National Forest Timber Management: Problems and Solutions

 Today's post is by a guest author who will expound upon my last post concerning the management of our National Forests. Mac McConnell is an "old time" forester who graduated from Penn State/Mont Alto back in 1943 (not a typo) and  spent the next 30 years with the U.S.Forest Service, working  in the southeast and specializing in timber management.  Following his retirement, Mac got a couple of advanced degrees (Urban and Regional Planning and Sociology) and spent time with the Peace Corps in South America.  As a consultant in Energy Biomass Management, he maintains his interest in Forest Service doings and considers himself a "constructive critic" of that organization. --Brian

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National Forest Timber Management Problems and Solutions

by

W.V. (Mac) McConnell, U.S. Forest Service Ret.  (1943-’73) 

This website’s recent comments on the drastic decline in National Forest (NF) timber harvesting over the past 30 years has raised a few eyebrows and prompted some of us to look at what’s happening in our own backyards.  For those of you who missed that post, here’s the graphic showing the NF harvesting  record.

 My “home” forest, the Apalachicola NF, is the largest (576,000 ac.) of the three National Forests in Florida, and timber management problems are typical of those in the entire NF system.  They include insufficient funding and manpower, endangered species concerns, excessive environmental studies, and over-detailed environmental assessments.  Unlike many forests, they have a solid market for all products (including 2 operating biomass-fueled power plants), an extensive prescribed burning program (947,000 ac. in the past 10 years), and cordial relations with the environmental community.  With these favorable conditions, you’d expect at least modest timber production.  Not so!  Here’s what happened during the ten year planning period that just ended.

This failure to perform has had many of the expected social and economic impacts: stressed local governments and schools,   jobs lost, and families disrupted.  Silvicultural impacts have been significant; timber stand mortality has increased and quality growth has decreased.

One unexpected environmental effect has been the decline of the endangered red-cockaded woodpecker.  This bird requires open park-like stands of older pine trees.  The imbalance of growth and harvesting shown in the previous graphic has resulted in increasing stand density and an estimated decrease of some 67,000 acres of high-quality habitat.  Here’s what the record shows.

  
Other forests have had similar problems with endangered species and other valued wildlife.   On The Ocala NF, failure to harvest has resulted in a 10,000 acre decrease in early successional habitat in the sand pine type.  This habitat is critical to the nesting of the scrub jay, an endangered species found only in Florida and especially on the Ocala.  In North Carolina, on the Pisgah and Nantahala NFs, ruffed grouse populations have declined as habitat has dwindled, (see graphic).

What to do?  Here are some suggestions that could help solve the problem.

• Simplify Environmental Impact Statements (EAs). (probability of success  - excellent)
• Outsource field work and writing of EAs and sale prep. (prob. - good to high)
• Reorder forest priorities and shift funds. (Prob. - unknown) 
• Secure Congressional approval for NFs in Florida and other selected forests to test the feasibility of timber program self-financing as is now done on DOD land (Title 10, USC 2665.) (Prob. unknown) 
• Secure adequate congressional funding. (prob. - zero to very low)

When all else fails: 

• Transfer/sell manageable timber land to other federal, state, NGO, or private entities with restrictive covenants and convey the balance to the State or U.S. Park Service. 
• In my opinion, the most promising long-term solution lies in the 4th bullet above: a system of self-financing for the timber sale program.  Here are some Pro and Con arguments that have been advanced.  Remember: These are arguments.  They may or may not be factual.  They may or may not be relevant.

     Pro-

• Will provide the means, not now available, for the U.S. Forest Service to follow Congressional direction for resource management as expressed in the National Forest Management Act of 1976, the Endangered Species Act of 1973, and related legislation.
• Will help insure continued economic survival of N.F. dependent counties after the expiration, in the year 2011, of the Secure Rural Schools and Community Self-Determination Act of 2000.
• Will create jobs and stimulate the economy.
• Will allow increased local participation in decision making through Resource Advisory Councils.
• Will provide an incentive for efficient management and will be budget neutral or positive.
• A trial run of the program on selected forests will allow an assessment of its impacts on the Federal budget and returns to the treasury, on the social and economic condition of counties, communities and forest industries, and on the quality of resource management.   
• The concept is simple, easy to apply, and has been thoroughly tested on timberlands managed by the Department of Defense.

     Con –

• Will reduce Congressional oversight over National Forest management and control over the expenditure of federal monies. 
• Will result in negative “scoring” in returns to the treasury and in an increase in the public debt.
• Will encourage continued dependency of Forest Counties on the Federal Government and discourage self-sufficiency and problem-solving through private enterprise.
• Will promote unrestrained, irresponsible logging and massive resource damage.  
• The concept is non-traditional to and untested by the Forest Service. 

In conclusion: 
While conditions on the Apalachicola National Forest are representative of the National Forest System and the basic management principles involved are applicable nationwide, the adverse economic, social, and mortality (fire and insect) impacts of under-management on Western National Forests have been much greater than on those in the East.

For those wishing to research conditions on their local Forest, growth and mortality data for all National Forests are available on-line from the U.S.F.S. Forest Inventory and Analysis program.  Your local Forest Supervisor can provide information on planned and harvested volumes.

This post is a condensation of Timber Resource Management: A Look at the Record a presentation that can be downloaded here in Powerpoint format.

More on the Economics of Longleaf Pine

What follows is an invited Blog on the economics of longleaf from a commercial perspective. It was written by the folks at FORSight Resources. I think one of the key components of the comparative economic analysis that still needs to be addressed is the difference in stumpage value at harvest between loblolly and longleaf when poles are factored in. Perhaps some readers have a few comments that will address the subject. Thanks to Bruce and his crew at FORSight for taking the time to provide additional insight into the economics of longleaf. --Brian
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The past decade has seen significant shifts in timberland ownership, particularly in the southern U.S. Integrated forest product companies have sold many of their land assets, which have subsequently been acquired by institutional investors. Timberland investments are often made by Timberland Investment Management Organizations (TIMOs), who both acquire and manage property on the behalf of institutional investors. Many TIMOs function as closed-end funds, meaning a key aspect of TIMO management is a short time horizon relative to integrated forest products companies. While forest product companies have traditionally held land ‘forever’, these closed-end funded TIMOs often plan to hold land for no more than 10-15 years.

Along with shifts in forest ownership, the past decade has also seen increased interest in longleaf pine management. In recent years, various organizations have begun encouraging longleaf plantation establishment with much of their effort directed at private landowners whose objectives include factors such as wildlife habitat and aesthetics in addition to economics. Little work has been done examining the economic viability of longleaf pine management on investment properties. This can be attributed to the commonly-held belief that returns from longleaf management cannot compare to those from loblolly pine plantations. TIMOs may be able to justify investments in longleaf pine plantations if they can show returns comparable to those from intensive loblolly pine management. This is particularly true given the higher amenity values attributed to longleaf pine.

To address this issue, the financial performance of loblolly and longleaf pine plantations were compared for four cases, each with low and high site productivity levels and each evaluated using 5% and 7% real discount rates (Table 1). Management regimes were selected for comparison from a reduced set of acceptable alternatives, which were constrained by management intensity and treatment timing. The regimes that maximized Land Expectation Value (LEV) for each site/discount rate combination were chosen for analysis. LEV is the present value per acre of the projected costs and revenues from an infinite series of identical rotations starting from bare ground.

Longleaf pine stands were simulated using FORSim Longleaf Pine Growth Simulator (www.FORSightResources.com) and loblolly stands were simulated using LobDSS (www.forestnutrition.org) which uses the FASTLOB2 whole stand growth and yield model (www.fw.vt.edu/g&y_coop/). Product prices and management costs and application rates were typical of the Southern US. Land expectation value (LEV) and present net worth (PNW) for the first rotation were calculated for each selected regime using both 5% and 7% real discount rates. Because loblolly and longleaf rotation lengths differ, LEV provides the only means for directly comparing results. Present net worth provides a means for analyzing cash flows over the short term.

Financial analysis results are shown in the last two columns of Table 1. The addition of pine-straw raking to longleaf pine management regimes resulted in greatly improved financial results (13-70% higher) that compared favorably with the loblolly pine management regimes. The loblolly regimes produced LEV values 3-16% higher than longleaf with pine straw raking in all cases except case 4, which exceeded the corresponding loblolly LEV by 2.6%. An examination of the cash flows reveals that the cumulative PNW ($/acre) from loblolly pine plantations remained negative until the final harvest in all cases. Interestingly, the economic rotation for longleaf without straw raking in case 1 (lower site, 5% rate) was shorter (32) than loblolly (35); in all other cases, loblolly economic rotations were shorter than longleaf, regardless of pine straw. Pine straw raking resulted in economic rotations for longleaf that were more than 10 years longer in all cases except case 4 (higher site, 7% rate) where the economic rotations for longleaf were the same (27). Pine straw harvests yield positive cash flows earlier in the rotation, especially for longleaf pine plantations on lower sites and evaluated using lower discount rates.

Table 1. Cases examined and financial results of each. Highest financial results in boldface.




Results indicate that longleaf pine regimes that do not incorporate pine straw raking yield financial results that are inferior to those from intensive loblolly management. However, with the addition of pine straw revenues, longleaf management can yield returns that are comparable to typical loblolly regimes. Longleaf pine plantations with pine straw harvests produced greater LEV than loblolly plantations on lands with higher site index (80 and 110 feet for loblolly pine and longleaf pine, respectively) when using the higher discount rate (7%). Other longleaf pine management regimes produced lower but comparable financial performance.

At lower discount rates longleaf pine regimes with pine straw raking provided positive cash flows sooner than loblolly pine. In all cases, however, positive cash flows were not achieved with any regime until after age 23. This result is noteworthy because this is longer than the expected land tenure of many closed-end funded TIMOs. Because there is likely to be little to no direct return on reforestation investments under such short land tenures, a logical consequence may be the minimization of reforestation expenses. Thus, longleaf pine may be a more attractive alternative, given a 25% lower initial silvicultural investment and the favorable LEV comparison. This analysis suggests that timberland owners managing strictly from the economic perspective should re-evaluate longleaf pine as a viable alternative to loblolly plantations. The tradeoffs for managing a species often considered to have higher amenity values than loblolly pine is not nearly as substantial as often believed.

This posting is a summary of a detailed paper prepared by the staff of FORSight Resources. Please visit FORSight Resources to download a copy of the complete white paper.

FORSight Resources is a leading provider of decision support services for natural resource management. The company’s main business lines are forest planning and harvest scheduling, timberland acquisition due diligence, forest inventory and biometrics and forestry GIS. For more information on FORSight Resources, LLC contact Bruce Carroll at 843.552.0717 or Karl Walters at 360.882.9030 or email: info@forsightresources.com.

Longleaf Pine

If you read my Blog through email subscription rather than visiting the Blog site, you probably have forgotten the byline. So..., The Timberland Blog: Examining the changes in timberland ownership and what those changes might mean. The pulp and paper industry was very focused on maximizing growth as opposed to the financial return focused on by the institutional investors. Management objectives are a primary key to what the future forest will look like. That's fact.

Way back in '67 while working on a major cruise/appraisal for the West Virginia Pulp and Paper Company, I remember vividly a sign near Washington, Georgia that said “Wilkes County, Gone to Grass”. I was with friend and mentor Kenney P. Funderburke, who said wryly “the sign should say, Gone to Loblolly Pine!”. Times change, economics change, landowners change, management objectives change, the forest changes. Like Wilkes County, the South went from natural forest, to cotton, to pasture, to loblolly pine for fiber production to whatever is next. What is next? For some of the Southern forest, maybe a return to the longleaf pine that once dominated this landscape. Management objective of optimizing financial return permitting.
If you are familiar with the longleaf and loblolly, the comparisons jump into your head very quickly. Longleaf is straight. Loblolly is crooked. Loblolly grows faster (at least initially). Loblolly occupies a broader range of sites. Longleaf is straight.

The lower pulpwood prices, combined with a focus on financial return of the new owners, provides an opportunity for longleaf to reassert itself. Back in the days when the land was managed by Native Americans, the objective of management was to burn the forest to prepare it for agriculture, provide nitrogen fertilization, reduce ticks and chiggers, improve hunting, grow broomstraw for housing, and to be able to see enemies lurking in the forest. That's some pretty powerful reasons to burn. At that time, the EPA was less concerned with smoke, environmentalists were less concerned with pine monoculture, and there were fewer lurking lawyers in the forests. The point here, is that the longleaf forest was not “natural”, it was created by its managers based on the objectives of management. These managers created a pine forest of an estimated 60 – 90 million acres that was reduced to less than three million acres in 1996 by a series of landowners whose objectives were cotton, rice, beef, soybeans, and wood fiber production. If longleaf is to expand replacing some of the loblolly acreage, that expansion must fit with the objectives of the new management – that being financial performance as opposed to the fiber productivity objective of the pulp and paper industry. I think it can do it. So do the sawmilling families that have owned and managed the longleaf remnants for the past 75 years.

The fact that longleaf is so straight can go a long way in a comparative economic analysis. The Longleaf Alliance has some financial analysis on its web site which illustrates the gains from increased pole production and the increased value of the poles over sawtimber. I didn't notice the increase in proportion of sawtimber to pulpwood characterized by longleaf stands although it may have been there. The growth and yield models do show that loblolly's growth advantage diminishes or disappears as the rotation age increases. In addition, nursery and silvicultural improvements have reduced the amount of time it takes to get the seedlings up and out of the grass stage thereby reducing the rotation age and improving the financial performance of longleaf. At any rate, it looks to me like the economics are there, at least on some sites.

I don't want to forget us Family Forest owners. Collectively, we own a lot more of the former longleaf forest than the institutional investors by a long shot. And our “management objectives” are generally broader than those of the investment community. The Feds are working to help us understand and to put money in our pockets if we will convert to longleaf and do it their way. So far, it seems to be working with a couple of hundred thousand acres being planted each year. That's enough to turn the tide and longleaf acreage is actually increasing now. It may not be increasing much but at least the decline has been arrested.

So..., what does all this mean? We are in the early stages of a change in the South's forest which will in fact see more of the landscape revert to the beauty of the historic longleaf pine forest that defined the “pineywoods” of the Old South. There is something about longleaf that stirs the soul, loblolly doesn't. --Brian

Longleaf Pine Growth Model and Stand Simulator Available

A new longleaf pine growth model and stand simulator is now available from FORSight Resources. The following information is from their news release. For additional details, you can email: info@FORSightResources.com. --Brian
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FORSight Resources releases FORSim – Longleaf Pine Growth Simulator (LPGS)

North Charleston, S.C., USA – November 16, 2007 – FORSight Resources, a leading provider of decision support services for natural resource management, announced today the release of FORSim – Longleaf Pine Growth Simulator (LPGS). LPGS is a versatile tool that provides biometricians and inventory foresters with the functionality of a longleaf pine growth engine in an easy-to-use, excel-based interface. The growth engine provides for alternative thinning treatments. LPGS provides a means for quickly analyzing and comparing stand-level treatments through graphical and tabular outputs. LPGS also calculates scores for assessing foraging habitat for the endangered red-cockaded woodpecker (RCW), providing foresters and wildlife managers a powerful tool for developing and assessing treatment regimes in support of RCW recovery. Overall, users will find this to be a valuable addition to FORSim product
suite.