Subsidies Anonymous #8 to #11

Table of Contents

#8 -- The Effects of Global Warming on America's Forests

March 1, 1996

The Forest Service has a long history of crying timber famine when in fact the major problem for the timber industry has always been a timber glut. This timber glut has kept wood prices low, keeping sawmill profits down and giving landowners little incentive to practice sustained yield forestry. Only in the last few years has this glut been relieved by the spotted owl controversy; and even today the huge volumes of timber in Russia and China threaten to pose a new glut.

Despite this history, Forest Service ecologists a few years ago warned that a new timber famine was just around the corner, this one caused by global warming. Ecologists painted a picture of western mountain ranges turning to deserts, with Douglas-fir forests pushed north of the Canadian border and western pine forests pushed to the northern Rockies.

President Bush responded to the global warming controversy by getting Congress to fund a major tree-planting program, with the intention that the trees would soak up carbon dioxide and thereby reduce global warming. At the same time, the Forest Service used the global warming crisis to convince Congress to fund a major research program on forests and global warming. The results of this research are now in.

Far from projecting a timber famine, Forest Service researchers predict that global warming will cause America's forests to grow considerably faster. In fact, the major problem predicted by the research is that global warming could greatly depress timber prices.

The researchers used a combination of computer models for predicting climate, forest growth, and timber prices. They started with the assumption that atmospheric carbon dioxide would double in the next seventy years. This assumption was applied to four different general circulation models. These models predicted that the increased carbon dioxide would increase average global temperatures by 2.8 degrees C to 4.2 degrees C. At the same time, average precipitation was predicted to increase by 8 to 11 percent.

These results were used as input to a Terrestrial Ecosystem Model that then predicted changes in forest productivity. The result of this model were used in a Timber Assessment Market Model to predict changes in timber prices. Since the latter model is based on projections of population and other factors of timber demand that look ahead just fifty years, the researchers limited their projections to fifty years.

Depending on the general circulation model, the researchers projected that, by the year 2045, America's forests will be growing 5 to 24 percent faster than with no increases in carbon dioxide. This increase in growth causes timber prices to fall by 6 to 35 percent below the baseline. Since the effects of global climate change are only beginning to be felt in 50 years, forest growth is likely to increase even faster and timber prices fall even further after 2045.

In fact, say the researchers, 2045 timber harvests are projected to increase by, at most 3 percent above the baseline. This is partly because "it takes time to build processing capacity to take advantage of more abundant resources." But the huge price drop resulting from such a small increase in harvests suggests that global warming will continue to make timber glut, not famine, the primary problem for the wood products industry.

The researchers also asked whether President Bush's tree-planting program was worthwhile. They concluded that it was not, since nearly all trees planted will eventually be cut and so their carbon would not be permanently removed from the atmosphere. "Only the most optimistic scenario"--i.e., the one with the greatest global warming--"shifts future forests from sources of carbon to a carbon sink."

This does not mean that global warming is not a problem. I tend to be skeptical of computer models anyway, though I have more faith in models developed by the Forest Service research branch than those used by the national forests branch. It does suggest that desertification is not the issue. Instead, if you are worried about global warming, better buy an umbrella.

More seriously, this research implies that:

The complete results of these research models are published in a Forest Service report titled "Productivity of America's Forests and Climate Change," edited by Linda Joyce with contributions from six other scientists. The report is available at no charge from the Rocky Mountain Forest and Range Experiment Station, 240 West Prospect Road, Ft. Collins, CO 80526 or by calling 970-498-1719. Ask for publication number RM-GTR-271.

#9 -- Timber Famine or Timber Glut?

March 13, 1996

As noted in the last issue of Subsidies Anonymous, the Forest Service has a history of crying timber famine when in fact the reality is a timber glut. A recent example was a 1988 report called The South's Fourth Forest. The title referred to the fact that many forests in the Southeastern U.S. had been cut three times and were now growing back and would be ready to cut a fourth time in a few years.

The report looked ahead fifty years to project growth and cutting rates in southern softwood and hardwood forests. It found that growth rates in hardwood forests would exceed cutting rates for the entire fifty-year projection period, while softwood growth would exceed cutting for all but the last five years of the projection. During those last five years, the net growth of hardwoods exceeded the net loss of softwoods so that overall growth exceeding cutting in all fifty years.

Rather than rejoice that growth would be ahead of cutting, the Chief of the Forest Service introduced the report with a dire warning of disaster should softwood cutting ever exceed growth. He urged that Congress fund a multi-billion dollar program designed to insure that growth would always stay ahead of cutting. In reality, of course, cutting has to sometimes exceed growth or we would all eventually be crowded out by trees.

Despite the Chief's opportunism, The South's Fourth Forest was notable in being the first Forest Service projection of future timber supplies that relied on a true supply-and-demand model. All past projections (and many projections done today by states and other nations) assumed the prices would remain fixed at current levels. With this assumption, increasing population would demand increasing quantities of wood, quickly leading to timber shortages.

The South's Fourth Forest and most subsequent Forest Service projections have been based on a computer model that was originally called the "Timber Market Assessment Model." "TMAM" was hard to pronounce, so the model's authors, Forest Service economist Richard Haynes and Darius Adams (now a forest economist at Oregon State University) switched the center two words to form "Timber Assessment Market Model," or "TAMM." TAMM was used in the 1990 and 1995 RPA assessments as well as for the global climate change research described in the last issue of Subsidies Anonymous.

Although the number of variables in the U.S. timber economy are huge, the model has proven fairly reliable in its short-term predictions. For example, the model predicted that reduced cutting in Pacific Northwest old-growth forests as a result of the spotted owl controversy would increase the price of an average new home by 6 percent--which is precisely what happened.

Longer-term projections are less likely to be accurate because of so many unpredictable factors. But they do provide a good baseline for policy analysts and decision makers. The Forest Service's recently published its latest fifty-year supply, demand, and price projections. Their baseline projections do not account for global warming (see last issue of Subsidies Anonymous for those that do), but they do account for increases in recycling, decreases in national forest timber cutting, and other factors.

In general, the Forest Service projects that timber prices will increase until about 2020. After that, increasing volumes of timber from private land in the South and Pacific Northwest will cause prices to level off or even fall.

For example, prices of softwood lumber--one of the most important wood products in the economy--are projected to increase to 42 percent above 1991 levels in the year 2020. But they will then fall about 3 percent by the 2030.

Stumpage prices--the price of timber when it is still "on the stump"--are also expected to peak in around 2020 at an average of 50 percent above current levels. After 2020, prices drop in the West but continue to increase slightly in the East.

The researchers also asked how prices would be affected by such changes as:

Projected Future Softwood Lumber Prices
Baseline 2040 prices as percentage of 1991 prices    	145
2040 prices as percentage of baseline prices
If states increase regulation of 2040 private forests	 95
If people recycle 60 percent of paper                	 97
If national forests maintain late 1980s cutting rates	 99
If people triple use of wood as fuel                 	102
If Congress subsidizes $1.1 billion for tree planting	 98
If global warming takes place (average)              	 88

The table shows that none of the assumptions other than global warming significantly affect projected prices. A near doubling of national forest timber cuttings above baseline rates, for example, reduces prices by only 1 percent. Quadrupling subsidies to tree plantings on private lands would reduce prices another 6 percent.

Strangely, lumber prices are decreased by increased state regulation of private forests. The authors say that the new rules would mostly reduce cuttings in pulpwood plantations. Pulp users would turn instead to sawtimber residues and recycled fibers. This frees pulp plantations to grow for longer rotations, making them suitable for sawtimber, which reduces lumber prices.

In sum, the researchers conclude that:

The complete results of these research models are published in a Forest Service report titled "The 1993 RPA Timber Assessment Update," by Richard Haynes, Darius Adams, and John Mills. The report is available at no charge from the Rocky Mountain Forest and Range Experiment Station, 240 West Prospect Road, Ft. Collins, CO 80526 or by calling 970-498-1719. Ask for publication number RM-GTR-259.

#10 -- The Fort Belknap Indian Reservation's Fish & Wildlife Program

April 23, 1996

Editor's note: The Winter, 1996, Different Drummer examines the Endangered Species Act. Space prevented us from including all of the original materials we gathered for that study. Some of the longer articles that could not be included in the issue in full are posted on the Web. The next few issues of Subsidies Anonymous will present some of the shorter articles we had to leave out of Different Drummer.

These shorter articles are by Craig Knowles, a wildlife biologist in Montana. Future articles will cover the USDA Conservation Reserve Program, and recovery of the mountain plover and swift fox. This article looks at wildlife policies on the Fort Belknap Indian Reservation.

by Craig Knowles

In 1983, when we first worked at Fort Belknap as wildlife consultants, mule deer were occurred only as transient individuals and pronghorn antelope were present in low numbers. During the entire summer of field surveys, we saw only two mule deer on the Reservation, one of which was shot. Pronghorn survived only through great wariness and extreme speed. It was common for pronghorn to start running at a distance of over a mile when approached by a vehicle. This near absence of large ungulates was due to the lack of a wildlife management program and no enforcement personnel.

The winds of change began in 1988 when the Assiniboine and Gros Ventre Tribes of Fort Belknap began a fish and wildlife program. In its infancy, the program struggled and there was little actual change from the perspective of wildlife. However, in 1991, Mike Fox became director of the wildlife program and he promoted non-member trophy hunting of pronghorn and other wildlife species. The goal of non-member hunting was for non-members to provide the financial basis for the wildlife program. This program was market driven and providing recreation was only a secondary objective. By 1995, a non-member pronghorn license cost $500. Tribal members are also required to buy licenses to hunt and fish on the Reservation but member fees are generally less than $10 per license.

The results of this program have been nothing less than astounding. Pronghorn numbers have increased dramatically, numbers of non-member hunters have increased, and as a result, so have revenues. By 1994, the wildlife program sold over $64,000 of licenses and, based on trends, revenues for 1995 will reach $100,000. This income has allowed the Tribes to hire additional personnel to patrol and enforce regulations, and to send their wildlife officers to professional training courses.

Perhaps one of the biggest benefits of the program is that non-member hunters are required to hire a tribal guide, which is a reasonable requirement for hunting on a 650,000 acre reservation. The average daily fee is $150 for guiding and the average hunt lasts about three days. In addition to providing income to tribal members, this program has created an army of volunteer game wardens. Now that pronghorn have direct economic value to a number of people, everyone is watching out for the welfare of the pronghorn. The comments we receive from guides when we visit the Reservation is that they want more pronghorn and more non-member hunters.

The program's success does not stop with pronghorn. The Tribes maintained a small bison herd started in 1974, but with income from non-member trophy hunting and live sale of bison to other Indian tribes, the Fort Belknap wildlife program has adequate finances to lease additional land in which to expand the herd. Mule deer are also returning to the Reservation. As a sign of this change, last year the Fort Belknap Reservation recorded its first road-killed deer since the invention of the automobile.

Although controversial, the Fort Belknap wildlife program has permitted recreational shooting of prairie dogs for non-members. The Tribes were under intense pressure from the ranching community to poison all of the Reservation's prairie dogs (about 22,000 acres) and, at a cost of about $10 per acre, this would have been no small financial undertaking. Rather than destroy their prairie dog ecosystem with poison, the Tribes opted to treat prairie dogs as a wildlife resource. The results have been that there is more demand for recreational shooting than the Reservation can supply. In response, non-member permits are being increased annually with the 1995 permit set at $50. On a per acre basis, the Reservation makes about three times more money with prairie dogs than the Bureau of Land Management grosses leasing Federal land for livestock grazing. The most significant aspect of this program, however, is that the prairie dogs and their associated species are still on the Reservation, and there is now little talk about poisoning prairie dogs.

The Fort Belknap fish and wildlife program vividly illustrates an important principle--when wildlife is given an economic value and its take is carefully regulated, there is tremendous incentive for a variety of people to promote the welfare of wildlife. We like to contrast the Fort Belknap Reservation with over 5,000 pronghorn and a thriving business based on trophy hunting, with the state of Nebraska which has a dwindling pronghorn population of about half that of Fort Belknap. In Nebraska, there is no local support for pronghorn and pronghorn are frequently viewed as agricultural pests. Market-driven hunting may not be a cure-all for wildlife management problems, but if paying a little more for hunting promotes ecosystem restoration and protection, then we should consider that as money well spent.

#11 -- The Dark Side of the Conservation Reserve Program

May 1, 1996

Editor's note: This issue continues with another article related to endangered species written by Montana wildlife biologist Craig Knowles.

by Craig Knowles

In the past few years, wildlife managers and the popular press have reported astounding wildlife successes resulting from the Conservation Reserve Program (CRP). Claims include increased pheasant and duck populations and greater bird densities in grasslands.

The Department of Agriculture, which administers the program, says that the program has saved many tons of soil from erosion, conserved thousands of gallons of fuel due to reduced cultivation, and reduced the application of fertilizers, herbicides, and insecticides. The Fish & Wildlife Service says that the CRP really costs nothing because it is cheaper to pay farmers not to grow crops than to pay the subsidies farmers get when they do grow crops.

The Conservation Reserve Program pays farmers not to grow crops on some of their acres. Farmers generally pick their least productive acres. Those are often also the most erodible lands, but they are not necessarily the best acres for wildlife.

Unfortunately, the program has a dark side that few have reported. As it is implemented, CRP has produced a steady decline in grassland biodiversity. The problem is that the Food Securities Act of 1985 permits sodbusting provided that farmers file a conservation plan with the Soils (now Natural Resources) Conservation Service.

A farmer in southwestern Wisconsin received CRP funds to set aside some acres previously used for croplands in a conservation reserve. The farmer used the funds to buy a bulldozer and promptly cleared several acres of woodlands and planted corn--even though the land was less suited to corn than the land in his conservation reserve. The farmer's conservation plan was simply a signed statement that he would not plant the newly busted cropland more than two years out of eight.

A Montana farmer planted wheat on two square miles of prairie that had previously been habitat for mountain plover and long-billed cerlews. The SCS district conservationist says that the farmer's conservation plan simply addressed soil erosion and did not consider wildlife habitat.

If you are growing wheat in Montana, CRP is almost to good to be true. First, the federal government pays you to grow the wheat. Then the Conservation Reserve Program pays you not to grow the wheat. Then you can take those payments and plant wheat elsewhere and get paid to grow it there. This is the most sensible use of your conservation payments because wheat farming requires big expensive machinery that can only be paid for by spreading around to as many acres as possible.

Montana farmers planted 95 percent of their CRP lands in crested wheat grass or another monocultural, non-native grass. This is hardly beneficial for biodiversity. Meanwhile, native prairies are plowed under. The SCS makes no attempt to monitor such "double dipping," but evidence--though sparse--is available.

In 1989, Jim Stutzman, working with the Fish & Wildlife Service, documented sodbusting of more than 56,000 acres of native prairie in five Montana counties between 1987 and 1989. Background checks showed that nearly a third of the sodbusters were enrolled in the CRP. The only official attempt to track the consequences of CRP ended when the Fish & Wildlife Service abruptly transferred Stutzman to another location.

During our own surveys of mountain plover in central Montana, we have seen CRP fields with dense stands of crested wheat grass immediately adjacent to wheat fields with freshly installed fence posts and wires. The Stutzman report showed us what this meant: rangelands converted to cropland.

Since the Conservation Reserve Program began in 1985, 2.8 million acres of Montana farmland had been enrolled in CRPs. This suggests that there would be a measurable decline in crop acreage planted each year, as well as in other indicators such as fertilizers sold and grain harvested.

Yet Montana agricultural statistics reveal no such decline. The total number of acres planted in grains decreased from 1985 to 1988, but jumped to record levels in 1989. Since then it has declined somewhat, but still remains above the 1988 levels and only about 1.2 million acres below the 1985 level. Meanwhile, total fertilizers used have increased and grain harvests reached record levels in 1993.

In other words, 2.8 million acres of CRP land translated to, at best, 1.2 million fewer acres being managed as croplands. This suggests that at least 1.6 million acres of rangeland were plowed under--probably more, considering the 1989 planting records.

On the other hand, annual payments to Montana farmers have increased significantly, from around $100 million per year to more than $350 million per year. So much for the claim that it is cheaper to pay farmers not to grow wheat than to pay subsidies for them to grow it! The reality is that taxpayers are now paying farmers to do both.

Peter Lesica, a Montana botanist concerned with conservation of native plants, interviewed six SCS district conservationists. Four told him that sodbusting was a significant problem in their districts, and three of those attributed it to the Conservation Reserve Program.

The Conservation Reserve Program has apparently financed the conversion of hundreds of thousands of acres of Montana's mixed-grass prairie, which have more than one hundred plant species and many associated wildlife species, to simple monocultures of alien bunchgrasses that have negligible wildlife value. Declines in plant and wildlife diversity when native prairies are converted to cropland are not offset by the enrollment of acres into conservation reserves. Although a few species, such as pheasants, may flourish in such simplified ecosystems, the net effect is a major loss of biodiversity.

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