- Report on Forest Health of the United States by the Forest Health Science Panel
- Director's Message
- Forestry in Transition: Outlook for Production and Trade in Eastern Russia to 2000
- 1997 CINTRAFOR Graduates
- FORESEA Symposium and Call for Papers Announcement
- 1996-97 Export Statistics

The Forest Health Science Panel, comprised of forest science professors from across the US, finalized the Report on Forest Health of the United States.  The report is written in non-technical language and is intended to present in an unbiased manner, the impacts of various forest management approaches.  By reviewing scholarly literature pertaining to forest management, the Forest Health Science Panel identified a list of important values in terms of contributions to human life and the environment.   The Panel used this list to evaluate various forest land management approaches (Table 1).

There were approximately 9.9 million forest land owners in the US in 1994.   Twenty percent of these land tracts are less than 50 acres each.  This varied ownership and inconsistent management has had mixed impacts on overall forest condition and timber volume (Figure 1).  Zero-use areas are often adjacent to commercial stands, pest-infested stands can infect healthy tracts, and over- or under-harvested areas impact regional animal populations.  The global harvest and trade of forest products also responds to increases and decreases in international harvest.  US laws and policies protect forest land and related environmental values more so than laws and policies in other countries.  Therefore, harvest reductions in the US can lead to accelerated harvesting in foreign countries and corresponding negative impacts on the global forest environment.

Table 1. Frequently Expressed Forest Values
 

Values Expressed as  Conditions & Functions of the Forest

Values Expressed as Contributions to Quality of Life

Sustain Growth of Forests:   Minimize levels of exotic insect & disease pests Minimize catastrophic levels of native mammals Minimize catastrophic levels of native insect & disease pests Minimize catastrophic fire events Minimize losses from catastrophic winds or other "natural" events Sustain The Global Environment:   Avoid atmospheric C02 & other pollutant buildup Conserve native forests in other countries Ensure Plant & Animal Diversity:   Conserve & restore native forest types & species Provide habitats for native species within forest types Ensure survival & recovery of threatened & endangered species Protect native species from invasive exotic species Maintain genetic diversity & architecture Ensure Productivity of Future Forests:    Maintain site quality Sustain watersheds Maintain forest land base

Timber Products:   Timber volume Timber quality Selected species Non-Timber Wildlife Products   Reserve Areas   Recreation:   Remote Accessible Rural Lifestyles:   Commodity-dependent Non-Commodity-dependent Earnings, Employment, & Value-Added   Water Volumes & Usefulness   Game & Non-Game Fish & Wildlife   Viability of Various Forest Economic Segments:   Small, private, non-industrial landowners Private, industrial landowners High-volume timber products manufacturers Products manufacturers utilizing high-quality timber Recreation industry Low Public Costs of Managing Forest Lands   Scenic, Existence & Historical Values   Spiritual & Cultural Values

 
The Panel identified three general management approaches: timber management to achieve the greatest financial return, management to integrate commodity and non-commodity interests, and management with no commodity extraction.  It then developed eight policy options for forest management, and the consequences of each option.  These options are mixtures of the three approaches and consider both public and private forests in all regions of the US because of the interrelated nature of forest land.  The authors then present a description of the impacts of these options for the US as a whole and for each region.
 
Liquidation, or rapid harvest of forests was employed in the 18th and 19th centuries in the US and is still used in some countries.  With the exception of converting land for agricultural or urban uses, liquidation is not practiced in the US.

Historically, timber management for financial performance was used as the criteria to manage timber.  Initially this approach meant harvesting old forests quickly to minimize the amount of timber lost to decay.  Cleared forest land was replaced with young, rapidly growing trees.  More recently, private owners apply even-aged management on their most productive sites by logging and rotating stands of timber between open and dense structures.  Weeding and thinning is only applied to some productive sites.  The result has been relatively small diameter, low quality timber, which is suitable for high volume processing facilities but of little use where high quality timber is needed.  It also creates only moderate employment levels since thinning and pruning are minimal and only a moderate amount of manufacturing labor is used.

Integrated management is aimed at combining commodity and non-commodity values.  Managers harvest some stands and maintain and enhance others as long as they remain valuable.  This approach requires more intensive management and more knowledge, skill, and technology than timber management for financial efficiency.  Integrated management would more likely produce higher quality timber as a result of pruning, thinning, and longer rotations.  Management costs would be higher due to more intensive, integrated management.  Analyses suggest the total return to the government may be high enough in some cases to compensate the landowner for the extra management needed to provide the additional values.  The government would benefit from lower unemployment; greater economic activity and a higher tax base with increased employment; more wood flow in thinnings; and the value of non-commodity benefits (e.g., recreation).

Initially, proponents of reserves with no commodity extraction sought to maintain areas free from human activities.  This concept began at a time when scientists and conservationists believed that without human intervention, forests would remain in a steady-state condition.  Mainstream ecological science argues that forests have always been impacted by natural and human disturbances.  A “hands-off” approach cannot be assumed to be an unchanging condition.  The forest will continuously change through natural disturbances, growth, and pests.   Eventually, buildup of fuels and epidemic levels of native and exotic pests inside these reserves may cause them to act as centers for fires and epidemic levels of pests to spread to other forests.

Finding a balance between providing values for the present generation and leaving options for future generations to achieve their values has been called “sustainable development”.  There are several components of “sustainability”.  Degrading soil productivity can limit the rate of forest tree growth for hundreds of years and reduce future options.  Elimination of standing forests (through harvest, fire, or pests) can limit future availability of wood and habitat for many decades if proper regeneration and management practices are not implemented. Sound management considers the impacts of human and non-human activities in land planning.  This report shows how various management and policy alternatives impact forest functions and quality of life values, and will contribute to this type of knowledge and planning.

The report can also be found on the web page of the House Resources Committee (downloadable with adobe acrobat) at: http://www.house.gov/resources/105cong/fullcomm/apr09.97/taylor.rpt/taylor.htm

There is no doubt that timber harvest restrictions have greatly reduced U.S. wood product exports. Only the secondary wood product export market has continued to grow despite raw material supply constraints. While growth in secondary manufacturing exports (see statistics p. 6), is encouraging, this market originates from a relatively small base. Secondary product exports have grown from $110 million in 1989 to $392 million in 1996. In contrast, 1996 primary product exports are down $385 million from 1989 exports of $3.2 billion. This newsletter highlights several studies relating to the environmental pressures on supply and an updated study on the impact of export barriers.

The basics of managing the forest environment to restore multi-species habitat is characterized in two reports. Washington Forest Landscape Management Project - A Pragmatic, Ecological Approach to Small Landscape Management covers the biology of landscape management. It was published by the Department of Natural Resources (DNR) and is available as a reprint (RE40). A companion report published earlier by CINTRAFOR provides a thorough economic analysis of the management alternatives considered and is available as SP21. Another report prepared at the request of the University of Washington and Washington State University applied some of these management approaches to develop alternatives to the DNR Habitat Conservation Plan for trust managed state lands. The report shows both large economics and habitat gains from the management alternatives presented in the report. This report is available as a reprint (RE42) titled Demonstration of Trust Impacts from Management Alternatives to Achieve Habitat Conservation Goals on Washington Department of Natural Resource Managed Lands. These four reports provide a scientific basis for management practices west of the Cascades that could better restore declining habitat, while bolstering rural economies and the region’s international competitiveness. Unfortunately, current forest regulations and other agency decisions have overly constrained supply, and made landowners wary of land management approaches that would produce better habitat at a lower cost.

An even more recent report summarizes similar land management issues for the entire United States. A science panel was commission by Congressman Taylor from North Carolina, the only forester in Congress, to analyze the Forest Health for all regions of the U.S. CINTRAFOR volunteered to reprint the report for distribution. The report is titled Report on Forest Health of the United States by the Forest Health Science Panel and is available as a reprint (RE43).

Small mills have been most visibly impacted by timber harvest restrictions on federal lands. In response, Congress has enacted a log export ban as one method to divert more timber to mills. An earlier CINTRAFOR study that examined the impact of an export ban or tax was recently expanded to more clearly demonstrate the tradeoff in jobs between sectors as well as income. This new report was published in Contemporary Economic Policy, entitled Trade Barriers in the Pacific Forest Sector: Who Gains and Who Loses, and is available as a reprint (RE41). Since the impact of barriers varies with the degree of market tightness we plan to provide an updated analysis of export price premiums in the next issue, as they are much higher today than they were when these studies were initiated.

While global timber prices adjust to Pacific Northwest supply limitations, the region’s share of the softwood market is giving way to other suppliers. More recently Russia, another major softwood competitor, is struggling to adopt market reforms and maintain capital investment. A summary of the Russian situation and an update to several earlier reports is now available as Forestry in Transition: Outlook for Production and Trade in Eastern Russia to 2000 (WP62).

We are in the process of a comprehensive review of changing export trends and plan to have a report compiling tables and graphs for all products available for participants at a Conference scheduled for October 16, which is designed to provide updated information on the rapidly changing Japanese market for housing related exports. No market has experienced such dramatic changes so quickly and you will not want to miss this update to last year’s very successful International Conference on Japanese Housing.
 

Forestry in Transition: Outlook for
Production and Trade in Eastern Russia to 2000
by Charles Backman and Dr. Thomas Waggener

Russia’s abundant untapped natural resources and the increasing worldwide demand for forest products make it obvious that Eastern Russia’s forests will play an increasing role in the Pacific Rim wood products market. Policies to assist Russia during its transition to a market economy have drastically altered production, consumption and trade. At the same time, Russia’s international role in forestry is increasingly determined by regional and local conditions, with substantial differences between European (Western) Russia and the forests of Eastern Russia, including East Siberia and the Russian Far East (RFE). The Eastern Region of Russia, including the RFE and East Siberia is largely characterized by extensive undeveloped forest resources, a relatively low population, a lack of infrastructure and transportation, and low levels of industrialization (capital investment and capacity) for the forestry sector.

Recent Industry Performance

Declines in Russia’s forest sector performance, first evident in 1990, continued largely unabated in 1995. The disruptions have affected both production and export trade. The sector has been plagued by high interest rates, lack of credit, shortage of capital for investment to replace obsolete equipment, lack of marketing knowledge (especially export markets), tax and license issues, and steeply rising rail and transportation costs.

Eastern Russia’s forest sector has not escaped the difficulties of the sector at the national level. Declining harvest and production trends and spiraling costs significantly impact the near-term outlook for Eastern Russia’s participation in the Pacific Rim timber market. The RFE produced approximately 8 percent of Russia’s timber industry output prior to the wave of economic and political change. RFE roundwood harvest was estimated at 42 million cubic meters in 1989, but declined to 13.5 million cubic meters in 1994. Harvest from East Siberia has also fallen sharply, from an estimated 73.4 million cubic meters in 1988 to only 24.7 million cubic meters in 1994.

Declining harvests have lead to significant cutbacks in domestic production of forest products throughout Russia as demand has shrunk. Export shipments have also declined, but by proportionately smaller increments as producers have sought to shift from disappearing domestic markets to hard currency foreign markets.

Forest Resources - Area and Volume

The Russian Republic includes approximately 771 million hectares of forest (82 billion cubic meters), spread widely across the national landscape. Only 446 million ha. (55 billion cubic meters) is considered accessible, indicating current developed access or a likely potential for developing access within the next twenty years. Approximately 110 million ha. (47 percent) of the Eastern Siberia’s forest is inaccessible, and 169 million ha., or 17 billion cubic meters (57 percent) in the RFE is considered inaccessible.

East Siberia and the RFE dominate most conifer species within Russia. Proportionately, these two regions account for the largest share of larch forests (271.6 million ha; 97.7 percent) and true fir (11.2 million ha; 71.3 percent). Pine, spruce, and cedar-pine forests are also nationally significant.

Development Outlook for Eastern Russia’s Trade

A key strategy of Russian economic reform has been to privatize much of the state owned productive capacity, with unprofitable state enterprises as the primary target. Privatization has placed the responsibility for profits and losses squarely on local managers. Privatization however, has not extended to forest land ownership. Overall use and regulation of forests now falls under the Russian Federation "Fundamentals of Forestry Act" enacted in March 1993. Assignment of rights to utilize forests rests with the Russian Federation "Forest Authority" and "its subordinate units." In practice, control of forest use (as allocated by the State) has been asserted at the Republic, Territorial, or District levels, resulting in considerable conflict and uncertainty as to actual legal authority and reliability of contracts.

The bulk of direct harvest from forestry operations ("principal harvest") is directly linked to the calculated "Annual Allowable Cut" (AAC) which is determined for both currently and "potentially" accessible forest lands as well as the total forest area including inaccessible and reserved forests. The total physical AAC for the RFE is reported at 188 million cubic meters, while the East Siberia AAC is 279 million cubic meters.

For the RFE, the total "currently and potentially accessible" AAC is 105 million cubic meters, with 87 million cubic meters of conifer and 18 million cubic meters of deciduous timber. Of this total, about 57 million cubic meters are derived from currently accessible forests while 48 million cubic meters could only be made available by developing "potentially" accessible forests.

East Siberia has an estimated "currently and potentially accessible" AAC of 179 million cubic meters, including 129 million cubic meters of conifer and 51 million cubic meters of deciduous timber. Approximately 109 million cubic meters of the AAC is from currently accessible forests, while 70 million cubic meters would be from "potentially " accessible forests.

Even the term "currently and potentially accessible" AAC can be misleading, particularly in the present economic and political climate of the Russian Republic. A part of the AAC is estimated here to be economically "not realistically" accessible under either the prevailing 1992 economic conditions nor is it expected to become economically "realistic" before the year 2000.

Projected Domestic Consumption and Trade

Trade in forest products from European Russia is primarily comprised of softwood lumber, plywood, and pulp and paper products. In contrast, trade from Eastern Russia is primarily unprocessed roundwood and smaller volumes of lumber and other processed material.

Total Russian annual wood supply was estimated at 227 million cubic meters for 1990-1995 with total domestic consumption of wood materials (which compete with exports) at an annual average of 207 million cubic meters. Wood exports were projected at an estimated 20 million cubic meters annually. Regional consumption projections for Eastern Russia were not estimated separately. Approximately 49 million cubic meters of the estimated Eastern Russia commercial wood supply (57 million cubic meters) would be delivered to domestic mills in Eastern Russia for further processing into manufactured products, while approximately 8 million cubic meters would be exported (6 million cubic meters) or shipped to other parts of Russia for processing (2 million cubic meters).

Trade in industrial logs have been almost entirely to Pacific Rim markets, primarily Japan and China. Lower grade logs (including pulpwood) are also important to Russia’s Pacific region trade. Trade from RFE is primarily conifer logs. Almost all of Russia’s exports destined for the Pacific Rim originate in the RFE, and to a much lesser extent, East Siberia. In 1994, total Russian industrial log exports were 14.85 million cubic meters, down from 18.7 million in 1989. Trade in conifer logs with Japan rebounded slightly in 1993, then reached 5 million cubic meters in 1995. South Korea has emerged recently as an importer of RFE timber in the form of unprocessed conifer logs. China has also been an important market, for both the RFE and East Siberian regions. Russia’s total softwood lumber exports dropped to almost 5.4 million cubic meters (1994), down from 7.7 million in 1989. In contrast with logs, Russia’s trade with Japan in softwood lumber has been small. Volume was below 200,000 cubic meters from 1983 through 1987, then reached 424,000 cubic meters in 1995. Imports of unprocessed logs into the Pacific Northwest have been prohibited due to regulations based on potential for pest and disease risks to U.S. forests and the higher cost of treatment which would be required prior to importation.

The forestry sector in Eastern Russia, including East Siberia and the RFE, has substantial potential for future development. Timber resources are relatively abundant but utilization is presently limited by lack of access, high transport costs, shortages of investment capital, political uncertainty, and high comparative costs due to inappropriate and outdated technology. The export of unprocessed timber and primary lumber products will, in the near term, remain the most attractive export even as domestic prices continue to rise towards international levels. Eastern Russia has not yet become competitive for exporting a wider variety of manufactured wood products.

Substantial capital investment will be required to transform the existing industry to standards of technology and product quality required for the industry to become truly competitive in international markets of the Pacific Rim. Prospects for the period ending in 2000 will depend on the success of emerging policies to promote investment, and the re-investment of a larger share of the hard currency earnings by the owners-managers of enterprises within the forest sector.

Wendy Sammarco, a forest producte marketing student who worked on CINTRAFOR funded projects, received her Master of Science this year.  Wendy co-authored the recently published  CINTRAFOR Working Paper 61 entitled Achieving Successful Business-to-Business Relationships Between Forest Products Suppliers and Distributors, and is doing additional CINTRAFOR research on Pacific Northwest hardwood markets and market opportunities.  She is now working as a forester with Merrill and Ring.

FORESEA International Symposium on Global Concerns for Forest Resource Utilization is a forum to discuss forest sector analysis as a means to balance environmental protection and economic development through forest activities. The conference will be held in Miyazaki, Japan. Topics include:

• Forest resource utilization and economic development
• Timber trade and environmental protection
• Timber demand and supply analysis
• Land use versus industrial deforestation
• Human value of forest resources
• Asian forest sector analysis
• Interpretation of modeling; theoretical vs. policy issues
• Comparison and evaluation of forest sector modeling
• Incorporating forest sector models into practical ground

Those interested in giving presentations at the symposium should provide 3 copies of their paper abstract by October 31, 1997 in camera-ready quality. Abstracts should be typed single-spaced containing between 200-300 words on one sheet of 8.5"x11" paper with 1.4" margins. Papers should include the paper title, author(s) names, full postal address, telephone, fax numbers and a contact email address. Notification of paper acceptance or rejection will be sent by December 31, 1997. Please submit abstracts with a pre-registration card to: Secretariat of FORESEA Conference c/o International Communications Specialists, Inc. Kasho Bldg., 2-14-9 Nihombashi, Chuo-ku, Tokyo 103, Japan Fax: 81-3-3273-2445. For more information please contact FORESEA directly, refer to the FORESEA web page, or contact CINTRAFOR at (206) 543-8684, email: Bruce Lippke

Top Ten Secondary Wood Product
Exports from the Pacific Northwest Region

Top Ten Secondary Wood Product Exports
to Japan from the Pacific Northwest Region

Leading Markets for PNW Secondary Wood Products, 1996 (in $ millions)
 

Source: US Department of Commerce

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