Cutting timber to save jobs: the economics of forest management

David Fettig | Managing Editor

Published September 1, 1989  | September 1989 issue

At first glance, the economic questions surrounding the sale of trees by the U.S. Forest Service to the timber industry seem apparent:

Should timber sales be based on the amount needed to keep local lumber mills open?

Should they be based on regional, national and international markets for the products?

Or should timber sales be based on price alone, with the U.S. Forest Service working solely on a profit motive?

But according to Jim Hagemeier, planning director for the U.S. Forest Service office in Missoula, Mont., those questions don't strike at the heart of the problem: "The economic part is a surrogate of the real issue: How should U.S. forests be managed?"

That's where the debate begins. In the Gallatin National Forest in western Montana, local lumber mills need more timber to avoid temporary shutdowns, but environmental groups believe timber sales should not be based on local economic needs. Just as in other national forests, environmental groups are filing appeals on proposed sale of Gallatin timber—appeals that can cause delays for local mills.

This spring Brand S Lumber of Livingston had to close its doors for a total of three weeks during a six-week period. That meant 120 people were without a paycheck for those three weeks, according to Doug Crandall, Brand S vice president.

Brand S has about six to seven months of timber under contract with the U.S. Forest Service, Crandall said, and he needs about two years of contracted timber—because of roadbuilding and weather-related factors—to ensure Brand S will run without interruption. He blames environmental groups who are appealing timber sales.

It takes about five years to establish a timber sale, Crandall said, and those sales are environmentally studied before being approved by the Forest Service. He believes environmental groups are abusing the appeals process—simply appealing every sale, regardless of the consequences.

"I'm concerned about it. The environmentalists know they've got us. We've got to have some help," Crandall said referring to special legislation aimed at opening up timber sales, "or we won't make it."

The Gallatin Forest, where Brand S gets its timber, is located in the Rocky Mountains of southern Montana, extending about 100 miles east to west and 125 miles north to south, where it borders Yellowstone National Park.

There are about 1.7 million acres of national forest within Gallatin's boundaries and approximately 330 wildlife species, including two endangered species (bald eagle and peregrine falcon) and one threatened species (grizzly bear).

Michael Scott, regional director for The Wilderness Society in Bozeman, said he appreciates Crandall's concern for his employees but insists the question of timber sales should address the overall economic benefits to Montana. The U.S. Forest Service is taxpayer-supported, he said, which means the timber industry is a subsidized industry that is destroying an economic base—the forests—while it makes marginal returns on cutting some of those forests.

The timber industry is fast becoming more mechanized, anyway, Scott said, and jobs will be lost in the future as more efficiencies are realized. He said the timber industry supports 10,000 jobs in the state, 20 percent less than 10 years ago.

Of the 45 to 50 billion board feet of timber consumed in the United States each year, 12 billion comes from national forests. Of that 12 billion, three billion board feet are produced at below market cost, according to Scott.

"Is what we are doing right? I'm not saying we should put timber out of business, I just have a very fundamental disagreement with the Forest Service," Scott said. "I don't see any time soon when the arguments will be abated. This is not a problem with Doug Crandall, it's a problem with the U.S. Forest Service."

While Gallatin provides a relatively small amount of timber compared to larger forests of the Northwest, it presents special problems because of its aesthetic and wildlife value, Scott said. Cutting timber in Gallatin Valley results in point-source degradation that forecloses future economic options, he said.

The beauty of Bozeman, which Scott referred to as "early Boulder, Colo.," has attracted and could continue to attract much more high-tech industry. But in order to do that the area must retain its natural beauty, he said.

Also, when the "easy timber" has been cut in Gallatin, more important wildlife areas are then marked for cutting, Scott said, and that poses risks for wildlife species in the area.

"The timber industry basically takes the position that every tree in the national forests should be cut," Scott said, and he believes the Forest Service is beholden to the industry.

The Forest Service's Hagemeier strongly disagrees. He does concede, however, that the Gallatin is not the most efficient forest. It's a "below-cost forest," he said, which is defined by the Society of American Foresters as: "[When] the net public benefits (NPB) of a forest following timber harvest are less than if the timber was not harvested."

But that doesn't mean there aren't some benefits, Hagemeier said. Cutting in Gallatin allows for the removal of diseased trees and burned logs and permits reforestation. While it would be cheaper to simply burn some sections and get the same results, Hagemeier said it is better to cut and at least get some local economic benefit.

Also, he defended the Forest Service's decisions to increase timber sales to keep local mills alive. For example, he said if a mill needs 25 million board feet to stay in business and the Forest Service has opened 20 million for sale, the agency will find an additional 5 million.

"If the mill goes we've lost the ability to harvest," Hagemeier said of the need to manage forest quality. "And we've lost the economic advantages to the communities. We're not cutting the world off, as Scott and others like to think."

Just because the Forest Service makes decisions regarding the social and economic benefits to mills and communities doesn't mean it automatically does the bidding of the timber industry, Hagemeier said. Trees are not cut indiscriminately, he said—every area that's cut has been carefully studied to determine the environmental impact.

When the Forest Service released its Land and Resource Management Plan in September 1987, it presented 10 alternatives for the management of Gallatin Forest. Of the 10, number seven was chosen by the Forest Service; number nine was the environmentally preferred alternative. Alternative seven was chosen, according to the report, because it provided more income than number nine, allowed for an increase of 162 jobs rather than a loss of 76 jobs, and maximized the "net public benefit while protecting the environment."

Montana is economically dependent on its natural resources, Hagemeier said, and fast and far-reaching changes can have devastating consequences. Economic relationships have been built over the years and much depends on their stability, he said. "We tend to be very oriented to the economic and social impacts of our decisions."

To be anything less, Hagemeier said, would spell the end of people like Doug Crandall and his employees.