Subsidized Timber Sales Raise Public-Benefit Issue

BY the time timber harvesters finished with the Bridger-Teton National Forest in 1990, the federal government's Wyoming tree farm was about 250,000 trees and $1.5 million poorer than when the cutting began. Not that the timber companies - some multinationals, some mom and pops - chopped down their logs for free. Actually, they bid a total of $750,000 for the trees that grow on the steep slopes surrounding Jackson Hole (which makes each tree worth about $3).

But Bridger-Teton administrators spent more than $1.5 million to run forest sales in 1990. And not one dime reached the United States Treasury from the $750,000 the timber purchasers promised to pay. Half that sum was never paid at all, because purchasers were permitted to deduct the cost of building roads to haul the logs away. The money they did pay went mainly to plant new trees and to repair the environmental harm done by the cutting.

Business management like that - the late Sen. Herman Talmadge called it "idiot forestry forms the nut of a policy debate that has been running for years on Capitol Hill, in the United States Forest Service, among environmentalists, and around the timber industry.

"The question is: Should a valuable federal resource be given away for less than what it costs to run the program?" says Bob Wolf, a veteran Washington, D.C., forest expert, congressional aide, and an author of the 1976 National Forest Management Act, which governs the Forest Service. "If you and I are selling timber, and our cash flow is always negative ... we'll stop selling."

Yet most of the 120 national forests lose money selling a commodity that the American economy cannot live without. Only in the Pacific Northwest and northern California do forests consistently recover the costs of running their timber harvests. Everywhere else, from the Alaska tundra to the arid Arizona desert to the stubby piedmont of East Tennessee - most never break even.

The dimension of the problem depends on how you measure the take. Consider three common gauges:

Effect on the federal deficit. All told, the 1990 timber program netted $5.1 million for the US Treasury, according to Forest Service data. But the 22 forests with profitable programs would have reduced the deficit by $262 million, if the 98 unprofitable forests had not lost a combined $257 million.

Income and expenses. By the Forest Service's "accrual" accounting system - which counts revenue that is kept by the agency and never reaches the Treasury and which distributes long-term costs of timber-growing over a century or more - 73 forests spent more than they earned. By this measure, the entire forest system made $302 million in 1990. Here, too, the 47 profitable forests would have netted $483 million, if the rest had not lost $181 million.

Net public benefit. In this system, the agency uses a series of formulas to assign specific dollar-values to the harms and benefits the logging program causes to the national forest system in general. By the agency's calculations, the logging program has enriched wildlife and fish habitats, improved the watershed, created new grazing land, and opened up more recreation area. Net gain: $1.1 billion. All but 20 forests show a "positive long-term value" by this yardstick, says George Leonard, assistant chi e

f of the Forest Service. In a related measure, the Forest Service holds that 1990 timber sales sustained 106,000 jobs, generating $500 million in federal income taxes.

EACH measurement system has its backers and critics. Much recent debate over below-cost sales has been a muddle of accounting arcana - how to count, when to count, what's "real" money, and what isn't. Still, there is wide agreement that Congress spends a lot of money subsidizing timber programs for most forests. The policy debate breaks on whether the costs are worth it.The Forest Service insists that net public benefit is the only relevant gauge.

Harvest programs often accomplish unrelated forest management goals, Mr. Leonard says, such as increasing watershed and improving the habitat for some animal species. Also, timber revenues help fund other Forest Service programs, like protecting endangered species. For instance, the money used to help preserve the red-cockaded woodpecker, a Southeastern US bird, came from timber revenues, he says.

"Our charge from Congress is to manage for net public benefit," Leonard says. "That's a concept that was developed to recognize that there are values to the National Forest lands that are quite unquantifiable."

Furthermore, says Sen. Larry Craig (R) of Idaho, numerous local economies depend on the logging companies and sawmills that cut the government's trees. "For me, this is a 'jobs' issue as much as it is a 'responsible forest management' issue," Mr. Craig said in a phone interview.

But environmentalists and an increasing number of Forest Service employees aren't buying it.

For one thing, they say, it's absurd to say that sweeping timber harvests don't harm the environment. "The type of forestry we're subsidizing is not environmentally sound," says Jeff DeBonis, a former Forest Service employee who quit to form the Association of Forest Service Employees for Environmental Ethics, a maverick group critical of timber sales. "They're taking complex native ecosystems and turning them into simple tree plantations," he says.

"It's easy to get foresters to say a timber sale is good for wildlife," says Bill LaVere, a Forest Service official who supervised the timber program until 1990. "It's not so easy to get a wildlife biologist to say so. To me, it's not until we get the biologists to say it's good that we should go ahead."

BESIDES their other concerns, critics of the agency cite basic supply-and-demand rules to explain why so many sales lose money: The timber the Forest Service sells is very often the poorest quality and most difficult to harvest. It often grows jaggedly off mountainsides or in remote zones (like Alaska's Chugash forest) where no private owner would consider setting up a tree farm.

The Bridger-Teton, a mountainous forest the size of Lebanon, is a good example of how the difficulty of harvesting the timber inflates operating costs. The purchasers were permitted to deduct $351,344 from their payments to cover the cost of building six miles of roads to haul the timber away. That's nearly $59,000 per mile, five times the rate on the nearby Shoshone forest.

"The primary problem is that this timber is high-cost and low-value," says Mr. Rice, of the Wilderness Society.

On this point, industry representatives generally agree. "We prefer to think of these not as below-cost sales, but as high-cost sales," Jim Riley of the Intermountain Forest Industry Association told a Senate hearing in April.

"We are convinced in some cases that some timber programs are not providing enough benefits to justify themselves," says Rick Prausa, who succeeded Mr. LaVere as supervisor of the Forest Service's program.

The administration released a policy proposal in April that mandates that forests justify chronically unprofitable sales by demonstrating some long-term environmental or economic benefit.

"For the first time, we are now going to take a look at each forest each year," Leonard says. "If we can't improve on the harvest operation, we will look to reducing or eliminating the harvest on that forest within five years."

Agency officials consider the new policy an important first step toward scaling back the subsidies. Critics say it will encourage forest managers to concoct analyses showing environmental benefits for logging, whether or not they truly exist.

In Congress, Sen. Wyche Fowler Jr. (D) of Georgia, who chairs the Forestry subcommittee, and Rep. James Jontz (D) of Indiana have vowed to introduce bills to slash the number of subsidized sales. Both have sponsored such bills in the past, however, and have run into opposition from Western legislators whose districts rely on subsidized timber.

This year, both are more optimistic. "There's a widespread recognition in Congress that the Forest Service should be forced to justify a below-cost sale," Mr. Jontz said in an interview. Sometimes, he says, subsidies are worth it.

"I don't think any mill out there is entitled to any long-term dependence on subsidized timber," Jontz says. "The losers are the taxpayers and the environment."