Keeping forests in forest: five experts describe how best to convince private forest owners to value their timberland for ecosystem services. With R. Scott Wallinger, Louise Milkman, Tom Tuchmann, Peter Stein, and Carol Daly.

America's private forestland is changing. The question now is how we shape that change; how we ensure that the debate over America's forests includes ecosystem services--the ability of trees to provide clean air and water, cool temperatures, prevent erosion, and hold back stormwater runoff. We must act now to prevent the wholesale loss of these valuable lands. With that in mind, AMERICAN FORESTS asked representatives from five diverse interests how best to help private forest landowners consider these important values when making decisions about their land. The question is at left, the answers below.

THE QUESTION: With the face of private forestland ownership changing, what types of public policies, incentive programs, or market-based approaches would you recommend to encourage private landowners to value and maintain their forestland for the ecosystem services it provides?

THE ANSWERS:

R. SCOTT WALLINGER

R. Scott Wallinger is a member of the National Commission on Science for Sustainable Forestry; a retired senior vice president of MeadWestvaco Corp.; and a former AMERICAN FORESTS' president. His perspective is based on a broadly based, senior-level Global Markets Forum convened by NCSSF.

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A: The United States is a large, mature forest products market. It offers family forest owners revenue for timber--their largest income source and economic incentive--but those markets are unlikely to grow and owners are concerned about future income and retention of their forests.

Prospects for alternate revenue from "ecosystem services" or "nontimber forest products" do not approach timber as an income stream. Examples of payments for watershed values are limited and anecdotal. Conservation easements tend to be one-time tax-reduction devices, not sources of annual income. Hunting leases are an existing revenue source. Paid recreation on private land is expanding but competes with public parks and forests. Carbon trading is new for large ownerships but not meaningful for family forest owners. Other "nontimber" forest products are niches, not broad income streams.

"Keeping forests as forests" is the common denominator to maintain ecosystem service values of forests to society, regardless of forest owner management goals or income streams.

This focus offers major potential for new public-private-nongovernmental collaboration with a common goal, regardless of the motives. It begins with progressive public policies--federal, state, and local--in forested rural areas to encourage a vibrant forest economy: economic development incentives to manufacturers and loggers, supporting tax policies, targeted worker training and education, functional roads and bridges, coordinated and efficient state and federal agency processes.

A commodity mentality in large forest industry opens opportunities for local entrepreneurship and innovation that needs local government support. Land trusts and conservation groups can play a key role in promoting active forest management with diverse income sources by supporting forestry policies while helping remove incentives to convert forests to other uses. More than anything, "Keeping forests as forests" requires coherent and sustained strategies, not merely random, short-term program elements.

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TOM TUCHMANN

Tom Tuchmann is president of US Forest Capital, a forestry and financial services company that specializes in conserving working forests.

A: There are many incentives that could be created to maintain ecosystem services, but the bigger question is how we make it economically attractive for landowners to maintain the ecosystem service factory--the forests themselves. For without the forest, there is no opportunity to provide the service!

The most promising incentives are those that integrate wins for the investor, landowner, community, and the environment. This can be achieved by integrating private investment and public policy. Indeed, one of the most rewarding aspects of leveraging market and public incentives is that historically polarized interests are now collaborating to keep working forests working.

There are a surprisingly large number of market and public incentives for large-scale conservation. Unfortunately, many public incentives that pay for nonmarket benefits are subject to the whims of annual public funding processes that have not faired well in recent years.

With this in mind we are working with the landowner and conservation communities on financing mechanisms that would allow qualified organizations to borrow money for long-term, large-scale conservation. One such mechanism, community forestry bonds, would allow taxable or tax-exempt municipal debt to be issued and the proceeds--$20 million, $50 million, $200 million--used by a qualified organization to acquire forests. The lower interest rate associated with municipal bonds would allow the property to be managed for various ecosystem purposes while timber harvest revenue pays off the bonds' principal and interest. Federal legislation is required to use tax-exempt debt, but current law allows for the issuance of taxable municipal debt. Similar strategies exist to achieve the same goals based on private interest and public funding in a local area.

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In looking at incentives, the most important thing to keep in mind is that an array of tools can be used to achieve forest conservation. The most successful transactions are the ones that marry different incentives and private capital to achieve seller and buyers' goals. While looking for new incentives, don't forget to consider how existing programs and investments can be used to conserve private forestlands.

LOUISE MILKMAN

Louise Milkman handles forest policy and public lands issues for The Nature Conservancy's government relations office; previously she served as an attorney at the U.S. Department of Justice, environment and natural resources division.

A: Approximately two-thirds of all forested land in the United States is in parcels of less than 1,000 acres; the vast majority are owned by families. In a rapidly changing economic and land-use environment, it is increasingly difficult for the millions of small forest landowners across the U.S. to find financial resources to keep their land in forests. Left unabated, the current loss of private forests to fragmentation and development will lead to reduced fiber and log supplies for mills, decrease biodiversity, and diminish the ecosystem services provided by forest land, services such as water resources, flood control, carbon storage, and recreational access.

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The 2007 Farm Bill provides the best near-term opportunity to assist small rural landowners in protecting the economic and environmental values that come from well-managed forest land. The Farm Bill's conservation programs provide public payments for sound conservation practices on rural lands and for the resulting public benefits. But to date, these programs have been directed largely toward agricultural lands: Past Farm Bills have provided forest landowners with far less than 1 percent of the estimated $30 billion spent to support agriculture programs. The demand by forest landowners to use these programs is increasing rapidly; the economic and environmental benefits of greater participation would be substantial.

This demand could be met by: increasing funding in the 2007 Farm Bill reauthorization for incentive programs aimed at private forests; targeting funding and support to areas most at risk of loss; encouraging landowners to work together across landscapes; improving coordination between the U.S. Forest Service and Natural Resources Conservation Service; and increasing outreach and technical assistance to small forest landowners.

With the current unprecedented pressure on family forests, groups concerned about the future of our forests will need a common voice on the issues Congress faces in reauthorizing the Farm Bill. Most Americans would like our forests to remain forests. The kinds of measures outlined above are critical to ensuring that private landowners maintain--for themselves and for all of us--the valuable ecosystem services their forests provide.

PETER R. STEIN

Peter R. Stein is a general partner of the Lyme Timber Company, which specializes in the acquisition and management of high conservation-value forests.

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A: I'd like to see new and expanded public policies that compensate private forestland owners for the wide variety of "services" forests provide both to human communities and natural communities. From watershed protection to long-term employment and ecological buffers, well-managed private forests can be conserved and supported via working forest conservation easements, the sale of carbon credits, species-specific mitigation banking, and other market-based incentive efforts. New and expanded efforts at all levels of government plus market-based trading and mitigation strategies will internalize the economic value of these societal benefits, thereby compensating forest landowners who, as a result of wise stewardship, regularly and sustainably deliver these "public" goods.

The pioneering efforts made by New York City to conserve its public water supply watershed will become the norm rather than the exception. Communities whose economic livelihood are dependent on working forests will pursue innovative public financing strategies to pay for conservation easements while still allowing the forest to be privately owned and managed. Global climate change mitigation and trade-off protocols will foster a market for carbon sequestration rights and help conserve forestland by monetizing those rights. With meaningful levels of public and private financial resources devoted to these pursuits, forest fragmentation and conversion to nonforest uses will be slowed.

CAROL DALY 

Carol Daly staffs Flathead Economic Policy Center of Columbia Falls, Montana, and is president of the Communities Committee, a national community-based forestry group.

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A: Family forest owners need good information to make good decisions. They need to know both the existing condition and the potential of their land, the ecosystem services it does or can provide, current or anticipated future markets for those services, the range of feasible forest management options (including participation in a forest cooperative), and each one's costs and revenue implications.

Couple that information with accessible technical assistance and consistently funded sources of financial assistance, resources such as landowner forest stewardship training programs and state or federal grant or cost-share programs, to help pay for forest restoration or habitat conservation activities.

Private forestlands that positively contribute to a community's clean air and clean water and help satisfy residents' and visitors' desires for open space and pleasing vistas have value beyond what owners enjoy. Favorable property taxation for forest lands, issuing bonds or dedicating a portion of lodging taxes or lottery proceeds to enable purchase of development rights, and other public finance tools can help spread the costs of maintaining ecosystem services over the broader spectrum of beneficiaries.

Communities and states need encouragement and assistance to deal with large-scale changes in private forestland ownership, particularly those that could impact their environment, economy, or quality of life. A recent Communities Committee-hosted conference gathered representatives of local governments and nonprofits that have confronted that challenge, frequently by creating community forests through acquiring easements and/or the fee purchase of lands from willing sellers.

Relative scarcity of funds for land acquisition has been a major barrier. Forest Legacy and other state/federal financing program increases are needed, as is greater commitment from private foundations. New tools, such as tax-exempt community forestry bonds, need to be made available.