of the Lower Peninsula."

Table l.-0rigins of wood supplies of wood-using industries
of the Lower Peninsula, 1959I

91

 

 

 

 

 

 

 

(Jmo‘hbo’ 1951) e

 

:Establfshn : 70°C! : ASouroe g:
Industry : ments :Employeesx consump-t :TTut oszichigan
: z : tion :Michigan: state: wood
Wufifier trumber Pfibom. bem. khan—Percent

Furniture and

carving 76 8,239 52,523 22.373 30,150 M
Containers 73 1,273 65,876 29,086 36,790 In
wood specialties 71 3,123 23,811 9.51:2 111,269 to
'Rvstic products 68 5&7 22,228 21,273 955 96
Custom wood-

working 141 195 1,705 666 1,039 to
Sash and door 22 856 51,520 535 50,985 1
Turnings 22 285 3,822 335 1,65 88
Store equipment 22 1,1187 10,980 2,931; 8,0h6 27
Boats 19 1,632 5,695 M1 5,253. 7
House trailers

and ready-cut

buildings 19 1,966 h0,2h0 1,680 38,560 . 1,
Game and sport-

ing equipment 12 651 7,882 8,1143 3.739 53
Flooring 11118 10 201 17,322 111,392 2.930 83
Caskets 9 105 1,669 289 1,380 17
Muiosl instrments 8 655 5,182 2,051 3,131 to
Radio cabinets 6 1, 510 28,529 not 28,125 1
Pulp-paper mills 6 1,920 108,600 57,620 50,980 53
Vehicle racks and

bodies 5 65 976 1125 551 ML
Ladders and

scaffolding h 1.2 2,101 21.7 1,851. 12
Shingle M113 3 19 187 187 access 100
Veneers, plywood 3 536 6,030 2,205 3.825 38
Wood machinery 3 205 ‘08 [£26 12 97
Excelsior 2 177 3,660 3,660 . . . . . . 100
Totals sot 25,690 1160.976 177.936 283.0110 39

1Table 1 reproduced from Michigan Conservation, Vol. 20

92

1.0 percent or over of Michigan wood used would be sufficient to
regard an industry as dependent on Michigan wood and owing its
location to the supply of Michigan wood available. The veneer and
plywood industry, using 38 percent Michigan grown wood, might also
be included because it is near the margin. One would thus be
obliged to regard the sash and door, store equipment, boats, house-
trailers and ready-cut buildings, caskets, radio cabinets, and
ladders and scaffolding industries as owing their location in
Michigan to market and processing considerations primarily rather
than to the availability of horns-grown wood materials.

The to percent or over native wood convention is helpful
also in dealing with such important wood-using industries as con-
struction, shipping, and general manufacturing. These uses within
the state rely heavily on imported wood, well in excess of the 60
percent minimum. There would still be construction and shipping,
whether a local supply of materials were available or not. 'lhe
lumber industry as a whole is a national industry serving a
national market, and for many years past it has partaken of this
character.

Value of production, built up in layers from raw products
through manufacture and beyond manufacture, is a good first
approximation to inconn produced by timber products. The approach
suggested represents a sort of modified "commodity flow" approach.
In the fbmst industries it is an easier matter to identify the
producers and follow their output forward than it is to work back

from the final damanders of the forest products. The correction

 

93

that is required to remove the influence of depreciation, indirect
taxes, and other non-factor payments may be found by comparing the
percentage differences between the Census estimates of value added
and the Department of Commerce estimates of "national income
originating“ for the forest industries. The ratios of national
income to value added computed for larger industry groups may then
be applied to the more detailed groupings of the Census of
Manufactures.

An example may serve to clarify the required procedure. In
1952, the value added by mmufacture was 3, ”19 million dollars for
the industry group ”Lumber and Products, except li‘urniture.":l The
estimate of national income originating in this same industry group
was 2,839 million dollars, which amounts to 82 percent of the amount
of value added by manufacture.2 A similar comparison of the
"Furniture and Fixtures" group and of the "Paper and Allied Prodmts'
group discloses that the corresponding ratios of national incom
originating to value added were 79 percent and 81 percent, respec-
tively. Appamntly, a deduction of 20 percent applied to the value
added figure will provide the needed estimate of national income for
the minor industrial groupings. For all of these more detailed
industrial groupings, there is a value added figure computed but

not a national income originating figure. A similar procedure of

M

1U. 5. Bureau of the Census, Annual burvey 3.1.: Manufactures,

1953.

2National Income, 1951:. P. 177.

9h

refining gross product to national income produced in Michigan must
be employed at the other stages of timer production enumerated
above, to raw timer products, and to value added by wholesale and
retail trade, as well as to the value added by mmufactm'e am to
the value of new plant and equipment.1

Recreation

£2.22

The economic contribution of recreation is the sum of the
incomes accruing to wildland owners in a year through recreational
use, plus the income component of the expenditures for new con-
struction and producer's durable goods contributing to the recreation
industry, plus the expenditures of government agencies for operatiom
and investment in recreational improvements and facilities. Beyond
such primary effects, the economic contribution of recreation
further includes that part of the national income originating in the
foods and eating, the sports equipment, the transportation, and a few
other miscellaneous industries of Michigan which can be attributed to
forest recreation. Forest recreation will be regarded as a broad
combination of wildland oriented activities, incluiing sight-seeing,
hunting and fishing, wilderness travel, winter sports, summer
resorting, and summer camping and vacationing.

Income accruing to the owners of wildland properties largely
takes the form of income in lcind, similar to the item "rental value
of owner-occupied housing" in the national income and products

2
accounts. The degree to which recreational rights are leased or

1A procedure analogous to that given in the example for the
income arising from sales to recreationist is recomnended. (see page 99)

2National Income, 1951:, p. ’46.

95

otherwise put on the market is very limited under Michigan conditions.
To take care of this small amount, an item must be provided for the
owners of deer parks who charge admission to the public and the like.
Dther'form of income from rental of cottages and homes for recrea-
tional use may better be measured through the renting public rather
than through the income recipients.

Investments in new construction and the purchases of pro-
ducers' durable equipment relate to the activities of businesses
serving forest recreationists. Construction of new resorts and en-
largement of old ones, purchases of trucks, boats, and other item
to be wed for profit all represent items which fall into this class.

The secondary effects of recreation include the income arising
out of added activity occasioned by recreational occupancy and use.
This activity must be over and above that vhich would occur even in
the absence of Michigan-provided forest recreation. In this category
fall the income from transportation, equipment and supplies, the
added components of food and lodging and other recreation-related
expenditures.

'Sources

Finding the sources for the needed data is not so straight-
forward a matter as is the case with the sources for timber product
data. The product mix which is to be separated out is closely en-
twined with non-recreational uses and the allocations needed are
very difficult to determine. The Census of Business provides usable
information on motels and other lodging establishments and on eating

places which may be localized to the recreational districts by

counties and other small subdivisions. Certain specialized businesses
which are allied with forest recreation, such as taxidermists, are
covered in the Census of Business.

A large proportion of the supplies and equipment needed for
recreational pursuits, including transportation expenses, are so
widely diapersed among different classes of retail and wholesale
establishnents in all parts of the state that there seems little
hope of extricating them from the records of enterprises, or from
the Census of Business. Where federal excise taxes apply, tax 1e-
cords will show country-wide totals for the particular items covered.
Purchases of hunting and fishing gear are specifically totaled in
connection with the administration of the Pittmm-Robertson and
Dingell-Johnson grants to the states, based on the excise taxes
paid on such gear.

Reliance for these important classes of recreation-induced
expenditures must finally be based on some sort of estimate of the
behavior of recreationists. The best way of making such an estimate
is by questioning a sample of recreationists as toptheir purchases
and investments. It is necessary also to know the total number of
recreationists to which this sample is to be made to apply and the
duration of their participation in the various forms of forest
recreation available. Expendituxes for transportation would be
among the more orderly ones to calculate on the basis of distances
traveled and a lmowledge of car mileage costs.

Data gathered in other states points to a certain stability

of eXpendituxe. pattern for hunters and fishermen as a group, the

 

97

well-interviewed portion of the recreational gentry. Results from

three different states suggest a breakdown of some to percent of
and

expenditures for equipment/ supplies, 20 percent for transportation,

12 percent for food and lodging, 5 percent for clothing, and the

1

reminder for a varying preportion of other goods and services. It

would be more satisfactory to have this information at first hand fcr
the State of Michigan. A nationwide survey, now being undertaken
by the U. 5. Fish and Wildlife Service, may supply a part of this
needed information.2 One could wish the other classes of recrea-
tionists were as well covered with survey information as are the
sportsmen. Some general guidelines may be available from surveys of
vacationists of the American Automobile Association and the Curtis
Publishing Company.3 But, one gets the feeling that available data
on the tourist industry of Michigan is slim and spotty, indeed.
Allocations
If it may be assumed that acceptable estimates of the re-

quired quantities could be made, substantial problem of allocation
would still remain. The line of recreation is a hard one to find,

as Dewhurst has pointed out in his able treatment of the subject.h

1The averages are generalized from the studies of Couture,
Royall, and Stains and Barkalow for Massachusetts, Idaho, and North
Carolina, respectively.

2Journal 2;: Forestg, ”An Economic Survey of Sport Hunting
and Fishing in the united States,“ Vol. 5h (Jam, 1956), p. 78.

3"Americans on the Highway," and "The Vacation Travel Market

0f the United States,“ respectively. .
hJ. Frederic Dewhurst and Associates, America's Needs and

Resources (New York: The Twentieth Century Fund, 19%;, Chap. 11.

 

 

98

A discussion of the problem of allocation will accordingly be
provided next leading to some practical decisions on how to make
the necessary allocations to wildland recreation as Opposed to the
rest of life.

The allocation of expenditures as between recreation and the
rest of life may have to wait on a fuller exploration of the con-
sumer mind. In the absence of such a further probing of motiva-
tions and behavior, the following arbitrary allocations are suggest-
ed as a starting point. Sales of food for home preparation would be
excluded, but meals purchased by recreationists would be incluied.
Expendable supplies, such as amunition, bait, camera film, would
be included, but the purchase of items of durable equipmnt would
have to be treated on a Judgment basis, item by item. Cameras,
binoculars, sport clothes, and footwear, dogs and their care, and
even guns, would have to be allocated on a percentage basis, partly
to wildland recreation and partly to other activities.

Of course, gross expenditures by themselves represent too
inclusive a measure of the contribution to the Michigan economy of
recreation. The sane reduction to ”national-income originating”
as was proposed for the product of forest industries is called for
in the case of the recreational products. A practical way of doing
this would be to find the appropriate percentage of retail sales
which represents national income arising in wholesale and retail

trade. Comparison of national income statistics with sales volume

 

 

 

figures from the Census of Business will supply the needed proportion.
Recreational goods manufactured in Michigan would be carried back to

1 Those goods coming in

the point of manufacture on an income basis.
from outside the State would not. be carried back that far.

An idea of the size of the national income component in retail
sales may be gained by comparing national income originating in whole-
sale and retail trade for the year l9h8 with the total volume of re-
tail sales fcr that year. Retail sales in l9h8 were 130 billion

dollars.2 The amount of national income originating in retail trade

 

was 28 billion dollars and in wholesale trade 13 billion dollars.3
Since wholesalers made only half of their sales to retailers, the
figure for national income originating in wholesale and retail trade
'to be compared with retail sales is 314.5 billion dollars. On this
basis, the desired ratio is 18 percent of sales as the preportion
which can be counted towards national income. It is such a pro.~
Portion as this which must be applied to purchases of recreational
consumers at retail in order to get the adjusted national income
totals sought. This reduction of sales to income originating from
sales is the largest and most important of the allocations to be

made a

_.‘
4‘ AA A A“
‘-A _- A mm

. lDifficulties of isolating such goods might oblige one to
Omit this item from the scheme.

2Census 9.1: Business, 19h8.

3National Income, 1951» p. 177.

VII. SWARY

Measuring Economic Importance

 

A growing population and advancing levels of living make added
demands on the wildland resources of Michigan. A growing industry
demands more forest raw materials. Working people with shorter hours
of work and more money to Spend demand more wildland in which to spend
their leisure and refresh their bodies and spirits. At the same time,
the lag in the economic advancement of large forested areas of the
state calls for attention and some kind of remedial action. Public
land administrators and legislators need guidance in the midst of
these conflicting demands. How can priorities be established to
govern the allocation of wildlands between uses which are sometimes
competitive?

One approach to establishing priorities of use for these wild-
lands is in term of measuring the present importance of the two major
uses, namely, timber production and wildland recreation. Timber pro-
duction results in masurable physical product and is the basis for
substantial timber-using industries whose economic effects may
readily be evaluated. Forest recreation, on the other hand, is a
different type of activity. It produces little visible product.

Its large economic importance expresses itself indirectly in the
numerous recreation-related activities which accompany recreational
enjoyment, such as purchases of equipment, travel, food, and lodg-

ing. To find a cannon means and framework for appraising two such

101

unlike "industries“ suggested itself as a piece of research to be done
preliminary to actually making the economic comparison.

A review of existing appraisals of the economic contributions
of forest recreation strengthened the impression that thought must be
given to forming a plan capable of measuring the economic contri-
butions of timber and recreation in Michigan in comparable tens.
Economic value produced by forest recreation tended to be estimated
either too narrowly in terms of pounds of wild meat in the possession
of hunters, or too broadly in terms of a mixture of gross sales at
retail and payments of property taxes to government. The problem
appeared to be to fbrm a reasonable concept of economic importance
in a statewide framework and then to show that such a concept was
capable of being translated into practice without an unreasonable
expenditure of time and money.

Income accruing to Phchigan people was readily accepted as the
desirable criterion for making the economic comparison. Health is
of little avail without income. Employment is of minor consequence
if productivity and, hence, income are low. Ihe advantages of
making use 0 f the general framework provided by the national income
and product accounts of the U. S. Department of Comme appeared
to be overwhelming. These accounts provided a complete and orderly
framework in which to consider incone systematically, giving both a
complete and a non-duplicating view of the phenomena of income.
Moreover, the national income and product statistics themselves pro-
vided controlling overall totals and showed a structure of relation-
ships that would prove to be valuable in fitting in statistical data

 

102

derived from other sources.

National income accounting measures the national income either
as the value of products or the sum of parents to factors of production
engaged in making those products. Either or both of these approaches '
might therefore be used in measuring the kinds of income of immediate
interest in the present stuiy. Measurement of product proved to be
the more feasible method in the case of both forestry and recreation.
It was found necessary to deduct charges for capital used up in pro-
duction and payments made for services not contributing anything to
production, in order to convert the measurement of income from gross
product to national income.

The way in which product had to be neasured was substantially
different for the one use as contrasted with the other. Timber pro-
ducts were carried forward from forest raw material to the highest
level of preduction attained in the state by that material, at or
near the level of final consurwtion. Recreational products, that is
the goods and services whose production was occasioned by recreation-
al use of wildlands, were more readily measurable at consumer level
with only minor adjustments being needed.

Retail sales occasioned by recreation are by no means all
income to the Michigan economy. This investigation suggested that
the income originating in such sales is of the order of 20 percent
of their gross value. It is necessary that the system of income
measurement reflect this important fact.

Income produced is not the sole determinant of importance in

general. Conservation and free public recreation are examples of

103

non-income values which are important to Michigan people. in income
comparison does not encompass these other values. Similarly, the
importance of higher education can not be stated in terms of the added
business which results for book stores, the value of the construction
of new school buildings, and the salaries of professors. No more
would one dare measure the importance of the national defense effort
in terms of its vast economic thrust. However, to the very large
extent that the income status of Michigan residents is held to be
important, then a measurement of economic importance in terms of
income effects is relevant and timely.

blated Research Needs

 

The present stxriy is offered in the hope that themethod here
outlined will be implemented. 'lhe resulting income comparisons, it
is believed, will be of value in setting policy. It is well at the
same time to suggest the connections of this approach with other
significant approaches to the evaluation of forest land policy, and
to suggest some related research needs in this area which remain
unfilled. 1

Because of the large measure of government ownership of wild-
lands and because of the semi-public character of the recreational
opportrmities of even the privately owned wildlands, political and
administrative decisions rather than the impersonal operation of the
market mechanism govern the allocation of resources to wildland
recreation. Yet, the knowledge of the production function for
recreation is far from satisfactory. 'Ihe relationship between inputs

of units of recreational land and other resources on the one hand

 

1014

and outputs of recreational use and secondary income flows is far
less straightforward than the corresponding relationship for timber.
Predictions of yields of timber, or even of deer, are more soundly
based than estimates of the carrying capacity of forest land for
deer'hunters and other recreationists. Since timber'and recreation-
al use are commonly Joint products of units of wildland, a know-
ledge of their production inter-relationships over a wide range of
conditions is greatly to be desired. It is a matter of experience
and observation that these inter-relationships are sometimes
complementary and sometimes competitive. There is a need for
establishing the extent and character of these inter-relationships.
The factors which are most significant in affecting yields and
determining the levels of maximum output should be identified.

The devotion of resouuces to group enjoyment, as in wild-
land recreation, at some point leads to a diminution of other pro-
duct which might have been created had such resources been used for
income-producing purposes. It might be desirable to calculate the
cost of the added enjoyment in term of income foregone. The
exploration of the Opportunity costs of forest recreation might,
therefore, be a worthwhile research undertaking. Related to such
a project would be the evaluation of the unappropriated benefits
and the unpaid costs which accompany the use of wildland for

recreation.

105

APPENDIX
SOIBCBS OF DATA ON INWME AND PRODUCT
United States Government _publications
united States Bureau of the Census

Censuses of Population and Housing, 1950 (Eecennial)
Census of Agriculture, 1955 (Quinquenniil)

Census of Manufactures, l9Sh (Periodic)

Census of Business, 19534 (Periodic)

Annual Survey of Manufactures, 1953 (Annual)

Comty and City Data Book, 1952 (Periodic)

Comty Bminess Patterns (Quarterly, jointly with
U. S. Bureau of Old-Age and Srn'vivors Insurance

United States Department of Commerce, Office of Business Economics

National Income, 19Sh (Periodic), book length supplement
to the Survey of Current Business
Survey of Current Business:
National Income umber, July 1955 (Annual)
Personal Income by States, September, 1955 (Annual)

United States Bureau of Labor Statistics

New and Maintenance Construction: Construction in the 19117
Inter-Indmtry Elations Study, BIS Report No. 2,
Washington, D. C. February, 1953-

Other Sources

Dewhurst, J. Frederic,and Associates. America's Needs and Resources.
2d ed. revised. New York: The Mnmtury Rim—3'; I555.

Evans, H. Duane, and Ho'ffenberg, Marvin. ”lire Interindmtry Relations
Strxiy for 19h7," The Review 91. Economics .29, Statistics, rmv

(Hay. 1952), 9741.21"

Ieontief, H. H. Structure 95 the American Econom. Evised ed.
New York, 1951.

 

 

 

In process of publication, February 1956.

106

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