A new tax law aimed at encouraging the reforestation of cleared land in order to increase the amount of forested land in a particular region offers lumber companies tax incentives for each unit of cleared land they reforest. ███ ██████ ███████ ███ ███████████ ███████ ███ ███ █████████ ██ ██████████ █ █████ █████ ██ ███████ ████ ██ ███ ██████ ███ ███████████ ███ ███ ███████ ████ ███ ███ ████████ ██ ████████ █ ██████ █████ ██ ████ ██ ███ ███████ █ █████ ████ ██ ███ ███████ ██ ████ ██ █████████ ████████
This new tax law intends to increase the amount of forested land in the region.
The law offers tax incentives for lumber companies for each unit of cleared land that they reforest.
A company purchased a large area of already cleared land and reforested it in order to receive the tax incentives.
The company paid for this purchase by clearing a larger tract of land in the region that it had originally planned to hold in long-term reserve.
The tax law incentivized the lumber company to clear more land than it otherwise would have. In order to buy and reforest a large tract of cleared land, the company cleared an even larger tract of land that it had intended to hold in reserve. This is a net-loss in forested area.
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