According to reports, the Coos County Commission will hold an all day hearing on July 1 at the Owen Building to discuss the future of the Coos Bay Wagon Road timber lands. There is a movement afoot to transfer title to the Coquille Tribe. An earlier transfer of BLM lands to the tribe was made subject to the conditions imposed by the Northwest Forest Plan but the tribe was accused of violating those terms. Any transfer would have to be approved by Congress and require the assistance of Senator Ron Wyden and Rep Peter DeFazio.

Because this is such an important matter I would like to encourage everyone to do some homework on this issue and also to look into alternative plans for this land that might include a community owned forest or transfer to the county inventory. For example, investor owned forests cut on faster rotation cycle to provide quarterly returns to shareholders and therefore reduce the potential yield of the property by half. The tribe, while technically not investor owned, may operate more from a position of ‘self-interest’ rather than the common good.

a) Trees are cut too early, thereby losing up to 50% of the land’s productive capacity for saw timber. This loss of productive capacity has barely been mentioned in the press and is never advertised by timberland owners. This loss of production is the simple result of cutting before what foresters call the Cumulation of Mean Annual Increment, or CMI.

Community forestry operates on a longer cycle, 140 years and produces double the yield of the corporate model. That means higher quality timber, healthier forests and better jobs.

The analysis compares two forest models for forest size and annual cut volume, and describes the income and expenses associated with each model’s operations. The difference between each model is the length of cutting rotation. One model uses a 45-year rotation and the other uses a 140-year rotation.

The 45-year rotation model represents the typical management practiced by today’s large corporate forestland owners. We call this model Corporate Forestry. Corporate Forestry is controlled by investor economics, does a poor job of growing high-quality wood, and appears to sacrifice much productive capacity. We call the 140-year rotation model Community Forestry. We show that a longer-rotation forestry is more productive, grows more valuable products, and sustains a forest for multiple values. Thus Community Forestry is a better deal for timber workers and rural communities and has the potential to be a sound business propositio

CoastRange.org has an excellent explanation of forestry economics and the controversial use of discounting to establish the net present value (NPV) of forests.

in academia and government there has been a persistent controversy over net present value analysis and the use of discounting. The issue is one of scale (individual, firm, community, government, society) and the subject being discounted (i.e. a steel mill or forest). A growing body of academic work is revealing the error of applying discount rate/net present value analysis to entities such as forests (Norgaard, 1991; Kula, 1999). The error occurs when one confuses the self interest of an individual with the public interest of society as a whole. We expect private business firm to act in their self interest.However, we should never confuse private self interest with the common good.

In 1991, Norgaard and Howarth demonstrated that while net present value analysis and discounting have a role in public policy and business, the assumed “correct” rate is actually derivative of an overall analysis of intergenerational efficiency and equity. We quote Norgaard and Howarth (emphasis added):

“Though high interest rates discourage the long term management of slow growing resources (forests) and the protection of long term environmental assets (biodiversity), high interest rates also discourage investment in projects which transform environments (dams) and in projects which are necessary to extract resources (oil wells). Thus, the relationship between interest rates and conservation (protecting the interests of future generations), and sustainable development is ambiguous.

We show that the conservationist’s dilemma results from a misspecification of the problem. Economists heretofore have not distinguished between decisions concerning the efficient use of this generation’s resources and decisions concerning the reassignment of resource rights to future generations. All decisions over time have been simply treated by economists as investment questions, as if all resources were always this generation’s resources. We properly specify the economic questions involved, clearly distinguishing between equity and efficiency, and show why discounting is appropriate with respect to the efficient use of this generation’s resources but is inappropriate when this generation is primarily concerned with redistributing resource rights to future generations. Further, we show that when rights are reassigned between generations, interest rates themselves change. We conclude that the assignment of rights to the future is the instrument of conservation and sustainability; interest rates are derivative.”

While discounting may be ambiguous for some natural resource issues, it is not ambiguous for forests. Time and again, forestry is offered as the case example where discounting engenders great unease. In response to the discounting controversy, the concept of a “social discount rate” has been suggested. The idea of a social discount rate acknowledges that different entities (e.g., a business firm in contrast to society as a whole) have different interests.