Economic Opportunities and Challenges in Forest Management

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Economic Opportunities and Challenges in Forest
Management

• Ching-Hsun Huang, Ph.D.
• Northern Arizona University

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One-third of the United States landscape is
forested.
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Forest Land Area in the United States by Ownership

• Total forest land 749 million acres
• Total public land 319 million acres
• Federal land 246 million acres
• State, county and municipal 73 million acres
• Total private land 430 million acres
• Forestry industry (firms owning wood-processing
  plants) 66 million acres
• Non-industrial private forest (NIPF) 364 million
  acres
• More than 57 of the U.S. forests are privately
  owned. Almost 50 of the U.S. forests are owned
  by NIPF landowners.

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Agenda

• Income Opportunities in Forest Management
• From the private point of view
• Economic Benefits in Forest Management
• From the societal point of view
• Challenges in Forest Management
• Four threats to the management of national
  forests and grasslands in the United States
• Five threats to private forests in the United
  States

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Income Opportunities in Forest Management

• From the private point of view

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Income Opportunities for Landowners and
Communities Timber Products

• The optimal thinning problem in even-aged stands
• Number of species
• Optimal timber stocking/planting density
• Optimal even-aged thinning regimes
• precommercial thinning
• optimal thinning intensity
• optimal thinning timing and frequency
• type of thinning (thinning from above, from
  below, row thinning
• Optimal rotation length (stand age)
• Maximum net present value or soil expectation
  value

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Income Opportunities for Landowners and
Communities Nontimber Products

• Nontimber (alternative) forest products
• Edibles (i.e. mushrooms, ferns, berries or other
  fruits, nuts, wild onions, herbs, spices)
• Medicinal and dietary supplements (i.e. products
  from sassafras, goldenseal, mayapple, slippery
  elm, black cohosh, white oak bark)
• Floral products (pine boughs, grape vines, ferns,
  and other plant products used for decorative
  applications)
• Specialty wood products (handicrafts, carvings
  and turnings, musical instruments, utensils and
  containers )
• Recreation
• Hunting leases
• Fuelwood
• Pine straw
• Christmas trees
• Carbon credit
• Bioenergy production

Arizona walnut Source USDA Natural Resources
Conservation Service
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Loblolly Pine (Pinus taeda)
Source North Carolina State University
Source Virginia Tech
Source Fairfax County Public Schools

• Multiple functions of forest ecosystem
• Timber Production sawlogs pulpwood
• Carbon Sequestration wood products
• Bioenergy logging residue

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The native range of loblolly pine. Source USDA,
Silvics of North America, 1990
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Young loblolly pine plantation
Evergreen fast growing used extensively for
wood and pulp production
Source Tennessee Valley Authority
Mature loblolly pines Source USDA Forest
Service
Source Auburn University
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Timber as a Single Output
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Financially Optimal Thinning and Final Harvest
Schedules
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Soil Expectation Values (/acre)
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SI 90, ARR7.5

• Commonly practiced
• 15-25-35 (30)
• NPW 876 (/ac)
• SEV 946 (/ac)
• EAA 71 (/ac/yr)

• Financially optimal
• 11-16-22-27 (30)
• NPW 1,015 (/ac)
• SEV 1,169 (/ac)
• EAA 89 (/ac/yr)

• ? SEV 223/ac
• ? EAA 18/ac/year
• 100 acres
• Earn 1,800 less per year

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Dual Products of Timber and Carbon Sequestration
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Carbon Sequestration

• Scenario a possible future carbon credit-trading
  market established between NIPF landowners and
  CO2-emitting companies
• Goal to determine the financially optimal
  management regimes and profitability of managing
  loblolly pine plantations for the dual products
  of timber and carbon storage

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Financially Optimal Thinning and Final Harvest
Schedules
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Soil Expectation Values (/acre) (C0, 10,
100/ton)
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SI 90, ARR7.5, C10/ton

• Optimal rotation for T
• 11-16-22-27 (30)
• NPW 1,240 (/ac)
• SEV 1,428 (/ac)
• EAA 108 (/ac/yr)

• Optimal rotation for TC
• 19-27 (35)
• NPW 1,260 (/ac)
• SEV 1,452 (/ac)
• EAA 110 (/ac/yr)

• ? SEV 24/ac
• ? EAA 2/ac/year
• 100 acres
• Earn 200 less per year

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SI 90, ARR7.5, C100/ton

• Optimal rotation for T
• 11-16-22-27 (30)
• NPW 3,262 (/ac)
• SEV 3,758 (/ac)
• EAA 285 (/ac/yr)

• Optimal rotation for TC
• 29
• NPW 3,749 (/ac)
• SEV 4,233 (/ac)
• EAA 321 (/ac/yr)

• ? SEV 475/ac
• ? EAA 36/ac/year
• 100 acres
• Earn 3,600 less per year

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Management Schedules Based on Landowners
Objectives
Production Curves (Dry Biomass lbs/acre)
Years
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Dual Products of Timber and Carbon
SequestrationConclusions

• Forests and forest management can contribute to
  the sequestration of C.
• The effect of C revenues on the financially
  optimal rotation is significant.
• C revenues can increase forest profitability.

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Carbon Sequestration and Forests

• Technically feasible and financially profitable
  alternatives are needed for increasing carbon
  sequestration and establishing CO2 trading
  markets.
• Although there is a limit to the efficacy of
  using forests to solve the complicated
  international CO2 problem, maximizing carbon
  fixation in forests could stabilize the
  atmospheric carbon level for several decades (a
  rotation) and could give society more time to
  develop alternatives for existing fossil fuels,
  such as solar power or wind energy.
• Source Huang, C. 1999. Economic Analysis of
  Carbon Storage in Loblolly Pine Plantations.

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Economic Benefits in Forest Management

• From the societal point of view

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The Economic Value of Forest Ecosystems

• Direct use values values arising from
  consumptive and nonconsumptive uses of the forest
• Timber values
• Fuelwood and charcoal
• Nontimber products hunting, latex, wild cocoa,
  honey, gums, nuts, fruits and flowers/seeds,
  spices, plant material for local medicines,
  rattan, fodder for animals, fungi and berries.
• Fish and wildlife habitat
• Biodiversity and genetic information
• Tourism and recreation values
• Amenity values (aesthetic beauty)
• Bioenergy production, bioproducts

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The Economic Value of Forest Ecosystems

• Indirect use values values arising from various
  forest services
• Watershed protection (soil erosion reduction,
  improved water quality)
• Carbon storage and sequestration (improved air
  quality)

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Challenges in Forest Management
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Four Threats to the Management of National
Forests and Grasslands in the U.S.

• Fires and fuels
• Land use conversion
• Invasive species
• Unmanaged recreation

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1. Fires and Fuels

• Primary reason why fire regimes are changing
• Human activities change the character of
  vegetation
• Effects of altered fire regimes
• Threaten human safety
• Endanger ecosystems and species
• Threaten communities adjacent to the forest or
  the urban-wildland interfaces.
• Contribute to global climate change by releasing
  stored carbon into the atmosphere

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Wildland/Urban Interface
9 of the land area and 39 of the homes are
located in the wildland/urban interface
Extreme fire behavior
Flagstaff, AZ
Prescribed Fire
Wildland/Urban Interface
Image Source USDA Forest Service, Fire
Aviation Management
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2. Land Use Conversion

• Primary reason why forests are converted to other
  uses
• Increasing population growth and development
  demands
• Effects of forest conversion on environments and
  societies
• Lose products and services
• provided by forest
• Affect both the amount and
• spatial pattern of forest habitat
• (habitat fragmentation)

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Population has declined at 5.6 per year since
1980 in Texas
Population has declined at 2.9 per year since
1980 in Texas
Source Smithsonian National Zoological Park
Where are the quail?
Source Scott Boume
75 loss in bobwhite quail populations
Northern Bobwhite Quail
66 loss in scaled quail populations
Scaled Quail
Source Smithsonian National Zoological Park
Source New Mexico Photojournal
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3. Invasive Species

• Primary reasons why invasive species are
  spreading
• Changing land use patterns
• Increased global travel and trade
• Effects of invasive species
• Kill or crowd out threatened and endangered
  native species
• Present a threat to biodiversity

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Pitch tubes (left and center) and adult Mexican
pine beetle (right).Source J. D. Stein and N.
E. Gillette, Trip Report 2003 Coordination of
Mexican Bark Beetle Studies
Both Mexican pine beetle and southern pine beetle
are highly destructive to pines.
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Galleries of Mexican pine beetle in Pinus
leiophyllaSource J. D. Stein and N. E.
Gillette, Trip Report 2003 Coordination of
Mexican Bark Beetle Studies
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4. Unmanaged Recreation

• Primary reason why unmanaged recreation problems
  are increasing
• The growth of ecotourism and outdoor recreation
  in recent decades
• Effects of unmanaged recreation
• Resource degradation
• Negative social impacts
• Loss of revenue for the protected area, local
  community and local business.

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Mt. Everest
The worlds highest garbage dump.
Source United World College of South East Asia
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Five Threats to Private Forests

• Development pressures
• Forest health problems
• Minimal planning for the future
• Minimal professional advice
• Loss of markets for forest products

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1. Development Pressures

• An average of 1 million acres of private forests
  is converted every year to development.

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2. Forest Health Problems

• 27 million acres of non federal forests are at
  risk of insect and disease damage, including
  invasive pests, and an estimated 90 million acres
  are at risk of wildfire.

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3. Minimal Planning for the Future

• Management planning helps families make a
  long-term commitment to the land. Yet estimates
  suggest that only 3 of family forest owners have
  a written management plan.

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4. Minimal Professional Advice

• Professional advice helps landowners avoid
  unintended, poor management. Yet only 22 of
  family forest owners have received professional
  advice prior to harvesting timber.

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5. Loss of Markets for Forest Products

• More than 330 paper and wood mills have closed
  since 1997 and more than 158,000 industry jobs
  have been lost.
• Lack of incentives for private forest management
  combined with global competition have decreased
  economic opportunity for U.S. forest products.

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Policy Opportunities

• Develop compensation opportunities for forest
  owners for ecosystem services and amenities their
  forests provide.
• Incorporate forest material into new renewable
  energy opportunities.
• Enhance the Conservation Reserve Program to
  restore important forest ecosystems.
• Create economic opportunities for forest
  landowners for traditional and nontraditional
  forest products markets.

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Questions?