Wildland Fire Behavior & Forest Structure

Environmental Consequences

Economics

Social Concerns

Financial Analysis of 

Fuel Treatments

United States Department of Agriculture

Forest Service

Pacific Northwest Research Station

General Technical Report

PNW-GTR-662

December 2005

U.S. Department of Agriculture

Pacific Northwest Research Station

333 SW First Avenue

P.O. Box 3890

Portland, OR 97208-3890

Official Business

Penalty for Private Use, $300

Roger D. Fight and R. James Barbour
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Authors

Roger D. Fight is a research forest economist and R. James Barbour is a research 

forest products technologist, Forestry Sciences Laboratory, P.O. Box 3890, Portland, 

OR 97208.
Abstract

Fight; Roger D.; Barbour, R. James. 2005. Financial analysis of fuel treatments. Gen. 

Tech. Rep. PNW-GTR-662. Portland, OR: U.S. Department of Agriculture, Forest 

Service, Pacific Northwest Research Station. 20 p.

The purpose of this paper is to provide information and discussion that will be helpful 

in promoting thoughtful design of fire hazard reduction treatments to meet the full 

range of management objectives. Thoughtful design requires an understanding of the 

costs and potential revenues of applying variations of fire hazard reduction treatments 

in a wide range of stand conditions. This paper draws extensively on the My Fuel 

Treatment Planner (MyFTP) software to highlight and illustrate the effect of treatment 

variables on the cost and net revenue from fire hazard reduction treatments in dry 

forest types of the Western United States. Treatments covered are thinning with or 

without utilization, prescribed fire, and mastication. For thinning with removal to a 

landing, costs can be estimated for four ground-based systems, four cable systems, and 

two helicopter systems.

Keywords: Financial analysis, silviculture, fire, prescriptions, economics, 

fuel treatments
Preface

This document is part of the Fuels Planning: 

Science Synthesis and Integration Project, a pilot 

project initiated by the U.S. Forest Service to respond to the need for tools and information useful 

for planning site-specific fuel (vegetation) treatment 

projects. The information primarily addresses fuel 

and forest conditions of the dry inland forests of 

the Western United States: those dominated by 

ponderosa pine, Douglas-fir, dry grand fir/white fir, 

and dry lodgepole pine potential vegetation types. 

Information, other than social science research, 

was developed for application at the stand level 

and is intended to be useful within this forest type 

regardless of ownership. Portions of the information also will be directly applicable to the pinyon 

pine/juniper potential vegetation types. Many of 

the concepts and tools developed by the project 

may be useful for planning fuel projects in other 

forest types. In particular, many of the social science findings would have direct applicability to 

fuel planning activities for forests throughout the 

United States. As is the case in the use of all models 

and information developed for specific purposes, 

our tools should be used with a full understanding 

of their limitations and applicability. 

The science team, although organized functionally, worked hard at integrating the approaches, 

analyses, and tools. It is the collective effort of the 

team members that provides the depth and understanding of the work. The science team leadership 

included Deputy Science Team Leader Sarah McCaffrey (USDA FS, North Central Research Station); 

forest structure and fire behavior—Dave Peterson 

and Morris Johnson (USDA FS, Pacific Northwest 

Research Station); environmental consequences—

Elaine Kennedy-Sutherland and Anne Black (USDA 

FS, Rocky Mountain Research Station); economic 

uses of materials—Jamie Barbour and Roger Fight 

(USDA FS, Pacific Northwest Research Station); 

public attitudes and beliefs—Pam Jakes and Sue 

Barro (USDA FS, North Central Research Station); 

and technology transfer—John Szymoniak, (USDA 

FS, Pacific Southwest Research Station). 

This project would not have been possible were it 

not for the vision and financial support of Washington Office Fire and Aviation Management individuals Janet Anderson Tyler and Leslie Sekavec. 

Russell T. Graham 

USDA FS, Rocky Mountain Research Station

Science Team Leader
Contents

1 Introduction

2 Economic Analysis Versus Financial Analysis

4 Things That Affect the Cost of Thinning

4 Tree Size

5 Volume Harvested and Unit Size

6 Terrain

9 Markets and Net Thinning Cost or Revenue

11 Unit Location

12 Unit Design and Landing Location

12 Cost of Other Treatments

12 Prescribed Fire Treatments

15 Mechanical Fuel Treatments

16 Net Cost or Return and Treatment Outcomes

16 Tradeoffs Between Treatment Method, Cost, and Outcomes

16 When Other Things Are Not Equal

18 Economic Impacts of Fire Hazard Reduction Treatments

18 Conclusion

19 Metric Equivalents

19 References



Introduction

The strategies used for managing wildfire by the 

USDA Forest Service, USDI Bureau of Land Man-

agement (BLM) and other federal and state land 

management agencies are changing. Our current 

fire organizations were built almost solely around 

preventing unwanted ignitions and preparing for 

and fighting those wildfires that do occur. Emerg-

ing strategies call for altering the vegetative condi-

tions (structure, composition, and density) that 

promote unwanted ignitions, allow fires that do 

start to grow larger or more severe than desired, 

or let wildfires damage housing or other infra-

structure that people value (Western Governors’ 

Association 2001). Ideally this means that one day 

we will manage vegetative conditions and design 

human infrastructure in ways that make it safe for 

many, perhaps even most, fires to burn without 

triggering massive fire suppression efforts because 

those fires will be smaller and more predictable. 

Meeting this objective calls for altering vegeta-

tive conditions on a grand scale throughout the 

Western United States (Vissage and Miles 2003). 

The National Fire Plan

1

 and related congressional 

direction, for example, the Healthy Forest Restora-

tion Act of 2003, draw attention to this need for 

vegetation manipulation and focus federal and 

state forestry resources on addressing the problem.

The three basic categories of tools available to forest managers for altering vegetative conditions are 

prescribed fire, mastication or mowing,

2

 and thin-

ning. The effectiveness of each of these methods in 

altering the structure of or reducing the amount of 

ground and ladder fuels, and reducing crown bulk 

density is different. Consequently, each of these 

leaves residual stands with different vegetative 

characteristics and environmental effects. Each 

type of treatment also has a different set of finan-

cial costs, and in times of tight budgets the choice 

of which method to use is important in achieving 

the best combination of risk reduction and envi-

ronmental effects within the available budget.

Prescribed fire is generally used to remove ground 

fuels, understory vegetation, and small trees, and 

sometimes to kill larger trees. It is not a pre-

cise way of reducing stand density, and several 

prescribed fires spread over many years are often 

necessary to accomplish management objectives. 

Prescribed fire is, however, often seen as more 

environmentally benign than other methods for 

modifying vegetation. Mastication modifies the 

form of ground fuels, understory plants of various 

sizes, and sometimes fairly large trees (15 to 20 

inches in diameter). Mastication is more precise 

than prescribed fire because human judgment is 

used to target particular trees and shrubs. Accord-

ingly, managers can use mastication to achieve 

specific stand density and vegetative composition 

goals in a single entry. Mastication changes fuel 

structure by grinding or chopping it into smaller 

pieces that lay close to or on the ground, but it 

does not reduce fuel loads. Thinning is also quite 

precise and, like prescribed fire, can include re-

moval of biomass from the site, some of which may 

be in the form of merchantable trees. Thinning 

is not particularly useful at reducing understory 1Managing the impacts of wildfires on communities and the 

environment: a report to the President of the United States in 

response to the wildfires of 2000. Signed by the Secretaries of 

Agriculture and the Interior September 8, 2000. 2Mastication is a special case of thinning without removal of 

the thinned materials. In the case of mastication, the thinned 

materials are ground and left on the site. This is different from 

precommercial thinning where the trees are simply cut down 

and left on site. The fuel characteristics after mastication and 

precommercial thinning are much different.


plants or ground fuels, and it typically adds to the 

surface fuel load in the form of tops and limbs, and 

even bolewood in the case of precommercial thin-

ning. Like mastication, the precision of thinning 

makes it useful for accomplishing large changes in 

vegetative structure and composition in one entry. 

The outcomes from prescribed fire, mastication, 

and thinning are so different they are frequently 

used in combination to capture the advantages 

of each. Combining treatment methods allows 

managers to tightly specify final conditions, and it 

can either add to or reduce the costs of treatments 

depending on how well planners understand the 

strengths and weaknesses of the methods they 

choose. 

These types of management activities are differ-

ent than those that were employed when timber 

production was the primary motivation for vegeta-

tive manipulation in federally administered forests. 

Planning teams are challenged to design treat-

ments that meet fire hazard reduction goals while 

paying for their implementation. This is often 

not possible and made more challenging by the 

difficulty in estimating how much treatments will 

cost, especially when trying new things. Without 

a good understanding of costs, it is difficult to 

design a management program that efficiently uses 

the available budget to accomplish the goals of the 

National Fire Plan. Financial analysis can be used 

together with analytical tools that help planning 

teams understand how fires will behave before 

and after treatments (Finney 2001, Peterson and 

others 2005), the effects of treatments on other 

resources (Ritter and others, in press; Sutherland 

and Black, in press), and how to engage people 

in issues related to fire hazard reduction treat-

ments (Sturtevant and others 2005) to improve the 

selection of stands for treatment and the design of 

fire hazard reduction treatment projects. In this 

paper we examine how financial analysis fits into 

broader economic analysis, the reasons for doing 

financial analysis, and the relative importance of 

numerous factors that affect the financial outcome 

of a treatment applied to a forest stand.

Economic Analysis Versus 

Financial Analysis

Many people are confused about the difference 

between economic analysis and financial analysis. 

The scope and complexity of a financial analysis 

resembles balancing your checkbook, whereas 

the scope and complexity of an economic analysis 

resembles planning for retirement. Understand-

ing this distinction is important because the scope 

and complexity of an economic analysis make it 

difficult to perform even with formal training in 

economics; however, given the proper tools, even 

people with a limited background in economics 

and forestry operations can perform a financial 

analysis.

 Economic analyses can help planners make strate-

gic decisions about what to do and where to do it. 

These decisions often involve evaluating important 

tradeoffs among the effects on stand structure, fire 

behavior, and the cost of fire suppression (Kline 

2004). For example, the size, nature, and place-

ment of treatments may affect patterns of habitat 

for wildlife or rare plants and how new habitat 

develops over time. They could also alter opportunities for recreation, the associated economic 

impacts, and property values, or the treatments 

themselves could result in undesirable outcomes 

such as smoke production from prescribed fire. 

Our ability to understand and quantify these types 


of effects is limited by the availability of skilled 

analysts, a lack of economic models that relate 

ecological and social benefits to manipulations of 

vegetation at the stand or landscape scale, and the 

availability of sufficient budgets to even conduct 

such analyses. 

A financial analysis is limited to addressing costs 

and benefits that are readily measured in dollar terms. The results of a financial analysis can 

be used with subjective judgments about the 

importance of benefits that cannot be reduced 

to dollar estimates to reach decisions about such 

tradeoffs. There are several reasons for doing 

financial analysis of fuel treatments. Most of the 

fire hazard reduction treatments in the Western 

United States are implemented on public land, and 

planners want to use tax dollars wisely to pay for 

these treatments. Financial analysis is well suited 

to determine the least-cost way to accomplish 

objectives where the costs and benefits that cannot be reduced to dollar terms are comparable or 

unimportant. Another reason for doing financial 

analysis is to determine whether the most appropriate arrangement to accomplish a project is a 

standard contract (all cost and no revenue), a timber sale (substantial net revenue), or a stewardship 

contract (a mechanism that allows net revenue 

from selected units to be used to cover part or all 

of the negative net revenue from other units so 

that the amount of appropriated funds needed to 

treat the units with negative net revenue will be 

reduced). Because financial analysis focuses on 

costs and revenues, it is an appropriate tool for 

making this type of determination. A third reason 

for doing a financial analysis is to assist in budget 

development and allocation. It might be useful to 

think of budgeting as determining how to combine 

different types of treatments and treatment locations to most effectively use the available budget. 

Because the selection of treatment locations and 

the costs of different types of treatments can differ 

widely, attention may be required in scheduling 

to match the acres treated with the anticipated 

budget over time. Alternatively, once a budget has 

been determined, the acres that can be treated will 

be affected by the selection of the places to treat 

and the way to treat them. 

Once a strategic decision has been made to conduct fire hazard reduction treatments across broad 

areas, a financial analysis can be used to help decide what treatments to apply to what stands. This 

involves evaluation of tradeoffs in the selection of 

the intensity of treatment, the size and species of 

trees selected for removal, and the types of stands 

targeted for treatment. The My Fuel Treatment 

Planner (MyFTP) software was developed to provide a structured process for conducting financial 

analyses of fuel treatments.3

We used MyFTP to conduct several analyses for 

this paper that illustrate some ways financial analyses support both strategic decisions about what 

types of stands to treat across broad landscapes 

and tactical decisions about which treatment to 

select for a specific stand. In both cases, standlevel information is fed into the model and results 

compared on a stand-by-stand basis. The big difference is that in a strategic analysis, the “stands” 

actually represent classes of stands with similar 

characteristics, and in tactical analyses the stands 

represent actual treatment units. For example, a 

strategic analysis might involve looking at 15 or 20 

stands that are representative of the stand types 

3The My Fuel Treatment Planner software and documentation 

is available from http://www.fs.fed.us/pnw/data/soft.htm.


found on a national forest where thinning with 

removal of wood for sale, prescribed fire, or mastication might be options. MyFTP could be used 

to compare the relative cost of treating each stand 

type with variations of each treatment. A planning 

team could use the results in a discussion about 

the least expensive way to treat each stand type. In 

a tactical analysis, MyFTP could be used in planning a specific project to help the planning team 

discuss how to accomplish the most work with the 

available funds.

The examples we selected are intended to both 

demonstrate the capabilities of MyFTP and illustrate the relative importance of factors that should 

be considered in financial analyses of fire hazard 

reduction treatments. We simulated scenarios 

that demonstrated use of each of the modules in 

MyFTP. These allow estimation of the following 

costs: mechanical fuel treatments including mastication, prescribed fire treatments, harvesting, and 

hauling. MyFTP also includes modules to estimate 

potential revenue from wood products and to estimate the economic impact of fire hazard reduction 

treatments. 

Things That Affect 

the Cost of Thinning

Tree Size 

The volume per acre of trees being cut, processed, 

and moved to a landing4 and the average size of 

the trees are the two most important variables in 

determining the cost of removing trees for a given 

harvesting system, slope, and size and shape of 

harvest unit. These two variables are determined 

by the starting conditions in the stand that is 

being treated and the choice of how many and 

which trees to remove. Fuel planners often have 

a lot of say in which trees to remove depending 

on the latitude given by policy on what silvicultural prescriptions are acceptable in fire hazard 

reduction treatments. This is a place where a good 

understanding of stand-level fire behavior can 

really help in deciding if an expensive or inexpensive treatment is needed to alter fire behavior in 

the desired way. Peterson and Johnson (2005) provided a detailed discussion of different categories 

of treatments and how they influence fire behavior. Their examples can help a planning team in 

making decisions about what treatments to use. 

The environmental effects of treatments will also 

be a point of discussion, and examples and tools 

can also help a planning team discuss the pros and 

cons of various treatment options.5

Other things being equal, thinning strictly from 

below will result in the smallest average size of 

material removed and ordinarily the highest thinning cost. For a given reduction in basal area, thinning from below will also provide the lowest total 

volume removed per acre and ordinarily the highest cost. Examining alternatives for the removal of 

small trees provides a good example of how seemingly small changes in treatment design can have 

big effects on costs. Options for treatment of small 

trees (<8 inches at breast height) might include 

among other things: 

4The terminology for moving logs to a landing is skidding for a 

ground-based skidder system, forwarding for a ground-based 

cut-to-length or harvester-forwarder system, and yarding for a 

cable or helicopter system. When referring to multiple systems 

or to no particular system we will use the generic term “moved” 

to the landing. 

5A set of tools to evaluate the environmental effects of fire 

hazard reduction treatments can be found at http://www.fs.fed.

us/fire/tech_transfer/synthesis/synthesis_index.


• Not cutting trees below a certain size and 

using prescribed burning after larger trees 

and ladder fuels are removed. 

• Leaving cut trees at the stump without 

further treatment. 

• Masticating or burning cut trees in the unit.

• Chipping or burning cut trees at a landing. 

• Removing all or parts of the cut trees for 

wood products and then chipping, burning, 

or leaving the unused parts on the site or at 

a landing. 

It is important to recognize that each step in the 

process has a cost associated with it and that each 

decision affects the ecological and aesthetic outcomes of treatments. Breaking the treatment into 

incremental steps and analyzing their cost with 

MyFTP can help in identifying the high- and lowcost parts of the various options. Understanding 

costs is an important part of discussions about the 

environmental and aesthetic affects of treatments 

because as more is spent on each treated acre, 

fewer acres can be treated.

One way to start thinking about this is to look at 

the cost of thinning and removing all of the cut 

trees from the stand. The example in figure 1 compares the stump-to-truck cost for removing equal 

volumes (600 cubic feet) of 6-inch diameter at 

breast height (d.b.h.) trees and 16-inch d.b.h. trees 

with whole-tree removal and hand felling. It illustrates the general conclusion that smaller trees are 

more costly to handle at every step of the thinning 

operation. The example in figure 2 illustrates that 

the same general conclusion also holds for wholetree removal by mechanical felling. Although 

the total cost is less with mechanical equipment 

that is designed for handling small trees, smaller 

trees are still more costly to handle at every step of 

the operation. 

Figure 1—Cost of thinning 600 cubic feet per acre with manual felling and whole-tree skidding. When manual 

felling is used, the cost of removing smaller trees is higher in every step from the stump to the truck.


Volume Harvested and Unit Size

The volume of merchantable wood removed and 

the amount of unmerchantable material that must 

be treated or removed are important in determining the cost of the treatment. Equipment move-in 

costs can also be important. Both the choice of 

stands to treat and the prescription selected to 

treat them affect the volume of merchantable and 

unmerchantable material that is removed per acre. 

When move-in costs are not considered, the effect 

of volume removed per acre is much less important 

than tree size (fig. 3). Figure 4 shows the obvious: 

total volume removed is related to the total area 

treated and the volume per acre. Move-in costs 

are spread over the volume that is harvested, so it 

is obvious that treating larger areas or clusters of 

areas reduces the cost of moving equipment from 

one place to another. When both the volume per 

acre and unit size are small, the move-in cost can 

be a substantial addition to total harvest cost per 

hundred cubic feet (fig. 5). 

Where move-in costs are nominal, average tree 

size is much more important than volume harvested per acre. Adding move-in costs in most 

cases will shift costs up a few dollars per hundred 

cubic feet and will be visually indistinguishable 

from figure 3. This conclusion holds for other 

systems as well. 

Terrain

Terrain is a major factor in determining the cost 

of thinning (Mellgren 1990). In general, stands on 

steep ground will be more expensive to mechanically thin because more expensive systems are required to operate on steep ground. Unfortunately 

it is also more difficult to control prescribed fires 

on steep ground because fuel ahead of the flame is 

heated more efficiently by radiant energy from the 

fire Rothermel (1983). In this situation mechanical thinning might be more desirable as an initial 

step in getting vegetation back under control as 

long as the treatment results in a higher canopy 

Figure 2—Cost of thinning 600 cubic feet per acre with mechanical felling and whole-tree skidding. 

Mechanical harvesting of trees reduces total cost, but the cost for smaller trees is still higher at every 

step from the stump to the truck.


Figure 3—Cost of thinning with mechanical felling and whole-tree skidding with equipment move-in costs 

excluded. Volume per acre has little effect on harvesting cost when move-in costs are excluded. 

Figure 4—Total harvest volume for a range of volumes per acre and size of unit.


base height and does not add too much surface 

fuel in the process (Agee 2005). The cost of thinning on steep ground with a cable system is higher 

than the cost of thinning on flatter ground with a 

ground-based system even when all of the steps in 

the process are the same, that is, manual felling, 

limbing, and bucking (fig. 6). The cost differential 

becomes even greater when it is possible to use 

mechanical felling and whole-tree skidding for the 

ground-based system (fig. 7). 

To accomplish the goals of the National Fire Plan, 

it is important to understand the things that cause 

fires to become large and threatening. To do so, 

planners need to think beyond the cost of treating 

individual stands and think about the strategic 

placement of treatments on the landscape (Finney 

2001). If cost is the only thing taken into account, 

planning teams will tend to select stands on flat 

ground and avoid stands on steeper sites, but these 

could be the least effective places to put treatment 

units (Finney 2001). 

Another important factor related to terrain is the 

equipment that can be used to accomplish the 

treatment. In general, ground-based systems are 

least expensive, followed by cable systems and 

then helicopter systems. Within each of these 

three system types, there are equipment choices. 

Sometimes equipment choices are restricted 

because of concerns about soil compaction, soil 

disturbance, residual stand damage, or other resource issues, again, often related to terrain. These 

restrictions can have significant cost implications. 

Figure 8 shows costs for four ground-based systems over a range of tree sizes. Understanding how 

equipment choice is affected by resource conditions and objectives can help fuel planners explain 

high costs to other resource specialists. Armed 

with this information, it is easier to discuss the 

way decisions about how to accomplish a task may 

influence the overall effectiveness of a fire hazard 

reduction program. For example, it might be possible to discuss the relative importance of spending a lot of money on protecting some aspect of a 

particular area as opposed to treating many acres.

Figure 5—Contribution of move-in cost to total cost per hundred cubic feet for a range of volumes per acre and 

size of unit when move-in cost is $1,000. The cost of moving equipment to the site can be substantial for small 

isolated units.


Markets and Net Thinning 

Cost or Revenue

The net revenue from thinning is the revenue from 

the sale of logs and chips minus the cost of harvesting and hauling, so prices in product markets 

are important. Higher product prices mean more 

revenue to offset treatment costs. Three product 

markets are important for fire hazard reduction 

treatments: solid-wood products, paper and board 

products from wood chips (clean chips), and wood 

used for energy (dirty chips or hog fuel) (Barbour 

2004, Barbour and others 2004). Trees less than 

Figure 6—This comparison of the cost of a cable yarding system and a ground-based skidding system both 

with manual logging illustrates the cost disadvantage of harvesting where cable systems are required. 

Figure 7—This comparison of harvesting cost for whole-tree logging with cable and ground-based systems illustrates 

the cost disadvantage of harvesting where cable systems are required. Cost differences are magnified, especially for 

small-diameter trees, when the ground-based system can use mechanical felling and whole-tree skidding.
10

about 7 inches at breast height are generally only 

used for pulp chips and hog fuel and by themselves rarely pay their own way out of the woods. 

Trees between about 7 and 9 inches d.b.h. can 

produce some solid wood products, but they are 

considered at or below the merchantable limit in 

most markets. Where saw-log markets are poorly 

established, as is the case over much of the interior 

West, these trees tend to be used for pulp chips or 

hog fuel. When saw-log markets are stronger, 7- to 

9-inch d.b.h. trees tend to be sold for solid wood 

products. A point that is often confusing for fuel 

planners is that trees of this size are sometimes 

an important part of the solid products resource. 

For example, in places like the boreal forests in 

Canada where ground is flat and mechanized 

clearcutting is typically used over fairly large contiguous areas, trees of this size can be an important part of the resource used to manufacture solid 

wood products. But where partial cutting of small 

volumes per acre is the norm, as is usually the case 

with fuel treatments, things are quite different. 

Figure 9 illustrates the general conclusion that 

larger trees are worth more per unit volume 

because of efficiencies in manufacturing and 

increased product recovery per cubic foot of log. 

There is, however, a limit to this trend because 

as more and more wood comes from industrial 

plantations and less from natural stands, mills 

are adapting to a much more uniform-sized raw 

material (Barbour et al. 2002). In practice, this 

means that in many places logs larger than about 

24 inches on the large end receive a lower selling 

price than smaller logs because there are so few 

mills that can physically accommodate them. 

Many people hope for development of new products from small trees to provide the break that is 

needed to make them more valuable. We believe 

this hope is based on a misunderstanding of how 

markets work. The wood properties of the small 

trees coming from fire hazard reduction treatments are not very different from the properties 

of larger trees associated with traditional timber 

Figure 8—Harvesting costs for 600 cubic feet per acre for different types of ground-based harvesting 

systems. Notice that the differences are much greater for small-diameter trees than for larger trees.
11

harvesting. This means that in most cases, new 

products from small trees tend to lift the overall 

demand for wood but not the demand for small 

trees in particular. Products would be needed 

where using small trees confers a cost advantage 

in processing or use, such as use of logs directly 

as round timber in structures (Wolfe and Murphy 

2005) or products where the very fine grain of 

slow-grown understory trees is important (Green 

and others 2005). So far, nothing has been developed for which the market would be big enough 

to substantially change the market price of small 

trees. The most common reason that small trees 

are worth less than larger trees is that the cost is 

higher to handle and process enough small trees to 

get the same volume of products that you get from 

handling and processing larger trees. 

Unit Location

Location not only determines what set of market 

prices apply, it also determines the cost of reaching 

the market. The distance from a treatment unit to 

a location where wood products are manufactured 

will have an important effect on the cost of hauling 

logs to market. The hauling cost module in MyFTP 

uses a simple model to predict hauling cost. A 

truck has an assumed haul capacity and a total 

cost per day for the truck and driver including fuel 

and other expenses. The cost per unit of volume 

is then determined by how many round trips the 

truck can make in a day. Figure 10 shows estimated loads per day as a function of the one-way 

mileage to the mill. This is a rough approximation 

that will be affected by the miles that are driven on 

forest roads and their condition and the miles that 

are driven on higher speed highways, because the 

issue is travel time. Local traditions, work rules, 

and flexibility in the hours worked per day will 

also have an effect. As the distance increases, the 

loading and unloading time remains the same, but 

the travel time increases. The total time increases 

proportionately less than the increase in distance, 

Figure 9—Example of gross revenue from logs calculated for 6- to 16-inch 

ponderosa pine trees. Pricing in Scribner scale is the primary reason that the 

curve is not smooth.
12

so the cost goes up, but at a decreasing rate with 

distance. Figure 11 illustrates this relationship for 

a truck and driver cost of $580 per day and a truck 

capacity of 26 tons per load. The MyFTP software 

allows the user to change any of these assumptions 

as appropriate for their area.

Unit Design and Landing Location

The average distance that trees or logs have to be 

moved to a landing will have an effect on cost. 

This will be determined primarily by the proximity of a unit to a permanent or temporary road. The 

size, shape, and orientation of a unit relative to the 

road will also affect the average distance that logs 

or trees are moved from the stump to the landing. Figure 12 shows the cost for different average 

stump-to-landing move distance with all other 

variables held constant. Because the move component of the operation is a small part of the total 

cost, a doubling or tripling of the travel distance 

increases the total cost by only about 10 to 20 

percent; the percentage increase for a cut-to-length 

(CTL) system is even less because most forwarding 

time (moving logs from the stump to landing with 

a piece of equipment called a forwarder) is spent 

accumulating the load rather than forwarding it to 

the landing. Although the placement and design of 

units can reduce the stump-to-truck distance and 

cost of harvesting, treating only along roads, for 

example, can make it difficult to go back to treat 

areas behind those units because there will be no 

low-cost parts to average in with the higher cost of 

the area that is farther from the road. Unless building roads is an option, there is not much flexibility 

to reduce the average distance to a landing. 

Cost of Other Treatments

Prescribed Fire Treatments

Prescribed fire is often one of the least expensive 

ways to reduce fuel loads. Some of the cost-influencing variables include activity type, project 

objective, and site characteristics such as fuel type. 

This discussion illustrates a method for evaluating 

the costs of prescribed fire treatments by using 

Figure 10—Loads per day for a range of one-way distances estimated by My Fuel 

Treatment Planner. 
13

Figure 11—Hauling cost per green ton for a range of loads per day for a truck hauling 

26 tons and costing $580 per day. 

Figure 12—Stump-to-truck cost for ground-based systems harvesting 600 cubic feet 

per acre of 8-inch ponderosa pine on a 25-percent slope with skidding or forwarding 

distances of 400 to 1,200 ft. 
14

a model developed by Calkin and Gebert6 with 

data from national forests in the Western United 

States. They present a base case treatment scenario 

that represents conditions commonly found in 

the database. The base case is a broadcast burn 

or underburn of 100 acres in a fuel model 1, 4, 

8, 9, or 13 (Anderson 1982) with mechanical or 

hand ignition, located in Forest Service Regions 1 

(Northern), 3 (Southwestern), 4 (Intermountain), 

or 6 (Pacific Northwest) and with any of the following as the primary objective of the treatment 

(which affects how the treament is applied): fuel 

reduction, defensible space, protecting threatened 

and endangered species, or ecosystem restoration. 

The estimated cost of this base case is $105 per 

acre. We can see the cost of some alternative 

scenarios by changing variables from the base case 

scenario one at a time. The effect of changing multiple variables is not additive, so the model must 

be run to see the effect on cost of changing two or 

more variables at one time.

One of the most important cost variables is the 

treatment acreage. The model calculates a 0.38-

percent reduction in cost per acre for every 1-percent increase in the treatment acreage. The following tabulation lists variables that cause a treatment 

to cost more than the base case, and shows the 

resulting cost increase (provided each item is the 

only thing that differs from the base case):

The following tabulation lists those variables that 

cause a treatment to cost less than the base case 

and shows the resulting cost decreases (again, provided that each item is the only thing that differs 

from the base case):

6Calkin, D.; Gebert, K. Modeling fuel treatment costs on Forest 

Service lands in the Western US. Manuscript in preparation. 

On file with: dcalkin@fs.fed.us.

Increase in cost per acre above

Variable	 base case cost of $105 per acre

Fuel model 5 108

Fuel model 10 45

Presence of threatened 

and endangered species 50

Located in wildland 

urban interface 37

Decrease in cost per acre below

Variable	 base case cost of $105 per acre

Fuel model 2 64

Fuel model 6 56

Fuel model 11 40

Fuel model 12 59

Burning hand piles 50

Burning machine piles 80

Using aerial ignition 45

Objective is forest health 28

There are no cost estimates available for fuel models 3 and 7 because no data were included in the 

sample for those fuel models.

These results come from data collected on a 

sample of projects on national forests that were 

reported in the National Fire Plan Operations and 

Reporting System (NFPORS) database. The data 

used went beyond what are found in the database 

and were provided by people with direct knowledge of the project. The cost estimates provided 

are the result of applying statistical models to the 

collected data. Substantial variation in cost was 

observed because of the large geographic scope of 

the study and the variability of conditions experienced in prescribed fires. The results are only valid 

for projects that are similar to the ones included in 

the database. Your good judgment is required in 

order to get reasonable cost estimates. If you know 

you are doing a novel treatment not represented in 
15

the database, do not expect the estimated cost to 

be reliable. 

Mechanical Fuel Treatments

Mechanical treatments to reduce fuel loading 

are usually more expensive than prescribed fire 

treatments. This discussion shows how the costs 

of various mechanical fuel treatments can vary, 

by using a model developed by Calkin and Gebert 

(see footnote 6). As with prescribed fire, the effects 

of changing a treatment are compared to a base 

case that represents conditions commonly found 

in the database. Here, the base case consists of 

hand piling, machine piling, lopping and scattering, or thinning without utilization. It covers 

a treatment area of 100 acres with a fuel load of 

20 tons per acre at an elevation of 4,000 feet, in a 

fire regime I, II, or V, (Hardy and Bunnell 2005) 

located in Forest Service Regions 1, 2, 5 (Pacific 

Southwest), or 6, and with any treatment objective 

except wildland urban interface protection. The 

estimated cost of the base case is $150 per acre. 

We can see the cost of some alternative scenarios 

by changing variables from the base case scenario 

one at a time. The effect of changing multiple 

variables is not additive, so the model must be 

run to see the effect of changing two or more 

variables at one time. One of the most important 

cost variables is the treatment acreage. The model 

calculates a 0.33-percent reduction in cost per acre 

for a 1-percent increase in the treatment acreage. 

If all other things are equal, an additional ton of 

fuel increases the cost per acre by 1 percent and 

an increase in elevation of 1,000 feet reduces the 

cost per acre by 13 percent. Other variables affect 

costs differently. The following tabulation lists the 

variables that cause a treatment to cost more than 

the base case and shows the resulting cost increase 

(provided each item is the only thing that differs 

from the base case):

Variable	 Increase in cost per acre above

base case cost of $150 per acre

Project located in 

wildland urban interface (WUI) 112

Located in WUI with

WUI protection objective 228

The following tabulation lists the variables that 

cause a treatment to cost less than the base case, 

and the resulting cost decrease (again provided 

that each item is the only thing that differs from 

the base case):

Variable	 Decrease in cost per acre below

base case cost of $150 per acre

Fire regime III 67

Fire regime IV 91

These results are from the NFPORS database, and 

the same caveats discussed about the prescribed 

fire model apply here. Note that in this analysis, 

the costs of the four mechanical treatment types 

(hand piling, machine piling, lopping and scattering, or thinning without utilization) were not 

statistically different. That does not mean that you 

might not experience large differences in cost between types of treatments for similar conditions on 

your area. Lack of statistical significance is a result 

of the combination of the sample size, the variability of the data owing to the large geographic scope 

of the project, and the variables that were available 

to relate to cost. It only means that with this data 

and model we are unable to predict with confidence what the difference in cost between types of 

treatments will be. Again, your professional judgment must be used to get reasonable cost estimates 

for conditions specific to your site and objectives. 
16

Although mastication is a mechanical fuel treat-

ment, data were not available to include it in the 

mechanical fuel treatment cost module described 

above. In the MyFTP software, mastication costs 

are simulated with an engineering cost model that 

is similar to the harvesting cost model. As with 

the other mechanical treatments, amount of fuel 

is an important variable affecting cost per acre. 

Another important cost variable with mastication 

is the type of mastication equipment required. 

Mastication in conditions that require an excava-

tor-mounted masticator (larger material, steeper 

slopes, and broken terrain) will cost considerably more than mastication in conditions where a 

wheeled machine can be used. 

Net Cost or Return and 

Treatment Outcome

Tradeoffs Between Treatment Method,

Cost, and Outcomes

As fire hazard reduction projects are developed, it 

is necessary to keep in mind the multiple objec-

tives of land management. The scenarios discussed 

here illustrate a process for gaining understanding 

of the relative costs involved in implementing sce-

narios designed to meet management objectives. 

In this section, we use MyFTP to look at several 

typical modifications to hazardous fuel treatments 

that are often proposed to reduce costs, increase 

revenues, or address resource concerns not di-

rectly associated with fire hazard reduction.

The three panels of figure 13 illustrate the use of 

MyFTP to compare different ways to remove small 

trees (3 to 5 inches d.b.h.) from a stand. Panel A 

shows the costs, revenues, and outcomes associ-

ated with chipping the 3- to 5-inch trees. Panel 

B shows the results for piling and burning these 

trees, and panel C shows the results for masticat-

ing them. In all cases, trees greater than 5 inches 

are made into logs.

In the first two cases (fig. 13a and b), the small 

trees are removed from the stand, and this is 

reflected in the lower amount of surface fuel 

remaining at the end of the treatment as compared 

to the third case (fig. 13c). In situations like this, 

planning teams must use judgment to decide 

whether it is better to select the cheapest treatment 

(pile and burn) or whether some potentially nega-

tive aspect of this treatment, such as smoke or the 

risk of escaped fire, would justify one of the higher 

cost options. For example, in much of the interior 

West, soils are relatively low in organic matter, 

and mastication could provide a viable alternative 

that improves soil by leaving more nutrients on 

the site (Ferguson 2005). If nutrients are not an 

issue but smoke or escaped fire risk are, or if there 

is potential for soil damage from soil heating if the 

masticated fuels are burned, then chipping and re-

moving the small trees may provide the best alternative. In any event, this type of analysis provides 

a planning team with some objective measures to 

use when considering the outcomes of a treatment 

along with its cost. 

When Other Things Are Not Equal

As we stated at the beginning of the paper, 

financial analysis is well suited to determine the 

least-cost way to accomplish objectives where 

the costs and benefits that cannot be reduced 

to dollar terms are comparable or unimport-

ant. Unfortunately, the conditions resulting from 

different treatments are often not comparable. 

Financial analysis can be used along with subjec-

tive judgments about the importance of benefits 

that cannot be reduced to dollar estimates to reach 
17

Figure 13—Output from My Fuel Treatment Planner software illustrating the financial and fuel results for three treatment 

options: (a) chipping the small trees at the landing, (b) piling and burning the small trees, and (c) masticating the small 

trees. 

a

b

c
18

decisions about such tradeoffs. Making those comparisons is not easy. 

 The choice of prescribed fire or mechanical treatment can have a large effect on at least the initial 

treatment cost. Prescribed fire generally costs less 

per acre, especially when large areas can be treated 

as a unit. Average costs may be deceiving, however, because the acres that have been burned and 

the acres that have been mechanically treated usually had very different vegetation. Furthermore, in 

most cases, both prescribed fire and mechanical 

treatment will require a series of followup treatments in the decades ahead. 

Mechanical treatment is often used in places where 

the amount of fuel or other conditions make it 

risky to use prescribed fire. In those cases where 

either method might be safely employed, other 

resource management objectives will often dictate 

which treatment method is more appropriate. 

Choosing the more expensive option will have 

implications for meeting broader management 

objectives for fire hazard reduction programs. A 

logical next step in this analysis would be to look 

at the relative posttreatment fire hazard associated 

with each scenario. This analysis would make it 

possible to compare the ease of following the thinning with a prescribed fire to reduce the surface 

fuels generated by the thinning. Combining such 

an analysis with information on the treatment 

effects on other resources such as understory 

plants (Sutherland and Miller 2005), wildlife 

habitat (Pilliod 2005), effects of erosion (Elliot and 

Robichaud 2005), or spread of Armillaria root 

disease (McDonald and others 2005), would provide a fairly complete picture of what each scenario 

would cost and how it will influence many of the 

things people care about in forested landscapes.

Economic Impacts of Fire 

Hazard Reduction Treatments

Fire hazard reduction treatments and other activities carried out on national forests expand, at least 

temporarily, the economic activity in the area 

surrounding the treatment area as contractors buy 

supplies and equipment and pay wages for workers 

needed to conduct the activity. When estimates of 

these economic impacts are needed, the information developed in a financial analysis is the starting point. The most commonly used source of economic impact information for USDA Forest Service 

projects is the IMPLAN model (Alward and others 

2003). A customized version of the IMPLAN model 

has been incorporated in MyFTP so that economic 

impacts are estimated for each scenario with very 

little additional work. Contract costs, agency costs, 

and forest products that are produced are used to 

estimate the employment and income that will be 

generated in the economic area in question. 

Conclusion

Although financial analysis is limited in its ability 

to deal with tradeoffs between costs and benefits 

of large fuel treatment programs over the long 

term, it is the appropriate tool to address many 

issues once a decision to implement a program of 

fuel treatment has been made. Financial analysis 

can be used to explore the cost of doing treatments 

under different conditions and different treatment designs. This information is useful in budget 

development and in the allocation of funds once 

given a budget. Financial analysis can help determine whether the most appropriate arrangement 

to accomplish projects in different circumstances 

is a standard contract (all cost and no revenue), a 

timber sale (substantial net revenue), or a stewardship contract (a combination of units, some 
19

with positive and some with negative net rev-

enue). Where environmental documents require 

an estimate of the economic impacts of a project, 

financial analysis provides the information needed 

to make that estimate. This paper uses the MyFTP 

software to illustrate the results of financial analy-

sis of fuel treatments and to highlight the factors 

that have a big effect on fuel treatment costs. 

Metric Equivalents

When you know: Multiply by: To find:

Inches (in) 2.54 Centimeters

Acres (ac) .405 Hectares

Feet (ft) .3048 Meters

Cubic feet (ft

3

) .0283 Cubic meters

Tons per acre 2.24 Tonnes per

hectare

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