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Western Forest Economists meeting May 9, 2007

The Future of Washington’s Forests UW College of Forest Resources & Washington State Dep’t. of Natural Resources. Western Forest Economists meeting May 9, 2007. Relevant History. Timber supply studies of 1990 Attempts to fund updates Environmental conflict & regulatory changes

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Western Forest Economists meeting May 9, 2007

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  1. The Future of Washington’s ForestsUW College of Forest Resources&Washington State Dep’t. of Natural Resources Western Forest Economists meeting May 9, 2007

  2. Relevant History • Timber supply studies of 1990 • Attempts to fund updates • Environmental conflict & regulatory changes • Pacific Northwest Forum created at UW-CFR to bring together differing views (Brian Boyle as Director) • Two meetings of the Forum on how to keep working forests working (2004, 2005) • Legislative request for DNR to contract with UW for an assessment on the Future of Washington’s Forests (Craig Partridge - DNR contract manager) • And develop recommendations • The Forum provided the vehicle to develop stakeholder acceptable recommendations (2006)

  3. Agenda • The process - Craig Partridge • The assessment - “a fire stream of facts”: • 6 hours to Forum Roundtable and 3 progress reports of 200 + pages reduced to: • 20 minute Legislative testimony reproduced here - Lippke, Perez-Garcia, Eastin • 1.5 hour more detailed version Concurrent Session A: • Eastside climate change & forest health - Elaine Oneil • Westside management & regulatory change - Kevin Zobrist • Competitiveness Issues & Economics - John Perez-Garcia • The Recommendations, Impact & Legislative Response - Brian Boyle

  4. The Future of Washington’s Working Forest LandCraig Partridge, Washington State Dep’t. of Natural Resources Brian Boyle, UW College of Forest Resources Western Forest Economists meeting May 9, 2007

  5. What’s so different in the process? • Prior studies - 1 or 2 presentations to professionals archived in the library • Easy to manage under control of PI’s • Legislative mandate with broader scope requiring both assessment and recommendations • Report to the Legislature when in session - ready or not • Involve stakeholders in the technical reviews & recommendations • Periodic progress reports, roundtable meetings and a final Working Forum • Frequent check points on process • Frequent progress reports that were communicated widely • Establish some consensus recommendations

  6. Threats to Washington’s Working Forests • Land conversionand urban sprawl • Forest Health and fire hazard, insects and disease • Manufacturing sector declines • Public attitudes, lack of knowledge, and pressure • Altered markets, commoditization, competition • Lack of infrastructure investment • Erosion of timber suppliers • Undefined or uncertain markets for off-market forest ecosystem services (carbon, water, biodiversity) • Competitiveness threats, such as taxes, regulations, trade restrictions, other external cost impositions

  7. 2004 & 2005 Forums • Defined major concerns • Identified potential solutions • Core market innovations: monetizing development rights; markets for ecosystem services, for carbon, for bioenergy • Tax innovations: investment tax credits for watershed protection, sewer and water service rates • Niche markets: Carbon, hardwoods, big timber, Washington-branded wood • Trading mechanisms: tradeable and saleable credits for services • Regulatory streamlining: for forest owners, for facility approvals, for flexibility • Eliminate disincentives, create incentives • Raise public sensitivity and support for working forestry

  8. Basics of the Forum • It’s a market economy –working forests on the landscape require market drivers. • Broad sector collaboration is needed. • Acceptance of ownership diversity and needs is critical. • Ecosystem services and values need to be enhanced. • Policy solutions are the endpoint.

  9. Legislature Altered the Forum(for the better, by commissioning research) • The research findings imposed a factual basis on the dialogue (which is how the Forum began.) • UW science and research have an acknowledged strong role now. • UW and DNR have a good collaboration and a joint responsibility to respond to the legislature. • We have an innovative process and collaborative model. • We get the right people to the Forum and engage them. • We produce complex but incisive reports, that clarify issues and keep the dialogue facts-oriented. • We talk about Actions and Completion – specific, limited things the Forum can propose. (This screen will self-destruct in ten seconds)

  10. Relationship Possibility Completion Clarity Opportunity Action Conversation for What Purpose?

  11. Washington Forest Futures Study:Timber Supply & Forest Structure, Economics & Competitivenessfor WFE Annual Meeting May 9, 2007 Bruce Lippke John Perez-Garcia Ivan Eastin College of Forest Resources University of Washington

  12. Westside Harvest: History, 15 yr Prediction & Variance

  13. Eastside Harvest: History, 15 yr Prediction &Variance

  14. Timber Supply & Forest Structure: Alternative Outputs: Simulated Alternatives of Treatments (not predictions) Start with initial tree list inventory plots & project forest structure from treatment impacts; Map riparian zone impacts and forest health from GIS hydro & health layers: • Harvest & inventory • Habitat & stream protection • Health & fire risk • Forest economics (SEV) & community economics (revenue, jobs, taxes) • Carbon Benefit/Cost analysis of alternatives(impacts on economics, fire, carbon, habitat, biodiversity)

  15. Eastside Issues Climate change & forest health Fire/carbon/avoidable future costs Declining harvest & infrastructure

  16. 2000+ Mortality Rate 8.4 TPA Latest inventory 1979-1999 Mortality Rate = 2.2 TPA

  17. Maximum Summer Temperature Maximum GS precipitation 1980’s outbreak in PP starts Current MPB outbreak in LP starts 2000 Minimum Summer temperature Minimum GS Precipitation Worst ever

  18. Photo credit: Don Hanley Anywhere you want to look in Central BC…. http://www.for.gov.bc.ca/hre/bcmpb/annual/title.htm://www.for.gov.bc.ca/hre/bcmpb/flightpics.htm Photo credit: Don Hanley

  19. Impact on Fire Hazard of Thinning to BA 45

  20. Avoidable cost estimates of fire related non-market and market values (incomplete list)

  21. LIDAR Measurement of Forest Lands • Some pulses reach the forest floor, others reflect from understory and canopy • Vegetation structure for habitat analysis Canopy height Vertical structure Ground elevation ~ 10 – 20 m Canopy profile Height above datum (m) Along track distance (m)

  22. Westside Issues • Economic viability is key to sustaining lands in forests and reducing conversions • Changing Management Technology increases income, jobs and even carbon but reduces habitat • Many opportunities to improve the environment at low cost are being missed

  23. Buffer canopy cover @ 110yrs Alternate thinned buffer with larger trees in core zone never more than 17% open stands outside of stability zone

  24. Sample Westside Management Treatments from No Harvest to BioPathways @100 years (medium site) No Harvest: TPA-170, QMD-16.8 Plant & Harvest: TPA-358, QMD-9.7 Plant Veg Control & Harvest: TPA-346, QMD-11.0 Plant Thin & Harvest: TPA-168, QMD-12.1 BioPath Long(retention): TPA OS-14, QMD OS-29 BioPath Short: TPA OS-31, QMD OS-26

  25. Suitable habitat conditions within 100 year time horizon under different management regimes

  26. Carbon Pools in: Forest, products, energy displacement, & fossil intensive substitutes Carbon pools in: unharvested forest, for stem, roots, crown, litter, and dead wood CORRIM: the Consortium for Research on Renewable Industrial Materials

  27. Historic Projected Source: Gray et al. 2005. PNW-RB-246

  28. Brief Remarks on CompetitivenessJohn Perez-Garcia College of Forest Resources University of Washington

  29. Washington’s Forest Sector Today • During past 15 years the industry was forced to adjust to new harvest levels as result of federal changes, HCPs, ESA and other regulations. • Primarily a commodity production business model • Produces lumber and newsprint

  30. Mbf Source: WA DNR Harvest Reports

  31. Mbf Source: WA DNR Harvest Reports

  32. Mbf Source: WA DNR Harvest Reports

  33. Mbf Source: WA DNR Harvest Reports

  34. Mbf Source: WA DNR Harvest Reports

  35. Primary Products Export Values Secondary Product Export Valves Source: US DOC

  36. Per Acre Tax Burdens All States Source: WFPA 2002 study

  37. Taxes on Farm and Forest Resources by East/West (2002) Source WFPA

  38. Effective Tax Rates on Private Timber Revenue Gross Revenue from Timber: $10,080 (80 acres) Net Revenue: $8,568 Revenue after State taxes: $7,959 After Tax Income BracketRateRevenue • Less than $30,650: 21.0% $6,765 • Less than $74,200: 30.3% $5,969 • Less than $154,800: 33.1% $5,730 • Less than $336,550: 37.8% $5,332 • More than $336,550: 39.6% $5,173

  39. Are there Other-than Resource Issues for Eastern Washington mills?

  40. Business Cost Comparison Washington Idaho Rank Rank Source: WashAce 2005

  41. Economic and Competitiveness Issues • Newest Westside mills are competitive in commodity markets. • Eastside mills however are high cost and compete directly with the Canadian mills. • Regulations impact the availability of wood, and wood has the highest cost share in producing products. • Tax impacts are important factors determining the level of investments at both the forest land and mill levels. • The cost of doing business in Washington impacts investments • Washington’s forest products industry today is primarily producing a commodity for the domestic market, with niche markets (such as alder) small although prosperous.

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