By Chad Hanson
"The only trouble with the movement for the preservation of our forests is that it has not gone nearly far enough, and was not begun soon enough."
--Teddy Roosevelt, 1908
METHODOLOGY: This report includes a cash flow analysis which attempts to assess the impact of the national forest timber sale program on the federal budget--using the Forest Service's own figures. The goal is to gauge expenditures associated with the timber sale program (i.e. expenditures which result from the overall timber sale program, including those related to anticipated future sales--not just current year timber sales), tabulate timber sale revenue, and determine the net effect on the budget--i.e., taxpayers. This analysis attempts to include all expenditures which would not exist if there were no timber sales program, such as in national parks. It, therefore, includes some expenditures which are sometimes referred to as "indirect" expenses. Where exact figures were unavailable, and a rational means of approximation could be devised, estimates were used.
However, it must be pointed out that the cash loss estimated in this report is likely to be conservative, since several expenditures associated with logging were not included, either because figures do not exist or because no rational means of estimation has yet been devised.
For instance, logging has now been identified as one of the primary causes of floods and mudslides, and has also been shown to substantially increase risk of forest fires. In FY 1996, $485 million was appropriated for the Forest Service's wildfire fighting program; and $830 million was enacted for FY 1997 [1]. Not only is logging increasing the number and severity of fires, which increases expenditures for fire-fighting, it is also true that one of the reasons for the existence of the forest fire fighting program is to protect timber commodity value for future logging operations.
As for floods, the preliminary damage estimate of the 1996 winter floods was $538 million for Oregon alone [2]. Taxpayers pay for this through disaster relief appropriations. Further, for fiscal year 1996, $60.8 million was appropriated for "emergency supplemental" expenditures to repair roads and facilities damaged by mudslides. Much of this expenditure undoubtedly went to repair logging roads, or to repair damage caused by mudslides which resulted from previous logging operations that destabilized the soil--though no reliable estimate is currently available.
Nor are estimates attempted for the logging-related portion of
maintenance of facilities (total appropriation of $23 million for 1996)
or law enforcement (total appropriation of $59.6 million for 1996, a substantial
but unknown portion of which is used for timber theft
investigations, as well as investigations and arrests of citizens who
protest Forest Service logging practices).
JOBS & ECONOMY: In fiscal year 1996, nearly $800 million
was appropriated from the General Fund of the U.S. Treasury (i.e. from
taxpayers' pockets) for expenditures associated with the timber sale program
on national forests (see Figure 1 below). In addition, the Forest Service
spent another $532 million from its off-budget logging accounts for additional
expenses of
the logging program (see Figure 2 below).
In the same year, the logging program generated only $535 million
in timber sales receipts; and it appears that none of these receipts were
returned to the General Fund of the Treasury (see Figure 4 below).
In years past, Forest Service records have indicated that some timber sales
receipts were deposited in the Treasury (though expenditures have historically
been far larger than these deposits). This was not true of fiscal
year 1996 logging receipts. While, due to the difficulty involved
in tracking timber sales receipts with absolute precision, it is not impossible
that some very small fraction made its way to the General Fund. However,
Forest Service records seem to indicate otherwise. Instead of going
to taxpayers, most of these receipts were funneled back into the
Forest Service's various timber accounts for future logging operations.
The remainder was apparently used for logging-related payments to states.
Since almost $800 million was taken directly from taxpayers' pockets in 1996 for expenditures associated with the national forest logging program, and apparently no funds were returned, the net cash loss to taxpayers in 1996 was, therefore, about $800 million.
Federal funds are currently used to pay the costs of logging road construction, timber sale planning and administration, and replanting and restoration expenses, as well as many other costs.
Contrary to the timber industry's frequent claims that the cause
of below-cost timber sales on public lands is environmental regulations,
all environmental analysis/documentation and appeals/litigation costs total
only $72.8 million [3]--less than 6% of the total expense of the
logging program, according to the combined total in Figure 3 below.
To put the federal timber subsidy in perspective, if we ended all commercial logging on our nation's national forests, and redirected these logging subsidies into timber community transition assistance, we would have over $25,000 for each public lands timber worker for job retraining and/or ecological restoration work [4]—and still have over $200 million left over to reduce the federal deficit in the first year alone! Soon, after new jobs were found and local communities became less dependent upon the boom and bust cycle of timber, several hundred million taxpayer dollars would be saved annually [5].
Further, recreation, hunting and fishing in national forests contribute vastly more income to the nation's economy, and generate far more jobs, than logging on national forests. And the gap is widening. In fact, the Forest Service itself predicts that, by the year 2000, recreation, hunting, and fishing in national forests will contribute 31.4 times more income to the nation's economy, and will create 38.1 times more jobs, than logging on national forests [6].
The timber industry frequently attempts to paint a "jobs vs. environment" picture, charging that environmental protection has caused sawmill closures and job losses. The facts, however, paint a very different picture. A 1997 study by Freudenberg et al recently published in the academic journal Sociological Perspectives (Vol. 41, #1) found that the vast majority of timber job losses and mill closures occurred before logging restrictions to protect the northern spotted owl and other forest species began in the early 1990's. Between 1979 and 1989—a period of extremely high logging levels on Northwest federal forests--timber employment in Oregon and Washington fell by about 20,000 workers. The study found that the culprit was not environmental protections, but automation and the loss of old-growth forests due to logging itself.
What's more, a December of 1995 study by dozens of the Northwest's
most prominent economists, entitled "Economic Well-Being and Environmental
Protection in the Pacific Northwest", found that, between 1988 and 1994,
the number of jobs in the Pacific Northwest increased by 940,000, and earnings
rose by 24%. The report found that many of the new
jobs were being attracted by the prospects of increased environmental
protection and quality in the region. Even the most "timber-dependent"
counties are reporting a net increase in jobs (see New York Times, October
11, 1994).
TIMBER SUPPLY: The total annual U.S. wood consumption is 100.3 billion board feet [7], while the annual timber volume cut from U.S. national forests is currently 3.87 billion board feet [8]--only 3.9% of the nation's total yearly timber consumption.
The total annual U.S. consumption of roundwood for lumber, plywood, and veneer is approximately 50.4 billion board feet [9], while the total annual production of all sawtimber from national forests is approximately 2.29 billion board feet [10]--about 4.5% of the total. In other words, of all the wood materials used annually in the U.S. for housing and commercial construction, roughly only 5% comes from our national forests.
We simply don't need to log public forests for our timber supply—especially when so much is being wasted currently. For example, approximately 48% of all U.S. hardwood lumber production in 1992 was for the manufacture of shipping pallets [11]. Industry sources estimate that 54% of these pallets are used just once, then thrown away, ending up in landfills [12].
PUBLIC OPINION: The Forest Service's own 1994 nationwide poll found that 58% of Americans expressing an opinion on this issue oppose any commodity production on federal public forests [13].
PRIVATE LANDS: As two conservative economists pointed out in a
recent editorial in the Wall Street Journal, "government 'dumping' of cheap
timber makes the market unpredictable for private-sector commodity suppliers,
reducing their incentive to manage land responsibly...It's
time for the Forest Service to abandon its role as a producer of commodities...Commodity
production is best left to the private sector." [14] In other words,
many private landowners are overcutting their lands to compensate for lost
profits as they struggle to compete with the
subsidized public timber that is flooding the market.
LOGGING INCREASES RISK OF FOREST FIRES: The 1996 scientific study of the Sierra Nevada forests, which was commissioned and funded by Congress, found that "more than any other human activity, logging has increased the risk and severity of fires by removing the cooling shade of trees and leaving flammable debris." [15]
HISTORY OF NATIONAL FORESTS: Commercial logging was illegal on
national forests when they were first established in 1891. [16] It
was not until June 4, 1897 that national forests were first opened up to
timber sales--by an appropriations rider. [17]
Fig. 1. Funds appropriated from General Fund of U.S. Treasury for National Forest Logging Program Expenses, FY 1996 (in millions):
Timber Sales Management [18]: 188.6
Forestland Vegetation Mgmt. [19]: 51.8
Land Management Planning, Inventory, and Monitoring [20]: 93.7
Timber Research [21]: 76.9
Landline location [22]: 14.0
Road maintenance [23]: 54.9
"Forest health" management [24]: 25.2
Support for timber sales [25]: 37.0
"Spotted Owl payments" [26]: 135.0
Forest Roads Program [27]: 57.0
General Administration [28]: 56.7
Damage from floods, mudslides, and forest fires caused by logging:
(unknown)
Total: 790.8
Fig. 2. Federal monies spent from Forest Service timber accounts in U.S. Treasury, FY 1996 (in millions) [29]:
K-V "Reforestation" [30]: 66.2
K-V "Timber Stand Improvement" [31]: 24.7
K-V Other [32]: 74.3
Reforestation Trust Fund [33]: 30.4
Salvage Sale Fund [34]: 204.6
Purchaser Elect Logging Roads [35]: 6.2
Payments to States (not including Spotted Owl payment) [36]: 125.4
Total: 531.8
Fig. 3. Total Combined Expenses of the Forest Service Logging Program, FY 1996 (in millions):
Money Appropriated from General Fund of U.S. Treasury: 790.8
Funds spent from Forest Service logging accounts: 531.8
Total Expense: 1,322.6
Fig. 4. Distribution of FY 1996 timber sales receipts (in millions):
Gross USFS timber sales receipts, FY 1996 [37]: 535.0
Less timber sales receipts funneled directly into timber program (K-V
& Salvage Fund) [38]: -348.2
Remaining timber receipts deposited into the National Forest Fund (NFF)
[39]: 186.8
Less distribution from NFF into Purchaser-Elect Logging Roads
account [40]: -5.9
Less distribution from NFF back into Salvage Sale Fund and K-V
Fund [41]: -56.1
Less distribution from NFF into "Timber Sales Pipeline Restoration
Fund" [42]: -2.4
Less payments to states from NFF (25% commission on gross timber receipts
outside of northern spotted owl forests) [43]: -125.4
Total timber sales receipts returned to General Fund of U.S. Treasury
or distributed to accounts not related to logging [44]: -3.0
Endnotes:
[1] U.S. Forest Service, FY 1998 Budget Explanatory Notes for the Committee on Appropriations, p. 128. The $830 million enacted for FY 1997 includes $300 million in emergency contingency funds, of which $202 million is partial repayment of a loan from the K-V fund for emergency firefighting and $98 million is to cover FY 1996 firefighting expenses (see Budget Explanatory Notes, pages 228 and 229). The portion of the (enacted) appropriation that is authorized for FY 1997 fire management activities therefore amounts to $530 million.
[2] "Counties Tallying Damage Estimates from Flood of '96", Eugene Register-Guard, p. 38, 2/17/96; "Clear-cuts, roads increase rivers' flows, study says", Eugene Register-Guard, 3/13/96.
[3] U.S. Forest Service, National Summary: Timber Sale Program Annual Report, Fiscal Year 1995, pp. 52-53 (This figure is an estimate based on fiscal year 1995 figures. Current figures are not yet available, but will not change substantially from 1995 numbers).
[4] U.S. Forest Service, Timber Sale Program Annual Report, Fiscal Year 1995, p. 7 (The Forest Service estimates that 63,623 people are employed as a result of the national forest timber program, including direct, indirect, and "induced" jobs. A general rule sometimes used by Forest Service staff to calculate a very rough estimate of the number of timber workers (i.e. direct jobs) employed nationally as a result of the logging program on national forests is to divide the total jobs figure by a factor of two (i.e. 63, 623 divided by 2 = roughly 32,000).
[5] There are roughly 32,000 timber workers (loggers, mill workers,
log truck drivers, etc.) employed as a result of the national forest timber
program nationwide (see Note 4 above). To provide $25,000 for each
of these workers for retraining or ecological restoration work, it would
cost approximately $800 million.
The Forest Service's D.C. office reports that at least $459 million
will be available in the K-V Fund in fiscal year 1997. At the beginning
of fiscal year 1997, there was $186.5 million in the Salvage Sale Fund
and $22.4 million in the Purchaser-Elect logging road construction account.
Additionally, not including payments to states, $430.3 million of taxpayer
money was appropriated from the General Fund of the U.S. Treasury in fiscal
year 1996 for logging on national forests (see Figure 1 above). Together,
these funds add up to just under $1.1 billion--nearly $300 million more
than the amount necessary to provide each current public lands timber worker
with $25,000 for retraining or restoration work.
[6] U.S. Forest Service, The Forest Service Program for Forest and Rangeland Resources: A Long-Term Strategic Plan, Draft 1995 RPA Program, Oct. 1995, pp. IV-2 & IV-3
[7] U.S. Forest Service Forest Products Lab, Madison, WI, 1994; see note 9 below (This figure is measured in terms of raw wood, not lumber or other finished products).
[8] U.S. Forest Service, Timber Sale Program Annual Report, Fiscal Year 1995, p. 6 (This figure is measured in terms of raw wood, not lumber or other finished products).
[9] "U.S. Timber Production, Trade, Consumption, and Price Statistics: 1965 to 1994", U.S. Forest Service, Forest Products Lab, Madison, WI, 1997 (soon to be published) (This figure is measured in terms of raw wood, not lumber or other finished products).
[10] U.S. Forest Service, "National Summary, Timber Sale Program Annual Report, Fiscal Year 1995" (This figure was derived by adding the regional totals for sawtimber).
[11] Robert Bush et al, "Recycling & the Use of Wood Materials," U.S. Pallet Industry, The Proceedings of the 1994 Forest Products Society, Southeast Section Workshop on Environmental Quality in Wood Processing.
[12] Dwight R. McCurdy & John E. Phelps, "The Pallet Industry in the United States, 1980, 1985, and 1990", Dept. of Forestry, Southern Illinois University at Carbondale, June 1991, p. 3, Table 2
[13] U.S. Forest Service, "Forest Service Values Poll Questions, Results and Analysis", Bruce Hammond, Section 3
[14] John Baden and Pete Geddes, "Resource Politics Miss the Forest for the Trees," Wall Street Journal, 5/22/96
[15] Sierra Nevada Ecosystem Project Final Report to Congress, vol. 1, Assessment Summaries and Management Strategies, 1996
[16] Act of March 3, 1891, c. 561, S. 24, 26 Stat. 1103; see also "Early Administration of the Forest Reserve Act: Interior Department and General Land Office Policies, 1891-1897", by James Muhn, BLM, in the Origins of the National Forests, ed. by Harold K. Steen (Forest History Society 1992) (This historical text discusses the 1891 Act's regulations of 1894 which stated that no one could "cut, remove, or use any of the timber, grass or other natural product" on national forest land; nor could anyone "settle upon, occupy, or use any [national forest] lands for agricultural, proprietary, mining or other business purposes." Livestock grazing on national forests was "strictly prohibited").
[17] 30 Stat. 35
[18] U.S. Forest Service, FY 1998 Budget Explanatory Notes for the Committee on Appropriations, p. 89
[19] Id.
[20] Id. This figure is an estimate {based on Forest Service appropriations for national forest and grassland resource management activities}. In fiscal year 1996, $188.6 million was appropriated for timber sales management; $51.8 million was appropriated for forestland vegetation management; $204.6 million was allocated for "salvage" timber sales; $63.2 million was appropriated and allocated for new logging road construction; and $195.6 million was allocated for replanting/timber sale site preparation (a total of $703.8 million). During the same period, $35.0 million was appropriated for minerals and geology management (mining), $27.0 million for rangeland management (grazing), and $211.2 million for recreation use. Thus, timber management accounted for approximately 72% of these expenditures. Therefore, we can estimate that the timber-related portion of the resource planning and inventory budget (which totals $130.1 million) was approximately .72 x $130.1 million = $93.7 million.
[21] U.S. Forest Service, Forest and Rangeland Research, 4/11/96 (document). This figure is conservative. It includes funds allocated for research directly related to timber management, such as silvicultural applications, quantitative analysis of forest vegetation, multiple-scale forest management relationships, forest operations engineering, renewable resources economics, forest products utilization and processing, forest products safety, and forest inventory and analysis. It does not include research allocations for wildlife habitat and watershed, for instance, since only a portion of these allocations is related to timber management, and exact figures are not maintained by the Forest Service.
[22] U.S. Forest Service, FY 1998 Budget Explanatory Notes for the Committee on Appropriations, p. 108. These funds are used for boundary surveys when conducting timber sales.
[23] Id., p. 53, 114, 180. This figure is an estimate. In FY 1996, $240.4 million was appropriated for timber sales management $204.6 was allocated for salvage sales; and $211.15 million was appropriated for recreation use. These figures combined total $656.15 million, of which timber sales account for 67.8%. Since the overall road maintenance expense was $81.0 million, we can estimate that 67.8%, or $54.9 million, of this expenditure was logging-related.
[24] Id., p. 28. This program involves pesticide application and cutting of trees to minimize loss of timber inventory and maximize growth of commercial timber.
[25] Report of the Forest Service, FY 1995, p. 123. This
figure is an estimate. The Forest Service no longer reports this
expenditure. In FY 1994, $36.2 million was used from other appropriated
programs (i.e. minerals, soil and water, wildlife and fish, etc.) for timber
sales. In that same year, $184.6 million was appropriated for timber
sales management. In FY 1996, $188.6 million was appropriated for
timber sales management. Therefore, we can estimate that $37.0 million
was spent on support for timber sales in FY 1996 (i.e. 36.2/184.6 = x/188.6).
Though the Forest Service claims that, as of 1995, support for timber
sales is now included in timber sales management, data exists which suggests
otherwise. To wit, the average costs for timber sales management
(including salvage) in FY 1995 was $90.90 per thousand board feet (MBF)
of timber offered for sale. These costs were 17% lower than the FY
1994 costs of $108.94 per MBF offered--excluding the $36 million ($10.63
per MBF) of support from other programs in FY 1994.
[26] Id., p. 191. This is a subsidy which goes to counties in western Oregon and Washington and northern California in order to compensate these counties for reduced revenue due to lowered logging levels on federal lands in the region to protect threatened forest species (under federal law, counties receive 25% of timber sales receipts for sales conducted on national forests within county boundaries).
[27] U.S. Forest Service, FY 1998 Budget Explanatory Notes for the Committee on Appropriations, p. 163
[28] Id. p. 53 (This figure is an estimate. The General
Administration appropriation covers the National Forest System, Forest
Research, State and Private Forestry, Wildland Fire Management, Construction
and Reconstruction, and Land Acquisition. The total amount appropriated
for all these programs in FY 1996 was $2.347 billion. The logging-related
portion amounted to $505.6 million, or 21.5%. Therefore, we can estimate
the amount spent on logging by multiplying the total General Administration
appropriation ($263.7 million) by 21.5%).
[29] The Forest Service distributes most of the timber sales
receipts it receives into its timber accounts for future logging-related
activities, rather than return these funds to the General Fund of the U.S.
Treasury.
[30] U.S. Forest Service, FY 1998 Budget Explanatory Notes for the Committee on Appropriations, p. 196
[31] Id.
[32] Id. (These funds are used to mitigate damage done by logging in timber sale unit areas).
[33] Id., p. 199
[34] Id., p. 180
[35] Id.
[36] U.S. Forest Service, FY 1998 Budget Explanatory Notes for the Committee on Appropriations, p. 191 (The Forest Service pays a portion of gross timber sales receipts to the states in which the logging occurred).
[37] U.S. Forest Service, Fiscal Year 1996 Statement of Receipts,
ASR-04, 12/3/96 (Timber sales receipts are distributed into three accounts:
the K-V Fund; the Salvage Sale Fund; and the National Forest Fund.
The figure for gross timber sales receipts was derived by adding together
the monies distributed into these three accounts in fiscal year 1996.
This is the standard methodology--used by the Forest Service and General
Accounting Office--for calculating gross timber sales receipts.)
[38] U.S. Forest Service, Fiscal Year 1996 Statement of Receipts,
ASR-04, 12/3/96 (The Forest Service funnels most of the gross timber sales
receipts directly back into its timber accounts, such as the Salvage Sale
Fund and K-V Fund, rather than sending it to the General Fund of the U.S.
Treasury).
[39] Id.
[40] U.S. Forest Service, FY 1998 Budget Explanatory Notes for the Committee on Appropriations, p. 180
[41] U.S. Forest Service, Summary of Adjustments Made by Regions As a Result of WO Letter dated August 27, 1996, Enclosure Number 1, 2/12/97; U.S. Forest Service, memo from Arnold Sartori dated 1/29/97, 12:26 PM
[42] U.S. Forest Service, Analysis of Estimated Timber Sales Pipeline Funds Becoming Available from Section 318 Sales (Second Draft as of February 5, 1997)
[43] U.S. Forest Service, FY 1998 Budget Explanatory Notes for the Committee on Appropriations, p. 191
[44] Note: though this figure is negative, the Forest Service
will return some money to the General Fund of the U.S. Treasury.
However, these funds will come from non-logging sources of revenue—primarily
receipts generated from recreation on national forests.