Why US wildfires could shape the timberland market

The tragic wildfires currently raging on the US West Coast have already claimed lives (including that of a TimberWest contractor), destroyed hundreds of thousands of acres and produced a fresh crop of apocalyptic images to help refocus attention on the pace and intensity of climate change.

Regional farmland markets have seen relatively little impact, but this summer’s fires have the potential to shape the trajectory of the US timber market.

Managers active in the space echo forestry experts’ diagnosis that mismanagement of overgrown, federally held forests has played a key role in fueling the intensity of this summer’s infernos. To be clear, arson has been proved the proximate cause of some of the most significant individual fires, but fire officials say their intensity is, in part, the result of decades without proscribed burns to manage the growth of vegetation that is now feeding the flames.

Kevin Bates, vice-president for timberland investment at Olympic Resource Management, told Agri Investor that in the timber-heavy region west of the Cascade Mountains, the risk of fire is generally higher in the drier regions of the Pacific Northwest to the south and east. Although ORM has already lost “some acres” due to forest fires this summer, Bates said fire is generally not as great a concern as some might think, largely because even trees that have been partially burned can be harvested and manufactured for salvage sales.

However, Bates did point out that harvesting restrictions on state and federal timberlands encourage the proliferation of plant material that feeds the kind of intense fires that make salvaging damaged timber less likely. He also noted they can influence deal terms on private timberland sales.

“If a fire starts in private ownership, it generally can be stopped fairly quickly because it’s ‘road-ed’ and it’s well-managed,” said Bates. “When we buy timberland, if we are neighboring – federal particularly, but generally speaking – government timberland, we have to increase the discount rate because we know that our fire risk is much higher.”

Bates’s point about private lands being more likely to have roads is an important one, in part because the presence of roads is one of the ways the US Forest Service classifies and manages its forestland. Since 2001, the Roadless Area Conservation Rule has restricted road building and logging on about 60 million acres of national forest and has been defended zealously by environmentalists, who view it as a bulwark against private development.

Earlier this month, the Forest Service announced plans for a revision of how those rules are applied in Alaska that will open up wildlands in that state to private logging. California Governor Jerry Brown used an executive order in May to gather resources for planned burnings and the Forest Service is reportedly considering steps to loosen logging restrictions in the Los Padres National Forest near Los Angeles.

Given that removing what the President sees as burdensome environmental regulations has been a key focus of the Trump administration’s environmental policy, it’s not hard to imagine the wildfires could accelerate future loosening of the ‘Roadless Rule’ on other government holdings.

Environmentalists have bemoaned early steps to roll back the Roadless Rule and will no doubt attempt to block future moves to open more federal land to private timber companies.

If this summer’s wildfires do, in fact, accelerate a relaxation of restrictions that have kept private firms from harvesting federal timberlands, it will be up to the timber industry to demonstrate that the short-term destruction environmentalists have long sought to prevent can be an important part of ensuring the long-term sustainability of the forests they look to protect.

Write to the author at chris.j@peimedia.com