Peer-Reviewed Science Reveals Markets are Vital for Sustainability

Markets for wood products are affected by polices that encourage or constrain market participation. Malmsheimer says ultimately, it is impossible to understand the impacts of wood energy without understanding landowners response to changes in demand.
By Robert Malmsheimer | May 21, 2015

The role of markets is sometimes ignored in forest sustainability analyses. Yet, the peer-reviewed scientific literature clearly demonstrates that in the United States increased demand for wood products, including wood used for bioenergy, results in increases in the amount of forestland, improvements in forest productivity, and investments in sustainable forest management, all of which can offset carbon impacts associated with increased harvesting. As my co-authors and I described in the November issue of the Journal of Forestry, evidence supporting this is based on observations, as well as empirical and modeling studies.

For example, since the early 1900s, demand for wood and paper products increased significantly. Yet during this time, the forested area of the U.S. remained stable. Additionally, U.S. forests have been carbon sinks since the 1950s, absorbing more carbon than they have emitted. Yet, this increase in carbon stocks occurred during a time when the demand for industrial roundwood greatly increased.

Empirical studies also document the importance of wood markets for retaining forested lands. Land constantly moves into and out of forest cover. Changes in net economic returns to landowners for different land uses result in more or less land in forest. For example, a study of factors affecting land use in the U.S. South found that the percentage of forest land was positively associated with increases in pine stumpage prices and negatively associated with increases in timber production costs.

The loss of forests in the U.S. is caused primarily by urbanization and development, not demand for wood. In fact increased demand for wood can thwart many of the pressures to convert land to other uses. As USDA Forest Service modeling of a range of scenarios for future forests revealed, the U.S. South is predicted to lose between 11 million and 23 million acres of forestland between 2010 and 2060, with the range of those losses based primarily on two factors: the rate of population growth and the future of U.S. forest products markets. Importantly, these researchers found that the smallest decrease in forested lands was projected to occur when population growth was low and forest products markets were strong. Additionally, a December 2014 Forest Service technical report that examined the effect of policies on pellet production in the U.S. Coastal South found that under a demand scenario where wood pellet demand continues to increase, the amount of timberland (as well as harvesting and logging residue use for pellets) would continue to increase.

Strong markets increase the amount of forestlands, forest productivity, and investments in sustainable forestry because landowners respond to markets and price signals. For example, landowners with marginal croplands are more likely to convert those lands to forests when forest markets are strong. Strong markets can provide landowners whose lands are prime for development with income that allows them to resist development pressures. While forest product markets dictate that this income will be based primarily on sawtimber prices―because where robust forest products markets exist, sawtimber commands significantly higher prices than pulpwood or wood used for bioenergy―markets for bioenergy products can provide additional income that allows landowners to offset some of the costs of ownership, such as taxes and insurance.

Ultimately, the message from the peer-reviewed research is simple. It is impossible to understand the impacts of using wood for energy, or any other purpose, without understanding how landowners respond to changes in demand for wood. This led the IPCC to conclude, “rather than leading to wide-scale loss of forestlands, growing markets for tree products can provide incentives for maintaining or increasing forest [carbon] stocks and land cover, and improving forest health through management.”

Markets for wood products, including bioenergy, are affected by polices that encourage or constrain market participation. Therefore, my co-authors and I conclude in our article that “policies that provide incentives for landowners to expand forest area, make forests more productive, and store more carbon could have important carbon benefits. On the other hand, policies that increase transaction costs to landowners or devalue forest biomass could have negative carbon consequences, by reducing incentives for investments in working forests, reducing biomass supplies, limiting afforestation activities, and leading to increased conversion of forests to other land uses. The potential for landowner response to disincentives could be especially important in the case of materials collected for energy due to their low value.”

Author: Robert Malmsheimer
Professor, Forest Policy and Law, SUNY College of
Environmental Science and Forestry