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Tongass timber: Bad decisions, big money

Posted: Tuesday, December 18, 2007

In the midst of corruption trials, fair oil taxes and Iraq, the Tongass National Forest looms again in the unending battle to cut or not to cut. While some of the more controversial issues can now be resolved through good science and the facts, a long-standing flawed calculation still persists to "justify" the Tongass timber program. The result: For nearly two decades, the Forest Service supplied about twice as much timber than what the industry buys. Rather than deleting this uneconomic timber from the sales program, the Forest Service offers even more timber in an effort to compensate for this lack of demand. Why? Because the agency has a timber bias for sure, but more importantly, the agency has truckloads of Sen. Ted Stevens' money and enjoys the blind eye of the Bush Administration.

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On the surface it starts with the Tongass Timber Reform Act of 1990. The Act required the Forest Service to seek to meet timber market demand. Since timber sales take years to prepare and administer, the only practical solution is to provide a backlog of purchased but yet-to-be-harvested timber. This way the industry can cope with market cycles and other unplanned events. Sounds reasonable, but the harder task is to set a sensible backlog and maintain it. The Forest Service conveniently assumes that high and low market cycles will cancel each other out and that they should simply offer what is planned for over a 10-15 year period. But the reality has been a deep-seated, long-term decline in demand, and the Forest Service continues to "supply the industry" as if it were in its glory days. So how can this justified?

It cannot be justified. Real trends in demand and basic economic feasibility are simply ignored. Instead the Forest Service uses a set of supply-side assumptions to artificially boost their notion of supply. For example, one overriding supply determinant is to fulfill mill capacity. Mill capacity has always been consistently above actual mill production. This is because Southeast Alaska is a marginal supplier among its competitors. Alaska is the first to lose market shares in a declining market and the last to regain market shares in rising markets. Consequently, there are prolonged periods when much of the mill capacity is not used. To assume that 100 percent of mill is the norm grossly overestimates timber demand. And, for nearly two decades, real information shows this for what it is - bad public policy. Nonetheless, the Forest Service still clings to fulfilling mill capacity.

The unspoken problem is that Southeast timber processors are becoming less and less competitive. This is due to smaller operations, older equipment, higher than average costs and longer distances to market. Alaska still enjoys lucrative niche markets, but they will be small. Oddly enough, Forest Service information from the 1990s highlights this problem. Documents showing efforts to maintain high profit margins in timber sales during the 1990s coincided with a precipitous and continuous decline in logging. Finally, when profit margins fell as well, the only reference to diminished demand was temporary market cliché. Simply stated, the emperor has no clothes - there has been fundamental reduction in timber demand.

Now we come to the latest argument of last resort. According to the Forest Service, determining "market demand" is complex, fraught with pitfalls and better left to the discretion of professional judgment. Let me decode the code words here. The courts, more often than not, defer to the professional judgment of federal land managers. That is, providing that they reveal their good or bad rationales through a public process. Just look at the successful lawsuits. They are due to an agency's failure to follow well-established processes rather than bonehead decisions that may be arguably within their purview. In short, federal managers have wide latitude to make decisions - especially if they are willing to take the heat. And in the case of the Tongass, there has been tons of money to take the heat of relentless bad decisions.

• Joe Mehrkens is retired and a former Forest Service economist and a former lobbyist for The Wilderness Society.



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