sustainable forestry

Where will the trees come from? How tariffs and new policies mean big changes on federal forests.

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by Brent Sohngen (sohngen.1@osu.edu)

In this post:

  • An assessment of the President’s recent executive order promoting timber harvests from federal lands to replace the 1.5 to 2 billion ft3 we import from Canada if tariffs reduce those flows.
  • Federal harvests provided 2 billion ft3 per year, 15-20% of U.S. timber, until the early 1990s, but were reduced for environmental reasons. Now they provide 0.3 billion ft3 per year.
  • Stocks have since grown significantly on these left-alone lands, and about 100 billion ft3 is reasonably available for harvest in the next few decades.
  • Harvesting levels of 0.9 to 1.3 billion ft3 per year would equal current growth and fire losses on these hectares and would promote thinned and younger stands that would be more resilient in the future.
  • There are environmental risks to building such a program that should be carefully weighed.

Now we know how the Trump administration plans to combat the effect of higher tariffs on wood prices: Harvesting more timber from federal forestlands, predominately in the western U.S. This approach would reverse thirty years of modest harvests from these forests, which began in the 1990s when the Endangered Species Act was invoked to slow down timber production in old growth forests that housed the Northern Spotted Owl (Strix occidentalis caurina).

Throughout their history, federal forests have been a punching bag, swinging back and forth between periods of protection and intensive logging as environmentalists and loggers duked it out in the court of public opinion and in front of judges. In the early 1900s, it was President Roosevelt who worried that lumberman and fires would destroy the great western forests and deprive future generations of habitat and boards. He set-aside millions of acres from the sawyer’s blade and hired forest rangers who tirelessly stood watch over their nation’s investment.

It turns out, back then, that logging was not much of a problem for federal forests. Sure, logging happened, but federal forests were remote and demand for industrial wood was modest in an era when population and income were far lower. Nature was a bigger “problem,” as 41 million acres per year burned before 1945.

Government set about slowing these conflagrations, hiring hearty soles, including servicemen returning from World War II, to put up a fight. Despite serious setbacks, like the Mann Gulch fire in 1949 that took 13 honorable lives, brave hand crews, hotshots, smokejumpers, and the like cut fires to 3 million acres per year by the 1970s.

What happened to all that wood saved from fires? Much of it made its way into houses and other products when the federal government built up a massive timber harvesting operation in western forests to meet growing demand during the post-World War II economic boom. By the 1970s federal harvests constituted 22% of softwood timber production in the U.S. In communities across the western landscape, forestry became a way of life, with booms and busts regulated by the number of housing starts.

But in 1991, all this came to a stop when Judge Dwyer ruled against the Forest Service, requiring changes in logging practices to save endangered species. Practically overnight, logging ceased on federal lands throughout California, Oregon, and Washington. They have remained low ever since as the Forest Service shifted its perspective.

These changes could not have come at a worse time for the American economy, which grew apace in the 1990s. Timber prices soared to new highs but mill towns in Oregon and Washington saw little benefit as log piles diminished. In 1993, President Bill Clinton chaired a timber summit in Portland, Oregon to make good on an election promise, but his words could not mend the obvious: a deep structural adjustment was underway, driven by a new calculation that favored owl habitat over tree cutting on federal lands.

Fortunately, for aspiring homeowners in the US, lumber poured in from Canada. The Canadians had plenty of trees and were keen to sell them. Lumber prices came back down as imports ramped up to 30% of lumber consumption by the early 2000s. The proportion has fluctuated a bit but remained close to this level ever since.

The question now is, what happens if tariffs reduce wood imports from Canada? Will prices stay high or can the US increase wood harvesting enough to counteract the market effects?
Consider federal timber lands, which have more or less been left alone since the early 1990s. These forests come under direct control of the President, who signed an executive order directing agency heads to increase logging on lands they control.

Can the US go back to the industrial-scale logging in federal forests like the 1950s through 1980s when federal harvests routinely hit 2 billion ft3 per year? Let’s look at the numbers.

The US consumes 12-13 billion ft3 of wood per year. Lumber accounts for about 55% of that, or 6.9 billion ft3. In recent years, we have imported around 1.7 billion ft3 per year. This level is down from the early 2000s when a housing boom drove imports to 2.5 billion ft3. Today, federal harvests stand at about 0.3 billion ft3 per year.

In principle, the US is capable of significantly ramping-up wood production on federal lands. With data downloaded from the US Forest Service Forest Inventory and Analysis database, I estimate that federal lands contain over 300 billion ft3 of softwoods, the key wood type imported from Canada.

We cannot access all that wood, though. About 23% is set-aside in wilderness areas and other protected places. An additional 43% is older than 120 years or in locations with slopes greater than 50 degrees. In both these cases, there are good environmental reasons not to cut. An additional 2.5% of the wood is too young to cut, so perhaps only 102 billion ft3 on 33 million acres is actually available for harvesting in a way that may not cause significant environmental damage.

That is a lot of wood. Can we cut it?

One answer is “yes” because we are already losing lots it each year to fires, which have now expanded to 7.5 million acres burned per year. Between fires and pests, 1.4 billion ft3 (1.4%) are killed annually, due in part to simple neglect. More harvesting would reduce fire and pest losses with thinned and younger forests.

How much can we safely cut? Simply cutting what grows every year would amount to 0.9 billion ft3 of wood for markets. Considering that these forests have not been managed for over 30 years, I hypothesize that we can harvest more than 0.9 billion ft3 per year and the effect on long-term volume growth will be positive. Currently, I’m assessing this with the Global Timber Model, so will have some actual analysis on that in the future.

But the current reality is that a significant amount of wood can, and probably should, be cut on public land. Based on the current inventory, growth, and dieback, I estimate that we can access 0.9 to 1.3 billion ft3 per year sustainably in the next two decades. Harvesting would also reduce forest fires.

That said, there are risks. The Forest Service has laid off lots of workers recently, and it is not clear the organization now has the capacity to manage a large and growing timber sale program. Lots of public and private infrastructure, including roads, machinery, and mill capacity, must be developed. Labor in western woodsheds has been scarce for years, so higher output will increase wages and drive-up costs.

There are also environmental risks. Road building and logging will denigrate habitat and water quality. In the haste to log, I worry that these risks will not be weighed carefully.

The carbon effects are not clear. Moving federal forests to shorter rotation ages with more harvesting could have short-term negative consequence for carbon emissions, but if management reduces fire damage and promotes increased growth rates through thinning and reforestation, the effects could be positive.

There is a way to have positive effects on the atmosphere, but it is not obvious that the Forest Service still has the personnel to ensure this outcome. And it is unlikely that the private sector, which will do the logging, has right incentives to do it well. The idea of using federal lands for more timber carries big risks.

One question folks might ask is why not harvest more on private land? Most forests and timber in the U.S. are on private land. Higher prices from tariffs could induce more harvesting there, but the tariffs must remain in place to have an effect. Landowners have inelastic supply, meaning that private wood supply will change modestly in today’s on-again, off-again policy environment.

The wildcard here is the potential federal timber harvesting program proposed through executive action. If private landowners come to believe the administration can actually pull off sustained increases in federal timber supply, logging on private lands in the east will edge up in anticipation. There is a modest overhang of mature logs in eastern forests that could enter the market in the next few years before the federal program gets up and running.

In conclusion, tariffs on wood imports from Canada would raise prices for lumber in the U.S. in the short term. We have plenty of wood available on federal forestlands, especially in the west, to expand our supplies and make up for any losses from Canada. However, it has been decades since most of these public forests have seen large-scale timber harvesting operations. Increases in harvesting can provide environmental benefits in terms of fire control and even long-term carbon storage, but there are also environmental risks to species, habitat, and the atmosphere.

Why the WRI No Harvest Counterfactual is the wrong approach for carbon accounting in forests.

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By Brent Sohngen (sohngen.1@osu.edu)

Have you ever wondered who owns the trees? Historically, of course, most observers would agree the trees belong to the landowner who can do with them what they wish. However, because 50% of the wood dry matter in trees is composed of carbon, the answer to this question is set to become less clear under some new rules proposed by the World Resources Institute for their Greenhouse Gas Measurement Protocol.

This new protocol will govern how companies and people who own forestland count the carbon in their forests. WRI is proposing to use an approach that only counts carbon when a stand is cut, ignoring any carbon changes that happen in forests owned by people who do not cut some stands, but instead let them grow. This approach uses what is called a stand-by-stand no-harvesting counterfactual to measure the effect of wood harvesting.

Figure 1 illustrates how the approach works. A growing timber stand is accumulating carbon from time-period 1 to 15 and is then cut. There is a harvest emission, shown by the immediate reduction in carbon. The forest begins to regrow either through planting or natural regeneration. At some point down the road, depending on the species, the new stand will have as much carbon as the original stand would have had if left alone.

The idea of the no-harvest counterfactual is to assume the level of carbon in an unharvested forest follows the hatched line and calculate the emissions associated with the difference between harvesting and not harvesting that stand.

Figure 1: Stand-by-stand no-harvest counterfactual

There are many problems with this no-harvest counterfactual approach. Mostly it is wrong because all wood harvesting is done in mature stands, which only become mature because someone left them alone long enough to get older. The WRI GHG protocol ignores any of this growth (what happens before t=15 in the figure). It focuses solely on the harvesting event, failing to account for the observed fact that landowners hold many trees they do not harvest, plant trees on old farms, let trees regenerate naturally on pastures, hold trees instead of growing crops, grazing, or building subdivisions and box stores. There are real opportunity costs with holding trees, but the WRI GHG Protocol assumes all these activities, and the associated costs, are irrelevant.

So why do they propose this scientifically challenged approach? Here’s my take.

First, WRI doesn’t want to provide carbon-based incentives for companies to grow and cut trees, especially in planted stands. This was clear in an article WRI scientists published in Nature in 2023 and the opinion piece by two of the nation’s most esteemed ecologists in the same issue. The general idea of this approach is that any tree harvesting is bad, including the millions of cubic meters harvested every year for fuelwood uses by folks in developing countries.

This approach – sometimes known as Proforestation – misses fundamental economic realities associated not just with supply and demand for wood, but also with emerging carbon markets. Economic studies have shown that wood market incentives increase carbon in forests (Tian et al. 2018). They have also shown that efficient carbon policies would incentivize lots of avoided deforestation, lots of reforestation and afforestation, lots of avoided old growth harvesting, and lots of improved forest management often coming in the form of extended timber rotations (Sohngen and Mendelsohn, 2003; Austin et al, 2020; Favero et al., 2020).

In these studies, more wood harvesting happens with carbon incentives over time because more carbon in forests means there is also more wood to harvest. Increased supply in turn lowers wood prices. Intensive plantations make up only about 10-15% of the new area in forests, even with high carbon prices. The rest of the carbon gains are predicted to happen in natural forests, where compensation levels for carbon would be large enough to support significant efforts to ward off fires.

Second, WRI has an additionality problem. For decades, people in carbon markets have argued for a strong additionality test, whereby tons of carbon sequestered by companies in the timber business cannot be used to offset fossil carbon emissions because the trees were grown for timber not carbon. The additionality problem arises because WRI and others cannot reconcile an accounting standard that would let a company use tons generated on its own forest as an offset against its own emissions with an approach that does not allow those tons to be sold in carbon markets due to additionality.

Concern about additionality is understandable, but plenty of approaches have been developed to handle it, including following the advice of van Kooten et al. (1995).

Third, WRI is worried that more scientifically appropriate approaches – such as the standard of measuring changes in stocks over time like the US Forest Service does for the US as a whole – will confer benefits on landowners for carbon fertilization and climate change, which have elevated the stock of trees (Davis et al., 2023). It is completely accurate that measuring carbon gains with stock changes over the area owned will credit landowners for carbon gains that are partly attributed to carbon fertilization or climate change. This means that people who hold forests could receive carbon benefits 15-25% larger than otherwise because of carbon fertilization and climate change.

Far from being a liability, as WRI claims, this is exactly what we should want because it means landowners are adapting to climate and market incentives.

Paying for the benefits of carbon fertilization, or in the case of the GHG Protocol, including them in insets generated from a land-based inventory, is the correct approach precisely because it encourages efficient behavior with respect to the atmosphere by landowners.

Rather than leading to more emissions, incentives that embody carbon fertilization values would reduce deforestation, increase afforestation, increase reforestation, reduce fire risks, and increase forest rotation ages. A recent US EPA report found that carbon sequestration would be 28% greater under policy incentives when carbon fertilization benefits are part of the incentives rather than ignored (USEPA, 2024).

In conclusion, WRI’s proposed GHG Protocol approach is the wrong policy approach. If the approach were correct, it could be extended to all forests for carbon accounting, but it makes no more sense in aggregate than it does as applied to a specific forest operation. Ultimately, it aims to reduce the value of carbon embedded in forests, constituting a legal “taking” of a resource in the United States that is worth billions.

WRI seems to have concocted this no-harvest counterfactual approach simply to limit how forest-owning companies count the carbon gains they provide. But it doesn’t work. In contrast, the economic literature illustrates that carbon incentives based on IPCC carbon accounting will lead to more of all forests. WRI should use this far more efficient, and environmentally sound, approach.

 

Reversing Deforestation in Latin America: How USAID has helped.

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By Brent Sohngen (sohngen.1@osu.edu)

Watching the current turmoil at USAID is more than sad. Not only is it devastating to hard working people and their families in all corners of the earth, but it will also have long-term implications for the welfare of people in other countries where economic development sorely lags. Yes, we can ignore the plight of others and focus only on ourselves. But the America I know has never been like that. I hope it doesn’t change. I fear it has.

Let me give one example of the type of work of USAID does. You can read more about it and other examples in the book I co-authored with Douglas Southgate Reversing Deforestation: How Market Forces and Local Ownership are Saving Forests in Latin America (Stanford University Press, 2024).

For years, USAID has supported community forestry in the Maya Biosphere Reserve of northern Guatemala. I wrote a bit about this project in an earlier blog post: Is timber harvesting in the tropics sustainable?

Back in the 1990s as Guatemala’s long-running civil war came to a close, there was discussion about what to do with land in the north of the country. The area contained an enormous wealth of Maya history locked up in buildings covered by half a millennium or more of rainforest growth. Lots of people had moved to the area to escape violence and more people were coming in search of a better life. An agricultural frontier was moving north towards the region along the recently paved road, shifting forests to farmland with significant losses of cultural Maya relics to the private black market.

Some people argued the entire northern part of the country should be turned into a giant set-aside, or national park. Fortunately, their arguments didn’t prevail and a more pragmatic approach emerged. This approach included setting some parks aside, while at the same time creating community forestry operations – where forests would be managed for timber and non-timber forest products by local groups.

USAID supported this institutional approach of providing limited ownership of forestland for forest management. The limited ownership occurred in the form of 20-year contracts with local groups. USAID supported efforts to manage these forests scientifically, using forms of selective harvesting in 30- to 40- year rotations which would help maximize value and regeneration of the most important species, Mahogany.

USAID supported entrepreneurship at timber mills that would receive the logs and turn them into boards, sometimes drying them before shipping them to other parts of Guatemala or the world. Famous rock bands have used the wood for their guitars because it’s sustainable. With support from USAID, local business groups would meet periodically to develop marketing strategies.

I haven’t spent an enormous amount of time in northern Guatemala. But the time I have spent has taught me that entrepreneurial spirit is alive and well there. With limited ownership of the land and forest resources through community forestry, full ownership of timber mill capital, and an eager willingness to work, members of the community forestry operations were well off.

As part of my research, we have shown that these efforts slowed deforestation (Fortmann et al., 2017) and increased incomes (Bocci et al., 2018).

Maybe it would have happened without USAID. I don’t know? What I do know is that USAID helped it happen by adapting the time-honored U.S. model of fee simple ownership and encouraging local community ownership because they are philosophically consistent. Back in the 1990s, people in that organization sensed an opportunity to encourage local ownership and help local organizations become better business people.

Who knows what the “new philosophy” at USAID, or whatever some new agency like it is called, will bring? It’s got a tall bar to get over to beat what USAID accomplished in the past.