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Sustainable growth in the forestry economy

With the global financial crisis of 2007 (hopefully) behind us, it is time to look at the future and what opportunities lay ahead for the forest products industry.

The world is increasingly becoming a single market, with interdependent production systems, consumption of similar goods and consumers responding to similar conditions.  We no longer compete only in a local economy.

Advancements in technology have definitely brought us to this juncture. The Director of Engineering at Google says the “law of accelerating returns,” suggests that “an analysis of the history of technology shows that technological change is exponential, contrary to the common-sense ‘linear’ view.  We will not experience 100 years of progress in the 21st century – it will seem more like 20,000 years of progress (at today’s rate).”  In other words, technology is moving faster than we can grasp.

Technological advancement and shifting demographic patterns will fundamentally shape our economic outlook.  According to recent reports, the global economy is growing as a result in exploding populations in areas outside of the United States.  According to experts, the global population will increase to 8.3 billion by 2030.  Sixty percent of the world’s population will live in urban areas.  There will be a 17 percent increase in urbanization in the United States and the middle class will see a 172 percent growth in developing countries. 

A Global Trends 2030 report states, “Owing to rapid urbanization in the developing world, the volume of urban construction for housing, office space, and transport services over the next 40 years could roughly equal the entire volume of such construction to date in world history.”

What does this mean for the forest products industry?   In addition to harvesting saw logs for traditional and essential commodity products, the exploding growth in the world economy likely means a greater emphasis on certified wood, an increased interest in cellulosic bio-energy, and new uses for wood fiber. 

Where is the supply to meet the demand going to come from? Currently, there are roughly 400 million acres of timberland across all ownerships in the United States in need of restoration.  Typically, restoration means removing excess forest biomass.  Without market outlets for this excess; materials often accumulate until a wildfire event.  Retaining and sustaining primary and secondary wood manufacturing, pulp and paper production, and creating high-value, market-based, outlets for excess forest biomass is vital to the success of accelerated forest restoration and meeting the emerging global demands for wood-based products. 

In the late 1990’s, the Government Accountability Office (GAO) concluded that “the most extensive and serious problem related to the health of forests in the interior West is the over-accumulation of vegetation, which has caused an increasing number of large, intense, uncontrollable, and catastrophically destructive wildfires.”  This report prompted the development of the National Fire Plan in 2001, which suggested that $850 million annually would be required to address this problem.  More recently, the GAO concluded that $69 billion is required over the next 16 years or $4.3 billion per year.  Relying on tax payer dollars, the U. S. Forest Service has managed an average of only $300 million annually for hazardous fuel treatments.  This current model simply will not restore forests let alone meet global demands.

Congress is not likely to cut a $69 billion check without some assurances that harvest levels are sustainable and treatments are ecologically and economically viable.  Traditionally, well-managed forests in the United States have been able to earn the Sustainable Forestry Initiative, the Forest Stewardship Council or the American Tree Farm seal of approval, demonstrating that harvest levels are sustainable, that bio-diversity and old growth are conserved, and water quality and wildlife habitats are protected.

Meeting the global demand for solid wood products and finding high-value, high-volume uses for low-value forest biomass is one of the most important challenges facing policy makers and the forest products industry today.  There is little doubt that technological advancements and shifting demographic patterns will fundamentally shape our economic outlook and will shift environmental, economic and social conditions that will play out over the next few decades. 

On behalf of the Montana Wood Products Association, I am Julia Altemus, thanks for listening.

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