What should forestland owners know about forest certification in the U.S.? Recently published research highlights the inconsistent implementation and varying operational impacts across U.S.-based forest certification programs. In sum, the findings indicate that forest certification creates, ironically, uncertainty for landowners and, in cases, destroys landowner value while producing unclear forest health benefits, if any, relative to standard and commonly applied best management practices (BMPs).
Forest Certification Refresher
Forest certification includes third-party programs that signal responsible forest management based on an audited set of criteria. Established forest certification programs in North America include:
- Sustainable Forestry Initiative (SFI). In 2005, the Programme for the Endorsement of Forest Certification endorsed SFI, giving it international recognition.
- The Forest Stewardship Council (FSC), based in Oaxaca, Mexico, is a major international certifier.
- The American Tree Farm System (ATFS) supports a program for nonindustrial family forest owners in the United States.
Generally, landowners enrolled in SFI or FSC programs are industrial owners that participate in certification as an industry standard and to satisfy investor requirements for sustainable management and public relations. Typically, small or nonindustrial private landowners either participate in ATFS or not at all.
Private landowners question the added costs for programs that seem to mirror existing sustainably-oriented forest management plans (“Forest Certification Conundrum”, June 8, 2012). This has been reinforced by research that shows state-mandated management practice guidelines provide effective means to protect water quality (Lang, A.H. and B.C. Mendell. 2012. Sustainable wood procurement: What the literature tells us. Journal of Forestry. 110(3): 157-163). For example, when BMPs are followed, water quality on forest stands in the South recovers in 2-5 years following a timber harvest. Research in the Pacific Northwest also confirms that buffer zones along stream banks allow water systems to recover following timber harvest.
Key Findings from Recent Research
Recent studies commissioned by the American Consumer Institute (ACI) and EconoSTATS at George Mason University assess implications from on-the-ground implementation of ATFS, FSC and SFI.
ACI’s white paper, “Comparing Forest Certification Standards in the U.S.: How Are They Being Implemented Today?” by Brooks Mendell and Amanda Lang at Forisk, notes that “adherence to a given certification program does not necessarily confirm specific forest management practices or restrictions.” To better understand how the certification programs implement standards on the ground, the authors conducted nearly two dozen interviews with timberland owners, managers, and auditors. Findings indicate that forest owners and certification auditors have wide latitude to design and interpret management plans that broadly conform to responsible forest management and satisfy forest certification objectives. In the words of one forest certification auditor interviewed for the paper:
“The way that foresters interpret plantations in the South is not the way FSC defines plantations. FSC has narrowed its definition of plantation: basically, the only plantation in the South would be a Eucalyptus plantation.”
EconoSTATS, in “Comparing Forest Certification Standards in the U.S.: Economic Analysis and Practical Considerations” by Brooks Mendell and Amanda Lang at Forisk, supported efforts to model and quantify operational and economic implications to timberland owners in Arkansas and Oregon from implementing four forest certification scenarios: FSC-Natural, FSC-Plantation, SFI, and a base case that corresponds with state timber harvest guidelines that approximate ATFS. FSC has two scenarios because it imposes different forest management standards on forest plantations versus natural stands.
The estimated effects are above and beyond what forest owners already account for in current management activities. The modeled scenarios comprise criteria from ATFS, FSC and SFI related to clear cut size, land set-asides, adjacency (“green-up”) and streamside management zones.
Key implications to timberland owners based on the EconoSTATS study include:
- In Oregon, both FSC scenarios significantly reduce economic returns to landowners. Relative to base forest management practices and SFI scenarios, forests managed as either natural stands or plantations under FSC reduce the estimated present value of net operating cash flows by 31% to 46% for modeled 46-year operating period. The FSC guidelines reduced the acres available for timber harvests, which resulted in 30% to 42% lower harvested volumes of wood compared with the base case and SFI scenario.
- In Arkansas, the FSC-Plantation scenario significantly reduces economic returns to landowners. Forests classified as plantations under FSC reduce the estimated present value of net operating cash flows by up to 26% and reduce total harvest volumes by up to 28% for the modeled 36-year operating period compared to other scenarios. For those seeking FSC certification in the South, this creates tremendous incentives to avoid classification as a plantation as defined by FSC.
Timberland owners enrolled in third-party certification programs adhere to program standards and are subject to confirmation by third-party auditors. However, when implemented, forest certification criteria remain subject to interpretation. Certification under a given program does not necessarily confirm specific forest management practices or restrictions. Even auditors responsible for verifying landowners’ compliance with certification programs acknowledge how some standards, even if explicit, remain subject to interpretation in implementation.
Forisk will discuss forestland ownership issues during “Timber Market Analysis” on August 12th in Atlanta, a one-day course for anyone who wants a step-by-step process to understand, track, and analyze the price, demand, supply, and competitive dynamics of timber markets and wood baskets. For more information, click here.