1. Introduction

Biomass production through the forestry sector are particularly characterized by three phenomena, which are not specific to them but are at the origin of regulations, taxation or management rules that are different from those used in other fields of economic activity. Firstly, the standing trees are both the productive capital and the products; secondly is the length of the production cycle (40 years for a maritime pine, two centuries for some oaks); and thirdly, the importance of the externalities of forestry on the economic, social and environmental levels ("Forests precede peoples, deserts follow them", falsely attributed to Chateaubriand).

However, the government is subject to budgetary constraints, requiring different sectors of the economy to contribute to the expenditures, including forestry

(e.g. see [1, 2]). In this context, many governments have adapted tax regulations where they have to be applied to forests. Broadly speaking, forest-related taxes can be classified (see [3]) into the following categories: (1) taxes based on the assumed productivity of woodlands (such as the land tax or forest income tax in France), (2) taxes on production (such as the value-added tax, where applicable), (3) taxes on wealth (such as the IFI—tax on real estate wealth in France) and (4) taxes on inheritance.

The effects of the first three taxes have been studied by forest economists: what are their impacts on the profitability of forests, the silviculture practiced, the interest of forestry vis-à-vis other activities or investments (see [4–6]). Some particular aspects have been the subject of detailed work. For example, Aschan (in [7]) shows how a progressive income tax directly impacts harvests and thus silviculture; the impact of various financial market conditions has been studied [8–10]. Some authors (see [11, 12]) have shown how these taxes decrease the value of forests, but also how, by inducing owners to change their forest management, these taxes create distortions leading to a further economic loss (e.g., by inducing to reduce or increase the rotations, i.e., the age at which the trees are cut before the forest is regenerated, compared to a situation without taxes).

The inheritance tax, applied when the owner dies, or when he gives his forest to a child or grandchild, is another possible instrument providing revenue to the government. It has a significant impact on the decisions taken by nonindustrial private forest owners and on the allocation of their capital between forest and other investments, as shown in Barua et al. [13] with a two-period theoretical model (see also [14]). As a result, it can be used to implement forest policy [15, 16]. Such a tool is used, for example, in France, but also in 23 other OECD countries [17], with very different modalities (e.g., exemption of the equivalent of the first inherited 17,000 dollars in Belgium versus the first 11,000,000 dollars in the USA) for a parent-child transmission; moreover, many assets are sometimes exempted, such as the principal residence, farms, life insurance, etc. The separation of usufruct and bare ownership is then in some countries a way of reducing the burden of this tax.

Here we are interested in the situation in France, where forests can benefit from exemption from inheritance tax for three-quarters of their value (only one-quarter is taxed), subject to a commitment to good forest management for 30 years (a commitment to be respected by the heir and possibly by his successors). The legislator's idea was to avoid taxing the same tree several times before it was harvested, and above all to avoid premature cutting of trees simply to pay this tax. On the basis of the approximation that the value of trees is on average (according to species, age, region, economic conditions, etc.) equal to three times the value of the forest land, this amounted in a way to taxing the land but not the trees. This is a very general average, as the value of the trees can be anywhere from zero to more than 20 times the value of the land (see [18]). This commitment to good future management gives the owner an incentive to abstain from harvesting trees prematurely, and this incentive is materialized in a lower amount of tax to be paid to fiscal authorities.

Our objective here is to calculate the burden that this tax represents under the present conditions, depending on whether or not this abatement (known as the "Monichon" abatement, named after the French senator Max Monichon, 1900–1977) is obtained, so as to better quantify the incentive it provides to subscribe to this commitment to good forest management. And above all, to better quantify the competitive advantage it gives to the forest among other possible investments that would not benefit from this partial exoneration.

The transmission of a legacy to future generations is also an important motive for forestry (see [19]), especially since, beyond a capital asset, a whole set of values is

transmitted [20, 21]. And for private forests, the lifetime of investments often exceeds the remaining life expectancy of the owners (cf. for example [22], and the models of overlapping generations; see also [7], which illustrates how an initial investment can allow for a sequence of revenues, but only after a long duration).

In the remainder of this chapter, we build a demographic model to represent the sequence of transmissions. We then obtain the evolution of the age of the owner of a woodlot, or any other asset transmitted from generation to generation. For this, we use data for the French population. In a second step, we describe the economic model, present its results, and in a third step, we make some comments.
