The national forest’s today sell less than 20 percent of the timber they sold just a dozen years ago, but most people still think of the Forest Service as the “timber service.” Yet the truth is that timber was “king” on the national forests for just a third of the Forest Service’s history, from roughly the mid 1950s to the late 1980s.
In 1940, the Forest Service was thirty-five years old and was still selling less than one billion board feet of timber a year. By 1960, national forest timber sales had zoomed to eleven billion board feet a year, around which they hovered for the next thirty years. In the course of this transition, the Forest Service sacrificed some its most cherished principles.
The most visible change was in cutting methods. In 1950, most national forests were proud of the fact that they used only selection cutting to remove timber. By 1960, most national forests had switched to clearcutting, and virtually all forests would do so by 1970.
In the National Agricultural Library
in
Up until 1950, at least, the Forest Service knew that clearcutting was ugly and that the public hated it. Forest Service officials told the public that private timber companies practiced timber cutting because they were greedy and didn’t care about the future. The agency’s anti-clearcutting rhetoric aimed to build support for the Forest Service’s long-term goals of acquiring more national forest lands in the East and gaining legal control over the cutting methods and cutting rates of private landowners—a goal that seemed feasible during the New Deal years.
With the 1952 election of Dwight Eisenhower as president, Forest Service Chief Richard McArdle told his staff that the agency had no chance of getting regulatory control of private forestlands during a Republican administration, and the agency should forget about that goal. (So much for Newsweek’s claim that the Forest Service didn’t worry about the results of the 1952 election.) Similarly, funding for Weeks Act purchases of eastern national forests was winding down. An ironic by-product of these changes was that the Forest Service no longer had to practice selection cutting to maintain its image as the agency that used only “proper cutting practices.”
From a silvicultural point of view, clearcutting has its place. Although Forest Service researchers Jerry Franklin and Dean DeBell say, “biologically, no types or species appear to require large [10 acres or more] clearcuttings for successful regeneration,”[i] some forest species, such as lodgepole pine, may do best under clearcutting. But by the 1960s, national forest managers applied this claim to all sorts of species and forest types, including Douglas-fir and ponderosa pine, which in fact probably did better under shelterwood or selection cutting than under clearcutting.
Aside from the silvicultural
debate, the real question is: Why did the Forest Service sacrifice its public
image on the alter of clearcutting? The agency that
in 1952 was (again quoting Newsweek)
“one of Uncle Sam’s soundest and most businesslike investments” had turned by
1970 into one of the most controversial agencies in the nation. Congress
investigated clearcutting in
To make matters worse, the Forest Service was no longer making a profit, as it did when Newsweek put Smokey the Bear on its cover in the 1950s. Although the Forest Service claimed that clearcutting was economically efficient, by the end of the 1970s Tom Barlow of the NRDC was proving that most national forests were losing money on their timber sale programs.[ii]
Between them, clearcutting and below-cost timber sales destroyed the credibility and reputation of the Forest Service. So why did the Forest Service shift from a profitable program of selection cutting in the early 1950s to an unprofitable program of clearcutting in the 1960s?
The short answer, of course, is incentives. In 1916, Congress authorized the Forest Service to keep a share of timber receipts to spend on “brush disposal” after the timber sale. In 1930, the Knutson-Vandenberg (K-V) Act authorized the Forest Service to keep timber receipts for reforestation. These two laws, and primarily the K-V Act, led the Forest Service down the wrong path.
Congress funds the cost of arranging and administering timber sales and engineering the roads needed to access the timber. Roads are built by the timber purchasers, who naturally deduct the cost of the roads from the timber value before bidding on the timber. The purchasers pay for the timber and the Forest Service keeps what it needs for brush disposal and reforestation. The rest of the money goes to the U.S. Treasury.
In 1930, when Congress passed the K-V Act, the Forest Service spent an average of 50 cents a thousand board feet arranging and administering timber sales. So the agency wrote a rule stating that timber managers had to return at least 50 cents a thousand to the Treasury. Of course, if timber values were high enough, they would return a lot more.
In a private enterprise, money left over after costs is profit, and most private enterprises have to earn at least enough profits to keep stockholders happy. But national forest managers, who were proud to earn a profit in the early 1950s, soon began to think of money returned to the Treasury as “losses,” because they lost control of the money. “I’d rather keep the money here where I know I can spend it effectively than have it go to Congress, which will probably spend it on bombs,” one manager told me in the 1980s.
In this situation, clearcutting had two huge advantages over selection cutting. First, the cost of arranging a clearcut was less, since managers only had to mark the boundaries of the sale, and not every tree. Since Congress appropriated a fixed level of sale preparation funds, clearcutting allowed managers to stretch those funds as far as possible.
Second, clearcutting created the harshest environment for reforestation, giving managers the opportunity to spend K-V dollars on artificial reforestation—initially seeding, later hand planting. As timber prices increased, providing more K-V funds, these practices were supplemented by herbicide spraying to protect seedlings from competition, plastic fencing to protect them from deer, shade cards to protect them from the sun, and in a few extreme cases, irrigation. Most if not all of these expenses could have been avoided had the Forest Service continued to use selection or shelterwood cutting.
The economics of timber cutting is complex, and many researchers backed up the Forest Service with studies showing that, even with these added expenses, clearcutting was more profitable than shelterwood or selection cutting, which posed added costs to protect the residual trees. But none of these studies counted the costs to the Forest Service’s public image when it began extensively clearcutting in forests where for decades it had promised to use only selection cutting.
More devastating to the case for clearcutting was the discovery that most national forests
lost money on timber. The reason was simple:
Table Six
Hypothetical
Cross-Subsidized Timber
Ponderosa Lodgepole Combined
Volume (mbf) 1,000 1,000 2,000
Appraised value per mbf $100 –$80 $10
K-V deposit per mbf 9.50 9.50 9.50
Total appraised value 100,000 0 20,000
Retained by forest 9,500 0 19,000
Returned to Treasury 90,000 0 1,000
If the
Most national forests included some valuable timber and some worthless timber—that is, timber whose value was so low the Forest Service would have to pay purchasers to take it away. Selling just the valuable timber might earn profits for the Treasury. But a forest could enhance its own budget by combining the valuable timber in the same sales with worthless timber. The valuable timber would be sold for less than it was really worth to compensate purchasers for having to cut the worthless timber.
Such sales were common enough that purchasers called the worthless timber units “punishment units” because cutting them was their punishment for getting the valuable timber at less than below-market prices. Cross-subsidies cost taxpayers millions and did nothing for purchasers. The only winner was the Forest Service, which got to keep more money for reforesting more acres of land.[iii]
Even without cross-subsidization, the Forest Service’s treatment of K-V funds meant that many sales would be below cost. Although sale preparation costs grew well beyond the 50 cents per thousand board feet of 1930, the rule that managers must return 50 cents a thousand to the Treasury was never updated. By the 1980s, sale costs on many forests exceeded $50 a thousand, so sales that returned only 50 cents a thousand automatically lost at least $49.50 per thousand.
This funding system led to many other controversial practices. Managers of many national forests routinely sprayed herbicides on all their clearcuts at least two times—before and after tree planting—whether spraying was needed or not. Why bother to evaluate if spraying was needed when the cost of spraying was paid for out of timber sale receipts?
The rewards of bigger reforestation budgets were spread throughout the agency. Although the Knutson-Vandenberg Act specified that all retained receipts were to be spent on the ground, in the mid 1950s the Forest Service started keeping a share of receipts for overhead. Every level of the Forest Service hierarchy—the Washington office, regional offices, supervisors’ offices, and ranger districts—gets a share of this overhead, giving every level an incentive to promote timber sales and clearcutting. By the 1980s, a third of the quarter of a billion dollars worth of Knutson-Vandenberg funds collected each year went into overhead.[iv]
Since overhead money was released to
the bureaucracy only after money was spent on the ground, managers who didn’t
spray herbicides were pressured to do so by higher levels that expected their
share of the take. In a famous case in
Congress made the incentives worse in 1964 when it authorized the Forest Service to keep a share of timber receipts for road maintenance. This had the effect of encouraging forest managers to build high-impact, high-cost permanent roads when low-impact temporary roads would have often been sufficient. Since ever-increasing timber prices paid for both road construction and road maintenance, managers saw no need to be cautious about road costs and claimed that the roads were providing all sorts of recreation and other multiple-use benefits. Yet behind the scenes, engineering soon became the number two profession in the Forest Service, as forest engineers funded out of appropriations made a practice of overengineering almost every road on the forests.
The 1964 law also saw the creation of
“purchaser road credits,” which let the Forest Service include permanent road
costs as a part of the bids for timber and then let purchasers credit the cost
of the road against the price they bid for timber. While subject to some abuse,
purchaser credits had little effect on incentives, and it was an empty victory
when environmentalists convinced the
In the 1970s, the Forest Service responded to the clearcutting debate by hiring wildlife biologists, hydrologists, and other specialists. This, however, created the danger that such “ologists,” as they were called, would dissent against the timber sale program. This danger was most acute when NRDC’s lawsuit against clearcutting proved successful and everyone—the timber industry, the Forest Service, and environmentalists—expected Congress to pass legislation that would either legalize clearcutting, reform the Forest Service, or both.
Timber companies had their bill to
simply legalize clearcutting, but it was a
non-starter. The two other bills in contention were the
Since then, about 10 percent of K-V funds have been spent on wildlife, with smaller percentages going for watershed, range, and recreation. Some of the things paid for by K-V funds were truly comical. One national forest started using K-V funds to put up signs explaining to recreationists why clearcutting was good for them. When these signs were vandalized, the forest rewrote its K-V plans to double the money for such signs so that the first ones could be replaced.
The effect of this amendment, of course, was not only to buy the support of the wildlife lobby for the National Forest Management Act but to buy the support of the ologists within the Forest Service for the timber sale program. So K-V now not only contributed to every level of the Forest Service hierarchy but to every resource manager in the agency. This change also gave managers enormous discretion in their use K-V funds, and such discretionary funds are far more valuable to bureaucracies than preallocated funds.
The National Forest Management Act created another fund that created an incentive for a new kind of timber sale: the salvage sale. Receipts from salvage sales would go into the salvage sale fund, which could then pay for more salvage sales.[vi] Congress seeded the fund with $6 million.
Initially, the Forest Service kept from each salvage sale the actual cost of that sale. But soon managers realized that some salvage sales could not be sold above their cost, so they began keeping a premium from above-cost salvage sales in order to maintain enough funds in the salvage sale fund for future sales.
At first, the premium was 50 percent, which allowed annual spending out of the fund to grow to about $15 million from 1979 through the mid 1980s. Then major fires in 1987 led to an increased need for salvage sales. To pump up the fund, managers started keeping as much as 450 percent of the costs of each sale. This boosted salvage sale receipts to $163 million by 1990 and a peak of $194 million in 1992. This increase was not reflected by an equal increase in salvage volumes; between 1987 and 1994, a five-year average of salvage sale revenues increased by ten times, but a similar average of salvage volumes only doubled. Meanwhile, many salvage sales returned no money to the Treasury—not even 50 cents per thousand, as the Forest Service exempted salvage sales from that rule.
Salvage sales did not provide as direct an incentive as K-V funds. While K-V funds could be spent only by the ranger districts that collected those funds, salvage sale funds went into a national pool. But the rapid growth of the fund after 1987 encouraged a free-spending attitude, and average salvage sale costs leapt from $15 per thousand in the early 1980s to more than $100 per thousand in the 1990s. As with K-V, a share of salvage sale funds also went into the overhead budgets of the agency hierarchy.
Moreover, salvage sales provided managers with a path of least resistance. No one likes to see something go to waste, and the salvage of dead and dying trees was less controversial than the cutting of green trees. Though environmentalists challenged salvage sales, especially those that included many green trees, the salvage sale program is the one component of the Forest Service’s timber sale program that didn’t substantially decline through most of the 1990s. Sales have fallen since 1999, but revenues still exceed $100 million per year.
All of these incentives led the Forest Service to overshoot the National Forest System’s capacity for producing timber while still providing other multiple-use resources. Growing pressure from environmentalists combined with the post-Earth Day generation of foresters—who were mainly urbanites with strong environmental attitudes as opposed to pre-1970 foresters who were mainly ruralites with strong commodity attitudes—convinced many on-the-ground Forest Service officials that they were cutting too much timber.
In 1989, forest supervisors from
National forest timber sales have declined since then, but the incentives remain in place. One measure of those incentives is the status of the Knutson-Vandenberg fund. Although sales have declined by 70 to 80 percent, increased prices allow forest managers to keep more money from each sale, so annual K-V and brush disposal receipts have declined by only 50 to 60 percent. Salvage sale receipts continue to average around $100 million per year, several times more than their pre-1989 levels.
Despite the decline in timber sales,
timber incentives continue to influence fire policy. Although Congress has
increased fuel treatment funds, forest managers still must sometimes turn to
timber sales to treat fuels. “The only way the forest could finance fuels
treatment was through a commercial timber sale that generated enough funds to
finance other treatments, such as prescribed fire,” said the
A recent Forest Service report observed, “Line officers have cited the budget structure as a major impediment to the cooperative, integrated development of plans and projects.”[ix] In other words, managers may want to do one thing, but are forced or at least encouraged by the budget to do something else.
Such incentives justify a measure of caution when considering Forest Service proposals to use commercial timber sales to treat the fuels built up from decades of fire suppression. While commercial timber sales may play an important role in such treatments, the incentives encourage the Forest Service to greatly exaggerate that role. So long as incentives exist to lose money on timber, the Forest Service cannot be trusted to plan or carry out commercial timber sales for forest health or other purposes.
[i]. Jerry F. Franklin and Dean S. DeBell, “Effects of Various Harvesting Methods on
[ii]. Tom Barlow, et al., Giving Away the National Forests (Washington, DC: NRDC, 1980), appendix one.
[iii]. Randal O’Toole, Reforming the
[iv]. Ibid, p. 132.
[v]. Ibid, p. 133–134.
[vi]. National Forest Management Act, 16 U.S.C. 472(a)(h).
[vii]. Region 6 Forest Supervisors, Up from the Ground videotape (Portland, OR: Forest Service, 1989).
[viii]. Six
[ix].