Are You Planning for the Reduction in Northwest Timber Supply?
The timber industry in western Oregon and Washington have been voicing concerns over log supply for decades. This started with the listing of the spotted owl and continued through the adoption of Habitat Conservation Plans for state and private lands in Washington. These policy changes reduced timber supply for the forest products industry. The supply is declining further, but the additional changes are not all policy related.
Recent and planned changes will reduce the annual harvest in Western Oregon and Washington by more than 575 million board feet, or about nine percent of the combined harvest in both states. Nine percent does not sound significant in the big picture, but it equates to approximately eight average size mills. According to the Associated Oregon Loggers there are 11 jobs per million board feet of timber harvest. That means these reductions will cause 6,325 people to seek new job opportunities. So, nine percent may not seem like much, but if you own a forest product business, or work in one, it may be very significant to you.
Oregon 2020 Labor Day Fires
On September 7th and 8th of 2020 strong winds arrived in Oregon and pushed what started as sparks into several very large fires across western and southern Oregon. These wind-driven fires moved very quickly, destroyed entire communities and took several lives. It will be many years before these areas, and the people that called them home, recover.
Included in the devastation were thousands of acres of forestland, much of it private. For the last three decades, private forestland owners have been supplying over seventy percent of the timber harvested in Oregon. These forestland owners had over 425,000 acres burn, 268,000 of which were of medium and high severity.
Private landowners are salvaging the burned timber’s remaining value in the short term, but those acres will not produce merchantable timber again for decades. In their report prepared for the Oregon Forest Resources Institute, 2020 Labor Day Fires, Economic Impacts to Oregon’s Forest Sector, Mason, Bruce and Girard and Forest Economic Advisors estimate that these fires will reduce harvest by more than seven billion board feet in the next forty years. That is nearly two years’ worth of Oregon’s annual harvest that will not be available over the next four decades.
Oregon Forest Accord
In January 2020, some conservation groups and timber industry representatives signed a memorandum of understanding to review the Oregon Forest Practices Act. By the end of the 2020 legislative session their immediate changes to the Forest Practices Act were adopted and the Private Forest Accord was recognized. The immediate changes focused on changes to aerial pesticide spraying on forestlands. Through the Private Forest Accord conservation groups and the industry hammered out other changes to the Forest Practices Act that would facilitate a Habitat Conservation Plan (HCP) for aquatic species. Those changes were agreed to in late 2021 and are expected to be passed in the legislature this year.
While the HCP should provide certainty for the private forestland owners in the future, the new rules will remove some of their land from the timber harvest. Some estimate it will reduce harvest by ten percent from private forestlands in western Oregon. That is over 270 million board feet annually in addition to the impact the fires will have. Others look to neighboring Washington State and see the harvest there was reduced over eighteen percent after their Forest and Fish Law was implemented in 2001. The true reduction in harvest will be seen as the new rules are implemented, but it will negatively affect Oregon’s timber supply.
Washington DNR Sustainable Harvest Calculation
The Washington Department of Natural Resources (WA DNR) is required to calculate the timber volume they are able to harvest sustainably every ten years. This calculation is required to ensure that trustees receive a perpetual supply of revenue from State Trust Lands. The most recent calculation was for the decade 2015-2024. Unfortunately, this calculation was not complete until December of 2019.
In their decision for the current decade, the Board of Natural Resources said the sustainable harvest was 4.65 billion board feet, or 465 million board feet per year. This is an 85 million board foot reduction from the revised 550 million per year the WA DNR had deemed sustainable previously. The WA DNR has begun the Sustainable Harvest Calculation for the 2025-2034 decade and the trend has not been to increase the harvest volume.
One may ask why is a harvest reduction in Washington discussed with all the reductions in Oregon? Logs cross the border of the two states going both directions. A change in Washington harvest will affect the wood basket in Oregon. It may not be a direct effect on an individual facility, but the ripples of change will impact them indirectly.
Oregon Department of Forestry Habitat Conservation Plan
In 2018 the Oregon Board of Forestry directed the Oregon Department of Forestry to develop an HCP for management of Western Oregon forestlands. HCP development is ongoing. The purpose of the HCP is to ensure that activities on state forestlands comply with the Endangered Species Act. It should also provide some certainty for the harvest levels from lands managed by the Oregon Department of Forestry.
While the HCP process continues, the ODF released a draft HCP in March of 2021. The impact of that draft was estimated to reduce harvest from state lands by approximately 45 million board feet or 17 percent. The real impact will be determined when the final decision is made for the HCP, and it is then implemented.
Oregon and Washington have been able to purchase volume from British Columbia (B.C.) in previous years that would supplement the supply in both states. Unfortunately, old growth deferrals and reductions in B.C.’s Annual Allowable Cut due to insects and fire are going to limit the ability to purchase supplemental volume there. British Columbia is experiencing its own timber supply crisis.
The annual harvest in Oregon will likely fall by more than 490 million board feet per year over the next forty years costing 5,390 jobs associated with seven mills. Washington’s harvest from state lands in Western Washington will drop by 85 million board feet per year until the next Sustainable Harvest Calculation is complete. That is a loss of a mill and 935 related jobs. Odds are the next iteration of allowable harvest in Washington will further reduce annual harvests. Also, British Columbia is in the process of determining the changes in their harvest volumes. Like Oregon and Washington most folks are expecting a significant reduction in British Columbia. This declining supply will mean significant changes to a region that has a rich timber history.
If you would like to see how these changes may affect your business or specific regions of Oregon, Washington and British Columbia, contact The Beck Group. We can illustrate how the changes may affect you and help you plan for them.
THE BECK GROUP Forest Products Planning & Consulting Services
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