Californian Forest Shows How to Cash In on Sustainable Forestry Management
Thursday, November 10, 2011
A recent article in the NY Times examined the case of a Northern California forest, which is not cashing in so much on the timber it produces, but on keeping its trees standing. The forest trust managing the lot has adopted a new management paradigm, which spares most of its trees, preserves the rich biodiversity, stores carbon and filters drinking water all the while earning a substantial income for its owners- in the millions to be exact.
The majority of forestry investments rely on income from sales of timber and timber products. With the construction and biomass industries gaining momentum, timber as a commodity has enjoyed increasing demand in recent years. There are fewer forestry management companies, which utilize their trees for their carbon sequestration and, as a result, carbon credit-earning potential.
"People have to become much more open-minded before we see mainstream industry moving in that direction" and relying on profits from carbon credits, explained in an interview for the NY Times Laurie Wayburn, co-founder of the Pacific Forest Trust, which manages the 2,200-acre Van Eck plot.
The nonprofit, based in San Francisco, seems to have found a solution to the decade-long tension between the local logging industry and environmental activists by redefining the economics of forestry investments.
According to the NY Times, the management style employed by the trust is the so-called "uneven-age" method, where clear-cutting of large areas is substituted for removal of select trees. The method encourages more rapid forest restoration. At the same time, larger trees, which store more carbon dioxide, are spared, increasing the overall sequestration capacity of the forest.
The management approach seems to be paying off with time. Pacific Forest Trust took over the Van Eck forest in 2002, when it was comprised of 18,000 board feet of wood per acre. In 2011, thanks to the new management method, forest density has more than doubled to 40,000 board feet per acre. The trust has expressed its ambition to reach a density level of over 100,000 board feet per acre.
To accomplish the goal, 50 per cent or less of annual growth is being harvested. This way, the trust collects only the "interest" earned on the forest's growth, never the "principal investment" of timber. Higher density means the trust can harvest more wood from larger, higher-value trees.
"It's not just for the good of the trees, but for the good of the bank account,"expanded by sales of carbon credits, explained Wayburn for the NY Times. The reported carbon credit sales between 2005 and 2009 have brought in more than $2 million for the trust.
The primary buyers of carbon credits are California industries that have otherwise failed to successfully reduce their emissions. The Van Eck Forest was one of the first carbon sequestration projects certified by the California Air Resources Board (CARB). According to the 2006 Global Warming Solutions Act, California needs to reduce its carbon emissions by 25 per cent. The CARB certification recognizes the Van Eck Forest as successful in helping the state reach its goal. California is also expected to implement statewide compliance regulations in 2012, placing limits on industry emissions and enforcing a cap-and-trade scheme. This can boost further the demand for forestry carbon credits.
What is more, trust officials tell the NY Times that, with timber prices tumbling, earnings from the conservation project and the sale of carbon credits exceed what the group is taking in from timber sales.
As forestry funds are exploring new ways to maximize investment profits in a time of economic crunch, they need to look to and learn from cost-efficient and effective management methods such as those employed by Pacific Forest. Cutting trees and exporting the logs can be quite costly; keeping trees intact eliminates expenditure on harvesting and transportation. Investors also need to keep in mind that the value of forests doesn't always lie in the number of logs exported, but also in the environmental and ecosystem benefits they carry, and the Van Eck case is a good example of that.
The competitive economic environment, which currently defines the timber industry, has been putting a lot of pressure on companies to differentiate themselves and to diversify their profit sources. Producing and selling carbon credits might just be the most effective as well as most ethical way to do so.
"To be competitive, we need to become part of a forest economy, not just a timber economy" while utilizing the profitability of carbon credits explained Wayburn. Van Eck is surely redefining the way in which forests do business.
Labels: Californian, Forest, Forestry, Management, Shows, Sustainable
