Forests Face New Threat: Global Market Changes; an Overhaul of Forest Policy Is Needed to Deal with the Economic and Environmental Consequences of Globalized Production
Franklin, Jerry F., Johnson, K. Norman, Issues in Science and Technology
For the past 100 years, U.S. forest policy has been guided by the assumption that the United States faced an ever-increasing scarcity of timber. Indeed, at times during the 20th century, there were fears of an impending timber famine. Policymakers responded accordingly, taking actions such as subsidizing reforestation, creating the national forests, and protecting forests from fires.
Now, however, the world has been turned upside down. The United States today finds itself in a world of timber surpluses and increasing competition. As a result, this country faces a declining role in the global wood products industry. In the Pacific Northwest, for example, questions about the competitiveness of the region's prized Douglas fir products have shaken the industry to its core; a situation that was unthinkable a few years ago.
At the heart of the matter, the globalization of capital markets is dramatically altering the socioeconomic context for growing and manufacturing wood-based products from timberlands. One key change has been the adoption of agronomic approaches to wood production. Particularly important has been the expanded use of intensively cultivated, short-rotation tree plantations in temperate and subtropical regions of the Southern Hemisphere. These "fiber farms" have proved to be extraordinarily productive. Capital investments by many North American wood products corporations have shifted to that hemisphere in response to such productivity, as well as to other competitive advantages that exist there. At the same time, these companies have been selling huge tracts of land in the United States. In the future, imports will likely supply a significant share of U.S. consumption.
A stabilization or contraction of U.S. timber production might seem a boon to the environment. After all, timber-cutting practices have often had detrimental effects. In our view, however, the loss of timber production may be too much of a good thing, for two reasons. First, most of the forested land in the United States is privately owned; yet private forests provide large public benefits, including watershed protection and wildlife habitat. How will we maintain these forests when the owners can no longer make money from selling wood? Won't they be increasingly tempted to sell their land to housing developers? Second, various human activities have radically altered the structure and functions of forests, to the point where it's inconceivable that Mother Nature alone can restore them to their desired conditions. For the past century, proceeds from logging on public lands have been used to help in restoring natural resources. How in the future will we obtain the money needed to carry out essential stewardship of public forests, including restoration efforts? In light of the new economic and social circumstances, we believe that it is time for a major overhaul of our policies regarding private and public forests.
The impact of globalization
The shift of wood production out of North America should not come as a surprise. In a capitalist society, capital flows to those who can extract the most value from it, measured in the long run by achieving an acceptable rate of return on investment. In today's globalized marketplace, the competition for capital occurs on a worldwide basis. With the dramatic reduction in impediments to capital flows, corporations have more freedom to seek out locations where factors of production provide the best return for stock-holders and then move appropriate operations to those locations. In addition, we would expect this capital to flow where there appear to be the fewest impediments to its effective use--where mill siting is easy and corporate decisions are not haunted by the potential for further regulation.
Publicly held wood products corporations are subject to these same competitive pressures and opportunities. Long-term decisions by these corporations are driven by return on investment, measured primarily by discounted present net value. …