May 19, 2022

How wood products could reduce the cost of forest management

In the spring of 2021, PPIC hosted seven focus groups to explore how to pay for upstream forest management. This work was carried out by the PPIC in collaboration with Van Butsic, Heidi Huber Stearns, Erin Kellyand Ryan Tompkins. This is the second article in a series of four.

In August 2020, the State of California and the U.S. Forest Service (USFS) agreed to dramatically increase the number of forested acres they treat each year with mechanical thinnings and prescribed burns. The agreement aims to reduce wildfire risk and improve forest health, and it came as California faced a record year for wildfires, exacerbated by drought and a dangerous buildup of fuel in state forests. The new goal represents a doubling of USFS efforts and a five-fold increase in state-funded management work by 2025.

One of the barriers to achieving this goal is cost. The net cost of mechanical thinning in the Sierra Nevada – the removal of small diameter trees that increase the risk of wildfire – varies widely, between $500 and $1,900 per acre. The role of wood products as a potential source of income came up repeatedly in our group discussions.

Wood products could diversify the funding portfolio for mechanical thinning, stretch state dollars and get more acres processed. Boosting wood products industries could also boost the economy rural communities in distress generating income for local businesses and creating additional opportunities for workforce training, employment and income across the forestry sector.

Processing costs depend in part on the ability to add value to wood products. Our previous estimates suggest that thinning could even generate a net income if loggers are allowed to harvest more high-value medium-sized trees.

As policymakers assess the next steps in this area, it is important to consider these takeaways and some key recommendations:

  • Find ways to conduct ecological restoration that generates revenue. Policy makers focused on stimulate new markets for small diameter trees– which is promising but several years away from being viable. In the meantime, ecological thinning efforts could adapt the concepts of timber harvesting, which uses similar equipment and techniques, to achieve ecological goals. Some forms of timber harvesting replicate the mosaic of variation in tree size, age and species that enhances the resilience of forests. Cal Fire should allocate a portion of public forest health funding to test this concept.
  • Invest in training and infrastructure for the wood products workforce. Many rural communities currently lack the infrastructure (sawmills, biomass energy facilities) and labor to support a growing wood products sector. The state is beginning to tackle this problem, carve out $25 million in advance spending the General Workforce Development Fund and loans to companies that use the wood harvested as part of development work. Public agencies should make a concerted effort to ensure that these investments result in measurable economic benefits. A multi-year commitment of funding to stimulate the forest economy, rather than one-time expenditures from the General Fund, would help achieve the desired results.
  • Cushion against volatility in wood products markets. Expanding the role of wood products use and markets in forest health has benefits, but it also carries risks. As the state explores more opportunities in the wood products market, the Office of Planning and Research should work with representatives of the wood industry to develop options for protection against volatile market dynamics. For example, direct subsidies to landowners for mechanical thinning could allow materials to continue to flow to end-use facilities even when national or global timber prices fluctuate.

Proactive upstream forest management aims to develop healthy, resilient forests that reduce wildfire intensity and air pollution, and support wildlife and drinking water. Although the state has dramatically increased funding for this purpose, public funds will only go so far and they will not last forever. The use of forest products must be part of sustainable forest management. Using wood products from mechanical thinning is a promising way to pay for the work that needs to be done. The approach will be more effective when stakeholders find common ground on environmental issues; the state can help by providing initial investments to catalyze new markets. When these pieces line up, the result will help rural communities rebuild around a green economy.