For decades, the debate has raged over how best to manage private forestland to promote forest health while taking full economic advantage of our natural resources. The Environmental Protection Agency (EPA), in an effort to appear to be fostering voluntary compliance, has increasingly supported Forest Certification programs. Now, I’m going to be honest with you – before I began researching this concept, I had no idea what the significance was or how it could affect the economy and consumers of wood products. These programs define standards and practices to which private landowners should adhere to demonstrate that they are taking proper care of the land while engaging in forest harvestation. Several voluntary certification programs currently exist, each with their own metrics for success. However, what I found is that adherence to these programs may not, in fact, be fully voluntary and may be frought with severe economic impacts, conflicting interests and the potential for abuse. A new academic study shows just how significant an impact would be felt if the most severe of the programs were to be universally adopted.
According to the EPA website,
Forest management certification is evolving rapidly in the United States. Forest management certification arose as a non-regulatory alternative for fostering the improved stewardship of working forestlands. While there are many regulations governing forest management—particularly in the United States—certification provides a private incentive to encourage landowner commitment to sustainable forest management. It also offers a stamp of approval for forest management practices that meet standards considered to be environmentally appropriate, socially beneficial, and economically viable.
The three major forest certification programs in the United States are the Sustainable Forestry Initiative, the American Tree Farm System and the Forest Stewardship Council (FSC). Each has varying rules regarding how best to manage the land for its health and continued harvestability. An academic paper has just been released that examines the FSC in particular, in light of a push in the environmentalist community to adopt the FSC standards exclusively across domestic production on private land, creating an effective monopoly in the certification business. The paper concludes that severe economic impacts would be felt if their standards were universally adopted. According to a press release announcing the findings,
While some activist environmental groups push for a monopoly, a new study released today found that a Forest Stewardship Council (FSC) monopoly on forest certification in the U.S. could destroy tens of thousands of American jobs and hurt forest economies in the South and the Pacific Northwest. The study also found that a FSC monopoly would significantly reduce wood flows in the U.S., resulting in substantial economic losses for landowners and job loss for direct employees such as foresters, loggers, and millworkers. The new research represents the most comprehensive economic analysis done on forest certification standards, and was prepared for EconoSTATS at George Mason University by Brooks Mendell, PhD, and Amanda Hamsley Lang at Forisk Consulting.
A contributor to the report, Wayne Winegarden, PhD, said, “American businesses and consumers rely on forest certification standards to ensure that their wood products come from sustainably managed forests. This study shows that healthy competition among credible certification programs guarantee sustainable wood products and avoid higher costs and job loss in the forest industry.”
The concern about the FSC certification program is that it is too restrictive and too burdensome on timber harvesters. Studies have shown that a universal application of these excessive standards in the US could lead to annual losses in the industry of up to $34 billion and could increase consumer prices for wood and paper products by as much as 20%. As the new report shows, the FSC program imposes significantly higher burdens by requiring wider streamside buffers (where harvesting would not occur), smaller clear cut areas, larger permanent set-aside areas, and longer green-up intervals before adjacent lots can be harvested. All of these standards are more restrictive than the other two prominent certification programs.
The report by EconoSTATS took a close look at two states heavily dependent on the timber industry, Oregon and Arkansas. What they found was a pretty bleak outlook:
In Oregon alone, the state level implementation of a sole FSC standard could:
Reduce forest industry employment by over 31,000
Reduce annual severance taxes by over $6 million
Reduce economic returns to landowners by at least 31%
In Arkansas, it could:
Reduce forest industry employment by up to 10,000
Reduce annual severance taxes by over $600,000
Reduce economic returns to landowners by at least 26%
And here’s where I really started to understand the conflicting interests of the FSC program. The forward to the paper contains a couple of statements that make me question the whole concept, and the real intentions of the program:
Then there is the problem of FSC’s ambiguity, exemplified by its varying standards across the globe. Policy implementation works best when there is little room for confusion or interpretation. When policies are vague or open to interpretation by either the industry or the regulator/auditor, uncertainty arises. Regulatory uncertainty is the enemy of business growth – whether that business is manufacturing, finance, or forestry. As Mendell and Lang illustrate, the forestry certification programs need improvement with respect to clarity in their practical application, particularly the FSC program.
While not discussed in the paper, the problem of uncertainty is amplified once the scope of the global certification marketplace is considered. FSC implements 38 different standards across the world, many of which are “interim,” or not fully developed. The requirements on businesses and landowners vary greatly across the 38 different standards even though all of these products are FSC certified. This lack of consistency leads to American foresters facing steep benchmarks, while some international landowners in countries like Brazil or Russia are receiving FSC certification more easily.
The U.S. FSC program’s excessive restrictions and higher costs are imposed with the intention of establishing better environmental stewardship. An unintentional consequence arises, however, because suppliers and consumers do not appear willing or able to afford the costs created by the U.S. FSC program. The result is lower U.S. FSC output. Of course, the lost domestic timber output can be fulfilled from other suppliers.
How weird is that? Foreign producers are not held to the same standards by the same organization, so a competitive imbalance is created that favors overseas producers. Whether this is intended as a punishment for US producers or some sort of redistribution scheme is unclear. What is clear is that this is an unfair application of rulemaking. I’ve been told anecdotally by those in the timber industry that FSC really games the system. Most forest landowners who look at certification recognize the shackles that FSC brings, so FSC is willing to “bend the rules,” granting waivers to gain more certifications. Regardless of which certification is sought, all certification is, in the end, a marketing scheme, trying to convince environmentalists and urban sympathizers that forest land owners are taking care of their land.
Never mind the potential for abuse – it’s not so hard to imagine, in this IRS/NSA world of preferential treatment, that even if we still have several different groups providing certification, the various governmental agencies and bureaus would only reward contracts or purchase orders from the group that fits their political agenda.
But all of these negative effects are possible, even likely, when a certification monopoly is created.