National Forest Timber Sale Receipts and Costs in 1997

The Forest Service reports that national forest timber sale losses climbed from $15 million in 1996 to $88 million in 1997. But it says that this increase was due to a change in how it accounts for roads.

The agency's publicity suggests that, for the first time, it is fully counting the cost of roads in 1997. This earned it accolades from a number of major environmental groups.

The reality is that the Forest Service made only a minor adjustment in road accounting procedures which added $54 million to total timber costs. Meanwhile, 1997 timber sale receipts were $40 million less than in 1996. Some costs declined slightly, but overhead costs remained almost exactly the same. The end result was a significant increase in total losses.

Despite the fix of the road costs, there are still major problems with TSPIRS. The most important problem is that TSPIRS mingles costs and receipts paid out of or to the Treasury with costs and receipts paid by timber purchasers. The agency also heavily amortizes reforestation costs, counting only about 10 or 15 percent of those costs against timber receipts.

In 1997, the Forest Service kept $305 million in timber receipts for its own budget. Only $208 million of these costs were counted by TSPIRS. In addition, appropriations for reforestation and timber stand improvement totaled nearly $60 million, but TSPIRS counted less than $10 million of these.

These two items account for the difference between the Forest Service's calculations and those of the Thoreau Institute. Where the Forest Service calculates an $88 million loss in 1997, the Institute calculates a $214 million loss before payments to counties in lieu of property taxes.

According to the agency, 36 out of 117 national forests earned a profit on timber in 1997. But the Institutes calculations show that only 15 forests paid more to the U.S. Treasury than they cost the Treasury. Of those, just seven ended up with any net after making payments to counties.

One of the supposedly profitable forests, the Uinta, claimed negative timber costs in 1997, which is improbable. The same forest reported zero timber costs in 1996. It is more likely that the forest lost money in both years.

In 1997, as in 1996, the biggest cost by far is overhead. TSPIRS, of course, counts only that share of overhead that is attributable to the timber program.

Such overhead totaled to more than $180 million, which is considerably more than the $130 million spent on sale preparation and roads. As illustrated by the table below, most costs have declined as timber sale levels have gone down. But overhead costs have not; in fact, 1996 and 1997 overhead costs are the same as they were in 1992, when twice as much timber was cut.

Basic Timber Receipts and Costs (thousands of dollars) and Volumes Cut (mmbf)

                        1991    1992    1993    1994    1995    1996    1997
Timber receipts        1,157   1,077   1,017     885     696     619     577
Sale costs               331     227     240     131      97      82      85
Road costs                83      94      64      29      41      40      45
Reforestation costs       73      87      84      72      72      62      65
Overhead costs           227     183     169     164     237     184     181
NEPA/Appeals costs        12      39      41      26      53      52      70
Volume cut             8,628   7,288   5,883   4,797   3,866   3,650   3,273

The table also fails to support the oft-heard claim that NEPA documentation and appeals are responsible for below-cost timber sales. These costs have increased, but they are still only a small fraction of the total cost, and much less than half of the overhead cost.

As with our 1995 and 1996 TSPIRS analyses, the 1997 Thoreau Institute analysis is contained in three different files. This year, we have two different formats: tab-delimited text and Excel 4.0, which should be readable by many spreadsheet programs. The text files are listed first:

  1. The key data include receipts, the basic costs, volumes cut, and so forth. Excel format.
  2. The detailed data includes information from the TPIR01 report. Excel format.
  3. The supplemental data comes from the salvage sale and receipts reports. Excel format.
The Excel files contain most of the formulas and links between the three files. For a detailed explanation of any of the rows or columns in the files, see the description of the 1995 files, which are nearly the same. If you have any further questions about the data, please send email to
rot@ti.org
.
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