Key Points

ANALYSIS OF THE MANAGEMENT SITUATION – 29

·   Lower timber harvests on BLM lands have reduced BLM’s contribution to community economic conditions in the form of:

• less than expected lumber/wood-related jobs

• less than expected personal earnings

Conservation Leaders Network's Response

BLM is erring in focusing on timber harvest.  The number of pages devoted to timber in this chapter, the short shrift given to other benefits from O&C lands and the lack of any information on the social and economic harm caused by timber harvests bears this out.  BLM would do more for community stability/resiliency by helping communities diversify their economies than by feeding the boom and bust cycle of a mature timber industry that has exhausted most of the raw materials it needs to exist.

“Federal and state forest managers emphasize the production of logs, forage, minerals, and other commodities without fully accounting for adverse impacts on services, such as recreation, provision of clean water in streams, sequestration of carbon, and the existence of roadless lands.  These actions reduce the overall value of good and services derived from public forests…

The economy is harmed when activities are allowed to proceed even though their economic costs outweigh their benefits.

The cost—to individual workers, families, firms, communities, and the economy as a whole—of the changing relationship between the economy and the environment are worsened by federal, state, and local actions that promote misunderstanding and divisiveness rather than cooperative problem-solving.  Especially divisive and costly are proposals and decisions that presume the economic benefits of an increase in an extractive, agricultural, or development activity necessarily exceed the costs, even when the evidence indicates otherwise.”  A Letter from Economists to President Bush and Governors of Eleven Western States Regarding the Economic Importance of the West’s Natural Environment. p.4 &5.

“Public officials can best promote long- run economic prosperity in the West by encouraging efficient transitions away from harmful activities toward those beneficial to both the environment and the economy.”  A Letter from Economists to President Bush and Governors of Eleven Western States Regarding the Economic Importance of the West’s Natural Environment, p.7.

“Finding direct connections between changes in forest management policy and socioeconomic change is difficult.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.155.

 “…the monitoring methods tested presented significant limitations.  Foremost were the lack of a proven basis for relating local economic change to change in regional federal forest management policy, and relating local economic change to local social change.”  Socioeconomic Monitoring Results--Volume VI: Program Development and Future Directions. Susan Charnley and Claudia Stuart. Northwest Forest Plan, The First 10 Years (1994-2003), p.5.

 “…federal forest managers cannot override the forces of demand by simply providing a steady stream of wood fiber to the market.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.344. 

“Because the Northwest Forest Plan was developed in the face of a dramatic decline in flow of wood fiber from federal lands, it focused on reestablishing and stabilizing the federal timber supply.  That focus primarily on raw material supply, however, was a serious economic error [emphasis added] in that the other half of the economic forces that drive almost all markets and industries, the demand for wood fiber, was ignored.

A nearly exclusive focus on timber supply was inappropriate [emphasis added] because in previous decades it was widely recognized that cyclical fluctuations in the demand for forest products were the most likely source of layoffs and mill closures.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.343.

“As a result, part of the increased federal harvest will be offset by declines from other sources of supply.  A steady flow of federal supply into the wood-fiber market regardless of economic conditions will further destabilize prices, driving them down during periods of weak demand and driving them up during periods of peak demand.  These destabilized prices are not what would result if federal timber managers behaved in a market-oriented manner.  Other landowners’ reactions to these more volatile prices may, in turn, destabilize harvest levels, the opposite of what federal land managers intend.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, 344

 “…contemporary economic analysis indicates that the economic links between natural forests and local communities are much broader than simply the flow of commercially valuable logs to manufacturing facilities.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.341. 

“Although stable timber supplies may contribute to economic stability, they do not ensure it. This finding is consistent with research undertaken in the 1990s that shows how assuming community stability depends on nondeclining, even flows of timber from federal forests can be misleading (see sources cited in Kusel 1996, Richardson 1996). Many factors can influence the stability of forest- based communities (USDA FS 2000: 3-326–3-329). Demand for wood and commodity prices fluctuates; alternative sources of supply are available; some firms prefer locating close to large labor markets rather than in geographically isolated areas; mills compete for timber supply; communities compete for jobs; wood products manufacturing technology changes; and other federal and state policies affecting the business climate change. All of these forces can affect jobs in the timber industry, and neither agencies nor communities have much influence over them. Consequently, the concept of community stability has come to be replaced by the concept of community resiliency—the ability of communities to respond and adapt to change in positive, constructive ways to mitigate the effects of change on the community.”  Socioeconomic Monitoring Results Volume I: Key Findings. Susan Charnley Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lisa P. Buttolph,  William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe.  Northwest Forest Plan—the First 10 Years (1994-2003), p.13

 “. . .the Northwest Forest Plan in the Pacific Northwest sought to stabilize local economies, including local employment and income, by stabilizing the flow of wood fiber from public forests.  This is also a common forest management objective in other regions and countries.  Because this economic strategy ignores basic market adjustments, it is likely to fail and to unnecessarily damage forest ecosystems.  [emphasis added]  Application of basic economic principles on how markets operate significantly changes the apparent efficacy of efforts to manage local economies by managing timber supply.  The emphasis on timber supply tends to ignore the dominant role that the demand for wood fiber and wood products, rather than wood-fiber supply, plays in determining levels of harvest and production.  Contemporary economics indicates that markets tend to operate to offset reductions in wood-fiber supply.  This significantly moderates the economic cost of reducing commercial timber harvest in the pursuit of environmental objectives. [emphasis added] In addition, contemporary economic analysis indicates that the economic links between natural forests and local communities are much broader than simply the low of commercially valuable logs to manufacturing facilities.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.341.

“The belief that local economies could be managed by managing federal timber supply was based on an unnecessarily narrow view of the relationship between forests, communities, and the [PNW] regional economy.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.342.

“Moreover, it is difficult to measure the extent to which federal forest management policy, versus other variables, contributes to positive or negative change in communities.”   Socioeconomic Monitoring Results--Volume VI: Program Development and Future Directions. Susan Charnley and Claudia Stuart. Northwest Forest Plan, The First 10 Years (1994-2003), p.11-12. 

“Concurrent with discussions about social assessments and socioeconomic monitoring is an evolving body of literature on understanding the relation between resource management actions and community socioeconomic well-being. . .

This has also led to recognition of the difficulty in attributing causal relations between federal resource management and socioeconomic conditions.”  Delimiting communities in the Pacific Northwest. Ellen M. Donoghue, p.4.

 “Misleading price signals slow economic growth.  [emphasis in original] Inefficient pricing of many natural resources encourages waste and diminishes economic productivity by allocating resources to low-value uses, while higher-value uses languish.  Subsidies to irrigation, logging, public-land ranching, and mining prop up activities that would not take place under efficient, market conditions.  Underpricing of urban roads, municipal-industrial water, and pollution emissions sends false signals regarding the true cost of urban sprawl, and the true value of free-flowing streams, and clean air and water. . . .

As these and related changes evolve, the economic health of western communities increasingly will depend on the health of the environment.  Long-run prosperity will derive from efficient, effective efforts to conserve increasingly scarce environmental resources, protect high-quality natural environments, reverse past environmental degradation, and manage congestion in both urban areas and on public lands with high recreational use.  Resource-management policies and economic-development activities that significantly compromise the environment will likely do more economic harm than good.”   A Letter from Economists to President Bush and Governors of Eleven Western States Regarding the Economic Importance of the West’s Natural Environment, p.3.

“Instead of collapsing, the region’s economy expanded.  The PNW weathered virtually unscathed the national economic recession that occurred at about the same time as Judge Dwyer’s ruling, and both Oregon and Washington have consistently outperformed the national economy throughout the 1990s.  While timber harvests fell 86 percent on federal lands and 47 percent overall from their peak in 1988 to 1996, employment in the lumber-and wood-products industry, which constitutes the bulk of the timber industry in the PNW, fell 22 percent.  In contrast, total employment rose 27 percent. "  The Sky Did NOT Fall: The Pacific Northwest’s Response to Logging Reductions. Ernie Niemi, Ed Whitelaw, and Andrew Johnston. ECONwest, p.i. 

“An increase in supply of BLM timber could lead to decreased stumpage prices and in turn to decreased supply by other ownerships.”  Western Oregon Plan Revisions: Proposed Planning Criteria and State Director, p.48.

“In the rural west, it turns out there is an inverse relationship between resource dependence and economic growth; the more dependent a state’s economy is on personal income earned from people who work in the resource extractive industries, the slower the growth rate of the economy as a whole.”  Prosperity in the 21st Century West: The Role of Protected Public Lands. Ray Rasker, Ben Alexander, Jeff van den Noort, and Rebecca Carter. Sonoran Institute, p.10. 

Contrary to BLM’s assertions, lower harvests on BLM lands may have increased BLM’s contribution to community economic conditions.

The following quote shows that during the timber boom years of the 1980s, median household income declined, timber cities experienced no growth and higher unemployment and poverty rates.

“All the indicators used in this publication to characterize the growth and economic health of timber-dependent cities reveal that they lag behind cities that are not timber-ependent.  Located primarily in rural parts of Oregon, the average timber-dependent city experienced no population growth between 1980 and 1990.  Median household income, already below that of non-timber-dependent cities in 1979, declined during the 1980s.  In 1990, the average timber-dependent city had higher unemploy-ment and poverty rates, lower educational attainment, and fewer workers in professional and managerial occupations than did the average city that was not timber-dependent.”   Delimiting Communities in the Pacific Northwest. Ellen M. Donoghue, p.4.

·   Over the last three decades real average earnings per job have decreased in several western Oregon Counties, many of which also experienced decreased employment for the manufacturing industry (including timber jobs).

But real average earnings, according to BLM figure 15, in most O&C counties increased, and in 5 O&C counties they increased significantly above average.

“Excluding 1990, real wages increased by 21 percent in primary wood-products during the decade.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.42.

“Despite failures to stabilize federal timber harvests or forest-products employment, the [NW Forest] plan area and most communities located within it did not fare badly.  In fact, the regional economy experienced an unprecedented boom during the 1990s in which three-quarters of local communities either maintained their level of community well-being or improved it.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.343.

“What were the effects of this declining flow of socioeconomic benefits from federal forests on rural communities and economies?  Our analysis of U.S. census indicators showed that 40 percent of the communities within 5 miles of federal forest lands decreased in socioeconomic well-being between 1990 and 2000, 37 percent increased, and 23 percent showed little change.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.159 

·   BLM has contributed to community economic conditions other than timber harvest by providing recreation opportunities and spending funds on:

• sivilcultural activities

• fire and fuels program efforts

• habitat and watershed restoration

• harvests of special forest products

·   Between 1990 and 2000 softwood log exports dropped by 2 billion board feet while imports increased at a lower magnitude of approximately 240 million board feet. There is some mill capacity or demand for log volume in the region that is not being met with locally produced logs.

“In general, federal forest managers are required to sell federal trees to the highest bidder.  The federal timber that is harvested at one location can be shipped hundreds of kilometers, out of state, and through displacement, even overseas, especially when prices of wood fiber are high.  Because of this, a small mill town located adjacent to federal timber land may well not receive logs from harvests in the immediate vicinity and have to import logs from outside the area.  These complex and long-distance log flows make it difficult for local forest managers to influence the economies of local communities.  Put slightly differently, increased local harvests do not necessarily mean increased production at local mills or vice versa.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.345.

“The ability to transport logs long distances was an important factor in changing the timber industry. It means that mill jobs are no longer as reliant on local harvest as in the past.”  Western Oregon Land Revisions: Analysis of the Management Situation. BLM 2005, p.36.

ANALYSIS OF THE MANAGEMENT SITUATION – 31

Current Conditions and Context

Complex social and economic changes have occurred in the Pacific Northwest over the last three decades. High rates of population growth in the region, especially in the urban areas along the I-5 corridor, have brought new people to the Pacific Northwest who have different values about the appropriate uses of federal lands.

“The structure of the western economy has changed. [emphasis in the original]  Though still important, extractive industries (logging, mining, and commercial fishing) and agriculture now play a smaller economic role because their ability to generate new jobs and higher incomes has declined.  Across most of the West, a community’s ability to retain and attract workers and firms now drives its prosperity.  But if a community’s natural environment is degraded, it has greater difficulty retaining and attracting workers and firms.”  A Letter from Economists to President Bush and Governors of Eleven Western States Regarding the Economic Importance of the West’s Natural Environment, p.2.

“The average median household income (within the NW Forest Plan area) (adjusted for inflation to 2000 dollars) for communities in the region went up 20.3 percent, from $35,214 to $42,351.  This change is higher than the change in national median household income that was $37,300 in 1990 and $41,994 in 2000, an increase of 12.6 percent.  Average unemployment for communities was about the same in 1990 as in 2000. . . The percentage of the population in a community living in poverty decreased from 12.9 percent in 1990 to 11.8 percent in 2000, a decrease of 8.5 percent.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.18.

“The past two decades have seen an evolution of terms used to depict communities that have distinct connections to forest resources: community stability, forest dependence, forest based, community capacity, community resiliency, and the recent emphasis on sustainable forest management (Montréal Process Working Group 1998), community viability and adaptability. This evolution of terms shows a growing emphasis on the complex, dynamic, and interrelated aspects of rural communities and the natural resources that surround them. The earliest terms dealt with the limits between forest management and stable communities achieved through stable employment in the forest sector. By the late 1980s, however, the notion of community stability as reflecting sustained-yield timber management was being called into question (Lee 1990, Schallau 1989). Although the use of the term “stability” continued to endure in policy debates, concern was raised about the lack of a clear definition of stability and how it might be measured (Fortmann et al. 1989, Lee 1989, Machlis and Force 1988, Richardson 1996). Some researchers began looking beyond employment indicators to other aspects of community life to assess community well-being (Doak and Kusel 1996, Kusel and Fortmann 1991). In addition to economic measures, indicators for poverty, education, crime, and other sociodemographic measures have been used to assess conditions in communities. 

Concurrent with discussions about stability and community well-being were discussions about the term “forest dependence.”  Forest and timber dependence were initially defined in terms of commodity production as well. Research has suggested, however, that communities are more complex than traditional measures of timber dependency would imply (Haynes et al. 1996). Most communities have mixed economies, and their vitality is often linked to other factors besides commodity production.  Some communities thought of as timber dependent have been confronted with economically significant challenges, such as mill closures, and displayed resilient behavior as they have dealt with change. The term “forest dependence” has since evolved in recognition that some economic ties that communities have to forests are not wood-product, based, but result from recreation and other amenities (FEMAT 1993, Kusel 1996). And the term has also evolved to reflect the noneconomic connections to forests, such as the symbolic living traditions that people have with the forested places in which they live—the sense of place (Hiss 1990, Kusel 1996, Stedman 2003, Tuan 1993).  . . .

Thus, the term “forest-based” community is increasingly being accepted as reflecting the complex, multidimensional, and multidirectional connections between communities and forests. A community may be forest based, but will have social and economic links to geographic scales larger than the community. ”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.28

·   Federal forests are highly valued for recreation, visual quality, and the protection of water, wildlife and fish in addition to timber resources.

·   Agriculture and industries based on the extraction of forest products have shown little growth.

·   The percentage of people in the region whose livelihood is based on the extraction of goods and services from federal lands has declined.

“Rural communities and economies underwent both positive and negative changes during the first decade of the [NW Forest] Plan. The Plan contributed to negative changes in some communities, primarily because of reduced federal timber harvests and the loss of associated jobs and income, substantial decreases in the number of agency jobs, and declines in procurement contract spending. The Plan may have contributed to positive changes in some communities by enhancing natural amenity values on federal forest lands such as natural-looking landscapes, recreation opportunities, older forest habitat, fish, and clean water.  Natural amenities attract tourists, new residents, and businesses that stimulate local economic development. . . . Interview results indicated that recreation and amenity values played a role in drawing new residents to communities around federal forests that lost timber workers and FS employees in the 1990s. Recreation and tourism also played an important and evolving role in contributing to the economies of some communities.”  Socioeconomic Monitoring Results Volume I: Key Findings. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lisa P. Buttolph,  William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe.  Northwest Forest Plan—the First 10 Years (1994-2003), p.18-19. 

“Our analysis of the census data found that communities in the [NW Forest] Plan area are changing.  The population is growing, educational attainment and household income are increasing, and poverty is decreasing.  At the same time, the manufacturing sector of the economy is declining in many communities.  Socioeconomic well-being increased for more than a third of the communities in the region, and decreased for about the same number between 1990 and 2000.”  Socioeconomic Monitoring Results Volume I: Key Findings. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lisa P. Buttolph,  William, p.12. 

“The economic benefits of protecting and restoring environmental quality are large and increasing. [emphasis in original] As the West’s population increases, the West enjoys greater economic benefits by avoiding exposure to hazardous pollution, maintaining scenic natural vistas, extending the availability of recreational opportunities in clean environments and on public lands, and sustaining the existence of undeveloped lands and healthy ecosystems.”  A Letter from Economists to President Bush and Governors of Eleven Western States Regarding the Economic Importance of the West’s Natural Environment, p.3.

“In the rural west, it turns out there is an inverse relationship between resource dependence and economic growth; the more dependent a state’s economy is on personal income earned from people who work in the resource extractive industries, the slower the growth rate of the economy as a whole.”  Prosperity in the 21st Century West: The Role of Protected Public Lands. Ray Rasker, Ben Alexander, Jeff van den Noort, and Rebecca Carter. Sonoran Institute, p.10

·   New business and employment opportunities fueled by the needs of the expanding population have been primarily in the trade and services sectors.

Oregon’s economy is diverse. As of the 2000 census Oregon’s total population was 3.4 million, an increase of 63 percent from 1970. Table 2 and Figures 13, 14, and 15 show the percent changes for population, employment and average earnings from 1970 to 2000 and later in some cases.

“Unemployment for the entire region is at its lowest in two decades.”   The Northwest Forest Plan: A Report to the President and Congress.  E. Thomas Tuchmann, Kent P. Connaughton, Lisa E. Freedman and Clarence B. Moriwaki. USDA, p.4. 

“Since 1970, regional employment has grown at a 2.8% annual rate, which exceeds the national rate of 1.85.  Today, regional employment stands at almost 4.4 million workers, almost twice what it was in 1970.  The region as a whole is experiencing a historically low unemployment rate.  Industries in and around major urban centers have led the region’s expansion with an employment growth rate of 2.9% per year, but employment in nonmetropolitan counties, which has been increasing at 2.3% per year, has also exceeded the nation’s rate (figure 10).  Some timber-dependent counties are exceptions, such as Coos County in Oregon and Humboldt County in California, where employment growth has been well below national regional trends.  Personal income (adjusted for inflation) also grew at rates that exceeded the nation’s over the same period, with metropolitan income more than doubling and nonmetropolitan income doubling, while the nation’s total personal income grew 83%. . . .Other measures of economic prosperity and social development describe the region, particularly its nonmetropolitan counties, less favorable.  Though per capita personal income (adjusted for the effects of inflation) for the region was equivalent to per capita income in the nation in both 1970 and 1993, per capita income for nonmetropolitan areas, which were at 90% of national per capita income in 1970, had fallen to 83% by 1993.  Much of the divergence happened in the early 1980s recession, and the affected areas never caught up with metropolitan areas and the nation as the domestic economy improved.”  The Northwest Forest Plan: A Report to the President and Congress.  E. Thomas Tuchmann, Kent P. Connaughton, Lisa E. Freedman and Clarence B. Moriwaki. USDA, p.144 

ANALYSIS OF THE MANAGEMENT SITUATION – 32

·   Of the total population, 88-percent live in the 18 western Oregon counties that make up the planning area.

·   In several cases, population growth was slow and steady while in others there were greater changes surrounding economic recession periods.

·   The counties with the fastest growing populations are in the Salem and Medford districts (Figure 13).

·   The county with the least amount of population growth is Coos County in the Coos Bay district.

“In the rural west, it turns out there is an inverse relationship between resource dependence and economic growth; the more dependent a state’s economy is on personal income earned from people who work in the resource extractive industries, the slower the growth rate of the economy as a whole.”  Prosperity in the 21st Century West: The Role of Protected Public Lands. Ray Rasker, Ben Alexander, Jeff van den Noort, and Rebecca Carter. Sonoran Institute, p.10.

·   Employment increased for all 18 western Oregon counties in the planning area. Growth was above the state average for counties located in the Salem and Medford districts (Figure 14).

“The average median household income (within the NW Forest Plan area) (adjusted for inflation to 2000 dollars) for communities in the region went up 20.3 percent, from $35,214 to $42,351. 

This change is higher than the change in national median household income that was $37,300 in 1990 and $41,994 in 2000, an increase of 12.6 percent.  Average unemployment for communities was about the same in 1990 as in 2000. . . The percentage of the population in a community living in poverty decreased from 12.9 percent in 1990 to 11.8 percent in 2000, a decrease of 8.5 percent.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.18.

As shown in Table 2 and Figures 16 and 17, the “Services and Professional” employment category experienced significant growth in all of western Oregon for the counties where data was available.  However:

·   Despite increased employment opportunities, the manufacturing industry which includes forest products and encompasses paper, lumber, and wood products manufacturing, has declined for several western Oregon counties.

·   The employment shift from manufacturing to services was consistent with nationwide shifts.” (Northwest Forest Plan: the first ten years.  Rural communities and economics).

·   The districts with counties showing declines in manufacturing are: Salem, Coos Bay, Roseburg, and the Klamath Falls field office.

The relative importance of forest base resource-relalted employment and income in the plan area’s economy has changed over time, as has the contribution of forest products from the BLM lands to this mix.” (Northwest Forest Plan: the first ten years.

    Rural Communities and Economics).

·   Contrary to the tremendous population growth and employment growth that occurred over the last three decades, average earnings have increased minimally in cases where an increase occurred at all (Figure 15).

·   In several of the western Oregon counties, average earnings actually declined.

·   As expected, the same counties that experienced decreased employment in the manufacturing industry also experienced a decrease in average earnings per job as shown in Table 2.

·   Where the average earnings are higher, there are more full-time jobs that pay higher.

“In the rural west, it turns out there is an inverse relationship between resource dependence and economic growth; the more dependent a state’s economy is on personal income earned from people who work in the resource extractive industries, the slower the growth rate of the economy as a whole.”  Prosperity in the 21st Century West: The Role of Protected Public Lands. Ray Rasker, Ben Alexander, Jeff van den Noort, and Rebecca Carter. Sonoran Institute, p.10.

"Excluding 1990, real wages increased by 21 percent in primary wood-products during the decade.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.42.

“Despite failures to stabilize federal timber harvests or forest-products employment, the [NW Forest] plan area and most communities located within it did not fare badly.  In fact, the regional economy experienced an unprecedented boom during the 1990s in which three-quarters of local communities either maintained their level of community well-being or improved it.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.343.

“Since 1970, regional employment has grown at a 2.8% annual rate, which exceeds the national rate of 1.85.  Today, regional employment stands at almost 4.4 million workers, almost twice what it was in 1970.  The region as a whole is experiencing a historically low unemployment rate.  Industries in and around major urban centers have led the region’s expansion with an employment growth rate of 2.9% per year, but employment in nonmetropolitan counties, which has been increasing at 2.3% per year, has also exceeded the nation’s rate (figure 10).  Some timber-dependent counties are exceptions, such as Coos County in Oregon and Humboldt County in California, where employment growth has been well below national regional trends.  Personal income (adjusted for inflation) also grew at rates that exceeded the nation’s over the same period, with metropolitan income more than doubling and nonmetropolitan income doubling, while the nation’s total personal income grew 83%. . . .Other measures of economic prosperity and social development describe the region, particularly its nonmetropolitan counties, less favorable.  Though per capita personal income (adjusted for the effects of inflation) for the region was equivalent to per capita income in the nation in both 1970 and 1993, per capita income for nonmetropolitan areas, which were at 90% of national per capita income in 1970, had fallen to 83% by 1993.  Much of the divergence happened in the early 1980s recession, and the affected areas never caught up with metropolitan areas and the nation as the domestic economy improved.”  The Northwest Forest Plan: A Report to the President and Congress.  E. Thomas Tuchmann, Kent P. Connaughton, Lisa E. Freedman and Clarence B. Moriwaki. USDA, p.144.

“Historically, employment in solid-wood products manufacturing (SIC 24) has been volatile. . . .From the high of 136,000 jobs in 1978 [in Oregon and California], employment dropped to 95,000 jobs 4 years later, a loss of 41,000 jobs or 30 percent.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.40.

 “In the West – defined in this study as the 11 western mainland states of Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming – mining, logging, and oil and gas development . . . provide few jobs. . . . They have not been a significant source of new jobs or personal income in the last three decades.” [emphasis added]  Prosperity in the 21st Century West: The Role of Protected Public Lands. Ray Rasker, Ben Alexander, Jeff van den Noort, and Rebecca Carter.  Sonoran Institute, p.7.

ANALYSIS OF THE MANAGEMENT SITUATION – 33

·   Where the average earnings are lower, there are a larger number of jobs with a lower wage or jobs are part-time or seasonal.

“The distinguishing feature of the Mountain West economy over the past quarter-century was a decline in natural resource production and processing.  Contrary to dire predictions, these changes in the industrial structure of the Mountain West did not lead to economic collapse.

Rather, during the period in which natural resource industries were contracting sharply, the region showed impressive economic vitality, leading the rest of the nation in population and job growth. . . .

By 1998, there appeared to be a looming gap in both pay and income between the region and the rest of the country.  But this gap largely disappears under closer examination.

We looked closely at which workers suffered the most from the pay gap.  Focusing on Montana workers, we found that it was upper-income and more highly educated workers who had the largest pay gap relative to the rest of the nation.

Lower-income and less-educated workers, although their pay was low, were being paid about as much as they could earn elsewhere in the nation.

Nationally, pay levels reflect community size; high in the biggest cities and low in smaller cities, towns and rural areas.  This means that in calculating and comparing average pay for the Mountain West and the nation as a whole, it is important to take into account where people live.

Residents of the Mountain West, on average, live in much smaller places than other Americans, and it is this difference that accounts for the entire gap in pay between the region and the nation.

When the pay received by residents of the Mountain West’s cities and rural areas is compared to that of residents in cities of similar size and other rural areas across the country, there is no gap.

Residents of the Mountain West earn relatively low incomes because, disproportionately, they live in small communities.  But this does not mean that they, and the millions of other Americans living in communities much like theirs, are economically deprived.  On the contrary, as do other Americans, they find life outside the nation’s large metropolitan areas offers important compensations for low earnings and income.”  Dispelling the Myths of a Declining Economy and a Deprived Citizenry in the Mountain West. Thomas Power, and Richard Barret.  Headwater News.

 “The average median household income (within the NW Forest Plan area) (adjusted for inflation to 2000 dollars) for communities in the region went up 20.3 percent, from $35,214 to $42,351. 

This change is higher than the change in national median household income that was $37,300 in 1990 and $41,994 in 2000, an increase of 12.6 percent.  Average unemployment for communities was about the same in 1990 as in 2000. . . The percentage of the population in a community living in poverty decreased from 12.9 percent in 1990 to 11.8 percent in 2000, a decrease of 8.5 percent.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.18.

“Unemployment for the entire region is at its lowest in two decades.”   The Northwest Forest Plan: A Report to the President and Congress.  E. Thomas Tuchmann, Kent P. Connaughton, Lisa E. Freedman and Clarence B. Moriwaki. USDA, p.4. 

Timber

The timber industry has evolved over the last several decades due to changes in timber supply, technology, and product demand:

·   Fewer mills in Oregon.

·   Greater diversification.

·   A wider range of products.

·   More efficient use of the timber resource.

“Personal income from agriculture, the wood products industry and mining in the rural west compared to the rest of the economy, 2000.

. . . Wood Products (incl. paper products) 1.8%.”  Prosperity in the 21st Century West: The Role of Protected Public Lands. Ray Rasker, Ben Alexander, Jeff van den Noort, and Rebecca Carter. Sonoran Institute, p.8.

“Oregon's wood products industry has seen significant changes in demand and supply over the past 30 years.  Once the mainstay of Oregon's manufacturing sector and still the primary driver for many rural areas of the state, the industry has been reduced in total and relative terms. 

The lumber and wood products industry in Oregon, propelled by a strong national housing market and steady supply of logs from public lands, hit its all-time peak employment level of 81,400 in 1978. . . .  At that time, the industry accounted for 49 percent of the state's manufacturing employment.

By the early 1980s, a severe downturn in the nation's economy and housing market led to a dramatic drop in industry production and employment levels. Between 1978 and 1982, nearly 26,000, or 32 percent of Oregon's lumber and wood products manufacturing jobs, were lost.”  The Lumber and Wood Products Industry: Recent Trends. Rob Abbott, and Brian Rooney. Oregon Employment Department website.

 “Much of what happens to Oregon's wood products industry will depend on housing starts. … Demand from new housing starts, however, is expected to drop from historic highs as interest rates creep up.”  The Future of Oregon’s Lumber and Wood Products Industry. Rob Abbott, and Brian Rooney. Oregon Employment Department website.

 “The Swanson Group’s stud mill in Glide, Ore., will curtail during May due to “high Douglas fir log prices and low sales returns on green Fir studs,” according to Jim Hunt, Swanson’s vice president for sales and marketing.  Hunt said the mill will run 14 shifts out of 44 that would normally be scheduled.  The company’s Wilbur reload facility also will be closed from May 8 until May 22.”  Random Lengths Daily WoodWire—April 26, 2006

“Stimson Lumber's stud mill in St. Helens, Ore., will cut one of its two shifts due to market conditions, effective Monday, May 22.”  Random Lengths Daily WoodWire—May 18, 2006.

 “A recovery in the national economy and housing market in the early '80s led to a quick rebound in industry activity, but a widespread drive to increase production efficiencies through investment in capital equipment, and a gradual shift to less labor-intensive processes, limited job gains. Even though output at Oregon sawmills recovered to greater than pre-recession levels, employment peaked in 1988 at only 69,500 jobs – nearly 12,000 less than the previous peak in 1978.

A second, milder recession in the early '90s, combined with timber supply constraints brought about by environmental concerns, produced a second pronounced downturn in the industry. Faced with a severe shortage of raw material and increased competition from abroad, many firms were forced to close. Between 1989 and 2001, there was a decline of 707 reporting units to Oregon's unemployment insurance program in wood products. These reporting units loosely define worksites. Over the same period, employment dropped by 32 percent. . . .  The downward trend continues with the new definition, however. Between 2002 and 2003, wood products manufacturing lost 1,280 jobs to reach 31,100.”  The Lumber and Wood Products Industry: Recent Trends. Rob Abbott, and Brian Rooney. Oregon Employment Department website.

“Forest-products manufacturing is a mature industry serving very specific markets for building and paper products.  As such one can expect technological change to continue to boost worker productivity as capital and energy are substituted for labor. [emphasis added]. . .  Total output has risen, whereas employment and labor income have declined (Howard 2003). . . .  The impact of this automation on employment can be seen in the Pacific Northwest where wood products output was higher in 1988 than it was in 1978, but the jobs associated with that output had fallen by 35,000 or 20%. . . . For instance, after 1994, log supply in the plan area actually increased modestly as a result of some of the market adjustments discussed above.  This increased log supply did not lead to stabilization or increase in primary forest-products-industry employment.  Instead, forest-products employment continued to decline, losing 11,000 jobs between 1994 and 2000.  Because federal timber harvests during this time period declined only modestly, USFS researchers estimated that only 400 of these 11,000 lost forest-products jobs were associated with reduced federal timber harvest.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.341.

“Primary wood-products processing accounted for 2 percent of all jobs in the PNW Plan area in 1990 and dropped to 1 percent by 2000.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.41.

“Over the period 1990 to 2000, primary-wood-products employment (SIC 24 and SIC 26) decreased by 30,000 jobs.  About 11,000 of these jobs were lost since 1994. A loss in timber industry employment during a period of increasing log volume to timber processing industries indicates additional industry restructuring and technological change.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.45.

“The fixed lower supply of timber forced the timber industry to make permanent adjustments, but many of the jobs losses occurring after Plan implementation were set in motion by earlier declines in timber harvest.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.47.

As shown in Figure 18 and 19, western Oregon harvest levels declined in the early 1980’s due to economic downturns and experienced further declines on federal lands starting in 1990 due to Endangered Species Act concerns.

Of the many changes in the industry, automation and technological change or “modernization and increased efficiencies” as BLM call them on page 33 are responsible for many of the lost jobs and personal income from the timber industry.

“About 400 of the 22,000 jobs lost since [in the NW Forest Plan area] 1994 can be attributed to a net reduction in federal timber harvesting.  The remaining 10,600 job losses occurred during a period of increased log availability to local mills, and are the result of less efficient mills closing, and mills continuing to invest in labor-saving technologies.”  Socioeconomic Monitoring Results Volume I: Key Findings. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lisa P. Buttolph,  William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe.  Northwest Forest Plan—the First 10 Years (1994-2003), p.13.

“Improved transportation and communications, proximity to urban centers, and an enviable quality of life have helped some rural areas grow and further diversify.  As a result of this growth and diversification, the proportional share of the timber industry as a source of employment in nonmetropolitan counties in the region was declining even before federal harvest reductions began.”  The Northwest Forest Plan: A Report to the President and Congress.  E. Thomas Tuchmann, Kent P. Connaughton, Lisa E. Freedman and Clarence B. Moriwaki. USDA, p.150.

“The reasons for changes in timber employment numbers have been similar in all three states: sharp reductions associated with changes in aggregate demand during domestic recessions; sharp increases during robust domestic economic expansion; a general downward trend related to investments in labor-saving technological improvements; reductions from changes in a mix of products that require less labor; reductions from changes in timber quality as the percentage of old growth available has declined; and, most recently, changes in timber supply.

The downward trend was further intensified by the recession in the national economy that reached full force during the early 1990s.”  The Northwest Forest Plan: A Report to the President and Congress.  E. Thomas Tuchmann, Kent P. Connaughton, Lisa E. Freedman and Clarence B. Moriwaki. USDA, p.148-149.

“Because of the dwindling availability of raw material – particularly large logs – the cost of obtaining timber became prohibitive to smaller mills, causing many to close. As smaller mills closed, production shifted to larger, more cost-efficient mills that could manufacture wood products at a per-unit price much below that of the smaller mills.

 Throughout the Northwest, there has been a tremendous change in the number of mills operating and many of them are completely gone now due to a reduction in the amount of raw material available and changes in the manufacturing processes," said Bob Ragon, director of Douglas Timber Operators. Graph 2 shows the result of the structural change is fewer but larger and more productive mills. 

The reduced supply of large, old-growth timber also caused many in Oregon's wood products industry to change production methods to better accommodate the growing number of smaller scale logs that were now coming into the mills. This ignited an explosion of new technology that streamlined the processing of raw materials into finished products and even changed the makeup of the raw materials themselves.

These structural changes in Oregon's wood products industry were necessary to keep the industry competitive, but made the industry less labor intensive. Oregon's softwood lumber production level remains the highest of any state in the nation and accounted for 18 percent of all U.S. production in 2003. The net result, however, is that while production remained around 5 to 6 billion board feet per year, employment steadily dropped through the 1990s into 2003.” [emphasis added]  Reduced Supply Causes Structural Changes in the Industry. Rob Abbott, and Brian Rooney. Oregon Employment Department website.

Also evident is BLM’s decreasing contribution to total western Oregon timber supply where BLM’s contribution declined from 16.03 percent in 1973 to 1.41 percent in 2002.

“That focus primarily on raw material supply, however, was a serious economic error [emphasis added] in that the other half of the economic forces that drive almost all markets and industries, the demand for wood fiber, was ignored. 

A nearly exclusive focus on timber supply was inappropriate [emphasis added] because in previous decades it was widely recognized that cyclical fluctuations in the demand for forest products were the most likely source of layoffs and mill closures.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Volume 20, No. 2, 341-350Plan. Thomas Michael Power. Conservation Biology, p.343.

Consumption (demand) of timber in Oregon was severely reduced by the depressed national economy at the start of the 1980’s, however; improvements in residential and commercial construction spurred the beginning of industry recovery creating increasing demand until about 1988.

“All of the case-study communities we monitored showed changes over the last two decades.  Although timber was one of the major economic sectors in all of these communities in the 1970s and 1980s, the timber sector had become minor or negligible in many of them by 2003. . .

The timber sector in some communities--such as Greater Coos Bay—had been declining since the early 1980s because of an economic recession, domestic and international competition, changes in market demand for wood products, industry restructuring, mechanization and technological advances, and environmental regulations—and the Plan added to these pressures.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.159.

“During the recession of the early 1980s, lumber and wood products employment dropped by around 25,000. In the recession of the early '90s, the industry lost about 11,000 jobs. During the last recession, wood products employment dropped by 4,000 from about 49,000 in 2000 to about 45,000 in 2002.”  The Latest Recession. Rob Abbott, and Brian Rooney. Oregon Employment Department website.

Softwood saw log consumption data in lumber and plywood mills are shown for western Oregon in Figure 20. Consumption for this sector constitutes the majority of demand for log volume is well above harvest with the gap being filled by log producers from outside the area.

“In general, federal forest managers are required to sell federal trees to the highest bidder.  The federal timber that is harvested at one location can be shipped hundreds of kilometers, out of state, and through displacement, even overseas, especially when prices of wood fiber are high.  Because of this, a small mill town located adjacent to federal timber land may well not receive logs from harvests in the immediate vicinity and have to import logs from outside the area.  These complex and long-distance log flows make it difficult for local forest managers to influence the economies of local communities.  Put slightly differently, increased local harvests do not necessarily mean increased production at local mills or vice versa.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.345.

“The ability to transport logs long distances was an important factor in changing the timber industry. It means that mill jobs are no longer as reliant on local harvest as in the past.”  Western Oregon Land Revisions: Analysis of the Management Situation. BLM 2005, p.36.

Increasing recovery is also important. While western Oregon log consumption by lumber and plywood mills has remained relatively stable for 10 years or so, lumber production has increased nearly 30%, likely due to modernization and increased efficiencies in mill processes.

“Forest-products manufacturing is a mature industry serving very specific markets for building and paper products.  As such one can expect technological change to continue to boost worker productivity as capital and energy are substituted for labor. [emphasis added] . . .

Total output has risen, whereas employment and labor income have declined (Howard 2003). . . .

The impact of this automation on employment can be seen in the Pacific Northwest where wood products output was higher in 1988 than it was in 1978, but the jobs associated with that output had fallen by 35,000 or 20%. . . .  For instance, after 1994, log supply in the plan area actually increased modestly as a result of some of the market adjustments discussed above.  This increased log supply did not lead to stabilization or increase in primary forest-products-industry employment.  Instead, forest-products employment continued to decline, losing 11,000 jobs between 1994 and 2000.  Because federal timber harvests during this time period declined only modestly, USFS researchers estimated that only 400 of these 11,000 lost forest-products jobs were associated with reduced federal timber harvest.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.341.

Quantifying timber harvest in terms of demand and supply is difficult because demand (log volume outputs) is not isolated to the planning area.

“In general, federal forest managers are required to sell federal trees to the highest bidder.  The federal timber that is harvested at one location can be shipped hundreds of kilometers, out of state, and through displacement, even overseas, especially when prices of wood fiber are high.  Because of this, a small mill town located adjacent to federal timber land may well not receive logs from harvests in the immediate vicinity and have to import logs from outside the area.  These complex and long-distance log flows make it difficult for local forest managers to influence the economies of local communities.  Put slightly differently, increased local harvests do not necessarily mean increased production at local mills or vice versa.” [emphasis added]  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.345. 

ANALYSIS OF THE MANAGEMENT SITUATION – 35

 Exports

The reduction in timber harvest across all ownerships in the planning area increased the prices the local timber industry paid for logs.  Because fewer logs were available locally, local industry became more competitive in the international market. Figure 21 shows that:

·   Softwood log exports dropped from 2.7 billion board feet in 1990 to 0.7 billion board feet by 2000,

Imports increased from about seven million board feet to almost 250 million board feet.*

“The ability to transport logs long distances was an important factor in changing the timber industry. It means that mill jobs are no longer as reliant on local harvest as in the past.”  Western Oregon Land Revisions: Analysis of the Management Situation. BLM 2005, p.36 

“The local mills now mostly process wood from Washington and Canada, because little federal timber is available, and private industrial forestland owners generally sell their wood to mills outside the area.” [emphasis added]  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.142. 

This shows that there is still a large demand for logs in western Oregon and imports are filling the gap. This helped timber manufacturing industries, but it negatively impacted the timber export industry (Northwest Forest Plan: the first ten years. Rural Communities and Economics).

“Because the Northwest Forest Plan was developed in the face of a dramatic decline in flow of wood fiber from federal lands, it focused on reestablishing and stabilizing the federal timber supply.  That focus primarily on raw material supply, however, was a serious economic error [emphasis added] in that the other half of the economic forces that drive almost all markets and industries, the demand for wood fiber, was ignored.

A nearly exclusive focus on timber supply was inappropriate [emphasis added] because in previous decades it was widely recognized that cyclical fluctuations in the demand for forest products were the most likely source of layoffs and mill closures.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.343.

“. . . federal forest managers cannot override the forces of demand by simply providing a steady stream of wood fiber to the market. [emphasis added] . . .As a result, part of the increased federal harvest will be offset by declines from other sources of supply.  A steady flow of federal supply into the wood-fiber market regardless of economic conditions will further destabilize prices, driving them down during periods of weak demand and driving them up during periods of peak demand.  These destabilized prices are not what would result if federal timber managers behaved in a market-oriented manner.  Other landowners’ reactions to these more volatile prices may, in turn, destabilize harvest levels, the opposite of what federal land managers intend.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.344. 

ANALYSIS OF THE MANAGEMENT SITUATION – 36

Allowable Sale Quantity

The allowable sale quantity (ASQ) of timber for the western Oregon BLM districts was set at approximately 211 million board feet annually (MMBF) by the 1995 western Oregon RMPs. This was adjusted to 203 MMBF 1999. Actual sales quantities have not met the levels anticipated in the RMPs. As reported in the eighth-year RMP evaluation and the Northwest Forest Plan socioeconomic 10-year monitoring report, several factors are believed to account for the inability of BLM to meet the projected allowable sale quantity levels and include:

·   Lawsuits.

·   Implementation of the Survey and Manage standards and guides.

Total BLM Timber volume offered for western Oregon averaged 63 percent of planned levels for the first eight years of plan implementation.  The total volume offered by districts between 1995 and 2002 was about 1,030 of the 1,624 MMBF projected.  On an average annual basis the districts offered 129 MMBF as shown in Figure 22.

BLM’s allowable sale quantity was an upper limit and was neither promised nor required.

Another factor that contributed to the BLM’s inability to meet the projected allowable sale quantity levels was BLM’s own lack of compliance with federal law.  One reason BLM is unable to meet its timber target is because it broke the law and continues to refuse to implement the conservation requirements of the Plan.  Judge Dwyer said: "The record shows that Forest Service and BLM managers uniformly relied on these memoranda in deciding not to require category two surveys before approving the ... timber sales challenged here, even though ground-disturbing activities have yet to begin on any of those sales. These actions by the federal defendants are arbitrary and contrary to the plain language of the ROD. ... Far from being minor or technical violations, widespread exemptions from the survey requirements would undermine the management strategy on which the ROD depends. ...The ROD’s category two survey requirements are clear, plain, and unmistakable." ONRC Action v. USFS. Aug 2, 1999.

Both Survey & Manage and Aquatic Conservation Standards violations nearly shut the agency's timber program down.   

The General Accounting Office noted that the decline in harvest volumes was itself anticipated:

“The drop in probable sale quantity bears out the plan’s observation that changes could occur. For example, the plan noted that timber sale levels could be affected by requirements for conducting additional environmental analysis or setting aside additional lands to protect threatened or endangered species or by a change in the acreage allocated to riparian reserves following an analysis and inventory of intermittent steams. Officials told us that the probable sale quantity will likely change yet again.”  GAO/RCED-99-64 Ecosystem Planning.

“The PSQ levels shown are estimates. They represent neither minimum levels that must be met nor maximum levels that cannot be exceeded. They are rough approximations because of the difficulty associated with predicting actual timber sale levels over the next decade, given the discretion that agency land managers possess in administering plans and deciding when and where to offer timber sales, as well as the complex nature of many of the standards and guidelines. They represent our best assessment of the average amount of timber likely to be awarded annually in the planning area over the next decade, following a start-up period. 

During the first several years, it is unlikely that the annual PSQ estimates shown in Figure ROD-1 will be achieved. Our decision represents a new strategy that involves new land allocations and a new set of standards and guidelines. It will take time for the land management agencies to develop new timber sales that conform with the planning amendments effected by our decision. In addition, our decision contains requirements to perform various levels of analysis or survey work prior to awarding timber sales in certain areas.”  1994 Northwest Forest Plan Record of Decision, p.19.

 In addition, we understand that not all offered sales were sold.

 "And we understand that after the lawsuits, at least the Coos Bay and Roseburg BLM began thinning projects in earnest, including in a lot of LSRs and RRs, none of which timber volume contributed to the ASQ. Though BLM didn't meet their ASQ target, a lot of timber volume was produced outside of the ASQ.

 In addition to the understanding that PSQ was a “rough approximation” (USDA, USDI 1994b, p. 19), the 1994 Final SEIS indicated Survey and Manage standards and guidelines “add to the uncertainty of PSQ calculations” (USDA, USDI 1994a, p. 3&4-267).  November 2000, Survey and Manage FSEIS Volume I, page 88.

“PSQ levels are presented as an effect, not a goal, of the standards and guidelines. Therefore, harvests within areas specified for habitat protection will be greatly curtailed.”  1994 Northwest Forest Plan Record of Decision, p.66.

And finally, there are examples of sales offered that were not bid. 

Jobs and Income

The forest products industry contributes significantly to the State’s economy as the activities of the industry are translated into jobs, payroll, tax contributions, and the purchases of services and materials.

“…as it responded to Judge Dwyer’s logging ban, the PNW found that it did not have to log massive acreages to prosper.  The industry, itself, had made logging less important.  After slashing jobs and wages in the 1980s, the industry provided only a small percentage of the region’s jobs.”  The Sky Did NOT Fall: The Pacific Northwest’s Response to Logging Reductions. Ernie Niemi, Ed Whitelaw, and Andrew Johnston. ECONwest, p.i.

“By 2000, FS and BLM lands provided less than 5 percent of the total timber supply [in the NW Forest Plan area]. This also means that FS and BLM timber harvests supported less than 5 percent of the 80,500 jobs in the direct primary-wood-products industries (SIC 24 and SIC 26) in the Plan area.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.47.

“Lumber-and-wood products employment had been steadily decreasing in the Pacific Northwest long before the listing of the spotted owl as a threatened species and Judge Dwyer’s injunction.  Timber employment declined by more than 27,000 in the Pacific Northwest between 1979 and 1989, the two peak years that bound the economic cycle of the 1980s, and by another 21,000 by 1996.  The wages paid to timber workers also decreased rapidly in the 1980s as payroll per employee fell 18.2 percent, from $38,732 in 1979 to $31,672 in 1989 (measured in 1997 dollars). . . . the lumber-and-wood products industry represented 1.9 percent of total employment in 1996.  Since 1990, the percentage of lumber-and-wood products employees in Oregon has decreased from 4.3 percent to 3.0 percent.”  The Sky Did NOT Fall: The Pacific Northwest’s Response to Logging Reductions. Ernie Niemi, Ed Whitelaw, and Andrew Johnston. ECONwest, p.iii. 

Given that BLM would have supported only 1.23% of timber industry employment, an industry that is less than 3% of the region’s work force, it begs the question of why BLM is investing so many public resources in the RMP revisions. 

“Logging can eliminate jobs [emphasis in original]: …To some extent, the region has prospered despite the logging reductions simply because the timber industry is such a small portion of the regional economy.  More important, though, the mounting evidence indicates the region has prospered in part because of the logging reductions, insofar as they reduced the subsidies, cleaning-up costs, and job losses that accompany logging.”  The Sky Did NOT Fall: The Pacific Northwest’s Response to Logging Reductions. Ernie Niemi, Ed Whitelaw, and Andrew Johnston. ECONwest, p.v. 

In order to provide full disclosure to the public, the agency should determine how many existing and future jobs will be destroyed due to the proposed increased logging.  

The viability of the industry is significant to many small communities. To some towns, the local mill may be the only employer other than the service industry (Oregon Forest Products Industry: 1998).

The location of the forest industry in Oregon is closely related to the geographic distribution of the timber resource. Due to proximity, much of the timber industry employment is also in western Oregon. On average about 59 percent of the logs processed are harvested within the area. (Oregon Forest Products Industry: 1998)

“In general, however, it does not make economic sense to analyze a single small community as if it were a stand-alone economy.”Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.347.

 What would the increase in the number of jobs be if 100% of logs harvested within the area were processed within the area?

·   The ability to transport logs long distances was an important factor in changing the timber industry. It means that mill jobs are no longer as reliant on local harvest as in the past.

“The local mills now mostly process wood from Washington and Canada, because little federal timber is available, and private industrial forestland owners generally sell their wood to mills outside the area.” [emphasis added]  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.142.

“Timber flows are increasingly intercounty and even interregional.”  Community Stability and Timber-Dependent Communities.  Gary E. Machlis and Jo Ellen Force, p.224.

“In general, federal forest managers are required to sell federal trees to the highest bidder.  The federal timber that is harvested at one location can be shipped hundreds of kilometers, out of state, and through displacement, even overseas, especially when prices of wood fiber are high.  Because of this, a small mill town located adjacent to federal timber land may well not receive logs from harvests in the immediate vicinity and have to import logs from outside the area.  These complex and long-distance log flows make it difficult for local forest managers to influence the economies of local communities.  Put slightly differently, increased local harvests do not necessarily mean increased production at local mills or vice versa.” [emphasis added]  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.345. 

·   BLM’s ability to provide a sustainable and predictable supply of timber directly and indirectly affects jobs and personal earning levels, particularly in western Oregon.  A majority of the top timber harvest counties in the state are in the planning area.

“…federal forest managers cannot override the forces of demand by simply providing a steady stream of wood fiber to the market. [emphasis added] . . .

As a result, part of the increased federal harvest will be offset by declines from other sources of supply.  A steady flow of federal supply into the wood-fiber market regardless of economic conditions will further destabilize prices, driving them down during periods of weak demand and driving them up during periods of peak demand.  These destabilized prices are not what would result if federal timber managers behaved in a market-oriented manner.  Other landowners’ reactions to these more volatile prices may, in turn, destabilize harvest levels, the opposite of what federal land managers intend.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.344.

“Rather, we are saying that nearly all communities in the West will find they cannot have a healthy economy without a healthy environment. [emphasis added] Moreover, there exist many opportunities in the West to improve both the environment and the economy, for example, the elimination of inefficient subsidies would make more money available for other public services or to reduce debt.  The longer these opportunities languish, the fewer will be the West’s jobs, the lower its incomes, and the poorer its communities.  Conversely, the sooner we seize these opportunities, the sooner the West will enjoy more mobs, higher incomes, and greater prosperity.

We are saying that the economic pressures to arrest and reverse environmental degradation will increase.  Those who promise that workers, firms, and communities tied to environmentally harmful activities can avoid these pressures if only the environmental laws, such as the Endangered Species Act, were set aside raise false hope.  The pressures are independent of specific laws.  Even if such laws are repealed, the costs of environmentally harmful activities will continue to rise and jeopardize the economic outlook for affected communities.  Public officials can best promote long- run economic prosperity in the West by encouraging efficient transitions away from harmful activities toward those beneficial to both the environment and the economy.”  A Letter from Economists to President Bush and Governors of Eleven Western States Regarding the Economic Importance of the West’s Natural Environment, p.7 

“Absolute predictability is impossible.  Nature, society, and human economies are extremely complex systems.  Cause and effect relationships follow many pathways in each system….while predictability is difficult for natural systems, the same can be said about economic and social systems.  When economic, social and natural systems interact, uncertainty dramatically increases, making reliable prediction of outcomes most difficult.” [MacCleery and LeMaster 1999: 522] Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.156.  

“Because the Northwest Forest Plan was developed in the face of a dramatic decline in flow of wood fiber from federal lands, it focused on reestablishing and stabilizing the federal timber supply.  That focus primarily on raw material supply, however, was a serious economic error [emphasis added] in that the other half of the economic forces that drive almost all markets and industries, the demand for wood fiber, was ignored.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.343. 

“Logging can eliminate jobs [emphasis in original]: …To some extent, the region has prospered despite the logging reductions simply because the timber industry is such a small portion of the regional economy.  More important, though, the mounting evidence indicates the region has prospered in part because of the logging reductions, insofar as they reduced the subsidies, cleaning-up costs, and job losses that accompany logging.”  The Sky Did NOT Fall: The Pacific Northwest’s Response to Logging Reductions. Ernie Niemi, Ed Whitelaw, and Andrew Johnston. ECONwest, p.v.

 A nearly exclusive focus on timber supply was inappropriate [emphasis added] because in previous decades it was widely recognized that cyclical fluctuations in the demand for forest products were the most likely source of layoffs and mill closures.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.343. 

“In the early 1970s timber industry employment in the Plan area (fig.1) stood at about 6 percent of total employment in Washington, almost 12 percent in Oregon, and 31 percent in California.  By the late 1980s, the relative importance of timber employment in each of these regions had declined by 50 percent.”   Socioeconomic Monitoring Results Volume I: Key Findings Socioeconomic Monitoring:  Introduction and Report Overview. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph,  William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe.  Northwest Forest Plan—the First 10 Years (1994-2003), p.2 

Lumber and Wood-Related Products Employment

·   For every million board feet of timber harvested and processed in Oregon approximately 10.0 jobs are generated, 8.0 in the lumber and plywood industry and 2.0 in the logging industry.*

ANALYSIS OF THE MANAGEMENT SITUATION – 37

·   For every direct job there is an estimated 1.5 indirect and induced jobs.*

·   For every dollar of job earnings it is estimated that indirect and induced earnings are up to an additional $1.00.*

*Note: Above statistics are based on calculations provided in the 2005 report: “Northwest Forest Plan: the First ten Years, Rural Communities and Economics”.

What would it have been before “efficiencies” reduced the number of jobs per MBF?

·   BLM timber harvests supported about 740 fewer direct jobs annually than would have been supported at projected harvest levels in the 1994 Proposed Resource Management Plan Environmental Impact Statement.

·   BLM western Oregon timber harvests contributed to two percent of industry employment in 2002. (Stevenson 2002, personal communication)

Putting this in perspective, the 740 fewer direct jobs amount to less than 1.25% of an industry that is less than 3% of the regional workforce.

“The contribution of the timber industry to regional employment, however, has been gradually declining.  More than 19% of the region’s workforce, representing 150,000 to 160,000 workers, was employed in the industry at the beginning of the 1970s; by the beginning of the 1990s, about 3% of the region’s workforce, representing between 120,000 and 130,000 workers, were employed in the industry (figure 12).  The change is due to reductions in the number of workers in the timber industry and increases in the nontimber economy in both metropolitan and nonmetropolitan counties. 

The size of the timber industry varies by state, with slightly fewer than 60,000 workers in western Oregon.”  The Northwest Forest Plan: A Report to the President and Congress.  E. Thomas Tuchmann, Kent P. Connaughton, Lisa E. Freedman and Clarence B. Moriwaki. USDA, p.148.

“By 2000 the relative importance of primary forest-products employment had fallen to about 1% of total employment in the, [NW Forest] plan area.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, 341-350 

Other Employment

BLM lands contribute to employment and income in industries other than those that are related to lumber and wood-related products. Dispersed and developed recreation, commercial fishing, hunting, special forest products, mining, grazing, and forestry services all contribute to the region’s economic health, and they are all affected by changes in federal forest management.

Special forest product output levels are constrained by two major items:

(1) amount of budget available to put toward developing, implementing, and   monitoring the program; and

(2) destruction of the products when creating other types of jobs and earnings; such as fuel management projects, pre-commercial thinning  projects, and other silvicultural and/or restorative efforts.

“Dispersed and developed recreation, commercial fishing, hunting, special forest products, mining, and grazing all contribute to the region’s economic health, and they are all effected by changes in federal forest management. 

Several other forest-based industries are significant to employment in the Pacific Northwest. These industries and their associated employment were discussed in the FEMAT report (1993), and they are addressed here to identify potential trends that may be associated with Plan implementation.  The FEMAT report estimated that the commercial fishing industry employed about 5,000 workers in the region in the early 1990s. In addition, more than 18,000 workers were employed in mining and minerals processing statewide in Oregon and Washington at that time. Floral greens, Christmas ornamentals, and mushroom harvesting provided at least seasonal employment for some 28,000 to 30,000 workers (FEMAT 1993), and the forestry services sector, which carries out forest management activities like tree planting supported about 6,000 jobs in the region.  Substantial job opportunities could be created in pruning and other timber-stand-improvement activities, reforestation, wildlife inventory and monitoring, watershed restoration, and technical survey and assessments on the region’s federal forest lands (FEMAT 1993). Wages, benefits, and employment conditions differ greatly between and within these industries.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.48. 

Estimating jobs and income associated with the non lumber and wood-related industries for western Oregon is not possible because of a general lack of data as well as a lack of data for correlating jobs to these specific industries.

Since the economic contribution of all forest products (including lumber and wood-related) to the regional economy of the planning area is small, continued implementation of the RMPs will not likely change existing economic conditions and trends in the planning area overall. But as noted earlier, resources and effects of the plan are not evenly distributed. Subregions, individual businesses, and individuals are not affected equally (Northwest Forest Plan: the First Ten Years, Rural Communities and Economics).

“12,000/full-time equivalents in commercial fishing in Oregon.”  Personal communication, Shannon Davis.  The Research Group. 

“The commercial fishing sector declined by an average annual amount of 3 percent.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.49 

“The commercial fishing industry is estimated to employ about 5,000 workers in the region…”  Protect and Enhance the Environment: A New Era for Natural Resource Management. E. Thomas Tuchmann, Kent P. Connaughton, Lisa E. Freedman and Clarence B. Moriwaki. The Northwest Forest Plan A Report to the President and Congress, p.148. 

“The number of people employed in these activities is not easily measured, though Radtke and Davis (1993) estimate 17,000 to 23,000 full-time jobs in the coastal tourism industry and between 50,000 and 80,000 full-time equivalents associated with recreation on federal forest lands in the region (of which 4,000 to 5,000 are estimated to be associated with fishing).”  The Northwest Forest Plan: A Report to the President and Congress.  E. Thomas Tuchmann, Kent P. Connaughton, Lisa E. Freedman and Clarence B. Moriwaki. USDA, p.147.

Recreation

While primary data is not available to appropriately measure economic benefits of recreation opportunities on BLM it is important to note that both resident and nonresident tourists contribute to local economies in the form of purchases of goods and services of accommodations, transportation, food and beverage, retail, and commercial recreation services. Below are some data on some of these expenditures.

“The number of people employed in these activities is not easily measured, though Radtke and Davis (1993) estimate 17,000 to 23,000 full-time jobs in  the coastal tourism industry and between 50,000 and 80,000 full-time equivalents associated with recreation on federal forest lands in the region (of which 4,000 to 5,000 are estimated to be associated with fishing).”  The Northwest Forest Plan: A Report to the President and Congress.  E. Thomas Tuchmann, Kent P. Connaughton, Lisa E. Freedman and Clarence B. Moriwaki. USDA, p.147.

“10,000 tourism jobs in coastal Oregon and growing recreational use.”  Personal communication, Shannon Davis.  The Research Group. July 2006.

“Currently, recreation opportunities provided by national forest lands in the Plan area support about 17.5 thousand direct jobs, and 25.5 thousand total jobs. The recreation-use-associated direct jobs make up less than 1 percent of all employment in the Plan area. The wage income generated from recreation expenditures was $357.4 million direct, and $629.6 million total.” [Note:  this does not include BLM lands .] Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.49.

ANALYSIS OF THE MANAGEMENT SITUATION – 38

·   Outdoor recreation on BLM administered lands in the planning area yielded an estimated 3,953,400 visitor days in 2004, of these an estimated 24% were tourists who resided more than 50 miles from the recreation site. Using regional tourism studies for western Oregon in combination with national outdoor recreation valuation studies cited by the National Park Service and the Bureau of Land Management reduces a conservative estimate of the value of nonresident outdoor recreation spending in the planning area.  In 2004, visitors to BLM recreation areas spent over $68,300,000 in local communities to support their visit to the public lands.

·   Resident outdoor recreation visitors also contribute to the regional economy. Studies conducted by the U.S. Forest Service in Region 6 show an average expenditure of $28.81/day for the common activities engaged in within the planning area. Given this multiplier, over $86,500,000 was spent within communities in the planning area in support of resident based outdoor recreation activity on BLM administered lands.

·   Combining the valuation estimates generated for non-resident visits with resident visits yields over $154,800,000 contributed to communities in the planning region by outdoor recreation visitors to BLM administered recreation sites.

·   Not all recreation visitors spend the same amount per day. Outdoor recreation tourists engaged in activities supported by commercial outfitters and guides spend a disproportionately higher amount per day than other outdoor recreation visitors. Studies cited by the National Park Service of river outfitters yielded an average per day expenditure of $93.64. Within the western Oregon planning area, 559,250 people recreated under the 1,415 Special Recreation Use Permits in 2004. Approximately 10% of these were issued to commercial outfitter and guide services offering numerous trips on the public lands. If only 10% of the total visits under permit were attributed to commercial guides, this activity alone would add $5,236,817 to western Oregon communities.

·   In addition to this spending, guide services charge an average rate of $212/day – generating $11,856,100/year in guide service revenues within the planning area. A very conservative estimate of the total contributions from these 151 commercial outfitter and guide services depending on BLM administered lands in the western Oregon would be at least $17,000,000.

Payments to Counties

Shared revenues generated by the sale of timber and other goods and services from federal lands are important sources of funds for local governments. Historically, 50 percent of BLM timber receipts for the Oregon and California Railroad (O&C) lands in the planning area have been returned to counties as compensation for revenues foregone because the lands and resources are not in private ownership (Northwest Forest Plan: the First Ten Years, Rural Communities and Economics).

·   The 18 western Oregon counties in the planning area were affected by the drop in federal timber harvest and associated timber. 

BLM’s statement that these are important sources of funds for local governments is untrue and has not been true for more than a decade, since county payments were decoupled from the sale of timber and other goods and services from federal lands.

·   Safety Net payments, and the Secure Rural Schools and Community Self Determination Act (P.L. 106-393), both referred to as “Owl guarantee adjusted,” were devised to compensate O&C counties for lack of timber receipts.

·   O&C receipts are distributed to the counties by a formula that is independent of from which specific county the timber is actually harvested. 

This statement is also untrue.   Neither of these payments were devised for O&C counties. 

The Owl Safety Net payments were devised for impacted counties in CA, OR and WA.  The Secure Rural Schools and Community Self Determination Act payments  were devised for all counties in 41 states with federal forest lands.

Owl Guarantee adjusted payments and unadjusted payments (what would have been payments to county governments based on timber receipts) are shown in Figure 24. It is important to note that the Secure Rural Schools payments are based on the highest three years of timber receipts, constituting an automatically increasing gap of payments to counties in years where timber harvests are lower.

This also means that counties have been awarded artificially high payment amounts without suffering a loss in forest values.

It is not known how the owl guarantee adjusted payments have affected overall county financing.  In the short-term, a guaranteed amount is likely to have a stabilizing effect.  The Secure Rural Schools legislation, however, expires on September 30, 2006.  To the extent that the actual harvest levels fall below planned allowable sale quantity levels, federal revenue sharing would also be reduced beginning in fiscal year 2007.  The long term stability of the payments

is uncertain. Without new congressional action, western Oregon counties will need to address a projected $70 to $100 million plus in revenue shortfall.

Any county commissioner from an O&C county outside of the Portland metropolitan area can assure the BLM that county payments have significantly benefited overall county financing in a majority of O&C counties. 

“The safety net makes a substantial difference over what would otherwise be paid if amounts were based on federal receipts.  [emphasis added] Using the National Forests of Oregon and Washington as an example, more than $101 million was paid to counties in 1994 but actual receipts would have returned slightly more than $38 million. . . .  forests in western Oregon managed by the Bureau of Land Management would have provided $30 million in 1994 if the payments had been based exclusively on actual receipts; with the safety net, however, the total payments amounted to $79 million.”  The Northwest Forest Plan: A Report to the President and Congress.  E. Thomas Tuchmann, Kent P. Connaughton, Lisa E. Freedman and Clarence B. Moriwaki. USDA, p.207.

This also means that counties have been awarded artificially high payment amounts without suffering a loss in forest values. 

“No direct observations were made on the effects that $233 million in county payments had on job retention and creation, but estimates that used broad averages for public investments conservatively suggest that some 6,000 jobs would have been maintained or created had the monies reached the region in conventional business and community-development programs.”  The Northwest Forest Plan: A Report to the President and Congress.  E. Thomas Tuchmann, Kent P. Connaughton, Lisa E. Freedman and Clarence B. Moriwaki. USDA, p.249.

To the extent that the actual harvest levels fall below planned allowable sale quantity levels, federal revenue sharing would also be reduced beginning in fiscal year 2007 ONLY if the legislation is not reauthorized. 

BLM data without guarantees were only reported until 1995  (Northwest Forest Plan: the First Ten Years, Rural Communities and Economics).  Owl guarantee payments are those payments compensated to counties to supplement reduced timber receipts, and include safety net payments, and Secure Rural Schools Self Determination Act payments.

ANALYSIS OF THE MANAGEMENT SITUATION – 39

Payments in Lieu of Taxes

In addition to receipts from timber harvest on O&C lands, counties receive payments in lieu of taxes based on the amount of eligible federal land (generally public domain lands) in each county.  Payments in lieu of taxes have generally not been affected by reduced harvest levels because the owl guarantee legislation and the Secure Rural Schools Act mitigated the loss in timber revenues.

The payments in lieu of taxes for Oregon have averaged between one $1.0 million and $2.5 million over the last 15 years (Northwest Forest Plan: the First Ten Years, Rural Communities and Economics).

This is not true.  These payments do not “supplement” reduced timber receipts, rather they supplant them.

Management Opportunities

BLM can directly influence the supply levels of natural resources to meet the goal of contributing to tribal and non-tribal community economic, social and environmental well-being.

“Other benefits from federal forests that contribute to the well-being of local communities include ecosystem services (such as clean air and water) and amenity values (such as scenic quality and wildlife).”  Socioeconomic Monitoring Results Volume I: Key Findings Socioeconomic Monitoring:  Introduction and Report Overview. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph,  William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe.  Northwest Forest Plan—the First 10 Years (1994-2003), p.8 

“Rather, we are saying that nearly all communities in the West will find they cannot have a healthy economy without a healthy environment. [emphasis added] Moreover, there exist many opportunities in the West to improve both the environment and the economy, for example, the elimination of inefficient subsidies would make more money available for other public services or to reduce debt.  The longer these opportunities languish, the fewer will be the West’s jobs, the lower its incomes, and the poorer its communities.  Conversely, the sooner we seize these opportunities, the sooner the West will enjoy more jobs, higher incomes, and greater prosperity."

Resources/programs include:

·   Forestry services including fuels management, planting, precommercial thinning and other silvicultural and restoration efforts that create jobs and personal earnings in local communities.

·   Timber Harvest.

·   Special forest products output levels.

·   Utilization of slash/residue from silvicultural/range/fuels treatments for biomass and energy production wherever appropriate.

·   Recreation opportunities.

This suggests that these forestry services are subject to BLM’s “supply levels” which, as stated above, do not necessarily contribute to well-being.  In reality, several of these resources/programs do contribute to “community economic, social and environmental well-being” which cannot be said for BLM’s “supply levels.”  BLM has neglected to include benefits from wildlife, drinking water, carbon sequestration as well as other benefits. 

"Finding direct connections between changes in forest management policy and socioeconomic change is difficult.”  Socioeconomic Monitoring Results--Volume III: Rural Communities and Economies. Susan Charnley, Ellen M. Donoghue, Claudia Stuart, Candace Dillingham, Lita P. Buttolph, William Kay, Rebecca J. McLain, Cassandra Moseley, Richard H. Phillips, and Lisa Tobe. Northwest Forest Plan, the First 10 Years (1994-2003), p.155. 

“Moreover, it is difficult to measure the extent to which federal forest management policy, versus other variables, contributes to positive or negative change in communities.”  Socioeconomic Monitoring Results--Volume VI: Program Development and Future Directions. Susan Charnley and Claudia Stuart. Northwest Forest Plan, The First 10 Years (1994-2003), p.11-12. 

ANALYSIS OF THE MANAGEMENT SITUATION – 40

Consider the mix of forest products and resource uses that best meets the needs of the multiple and diverse communities in each District.  For example, strategic management of silvicultural practices, and increased allowable sale quantity levels would benefit those counties with communities that have been more adversely affected by decreased harvest levels.

“We are saying that the economic pressures to arrest and reverse environmental degradation will increase.  Those who promise that workers, firms, and communities tied to environmentally harmful activities can avoid these pressures if only the environmental laws, such as the Endangered Species Act, were set aside raise false hope.  The pressures are independent of specific laws.  Even if such laws are repealed, the costs of environmentally harmful activities will continue to rise and jeopardize the economic outlook for affected communities.  Public officials can best promote long-run economic prosperity in the West by encouraging efficient transitions away from harmful activities toward those beneficial to both the environment and the economy.” [emphasis added]  A Letter from Economists to President Bush and Governors of Eleven Western States Regarding the Economic Importance of the West’s Natural Environment, p.7. 

“In the rural west, it turns out there is an inverse relationship between resource dependence and economic growth; the more dependent a state’s economy is on personal income earned from people who work in the resource extractive industries, the slower the growth rate of the economy as a whole.”  Prosperity in the 21st Century West: The Role of Protected Public Lands. Ray Rasker, Ben Alexander, Jeff van den Noort, and Rebecca Carter. Sonoran Institute, p.10. 

·   Increasing timber receipts would increase payments to counties facing the potential loss of current safety net payments.

This is not true at the present time, has not been true for more than a decade, and would only be true if county payments legislation is not reauthorized and one is comparing what actual receipts would be now versus an increased cut. 

Increasing harvest levels would influence the job and personal earnings component of local and regional economics.

Increased cut is a minor short-term economic benefit at best and a major long-term economic and environmental loss.

 “Forest-products manufacturing is a mature industry serving very specific markets for building and paper products.  As such one can expect technological change to continue to boost worker productivity as capital and energy are substituted for labor. . . [emphasis added]

Total output has risen, whereas employment and labor income have declined (Howard 2003)…

The impact of this automation on employment can be seen in the Pacific Northwest where wood products output was higher in 1988 than it was in 1978, but the jobs associated with that output had fallen by 35,000 or 20%.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2.  p.345 

“For instance, after 1994, log supply in the plan area actually increased modestly as a result of some of the market adjustments discussed above.  This increased log supply did not lead to stabilization or increase in primary forest-products-industry employment.  Instead, forest-products employment continued to decline, losing 11,000 jobs between 1994 and 2000.  Because federal timber harvests during this time period declined only modestly, USFS researchers estimated that only 400 of these 11,000 lost forest-products jobs were associated with reduced federal timber harvest.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.341.

“As a result, part of the increased federal harvest will be offset by declines from other sources of supply.  A steady flow of federal supply into the wood-fiber market regardless of economic conditions will further destabilize prices, driving them down during periods of weak demand and driving them up during periods of peak demand.  These destabilized prices are not what would result if federal timber managers behaved in a market-oriented manner.  Other landowners’ reactions to these more volatile prices may, in turn, destabilize harvest levels, the opposite of what federal land managers intend.”  Public Timber Supply, Market Adjustments, and Local Economies: Economic Assumptions of the Northwest Forest Plan. Thomas Michael Power. Conservation Biology Volume 20, No. 2, p.344.

“Rather, we are saying that nearly all communities in the West will find they cannot have a healthy economy without a healthy environment. [emphasis added] Moreover, there exist many opportunities in the West to improve both the environment and the economy, for example, the elimination of inefficient subsidies would make more money available for other public services or to reduce debt.  The longer these opportunities languish, the fewer will be the West’s jobs, the lower its incomes, and the poorer its communities.  Conversely, the sooner we seize these opportunities, the sooner the West will enjoy more jobs, higher incomes, and greater prosperity.

We are saying that the economic pressures to arrest and reverse environmental degradation will increase.  Those who promise that workers, firms, and communities tied to environmentally harmful activities can avoid these pressures if only the environmental laws, such as the Endangered Species Act, were set aside raise false hope.  The pressures are independent of specific laws.  Even if such laws are repealed, the costs of environmentally harmful activities will continue to rise and jeopardize the economic outlook for affected communities.  Public officials can best promote long-run economic prosperity in the West by encouraging efficient transitions away from harmful activities toward those beneficial to both the environment and the economy.” [emphasis added]  A Letter from Economists to President Bush and Governors of Eleven Western States Regarding the Economic Importance of the West’s Natural Environment, p.7.