Seeing the Forests
The agreement with Bowater - the largest newsprint manufacturer in the U.S. - will change the way the company does business and serve as a model for all other paper companies operating in the South.
"This is a major win for hundreds of communities throughout Tennessee and the South that have been living with the impacts of paper production for generations and have been calling for change," said Danna Smith, Policy Director for Dogwood Alliance. "We believe that other paper companies can and must follow Bowater's lead."
Highlights of the accord include:
• Bowater will end conversion of natural hardwood forests to pine plantations on all the land it owns in the United States within three years. Such conversions recently have totaled approximately 500 acres per year.
• Bowater will stop buying from third-party land owners pine fiber converted from natural forestland to pine plantations after 2007. The phase out will take place over the next three years.
• Bowater will expand its buffer zones during aerial applications of herbicides and fertilizers to a uniform 300 feet. The company will also formalize a public communication program of these activities.
• Bowater is in the process of studying approximately 7,000 acres of particularly sensitive areas (known as ‘gulfs and coves’) areas on its Tennessee lands to identify those of exceptional ecological, geological or historical significance. The company has committed to take appropriate measures to protect these areas as they are identified. While that study is underway, Bowater has agreed not to sell or harvest those areas.
Other innovative timber harvesting techniques are underway in the Pacific Northwest as well.
Ecotrust is using the power of private markets and federal incentives to try to change harvesting methods there. The group is using $50 million in Federal Tax credits to work with timber companies that have big tax burdens.
The tax credits will allow Ecotrust -- via its recently formed Ecotrust Forests LLC -- to provide investors a better return. Investors will be eligible to claim 39 percent of the amount placed with Ecotrust Forests in federal income tax credits over a seven-year period.
"An investment that doesn't at first offer market returns suddenly becomes viable" because tax credits provide gains for investors, said Stuart Cowan, an expert hired by Ecotrust to navigate the New Markets Tax Credit application process.
Ecotrust is a 14-year-old organization that seeks environmental conservation by employing a strategy called a "triple-bottom-line-oriented system" along the temperate rain forest of the West Coast. The system weights environmental stewardship and social equity with the economic bottom line.
Through the new organization, Ecotrust plans to purchase significant forest parcels along the western edges of California, Oregon and Washington in a range of sizes between 1,000 and 20,000 acres. Ecotrust will hire firms to manage the forests in each of the communities nearest its lands. .........."It is pretty tough to do this sort of thing for the kinds of money available through charitable grants and government funding. So we are going to capital markets," said Ecotrust President Spencer Beebe.Von Hagen said current trends in forest ownership emphasize economics to the detriment of the long-term health of timber towns and the environment. "The forest products industry is facing intense global competition in terms of new products from plantations in fast-growing, low-cost regions. As a result, there is a huge transition of forests from corporate ownership," she said.........imber investment organizations, known as "Timos," are purchasing a growing number of those lands to provide investors strong, relatively short-term returns. Forest land holdings in the United States owned by Timos are valued at roughly $15 billion. They typically work by logging and reselling property within about a decade. "Timos certainly aren't thinking very long term," said Grant Munro, president of Port Angeles, Wash.-based Munro LLC. "Ecotrust is taking a very novel approach. It is much like the industry used to do. And it is a way to get investors to put money into commercial timberland, operate with a lower project return and yet get investors the same return they might have been hoping for," he said.Ecotrust wants to whittle the amount of lands left vulnerable to investors seeking short-term returns. When forests are managed in a time-frame of at least several decades, von Hagen said, a variety of revenue streams can be established. When a forest is selectively logged and clear cuts are avoided, larger, high-value trees can be steadily harvested for years.
"By engaging in long-term management for optimum forest health productivity, we think we can allow timberlands to generate a whole suite of products and services that will provide economic and social benefits to the local communities," von Hagen said.In addition, sources of revenue not typically cultivated by traditional forest owners also can boost returns. For instance, a growing number of corporations that emit carbon dioxide are looking to purchase carbon credits to offset pollution. "The long-standing controversy around forest management is that it does not create the most wealth, innovation or happiness," von Hagen said. "We could be creating a prosperous and wealth-building forest products industry and regaining the market position that Pacific Northwest forests should have in the world."