The Forest Damage Compensation Law

Federal states affected by forest damages can request the commencement of a "Compensation of Effects of Special Damage Occurrences in Forestry" ordinance under the Forest Damage Compensation Law from the federal government of Germany (Bundesrat).

With this ordinance the timber harvest of the current forest year can be restricted in all federal states to avoid excess supply on the timber market. Requirements for an ordinance under the Forest Damage Compensation Law are fulfilled if a significant and national timber market disturbance is expected due to forest damages. The objective of the sanction is minimising the extent and length of the market disturbance. After acceptance by the federal council, the ordinance will be implemented by the federal Minister of Agriculture. Together with the restricted timber harvest, the following fiscal relief also applies:

• During the restricted harvesting period any salvage logging incurs only a ¼ of the average income tax rate it would have incurred if it were earnings from non-calamity wood.
• Forest enterprises, who are not obligated to book, can write off 90% of their wood earnings as operating expenses during the restricted harvesting period.
• It is possible to accumulate a tax reducing reserve.
• Forestry can balance above-average stock of wood and wood products with 50 % of the value.

In January 2000 the federal states of Baden-Wuerttembeg and Bavaria introduced a corresponding proposal for an ordinance, which was approved by the federal government. The Minister of Agriculture implemented the ordinance in March 2000. In 2001 a subsquent ordinance was also implemented.