15 minute read
The State of Timber in Oregon
The State of Timber
Why it matters who owns Oregon's Forests
written and photographed by Daniel O’Neil
ATOP THE capitol building in Salem stands a gilded pioneer, axe in hand, his gaze pointed toward the Coast Range. Naturally one of the world’s premier regions for growing high-quality trees, Oregon owes much of its existence to forests. Ecological, scenic and recreational values derive from Oregon’s emerald landscape, but forestry has long held sway over these woods. Like a springboard notch in an old-growth stump, logging lies carved into the state’s backbone.
Forests cover half of Oregon, the nation’s top producer of softwood lumber, plywood and engineered wood products. Most of this forestland stretches between the Pacific Ocean and the Cascade Crest, where the state tree, Douglas fir, dominates. Other industries now outshadow timber in Oregon’s economy, but in a state with nearly 30 million acres of trees, the forest here still carries its weight in gold. It’s considered, and discussed, like a cash crop.
Oregon’s forest sector produces about 3.8 billion board feet of wood each year, adds $8 billion annually to the state’s gross domestic product, and employs some 60,000 people. Forestland owners form a motley group: governments, newcomers, restructured old dynasties, nonprofits, entire communities, small and large families, and Oregon’s first peoples, for instance. How they manage their land depends on their needs and values.
This ownership matrix holds implications because in Oregon the use of a forest affects forest-dependent communities and Oregonians as a whole. But it also often influences the success of pension plans and Wall Street investments. Forest ownership carries the burden of prioritizing management outcomes that reach from habitat to carbon storage to income, and whether or not to involve local decision-making. Which owners uphold Oregon’s best interests depends on who you talk to.
THE STATE of Oregon, its counties and municipalities own only 4 percent of Oregon’s forestland. The federal government owns almost two-thirds of Oregon’s forests, and it once provided the majority of Oregon’s timber. But passage of the Northwest Forest Plan in the early 1990s halted record-level harvests on federally owned lands in Oregon, slashing production by 90 percent.
Dan Shively, the Forest Service’s Pacific Northwest Region natural resources director, considers his agency a community-based land management organization now. With its focus mostly off of timber, the Forest Service works with private, tribal and other public forestland owners to apply new approaches across federal lands in Oregon.
“We’re bringing stakeholders in these settings together to have a voice in helping shape management of our National Forests,” Shively said. “Partnerships and collaboration are vital to our collective success. Our best examples are where we have put in the time and we’ve nurtured these collaboratives.”
After the Forest Service cutbacks, large private forestland owners filled the void. Private forestry in Oregon is largely a numbers game. Private interests own 34 percent of Oregon’s forest but provide three-quarters of the state’s timber. Ninety percent of Oregon’s timber harvest comes from counties on the west side of the Cascades. And in Western Oregon, the ten largest private owners control 80 percent of the timberland. Some are still family-owned, but most are investment firms or the timber management arms of insurance companies and pension funds.
Environmentalists and industrial “Big Timber” have fought for generations, but in the early 1990s a storm of ownership changes blew through the timber industry. An adjustment to the Real Estate Investment Trust (REIT) rules allowed indexed companies to classify as REITs and thereby shred their tax obligations. REITs pay no corporate earnings or capital gains taxes—their shareholders do when they sell stock. Oregon’s largest forest products companies began selling forestland, mills and other assets as they reincarnated as REITs.
Coincidentally, an economic boom attracted new investment to Oregon. Forests provide, among other things, regular cash flow, a reduced tax burden and hedging against inflation, making timberland a calculated choice for growing wealth. In the frenzy of corporate restructuring, Timberland Investment Management Organizations (TIMOs) bought land for their clients and began to manage it for revenue.
By the early 2000s, the majority of Oregon’s private forestland ownership had shifted to REITs and TIMOs. The new ownership represented pension plans, mutual funds, insurance companies, endowments, foundations, wealthy individuals and retired teachers, from across the United States and the globe. To meet the required returns, these investment groups have had to manage their forests in a way that some say demands too much from the land.
IF OREGON has an epicenter for investment forestry, it’s the Coast Range, where vast expanses of private timberland are punctuated by relatively small state and national forests. Chuck Willer, co-director of the Coast Range Association, a nonprofit founded in 1991 to defend Western Oregon’s forests and communities, challenges the ownership regime found here.
“The management of our industrial private forest is financial, and financial management has a certain mandate,” Willer said. That mandate prioritizes return on capital and results in intensive forest management, meaning clearcut harvest, short rotation times between harvests, the use of herbicides and monoculture replanting. Willer calls it Wall Street forestry. “They grow money. They don’t grow forests.”
Willer cites the damage to wildlife, streams, salmon, drinking water, entire ecosystems, the climate and timber communities as consequences of investor ownership of Oregon’s forests. But for each of Willer’s arguments, the timber industry has a counterpoint.
“It’s hard to make a broad statement about ownership and relate it to management activities,” said Sara Duncan, director of communications for the Oregon Forest Industries Council, a trade association representing large private timberland owners. “Every member of ours has its own approach regardless of if they’re family-owned, REIT or TIMO. And even if those owners decide to just operate at the Forest Practices Act baseline, that is already doing a spectacular job of protecting clean water, clean air, wildlife habitat, et cetera.” (Oregon’s Forest Practices Act, created in 1971 as a set of regulations for forestry practices, was the nation’s first. It sets the minimum standards for logging in Oregon and requires, for example, replanting after harvest.)
Willer disagrees with the tax treatment for REITs and TIMOs, especially at the state level where a quasi-total decline in the harvest tax now starves Western Oregon’s timber-producing counties. Like other critics, Willer believes the separation of anonymous shareholders from the lands that grow the trees permits a desecration of Oregon’s verdant westside.
“Some outfits that have moved into Oregon’s forests are just timber investment firms who solicit money from rich qualified investors, or they’re timber management organizations that get money from the large Wall Street financial outfits like Blackrock,” Willer said. “In the past, the Weyerhaeuser family was involved in the company. It had some sort of a human dimension to it. That all changed with the transition to financial forest management.”
Duncan views things differently. “A significant number of Oregonians are investing in these companies as well,” she said. “And just because the ownership changes hands doesn’t mean that the foresters change hands.” Duncan points to the employment opportunities and above-average salaries in rural counties where the timber industry still supports timber-proud communities.
Despite their opposition, both sides share some common interests, like keeping the forest intact and undeveloped. Existential threats that ignore property lines, like climate change and wildfire, are meanwhile galvanizing all of Oregon’s timber industry.
More middle ground exists in these dark woods. Objective observers like Dr. Kate Anderson can see it. A senior researcher at the independent, nonprofit Sightline Institute, Anderson analyzes Oregon’s forestry ownership through a wider lens.
“When you have securitized production, the owners are often non-local investors and people saving for retirement,” Anderson said. “They may not even know they own any Weyerhaeuser or Hancock/Manulife shares and often don’t have a lot of understanding or interest in the day-to-day workings of forest management. So you end up with different management incentives and a different emotional, human relationship to production.”
Anderson points out that California has very few REITs and TIMOs in forestland ownership. For decades California’s forestry laws have remained stricter than Oregon’s, preventing the high-intensity, short-rotation logging that generates quick returns on investment. Oregon’s recent Private Forest Accord will bolster forestry laws, but it was not meant to evict its co-signers, the investment timber industry.
Some financial outfits, like Portland-based EFM, set their sights on investment forestry that values the land and local communities as much as the timber it regularly, carefully harvests. The emerging carbon storage market proves another alternative method of cashing in on trees’ potential.
“Some securitized companies do a better job managing their forests,” Anderson said. “When owners are embedded in their communities, are accountable to their workers and to future generations, and don’t have short-term pressures that determine their professional success, they have a different set of incentives.”
SOME SAY those who work in the forest, with their hands on furrowed bark and trusted chainsaw, know the forest best. In the case of Peter Hayes, that might be true. Hayes’ family has worked with forests and sawmilling since the 1840s. Today they own 1,000 acres of forest west of Forest Grove.
Hayes is a problem solver by nature. As a small forestland owner, he uses his forests to explore positive paths forward. His family’s forests provide experimental venues for maintaining common forestry’s strengths and for testing and accelerating necessary innovations.
Small owners come in myriad forms, with objectives from maximizing wood production to maximizing ecological value. Hayes manages his forest for the entire spectrum, applying a holistic view that values ecology and community as much as timber. He works neither in clearcuts nor in rotations.
From 2007 to 2011, Hayes served on the Oregon Board of Forestry. In his opinion, the average Oregonian has too little understanding of and connection to forestry. “Looking at Coast Range clearcuts, Oregonians often indignantly ask, ‘How could they do that?’ The better question is, ‘How couldn’t those owners do that?’ They’re operating within a set of economic drivers that leave them with essentially no alternative. It’s basically modern capitalism written out across the landscape.”
Private forestland ownership in Oregon could benefit from a modernized perspective and some upgraded policies, markets and strategies, Hayes suggests. Examples include using economic incentives like taxing land according to its carbon storage, or marketing Oregon’s wood products for their quality rather than quantity. “In my experience, many of the industrial owners would like to manage for a wider range of values, but we need to create systems that would help them do that,” Hayes said.
Oregonians want a lot from forests: lumber, drinking water, wildlife, recreation, carbon storage. But only wood is meaningfully priced in today’s markets, so forestland owners understandably maximize what they are paid for, Hayes believes. Because no one owns the air, water or animals that inhabit the woods, Hayes argues that these commonly owned values deserve recognition alongside the dollar value of trees. He would like to see Oregonians accept the responsibility for improved monitoring, protection and restoration of those common values, and become better at asking what the forest demands of them.
“We need to transition from this frontier-pioneer mentality, where we draw wealth from the land but without enough commitment to reciprocity, to a long-term settled citizen mentality, which means you have to take more responsibility for caring for the land and for human communities,” Hayes said.
IN A STATE with as much forestland as Oregon, ownership types continue to evolve. REITs and TIMOs revolutionized profit-based “Big Timber” several decades ago. Today, land trusts and community forests are finding new options for growing and cutting trees, for conservation, and for local ownership.
Land Trusts care for 300,000 acres of protected land in Oregon. The Columbia Land Trust, a nonprofit, owns or stewards 37,000 acres in Oregon and Washington. Management of each site depends on the objectives for that forest. Some they cut, using ecological forestry practices, and some they protect as critical habitat or for carbon storage.
Using transactional rather than regulatory means, land trusts leverage grant money to either purchase land outright or to buy a conservation easement on working timberland, such as the timber rights in a riparian buffer or the rights to develop a parcel. Unable to compete financially with REITs and TIMOs, land trusts instead collaborate with them to acquire properties of key ecological importance.
“We negotiate our way to something so there’s a win-win on each side,” said Cherie Kearney, forest conservation director for the Columbia Land Trust, where she has worked for the past twenty-five years. “Each party has to compromise. Maybe we see more trees cut, but it doesn’t convert and the forest is not lost to development.”
Over the last decade, community forests have expanded across the state. Today they account for nearly 20,000 acres in Oregon. Like land trusts, community forests protect drinking water and recreation access, preserve habitat, capture carbon and provide ecologically sourced timber. Purchased and managed by a community, the community forest serves local priorities first.
“It’s a good example of managing for a holistic suite of values,” said Dylan Kruse, vice president of Sustainable Northwest, a nonprofit that advises on Oregon forestry issues, including community forests. “Community forestry shows how we can get something for everyone. I think we are seeing a trend here in the Pacific Northwest where forest-dependent communities are interested in keeping those forests within local ownership and retaining that decision-making structure for those resources that are important to them.”
Industrial timberland owners have largely cooperated with the community forest movement because they recognize that certain parcels carry intrinsic local significance. For example, Arch Cape, on the north Oregon Coast, recently secured its drinking water source with the creation of the Arch Cape Community Forest, a collaboration between local stakeholders of many sorts.
“It matters who owns and has governance over the land,” Kearney said. “Land trusts want to keep ownership closer to home because, by and large, where community and land are connected, the land ends up better cared for.”
THE LAST two centuries in Oregon have yielded a variety of forestland owners. Throughout that time, and certainly before it, a deeper way of relating to the woods has endured. Tribal forestry today finds balance in modern forestry while maintaining a traditional respect for the land.
Tribal ownership represents only 2 percent of Oregon’s forestland, but its influence on other timber stakeholders in the state is growing. Jason Robison serves as the land and resources officer for the Cow Creek Band of Umpqua Tribe of Indians and serves on the board of the Intertribal Timber Council.
Robison doesn’t denounce investment forestry. But he does highlight the profound connection that tribes maintain with their local land and resources, a contrast to outside investors primarily driven by economic gains. “Tribes don’t simply uproot and shift their culture,” Robison said. “They bear the lasting consequences of their land management decisions. The choices they make today lay the foundation for the actions to be taken seven generations from now. Tribes are truly committed for the long haul.”
Tribes don’t simply uproot and shift their culture. They bear the lasting consequences of their land management decisions. The choices they make today lay the foundation for the actions to be taken seven generations from now.
Robison expresses concerns over the common fifteen- to twenty-year ownership turnover rate typical of many industrial timberlands. The Cow Creek Band of Umpqua Tribe of Indians has procured lands from these larger forestland owners for tribal use. Robison points out, however, that the costs of rehabilitating lands after intensive management can be significant, posing challenges to some of the tribe’s aspirations.
“The cumulative effect of that land changing hands is hard to quantify, but it’s there, it’s real,” Robison said. “And it’s different when you have a long-term manager that’s local, whether it’s the small woodland owner, whether it’s the family wood farm, or whether it’s a tribe. They’re physically present, they’re connected to that land, and they’ve been ingrained in that community.”
Each tribe has its own approach to forestry, but key values guide the way: ecological, cultural and economic. While timber production serves as a financial cornerstone for the tribe, it’s not their sole focus. The health of fish and wildlife habitats, carbon sequestration through extended rotations, and the preservation of traditional food-gathering and sacred areas are of paramount importance.
Robison sees partnerships with philanthropic organizations and like-minded private equity groups as a way to “level the playing field” and bring more lands back into tribal ownership. Land trusts, community forests, other private owners and government agencies have already begun working with tribes to manage Oregon’s forests.
In the Umpqua National Forest, the U.S. Forest Service has a co-stewardship agreement with the Cow Creek Band of Umpqua Tribe of Indians on a hazardous fuels reduction project to help prevent future large-scale wildfires. Robison appreciates the potential this offers for all Oregonians. “Those jurisdictional boundaries start to gray a little bit when we start working together for more healthy and resilient forests.”
As Oregon’s forestland ownership evolves, old biases fade and new alliances emerge. Public, private and tribal stakeholders are finding common ground. In the end, Oregon’s forests belong to those who live with the trees that made, and make, the state. Who formally owns those forests, and how they use them, depends on the will and priorities of Oregonians, the state’s shareholders.
