No Mill, No Market, No Forest

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"Healthy Landscapes, Thriving Communities Bio-Energy and Wood Products
Conference"

Sponsored by the U.S. Departments of Agriculture, Interior and Energy,
the National Association of Counties and the Western Governors'
Association

Technical Session: Meeting the Needs of Communities

Panel: Sustainable Development of a Local Wood Products Industry\
Hyatt Regency Hotel, Denver, Colorado

January 21, 2004

By James D. Petersen

Publisher, Evergreen Magazine

# Executive Director, The Evergreen Foundation

I confess I have struggled mightily with what to say to you this
afternoon. Fifteen minutes is not a long time in which to cover 20 years
of research, writing and travel; and it is certainly not enough time in
which to sort through the underpinnings of an ecological crisis that was
150 years in the making.

I suspect many of you are scientists or engineers of one kind of the
other, or that you work for federal or state agencies, or both. Others
here this afternoon are probably chasing dreams, trying to figure out
how to capitalize on the opportunity fire-ravaged forests present. You
need money or technical help, probably both. Like a moth to a flame, you
have been drawn close, possibly too close, to one of the most vexing
environmental problems of our time. So have I.

I am a writer by profession. Writing is a solitary craft. I spend a lot
of time crawling around inside my own thoughts. Evergreen -- which I
publish -is essentially me. There is no staff, and never has been. We
can't afford one.

But I do have the ear -- and the phone numbers - for some of the world's
most respected forest scientists. They are my trap line, my primary
source of information, analysis and perspective. Without them, there
would be no *Evergreen.*

We operate as a non-profit corporation because we believe it gives our
work added credibility in a cynical world. Our board of directors is
composed of men and women whose main job is to keep me well stocked with
fresh ideas and old-fashioned wisdom. There are no marquee names you
would recognize.

Our mission is simple: to help advance public support for science based
forestry and forestry policies. We fulfill this mission on the pages of
*Evergreen,* which we publish when funding permits. Last year we
published five issues. We have about 50,000 readers, which we think
makes us one of the most widely read forestry magazines in the country.

Some say we are the architects of the healthy forests debate that last
fall culminated in passage of the Healthy Forests Restoration Act. I do
not know if this is true, but I can tell you we first wrote about the
wildfire crisis in 1990, and that we have since published six special
issues designed to call attention to the problem and its solution. Along
the way we have helped create a nation-wide network of grass roots
groups that share our desire to reduce the risk of catastrophic wildfire
in the West's great forests.

Most of our contributions come from small logging and sawmilling
businesses: second, third and fourth generation family affairs that were
the economic and cultural backbones of their close knit communities
before the federal timber sale program collapsed under the weight of
litigation.

The big publicly traded outfits -- the GP's and IP's of the world --
aren't Evergreen contributors. They have their own global agendas and
their own public relations departments. Their business interest in
public land issues - and the federal wood fiber supply - died almost
without notice nearly 20 years ago. The Healthy Forests Restoration Act
means little to them because, to state their case as kindly as I can,
you can't run billion-dollar a year global businesses on verbal promises
the government cannot keep.

The carefully worded title of this panel fascinates me: *Sustainable*
Development of a *Local* Wood Products Industry?

"Local" I presume to mean smaller, family owned businesses, not the
aforementioned global giants engaged in intensive forest management,
increasingly in the southern hemisphere, where trees grow rapidly and
land, labor and regulatory costs are a fraction of what they are here.

But defining "sustainability" is more difficult. Like beauty, it lies in
the eye of the beholder, so I wonder if some qualifying benchmarks might
be useful. Picture a solid block of wood the dimensions of a football
field stretching a mile into the sky. That's how much new wood fiber is
being added to forests in Arizona and New Mexico annually: one mile this
year, two miles next year, three miles the year after. I presume the
Southwest would want a local wood processing industry large enough to
handle this amount of wood -- a little bit more. Otherwise, they will
never make a dent in their forest density-disease-wildfire crisis. But
they face a daunting task because there is not enough wood processing
infrastructure left in the Southwest to make a market. Ask the White
Mountain Apache how much this void cost them after the tragic
Rodeo-Chediski Fire.

Then there is Montana. We still have eight family-owned sawmills left.
Together, they require about 150 truckloads of logs daily. That's nine
less than the 159 truckloads of logs that die *every day* on just *one*
Montana national forest, the Kootenai. Mortality also exceeds growth and
harvest by wide margins on the Lolo and Panhandle National Forests. I
assume that a sustainable local industry here would have to be large
enough to control both growth and mortality. But less than ten percent
of what grows and dies in the Northern Region is harvested annually.
This is not sustainable from either environmental or economic points of
view.

Across the West, more than a thousand local sawmilling, logging and
trucking businesses that I assume to be the focal point of this panel
were wiped out by the collapse of the federal timber sale program. Faced
with the need to spend millions of dollars on new sawing technology some
owners chose not to make the transition to small logs. But many more did
make the investment in anticipation of the government's shift from old
growth liquidation to thinning and harvesting regimes that favored late
succession species. But the shift never came, and so many of these mills
are gone too.

The survivors buy their logs from state, private and tribal lands, and
are very wary of again dealing with federal government. A few buy fire
salvage sales when they can, but most remain skeptical about whether the
Healthy Forests Restoration Act will usher in a new era of trust and
cooperation.

This is not good news for the so-called New West with its trophy log
homes, ski resorts, wine shops, golf courses and telecommuters. Because
minus the wood processing infrastructure and the unsubsidized markets
for solid wood and biomass these companies provided for the federal
government for more than 60 years, restoration forestry will remain a
distant dream.

Let's be clear here. Restoration forestry isn't a jobs issue, and there
is no public mandate to save trophy homes from firestorms. But there is
a public mandate to protect what wildfires are destroying: human life,
communities, municipal watersheds, air quality, fish and wildlife
habitat and the wellspring of year round recreation opportunity.

Yet despite the tragic and preventable loss of these great natural
assets, which form the very foundation on which the New West is being
built, I don't think much private capital flow is going to flow toward
the wildfire crisis until the federal government again demonstrates that
it can produce a stable and predictable flow of wood fiber. And this
won't happen until the public condemns and rejects litigation. Hardly a
day passes without a new lawsuit designed to stop a fire salvage sale or
a restoration project. Mill owners know this. So do their bankers. This
is why entrepreneurs who lack the generations of experience the West's
sawmill families have can't get loans to finance their biomass and
small-wood utilization projects. No lender in his right mind is going to
risk his bank's capital on promises the government cannot keep.

But the news is not all bad. Public support for forest restoration is
strong and growing. Focus group and opinion survey work done in several
major cities including Denver, reveal that when people are given the
opportunity to choose between fearsome and unpredictable wildfire and
the safety that forest restoration symbolizes they choose restoration
more than 90 percent of the time.

I think there is a reason for this: people don't like what big wildfires
do to forests. And in restoration's powerful visuals they see a
proactive alternative they perceive to be therapeutic, not destructive.
This is why forestry, which was for so long an economic issue, is fast
becoming a quality of life issue, a tested and proven tool for
protecting air and water quality, fish and wildlife habitat, recreation
areas, communities and sylvan homes. To its credit, the current
administration recognizes both the problem and the opportunity this
crisis presents, so this would seem to be a good time to offer a few
suggestions for speeding this long overdue process along.

First, forest restoration will fail if the work is not done on physical
scales that are ecologically and economically meaningful.

Small pilot projects, which are designed to show the public what is
possible, and to encourage collaboration, usually along well-traveled
routes near communities, do nothing to reduce the landscape scale risk
of catastrophic wildfire. Remember, some 70 million acres of federal
forestland in the West need treatment, about 40 million acres sooner
rather than later. We will never get ahead of this crisis if we persist
in our 10-acre-at-a-time incubator approach. We have ramp up,
ecologically and economically.

Similarly, we have to work well beyond the wildland-urban interface. If
we don't we risk the loss of millions of acres of forest habitat
critical to the recovery of threatened and endangered species -- and we
risk the loss of our municipal watersheds. Water has replaced timber as
the primary raw material the public needs from its forests. But far too
little is being done to protect these watersheds. Ask taxpayers here in
Denver what it costs to pick up the pieces after a wildfire devastates
your city's source of drinking water.

Second, there is not enough gold in Fort Knox to pay for all the
restoration work that lies ahead. The work has to pay for itself, which
means it has to be done on physical scales large enough to accommodate
the capital and operating costs of some quite sophisticated thinning and
processing technologies. Mechanical harvesters cost about \$1 million
new. High-speed small-log sawmills cost \$25 million. In-woods chippers
sell for about a half million. Trucks are extra. And small power plants
built to convert woody biomass to energy cost a minimum \$1 million a
megawatt to construct.

Field research conducted in the Northern Rockies and in New Mexico
proves forest restoration can pay its own way -- and perhaps even earn a
modest profit - if the government widens its management horizon to
include all plant and animal species, not just late succession species.
We all seem to agree on the benefits of maximizing biological diversity,
yet we are preoccupied with protecting old growth forests, which provide
precious little forage for animals. Why not protect the whole forest,
which in turn could support a much wider variety of plant and animal
life? Why not pay more attention to structural and age class diversity?
Imagine living in a town struck by a great plague, and learning that the
city fathers had decided to make their limited supply of life saving
vaccine available only to the oldest and sickest people in town. Can a
community survive without the very young, without adolescents, without
young families, without an able-bodied work force? I don't think so. A
forest can't either.

Third, before it tries the reinvent the wheel, the government should
enlist the help of the wood processing industry that is still here.
Using federal or private grant monies to fund startup businesses is
fine, but it will be years before these inexperienced businesses can
make their own way without subsidy. We don't have time to wait for them
to succeed or fail on their own merit. But existing businesses, with
years of experience and knowledge, provide the government with an
unparalleled opportunity to succeed immediately, while forest
restoration is still very much in the public spotlight.

There is still sufficient processing and marketing capacity to begin the
rescue work tomorrow in western Montana, northern Idaho, South Dakota's
Black Hills, eastern Washington, southern and eastern Oregon and
northern California. These mills, which are mostly family-owned, lie
within some of the sickest forests in the entire national forest system.
If existing infrastructure can't be put to work here tomorrow, it
doesn't say much for the future or the credibility of the rest of the
process.

Fourth, replicate success. Of all the forest restoration projects I've
seen the most successful, by far, is the Clearwater Stewardship Project
near Seeley Lake, Montana. I think there are six reasons for its
extraordinary success, and not surprisingly all of the reasons are
people: a competent and enlightened District Ranger, a very supportive
Forest Supervisor, a family-owned milling business willing to invest its
capital in the venture, a very supportive community, conservation groups
that saw the value in the project and a first-rate monitoring committee
handpicked by the District Ranger. These human resources are available
all over the West. It is the government's job to nurture political and
investment climates in which they can blossom. Begin by learning from
and building on Seeley Lake's stellar success.

Fifth, the government needs a prospectus, just like any other suitor
looking for investment capital: a series of reports that quantify and
qualify the restoration work to be done over the next few decades on a
forest-by-forest basis. No such documents exist. I tried for three years
-- unsuccessfully I should add - to find funding for a comprehensive
biomass study for Montana. The last such report was completed in 1988.
It is too old to be of any value to anyone considering a power plant or
high-speed sawmill. You cannot fund such sophisticated operations on
16-year-old information. No lender will talk to you.

Sixth, it is long past time for our government to get serious about
managing risks in forests. I know of no evidence in science or history
to support the claim that forest restoration will only make things worse
than they already are. The court-sanctioned destruction of public and
private assets to fulfill the misguided ambitions of a few is wrong.
Nowhere else in our society is such a callous disregard for humanity's
needs tolerated: not in crime prevention, national defense, homeland
security or health care. Why are we tolerating it in forests so vital to
all of us?

Last, I want to beat the drum for the only place in the entire
government where you can get answers to questions concerning small wood
processing, utilization or marketing: the Forest Service's Forest
Products Laboratory at Madison, Wisconsin. The lab's scientists,
engineers and marketing specialists have so impressed me over the years
that last year we belatedly devoted an entire issue of *Evergreen* to
their work. Perhaps you've seen the issue: "Giant Minds, Giant Ideas."

We are such strong believers in what these men and women are trying to
do that we've joined with them to co-host a series of tours for mill
owners, loggers, entrepreneurs and community groups interested in
learning more about small wood research, utilization and marketing. Our
first tour is next week. Another is scheduled in March. More will
follow. See me if you'd like to sign up, or sign up on our website
www.evergreenmagazine.org

Let me close with a point to ponder. Even if the federal government
never again sells a stick of timber to a private enterprise, it will
still be necessary to actively manage the public's forests, to thin and
harvest trees periodically in ways that replicate nature's rhythms,
thereby controlling the limits of natural disturbance, the crippling
influences of insect and disease infestations and the devastating
impacts of unnatural wildfires.

In these endeavors, we would do well to heed the wisdom of an old
Tennessee forester friend who, while walking with me one fall afternoon
in the Cumberland foothills, said something I have never forgotten. He
said, "When we leave forests to nature, as so many seem to want to do,
we get whatever nature serves up, which can be pretty devastating at
times. But with forestry we have options, and a degree of predictability
not found in nature."