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T A X P AY E R O L O S S E S 0 A N D 0 M I S S E D 0 O P P O R T U N I T I E S

How Tongass Rainforest Logging Costs Taxpayers Millions

S O UT H EA ST A LA S KA C O N S E RVA T I O N COUNCIL J U LY 2 0 0 3 © 2003 Southeast Alaska Conservation Council


ENDNOTES 1

Robertson, Regional Economist, R10 Budget Expenditures by Fund Code U.S. Forest Service data for Alaska Region obtained by SEACC through FOIA, December 2002.

2

Timber Cut and Sold on National Forests, Region 10 Fiscal 2002 report, from U.S. Forest Service Alaska Region Reports and Policies webpage: http:// www.fs.fed.us/r10/ref_reports/reports.shtml. Receipts cited are for value of Tongass timber cut. Calculation based upon data from: 1) Robertson, Regional Economist, U.S. Forest Service, Employment in the Wood Products Industry in Southeast Alaska,1982-2002 data provided to SEACC, May, 2003, 2) Robertson, Regional Economist, R10 Budget Expenditures by Fund Code U.S. Forest Service data for Alaska Region obtained by SEACC through FOIA, December 2002, and 3) Timber Cut and Sold on National Forests, Region 10 Fiscal 2002 report.

4

Calculations based upon data from Congressional, General Accounting Office, and U.S. Forest Service sources, available on request from SEACC.

5

Calculation based upon data from: 1) Robertson, Regional Economist, R10 Budget Expenditures by Fund Code U.S. Forest Service data for Alaska Region obtained by SEACC through FOIA, December 2002, and 2) Timber Cut and Sold on National Forests, Region 10 Fiscal 2002 report.

6

Calculation based upon data from: 1) Robertson, Regional Economist, Tongass National Forest Log Exports CY 1997-2001, data provided to SEACC, May, 2003, and 2) Timber Cut and Sold on National Forests, Region 10 Fiscal 2002 report.

7

Robertson, Regional Economist, U.S. Forest Service, Exports of Softwood Logs and Lumber from Alaska (Anchorage Customs District), CY 1988-2001, data provided to SEACC, May, 2003. U.S. Forest Service Final Supplemental Environmental Impact Statement Roadless Area Evaluation for Wilderness Recommendations February 2003, at 3-107.

8

9

10

John Schoen

11

12

U.S. Forest Service Contract Number 50-0109-2-61300, Midway Road Construction, issued April 30, 2002.

13

U.S. Forest Service Final Supplemental Environmental Impact Statement Roadless Area Evaluation for Wilderness Recommendations February 2003, Figure 3.4-15 Projected Demand and Estimated Average Annual Supply, First Decade at 3-287.

14

Robertson, Regional Economist, Volume Harvested in Million Board Feet, Fiscal Year 1980-2002, U.S. Forest Service data for Alaska Region obtained by SEACC through FOIA, December 2002.

15

Id. Id.

T HE S OUTHEAST A LASKA CONSERVATION COUNCIL (SEACC) is a coalition of 18 volunteer conservation groups in 14 Alaskan communities surrounded by the Tongass National Forest. SEACC’s members include small wood product manufacturers, commercial fishermen, Native Alaskans, sportsmen and women, and others who want to safeguard the Tongass’ world-class environment while providing for the sustainable use of the region’s resources. For membership information call (907) 586-6942 or visit www.seacc.org

16 17

U.S. Forest Service data provided in response to a FOIA request by Taxpayers for Common Sense (2002).

18

U.S. Forest Service Remaining Timber Sales Volumes and Values Through March 31, 2003 report, from USDA Forest Service Alaska Region Reports and Policies webpage: http://www.fs.fed.us/r10/ref_reports/reports.shtml.

19

Robertson, Regional Economist, Volume Harvested in Million Board Feet, Fiscal Year 1980-2002, U.S. Forest Service data for Alaska Region obtained by SEACC through FOIA, December 2002. Pacific Rim Wood Market Report no. 170 at 5.

20

© 2003 Southeast Alaska Conservation Council Cover photo by Jim Mackovjak

2002 Road Deferred Maintenance Report, U. S. Forest Service response to SEACC FOIA of October 10, 2002. Assessment of Fish Passage Through Culverts on the Tongass National Forest, U.S. Forest Service, March, 2002, Table 2. U.S. Forest Service Final Supplemental Environmental Impact Statement Roadless Area Evaluation for Wilderness Recommendations February 2003, Table 3.3-15 at 3-109.

21

March 28, 2002 memo, Steve Brink, Deputy Regional Forester for Natural Resources, to Chief of the U.S. Forest Service.

22

Notice of Extension of Certain Alaska Timber Sale Contracts, 67 Fed. Reg. 51165-67, (August 7, 2002).

23

2003 Tongass FSEIS, supra note 8, Table 3.4-3 at 3-246.

24

Id.

25

U.S. Forest Service, Shoreline Outfitter/Guide Draft Environmental Impact Statement, July 2002, at 3-64.

26

Calculations based upon data from: 1) Robertson, Regional Economist, R10 Budget Expenditures by Fund Code U.S. Forest Service data for Alaska Region obtained by SEACC through FOIA, December 2002, and 2) U.S. Forest Service Budget Allocation data for Alaska Region obtained by SEACC through FOIA, July 2002.

27

Id.

Jack Gustafson

3


John Schoen

“We could provide more jobs in our region if the Forest Service would start investing in the future rather than the past. We’d like to work with others in the region to figure out how to provide more jobs and do less damage to the environment.”

T A X PAY E R O L O S S E S O A N D O M I S S E D O O P P O R T U N I T I E S

Jeremy Anderson Southeast Alaska Conservation Council

Recommendations

How Tongass

The Southeast Alaska Conservation Council urges the Forest Service to: Reduce logging subsidies. The Forest Service should redirect its large

Rainforest Logging

timber and road building spending into tourism and recreation planning and infrastructure development, restoration work, and marketing fish and high value-added wood products. The Forest Service could invest

Costs Taxpayers Millions

in improved visitor facilities, campgrounds, and sea and land trails that benefit local Alaskans as well as the hundreds of thousands of Americans who visit the famed Inside Passage every year. Create incentives to reduce the export of raw unprocessed logs to Asia and encourage the development of a high-value-added timber industry that manufactures finished wood products in Alaska. Stop building logging roads into roadless areas at taxpayer expense. Taxpayers shouldn’t pay millions of dollars to build roads into environmentally sensitive areas for timber corporations to haul away public timber for private profit. Focus any future logging efforts on the existing road system. Adopt a timber sale schedule that responds to real market demand, consistent with the Tongass Timber Reform Act of 1990, not an artificially inflated number that wastes precious tax dollars and threatens roadless areas that Tongass residents and Americans want to see protected. Make wiser investments for the future of the region. The Forest Service should invest more in growing sectors of the economy that provide more jobs and income at a fraction of the cost to taxpayers and the environment. This report summarizes the findings of a larger report that can be obtained from the Southeast Alaska Conservation Council (907) 586-6942 or www.seacc.org. A special thanks to the following people who contributed to this publication: Jeremy Anderson, David Katz, Buck Lindekugel, Sue Schrader, Peter Goll, Sarah Lemagie and Ellen Gilman.

P p a g e 8 O T A X P AY E R O L O S S E S O A N D O M I S S E D O O P P O R T U N I T I E S

S O U T H E A S T O A L A S K A O C O N S E R VAT I O N O C O U N C I L


The

Real Growth, Real Jobs

TONGASS NATIONAL FOREST

Today, taxpayer subsidies on the Tongass largely benefit a

is found in Alaska’s Inside Passage.

including tourism and recreation businesses, commercial

declining timber industry that provides fewer jobs and economic benefits than other sectors of the region’s economy. These timber subsidies also degrade a landscape that many Alaskans,

SOUTHEAST ALASKA RESOURCE JOBS, 2001

fishermen, hunters, and subsistence users depend on for their

The Tongass is the largest intact

livelihood.

temperate rainforest remaining in the world and one of the earth’s

Recreation, tourism, and commercial fishing related to the

most incredible landscapes.

Tongass provide far more jobs and income to the region’s

Owned by the American people,

economy than the timber industry. Salmon harvesting and sea-

Recreation and Tourism

the Tongass is managed by the

food processing produced over 3,000 jobs in 2001, nearly 37

4,278

percent of direct resource jobs in the region.23 Recreation and

U.S. Forest Service. The islands

amount of jobs in the timber industry.24 Most of these tourism

bears, eagles, wild salmon, and

Timber

and recreation jobs were associated with small businesses. The

whales like nowhere else in the

Alaska Division of Community and Business Development

world. Hundreds of thousands

identified 736 commercial recreation businesses working in the

of Americans

Tongass region in 2000.25 ALASKA

782

FOREST SERVICE SPENDING, 2001

Most timber jobs in the region are associated with private

rainforest and

lands. In 2002, the Forest Service estimated the Tongass

Inside Passage every year.

3,080

tourism accounted for 4,278 jobs, more than five times the

and waters of the Tongass support

visit the Tongass

Fishing and Seafood

Timber and Road Building $37,395,000

National Forest provided 195 timber jobs.

Tongass National Forest

Failing to Respond to Changes in Alaska’s Economy

Recreation and Tourism $15,539,400

Rather than helping to move the region into a new era by focusing its spending on growing sectors of the economy, the Forest

Fish $5,752,247

Service continues to throw good money after bad trying to resuscitate a declining timber industry. The Forest Service spends two and a half times more money on Tongass logging and log-

While recreation, tourism and seafood processing provide far more jobs, the Forest Service spends far more money on logging and logging roads. The Forest Service could provide more jobs in the region if it changed its spending habits.

ging roads than it does on tourism and recreation.26 Similarly, the Forest Service spends four times more on logging and road building than it does on fish and wildlife.27 Timber, recreation, and tourism jobs are all important. But if the Forest Service really cared about jobs in the Tongass region, it would get a bigger bang for the taxpayer buck by investing less

Matthew Davidson

David Job

Mark Kelley: www.markkelley.com

John Schoen

Mark Kelley: www.markkelley.com

Background photo by Mark Kelley: www.markkelley.com

in logging and more in other sectors of the region’s economy.

T A X P AY E R O L O S S E S O A N D O M I S S E D O O P P O R T U N I T I E S P p a g e 7


TONGASS TIMBER

Million board feet of timber

FOREST SERVICE MARKET PROJECTIONS IGNORE REALITY 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0

Providing Too Much Timber Today, the Forest Service is wasting precious tax dollars and threatening other Tongass users by producing timber sales in excess of actual market demand. To determine how much tim-

How Tongass Rainforest Logging Costs Taxpayers Millions

ber it will prepare and offer, the Forest Service uses a flawed economic model to estimate market demand for timber. The higher its market demand estimate, the more taxpayer dollars

UNFORTUNATELY, the Federal Government is wasting millions

the Forest Service gets for its Tongass timber program, and the

of taxpayer dollars every year logging the Tongass rainforest.

more pressure there is for logging and road building projects in

Timber corporations are allowed to pay the government a frac-

environmentally sensitive roadless areas on the Tongass.

tion of what it costs taxpayers to prepare logging projects. In fact, the U.S. Forest Service is paying private corporations to

2001 cut

2002 cut

20 year average cut*

*Timber logged by independent

Forest Service estimate of market demand for timber

operators during 1983-2002

In 2002, the Forest Service model estimated market demand at

build logging roads into pristine areas. These roads are used to

150 million board feet of timber.13 But independent timber

haul away public timber at dirt cheap prices. The Forest Service

operators have logged at this level only twice in the last twenty

is also wasting millions of taxpayer dollars subsidizing timber

years, in 1982 and 1990, during very different market conditions.14

sales for which there is no demand. Many logging projects go

The 20 year average for independent timber corporations is

unsold.

67 million board feet.15 In 2002, timber companies cut only

The Forest Service prepares timber sales to meet its overly optimistic estimate of market demand for timber. Independent timber corporations have logged the Forest Service’s estimate—150 million board feet—only twice in the last twenty years, in 1982 and 1990, during very different market conditions.

34 million board feet16 — four times less than the Forest Service’s

The private timber corporations benefiting from these huge tax-

timber demand estimate.

payer subsidies say the subsidies are needed to provide jobs in the timber industry. But investigative research shows that while

Agency data reveal that the Forest Service failed to find a buyer

the subsidies continue to grow, employment in Alaska’s timber

for 30 percent of the timber sales it offered between 1998 and

industry has declined dramatically because of increased competition in world timber markets. These corporations are also ex-

17

2001.

porting huge volumes of trees (and associated jobs) to Asia and

Tongass Wood Products Face Weak Demand and Low Prices

30% of Tongass timber sales went unsold 1998-2001.

At the end of March 2003, the Tongass timber industry had

the Pacific Northwest without any processing or manufacturing

more than 306 million board feet of timber under contract free

in Alaska.

TONGASS LOGGING AND ROAD BUILDING

and clear of litigation that can be cut at any time.18 This is nearly

ANNUAL TAXPAYER SUBSIDY 1997-2002

a five-year supply at the 20-year average logging level of inde-

If the Forest Service really cared about creating jobs in Alaska, it

pendent operators and a nine-year supply at the 2002 logging

would change its spending habits. It would stop squandering trees

level.19 The Forest Service is currently cancelling contracts due

and taxpayer dollars trying to rebuild a timber industry in decline

to poor market conditions on the Tongass, but this timber is

because of global economic forces. It would identify growing

already approved for sale and could be resold at any time.

sectors of Southeast Alaska’s economy and invest more in tour-

$30.0

ism and recreation, commercial fishing, and environmental res-

$25.0

in millions of dollars $40.0

years because of permanent and fundamental changes in world

unmanufactured logs. It would also adopt a logging schedule that

timber markets and increased competition. The Tongass timber

responds to actual demand for Tongass timber and protects the

industry is a high cost producer in a tough international market

environment important to the American people and Alaskans,

$10.0

Without competition, timber

and has shrunk to a fraction of its former size. In Japan building

including tourism and recreation businesses, commercial fisher-

$5.0

purchasers are unlikely to pay prices

codes have changed since the Kobe Earthquake, and the coun-

men, hunters, and subsistence users.

only had one bidder, 1998-2001.

try is now purchasing wood products from Europe rather than that equal what the government

Alaska.

20

spent to prepare the sale.

Because of low timber prices, the Forest Service estimates that 90-95 percent of all existing timber contracts are unprofitable.21

90-95% of all existing timber sale contracts are unprofitable.

millions

Demand for Tongass trees has fallen dramatically in recent

toration. It would create incentives to reduce the export of raw

52% of Tongass timber sales

$35.5

$34.9

20 01

20 02

$35.0

$25.3 $21.4

$22.7

$20.0

$15.8 $15.0

$0.0 1997

1998

1999

20 0 0

Taxpayers lose millions every year because the Forest Service spends far more money preparing logging projects and building logging roads than timber corporations pay in return for the timber.

In fact, in August of 2002 the Forest Service gave timber corporations that had purchased Tongass timber sales a blanket threeyear contract extension to allow them to hold onto timber they had purchased so that they could speculate on better prices in the future.22

P p a g e 6 O T A X PAY E R O L O S S E S O A N D O M I S S E D O O P P O R T U N I T I E S

T A X P A Y E R O L O S S E S O A N D O M I S S E D O O P P O R T U N I T I E S P p a g e 3


SUBSIDIES vs. JOBS

The U.S. Forest Service spent more than $36 million dollars of

TAXPAYER SUBSIDY PER TONGASS TIMBER JOB

U.S. taxpayer money preparing logging projects and building

Jim Mackovjak

Tongass Timber Jobs are Increasingly Expensive The Midway Road Boondoggle

logging roads on the Tongass rainforest in 2002.1 Yet, private tim$180,000

ber corporations paid the Federal Government just $1.2 million in

$178,872

$160,000

return for the right to cut down hundreds of acres of old-growth

Building Logging Roads to Nowhere

$140,000

rainforest, resulting in nearly a $35 million subsidy.2

One of the biggest reasons taxpayers lose money on the

$91,834

The Forest Service estimates that it spends more than $100 of

where except to stands of publicly owned timber. Private

$80,000

taxpayer money to prepare, administer, and support every

timber companies then use these roads to haul away the timber

$60,000

thousand board feet of Tongass timber it sells. But the agency

for their own profit.

$100,000

$40,000

$33,808 $22,359

$25,324

0 19 9 8

19 9 9

building the Midway Road on the 12

Tongass. The only use of the road is to access unsold old-growth timber

estimates that selling this timber generates only $36 in return. The Tongass National Forest already has 5,008 miles of logging

for logging. The Forest Service has

In 2002, U.S. taxpayers spent more than $170,000 for every

roads — enough roads to drive from Seattle to Miami and then

tried to sell the timber twice, once

direct timber job created by logging on the Tongass National

north to Boston.8 The vast

Forest.3 These taxpayer subsidies add up. Since 1982, American

majority of these roads are

taxpayers have spent almost one billion dollars supporting

abandoned logging roads the

activities related to logging on the Tongass rainforest.4

Forest Service can’t afford to

$20,000

19 9 7

The Forest Service spent $2.7 million

Tongass is the high cost of building logging roads that go no-

$120,000

20 0 0

2 0 01

20 02

In 2002, every Tongass timber worker cost taxpayers more than $170,000. While subsidies for logging and logging road construction have skyrocketed, the number of jobs in the timber industry have declined because of intense market competition and low timber demand.

before building the road and once

Seattle

afterward. Both times the Forest Boston St. Louis

maintain. With an estimated

ed

Service failed to find a buyer.

pos

pro

road maintenance backlog of nearly $100 million dollars on the

As of this report, the timber at the

Tongass,9 the Forest Service end of the road remains unsold.

needs to replace or repair up to

Exporting Trees and Jobs

Miami

1,500 metal culverts that prevent salmon

Despite the claim that these subsidies are needed to provide jobs in Alaska, many of the trees logged on the Tongass are exported directly to Asia without producing a single American or Alaskan manufacturing job.

succeeds in selling it, the government

Despite the high cost of building and maintaining

will be unable to recover the full

logging roads, the Forest Service shows no sign of slowing its road building. It plans to build another 1,065 miles of new taxpayer-subsidized logging roads on the Tongass over the next

Taxpayers lost $35 million in 2001 on logging projects in the

Even if the Forest Service eventually

and other fish from passing under logging roads.10

taxpayer cost of building or maintaining the road.

11

ten years, enough roads to drive from Boston to St. Louis.

Tongass in the name of providing Alaskan timber jobs.5 But that year timber corporations exported an amount equal to twenty percent of the total trees cut on the Tongass as raw unprocessed and unmanufactured logs to Asia and the Pacific Northwest.6

Jim Mackovjak

These subsidized but unprocessed logs didn’t create any

Timber corporations have exported $3.6 billion worth of raw unprocessed logs from Alaska to Asia and the Pacific Northwest since 1990 — logs that could have created Alaskan manufacturing jobs.

manufacturing jobs in Alaska.

The Tongass Needs Roadless Area Protection Many of these new logging roads are planned for pristine

Timber corporations have exported more than 6.1 billion board feet of timber worth nearly $3.6 billion as unmanufactured and unprocessed logs from National Forest, State of Alaska, University of Alaska, Mental Health Trust, and private lands in Alaska since 1990.7 Most of these logs and jobs went to Asia.

wildlands currently protected by the 2001 Roadless Area Conservation Rule. This rule protects the largest blocks of oldgrowth temperate rainforest remaining in the world. These lands are also important for community hunting, fishing, commercial fishing, subsistence, recreation, and tourism use. If the Bush Administration succeeds in its efforts to override strong public support for the Roadless Rule and eliminates protections for Tongass roadless areas, the cost to taxpayers and the environment will only grow.

P p a g e 4 O T A X PAY E R O L O S S E S O A N D O M I S S E D O O P P O R T U N I T I E S

T A X P AY E R O L O S S E S O A N D O M I S S E D O O P P O R T U N I T I E S P p a g e 5


SUBSIDIES vs. JOBS

The U.S. Forest Service spent more than $36 million dollars of

TAXPAYER SUBSIDY PER TONGASS TIMBER JOB

U.S. taxpayer money preparing logging projects and building

Jim Mackovjak

Tongass Timber Jobs are Increasingly Expensive The Midway Road Boondoggle

logging roads on the Tongass rainforest in 2002.1 Yet, private tim$180,000

ber corporations paid the Federal Government just $1.2 million in

$178,872

$160,000

return for the right to cut down hundreds of acres of old-growth

Building Logging Roads to Nowhere

$140,000

rainforest, resulting in nearly a $35 million subsidy.2

One of the biggest reasons taxpayers lose money on the

$91,834

The Forest Service estimates that it spends more than $100 of

where except to stands of publicly owned timber. Private

$80,000

taxpayer money to prepare, administer, and support every

timber companies then use these roads to haul away the timber

$60,000

thousand board feet of Tongass timber it sells. But the agency

for their own profit.

$100,000

$40,000

$33,808 $22,359

$25,324

0 19 9 8

19 9 9

building the Midway Road on the 12

Tongass. The only use of the road is to access unsold old-growth timber

estimates that selling this timber generates only $36 in return. The Tongass National Forest already has 5,008 miles of logging

for logging. The Forest Service has

In 2002, U.S. taxpayers spent more than $170,000 for every

roads — enough roads to drive from Seattle to Miami and then

tried to sell the timber twice, once

direct timber job created by logging on the Tongass National

north to Boston.8 The vast

Forest.3 These taxpayer subsidies add up. Since 1982, American

majority of these roads are

taxpayers have spent almost one billion dollars supporting

abandoned logging roads the

activities related to logging on the Tongass rainforest.4

Forest Service can’t afford to

$20,000

19 9 7

The Forest Service spent $2.7 million

Tongass is the high cost of building logging roads that go no-

$120,000

20 0 0

2 0 01

20 02

In 2002, every Tongass timber worker cost taxpayers more than $170,000. While subsidies for logging and logging road construction have skyrocketed, the number of jobs in the timber industry have declined because of intense market competition and low timber demand.

before building the road and once

Seattle

afterward. Both times the Forest Boston St. Louis

maintain. With an estimated

ed

Service failed to find a buyer.

pos

pro

road maintenance backlog of nearly $100 million dollars on the

As of this report, the timber at the

Tongass,9 the Forest Service end of the road remains unsold.

needs to replace or repair up to

Exporting Trees and Jobs

Miami

1,500 metal culverts that prevent salmon

Despite the claim that these subsidies are needed to provide jobs in Alaska, many of the trees logged on the Tongass are exported directly to Asia without producing a single American or Alaskan manufacturing job.

succeeds in selling it, the government

Despite the high cost of building and maintaining

will be unable to recover the full

logging roads, the Forest Service shows no sign of slowing its road building. It plans to build another 1,065 miles of new taxpayer-subsidized logging roads on the Tongass over the next

Taxpayers lost $35 million in 2001 on logging projects in the

Even if the Forest Service eventually

and other fish from passing under logging roads.10

taxpayer cost of building or maintaining the road.

11

ten years, enough roads to drive from Boston to St. Louis.

Tongass in the name of providing Alaskan timber jobs.5 But that year timber corporations exported an amount equal to twenty percent of the total trees cut on the Tongass as raw unprocessed and unmanufactured logs to Asia and the Pacific Northwest.6

Jim Mackovjak

These subsidized but unprocessed logs didn’t create any

Timber corporations have exported $3.6 billion worth of raw unprocessed logs from Alaska to Asia and the Pacific Northwest since 1990 — logs that could have created Alaskan manufacturing jobs.

manufacturing jobs in Alaska.

The Tongass Needs Roadless Area Protection Many of these new logging roads are planned for pristine

Timber corporations have exported more than 6.1 billion board feet of timber worth nearly $3.6 billion as unmanufactured and unprocessed logs from National Forest, State of Alaska, University of Alaska, Mental Health Trust, and private lands in Alaska since 1990.7 Most of these logs and jobs went to Asia.

wildlands currently protected by the 2001 Roadless Area Conservation Rule. This rule protects the largest blocks of oldgrowth temperate rainforest remaining in the world. These lands are also important for community hunting, fishing, commercial fishing, subsistence, recreation, and tourism use. If the Bush Administration succeeds in its efforts to override strong public support for the Roadless Rule and eliminates protections for Tongass roadless areas, the cost to taxpayers and the environment will only grow.

P p a g e 4 O T A X PAY E R O L O S S E S O A N D O M I S S E D O O P P O R T U N I T I E S

T A X P AY E R O L O S S E S O A N D O M I S S E D O O P P O R T U N I T I E S P p a g e 5


TONGASS TIMBER

Million board feet of timber

FOREST SERVICE MARKET PROJECTIONS IGNORE REALITY 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0

Providing Too Much Timber Today, the Forest Service is wasting precious tax dollars and threatening other Tongass users by producing timber sales in excess of actual market demand. To determine how much tim-

How Tongass Rainforest Logging Costs Taxpayers Millions

ber it will prepare and offer, the Forest Service uses a flawed economic model to estimate market demand for timber. The higher its market demand estimate, the more taxpayer dollars

UNFORTUNATELY, the Federal Government is wasting millions

the Forest Service gets for its Tongass timber program, and the

of taxpayer dollars every year logging the Tongass rainforest.

more pressure there is for logging and road building projects in

Timber corporations are allowed to pay the government a frac-

environmentally sensitive roadless areas on the Tongass.

tion of what it costs taxpayers to prepare logging projects. In fact, the U.S. Forest Service is paying private corporations to

2001 cut

2002 cut

20 year average cut*

*Timber logged by independent

Forest Service estimate of market demand for timber

operators during 1983-2002

In 2002, the Forest Service model estimated market demand at

build logging roads into pristine areas. These roads are used to

150 million board feet of timber.13 But independent timber

haul away public timber at dirt cheap prices. The Forest Service

operators have logged at this level only twice in the last twenty

is also wasting millions of taxpayer dollars subsidizing timber

years, in 1982 and 1990, during very different market conditions.14

sales for which there is no demand. Many logging projects go

The 20 year average for independent timber corporations is

unsold.

67 million board feet.15 In 2002, timber companies cut only

The Forest Service prepares timber sales to meet its overly optimistic estimate of market demand for timber. Independent timber corporations have logged the Forest Service’s estimate—150 million board feet—only twice in the last twenty years, in 1982 and 1990, during very different market conditions.

34 million board feet16 — four times less than the Forest Service’s

The private timber corporations benefiting from these huge tax-

timber demand estimate.

payer subsidies say the subsidies are needed to provide jobs in the timber industry. But investigative research shows that while

Agency data reveal that the Forest Service failed to find a buyer

the subsidies continue to grow, employment in Alaska’s timber

for 30 percent of the timber sales it offered between 1998 and

industry has declined dramatically because of increased competition in world timber markets. These corporations are also ex-

17

2001.

porting huge volumes of trees (and associated jobs) to Asia and

Tongass Wood Products Face Weak Demand and Low Prices

30% of Tongass timber sales went unsold 1998-2001.

At the end of March 2003, the Tongass timber industry had

the Pacific Northwest without any processing or manufacturing

more than 306 million board feet of timber under contract free

in Alaska.

TONGASS LOGGING AND ROAD BUILDING

and clear of litigation that can be cut at any time.18 This is nearly

ANNUAL TAXPAYER SUBSIDY 1997-2002

a five-year supply at the 20-year average logging level of inde-

If the Forest Service really cared about creating jobs in Alaska, it

pendent operators and a nine-year supply at the 2002 logging

would change its spending habits. It would stop squandering trees

level.19 The Forest Service is currently cancelling contracts due

and taxpayer dollars trying to rebuild a timber industry in decline

to poor market conditions on the Tongass, but this timber is

because of global economic forces. It would identify growing

already approved for sale and could be resold at any time.

sectors of Southeast Alaska’s economy and invest more in tour-

$30.0

ism and recreation, commercial fishing, and environmental res-

$25.0

in millions of dollars $40.0

years because of permanent and fundamental changes in world

unmanufactured logs. It would also adopt a logging schedule that

timber markets and increased competition. The Tongass timber

responds to actual demand for Tongass timber and protects the

industry is a high cost producer in a tough international market

environment important to the American people and Alaskans,

$10.0

Without competition, timber

and has shrunk to a fraction of its former size. In Japan building

including tourism and recreation businesses, commercial fisher-

$5.0

purchasers are unlikely to pay prices

codes have changed since the Kobe Earthquake, and the coun-

men, hunters, and subsistence users.

only had one bidder, 1998-2001.

try is now purchasing wood products from Europe rather than that equal what the government

Alaska.

20

spent to prepare the sale.

Because of low timber prices, the Forest Service estimates that 90-95 percent of all existing timber contracts are unprofitable.21

90-95% of all existing timber sale contracts are unprofitable.

millions

Demand for Tongass trees has fallen dramatically in recent

toration. It would create incentives to reduce the export of raw

52% of Tongass timber sales

$35.5

$34.9

20 01

20 02

$35.0

$25.3 $21.4

$22.7

$20.0

$15.8 $15.0

$0.0 1997

1998

1999

20 0 0

Taxpayers lose millions every year because the Forest Service spends far more money preparing logging projects and building logging roads than timber corporations pay in return for the timber.

In fact, in August of 2002 the Forest Service gave timber corporations that had purchased Tongass timber sales a blanket threeyear contract extension to allow them to hold onto timber they had purchased so that they could speculate on better prices in the future.22

P p a g e 6 O T A X PAY E R O L O S S E S O A N D O M I S S E D O O P P O R T U N I T I E S

T A X P A Y E R O L O S S E S O A N D O M I S S E D O O P P O R T U N I T I E S P p a g e 3


The

Real Growth, Real Jobs

TONGASS NATIONAL FOREST

Today, taxpayer subsidies on the Tongass largely benefit a

is found in Alaska’s Inside Passage.

including tourism and recreation businesses, commercial

declining timber industry that provides fewer jobs and economic benefits than other sectors of the region’s economy. These timber subsidies also degrade a landscape that many Alaskans,

SOUTHEAST ALASKA RESOURCE JOBS, 2001

fishermen, hunters, and subsistence users depend on for their

The Tongass is the largest intact

livelihood.

temperate rainforest remaining in the world and one of the earth’s

Recreation, tourism, and commercial fishing related to the

most incredible landscapes.

Tongass provide far more jobs and income to the region’s

Owned by the American people,

economy than the timber industry. Salmon harvesting and sea-

Recreation and Tourism

the Tongass is managed by the

food processing produced over 3,000 jobs in 2001, nearly 37

4,278

percent of direct resource jobs in the region.23 Recreation and

U.S. Forest Service. The islands

amount of jobs in the timber industry.24 Most of these tourism

bears, eagles, wild salmon, and

Timber

and recreation jobs were associated with small businesses. The

whales like nowhere else in the

Alaska Division of Community and Business Development

world. Hundreds of thousands

identified 736 commercial recreation businesses working in the

of Americans

Tongass region in 2000.25 ALASKA

782

FOREST SERVICE SPENDING, 2001

Most timber jobs in the region are associated with private

rainforest and

lands. In 2002, the Forest Service estimated the Tongass

Inside Passage every year.

3,080

tourism accounted for 4,278 jobs, more than five times the

and waters of the Tongass support

visit the Tongass

Fishing and Seafood

Timber and Road Building $37,395,000

National Forest provided 195 timber jobs.

Tongass National Forest

Failing to Respond to Changes in Alaska’s Economy

Recreation and Tourism $15,539,400

Rather than helping to move the region into a new era by focusing its spending on growing sectors of the economy, the Forest

Fish $5,752,247

Service continues to throw good money after bad trying to resuscitate a declining timber industry. The Forest Service spends two and a half times more money on Tongass logging and log-

While recreation, tourism and seafood processing provide far more jobs, the Forest Service spends far more money on logging and logging roads. The Forest Service could provide more jobs in the region if it changed its spending habits.

ging roads than it does on tourism and recreation.26 Similarly, the Forest Service spends four times more on logging and road building than it does on fish and wildlife.27 Timber, recreation, and tourism jobs are all important. But if the Forest Service really cared about jobs in the Tongass region, it would get a bigger bang for the taxpayer buck by investing less

Matthew Davidson

David Job

Mark Kelley: www.markkelley.com

John Schoen

Mark Kelley: www.markkelley.com

Background photo by Mark Kelley: www.markkelley.com

in logging and more in other sectors of the region’s economy.

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John Schoen

“We could provide more jobs in our region if the Forest Service would start investing in the future rather than the past. We’d like to work with others in the region to figure out how to provide more jobs and do less damage to the environment.”

T A X PAY E R O L O S S E S O A N D O M I S S E D O O P P O R T U N I T I E S

Jeremy Anderson Southeast Alaska Conservation Council

Recommendations

How Tongass

The Southeast Alaska Conservation Council urges the Forest Service to: Reduce logging subsidies. The Forest Service should redirect its large

Rainforest Logging

timber and road building spending into tourism and recreation planning and infrastructure development, restoration work, and marketing fish and high value-added wood products. The Forest Service could invest

Costs Taxpayers Millions

in improved visitor facilities, campgrounds, and sea and land trails that benefit local Alaskans as well as the hundreds of thousands of Americans who visit the famed Inside Passage every year. Create incentives to reduce the export of raw unprocessed logs to Asia and encourage the development of a high-value-added timber industry that manufactures finished wood products in Alaska. Stop building logging roads into roadless areas at taxpayer expense. Taxpayers shouldn’t pay millions of dollars to build roads into environmentally sensitive areas for timber corporations to haul away public timber for private profit. Focus any future logging efforts on the existing road system. Adopt a timber sale schedule that responds to real market demand, consistent with the Tongass Timber Reform Act of 1990, not an artificially inflated number that wastes precious tax dollars and threatens roadless areas that Tongass residents and Americans want to see protected. Make wiser investments for the future of the region. The Forest Service should invest more in growing sectors of the economy that provide more jobs and income at a fraction of the cost to taxpayers and the environment. This report summarizes the findings of a larger report that can be obtained from the Southeast Alaska Conservation Council (907) 586-6942 or www.seacc.org. A special thanks to the following people who contributed to this publication: Jeremy Anderson, David Katz, Buck Lindekugel, Sue Schrader, Peter Goll, Sarah Lemagie and Ellen Gilman.

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S O U T H E A S T O A L A S K A O C O N S E R VAT I O N O C O U N C I L


ENDNOTES 1

Robertson, Regional Economist, R10 Budget Expenditures by Fund Code U.S. Forest Service data for Alaska Region obtained by SEACC through FOIA, December 2002.

2

Timber Cut and Sold on National Forests, Region 10 Fiscal 2002 report, from U.S. Forest Service Alaska Region Reports and Policies webpage: http:// www.fs.fed.us/r10/ref_reports/reports.shtml. Receipts cited are for value of Tongass timber cut. Calculation based upon data from: 1) Robertson, Regional Economist, U.S. Forest Service, Employment in the Wood Products Industry in Southeast Alaska,1982-2002 data provided to SEACC, May, 2003, 2) Robertson, Regional Economist, R10 Budget Expenditures by Fund Code U.S. Forest Service data for Alaska Region obtained by SEACC through FOIA, December 2002, and 3) Timber Cut and Sold on National Forests, Region 10 Fiscal 2002 report.

4

Calculations based upon data from Congressional, General Accounting Office, and U.S. Forest Service sources, available on request from SEACC.

5

Calculation based upon data from: 1) Robertson, Regional Economist, R10 Budget Expenditures by Fund Code U.S. Forest Service data for Alaska Region obtained by SEACC through FOIA, December 2002, and 2) Timber Cut and Sold on National Forests, Region 10 Fiscal 2002 report.

6

Calculation based upon data from: 1) Robertson, Regional Economist, Tongass National Forest Log Exports CY 1997-2001, data provided to SEACC, May, 2003, and 2) Timber Cut and Sold on National Forests, Region 10 Fiscal 2002 report.

7

Robertson, Regional Economist, U.S. Forest Service, Exports of Softwood Logs and Lumber from Alaska (Anchorage Customs District), CY 1988-2001, data provided to SEACC, May, 2003. U.S. Forest Service Final Supplemental Environmental Impact Statement Roadless Area Evaluation for Wilderness Recommendations February 2003, at 3-107.

8

9

10

John Schoen

11

12

U.S. Forest Service Contract Number 50-0109-2-61300, Midway Road Construction, issued April 30, 2002.

13

U.S. Forest Service Final Supplemental Environmental Impact Statement Roadless Area Evaluation for Wilderness Recommendations February 2003, Figure 3.4-15 Projected Demand and Estimated Average Annual Supply, First Decade at 3-287.

14

Robertson, Regional Economist, Volume Harvested in Million Board Feet, Fiscal Year 1980-2002, U.S. Forest Service data for Alaska Region obtained by SEACC through FOIA, December 2002.

15

Id. Id.

T HE S OUTHEAST A LASKA CONSERVATION COUNCIL (SEACC) is a coalition of 18 volunteer conservation groups in 14 Alaskan communities surrounded by the Tongass National Forest. SEACC’s members include small wood product manufacturers, commercial fishermen, Native Alaskans, sportsmen and women, and others who want to safeguard the Tongass’ world-class environment while providing for the sustainable use of the region’s resources. For membership information call (907) 586-6942 or visit www.seacc.org

16 17

U.S. Forest Service data provided in response to a FOIA request by Taxpayers for Common Sense (2002).

18

U.S. Forest Service Remaining Timber Sales Volumes and Values Through March 31, 2003 report, from USDA Forest Service Alaska Region Reports and Policies webpage: http://www.fs.fed.us/r10/ref_reports/reports.shtml.

19

Robertson, Regional Economist, Volume Harvested in Million Board Feet, Fiscal Year 1980-2002, U.S. Forest Service data for Alaska Region obtained by SEACC through FOIA, December 2002. Pacific Rim Wood Market Report no. 170 at 5.

20

© 2003 Southeast Alaska Conservation Council Cover photo by Jim Mackovjak

2002 Road Deferred Maintenance Report, U. S. Forest Service response to SEACC FOIA of October 10, 2002. Assessment of Fish Passage Through Culverts on the Tongass National Forest, U.S. Forest Service, March, 2002, Table 2. U.S. Forest Service Final Supplemental Environmental Impact Statement Roadless Area Evaluation for Wilderness Recommendations February 2003, Table 3.3-15 at 3-109.

21

March 28, 2002 memo, Steve Brink, Deputy Regional Forester for Natural Resources, to Chief of the U.S. Forest Service.

22

Notice of Extension of Certain Alaska Timber Sale Contracts, 67 Fed. Reg. 51165-67, (August 7, 2002).

23

2003 Tongass FSEIS, supra note 8, Table 3.4-3 at 3-246.

24

Id.

25

U.S. Forest Service, Shoreline Outfitter/Guide Draft Environmental Impact Statement, July 2002, at 3-64.

26

Calculations based upon data from: 1) Robertson, Regional Economist, R10 Budget Expenditures by Fund Code U.S. Forest Service data for Alaska Region obtained by SEACC through FOIA, December 2002, and 2) U.S. Forest Service Budget Allocation data for Alaska Region obtained by SEACC through FOIA, July 2002.

27

Id.

Jack Gustafson

3


T A X P AY E R O L O S S E S 0 A N D 0 M I S S E D 0 O P P O R T U N I T I E S

How Tongass Rainforest Logging Costs Taxpayers Millions

S O UT H EA ST A LA S KA C O N S E RVA T I O N COUNCIL J U LY 2 0 0 3 © 2003 Southeast Alaska Conservation Council


How Tongass Rainforest Logging Costs Taxpayers Millions