The Woods Aren't Deep.

Critics are calling on regulators to put a stop to the destruction of Chile's native forests.

AFTER 15 YEARS OF LIVING IN BALMY Miami, aeronautical engineer and Chilean native Felix Oyarzo was ready to return home to Puerto Montt, his hometown.

The Pacific port town in Chile's southern 10th region is the gateway to the luxuriously forested "deep south" of the country, a breathtaking topography of snow-capped volcanoes, crystalline fjords and temperate rain forests jammed with some of South America's most spectacular native trees. Every year, more than 100,000 international tourists use Puerto Montt as the starting point for all sorts of nature expeditions, so Oyarzo decided a hotel was the best investment.

Oyarzo says he's now seeing less visitors as agriculture and forestry grow in the region. "If you drive along the highways here, you can see the destruction," the 50-year-old hotelier says. "I used to be able to leave my house to go motorcycling and head straight into the trees. Now it takes me half an hour cross country to reach the woods."

Oyarzo is not alone in his concern. Chile's green movement has for years tried to sound the alarm, decrying what they consider weak forestry policies coupled with unchecked greed. To their chorus the unlikely bedfellow of business has been added recently: Joining the hotel owners and tour operators, southern Chile's salmon growers are up in arms about plans for forestry projects they say could wreak havoc on the region's supply of clean water, tampering with a US$1 billion export industry dependent on delicate environmental factors.

Fast-running water from the Andes needs the trees to keep streams from becoming gullies of mud, says Hans Kossmann, chief executive of Patagonia Salmon Farming in Puerto Montt. The runoff also contributes to massive algae blooms that literally choke salmon in their ocean pens by consuming all the oxygen in the water. "We're not against forestry," Kossmann says. "But once the damage is done, it will be a long time in recovering. Water quality should be the basis of any environmental impact studies that are done."

As is usually the case in arguments over resources, balancing economic interests is tricky at best. Chile's most recent forestry census shows just one fifth of the country is forested, and the vast majority of the almost 16 million hectares is located in the three southernmost regions of the country, which are ground zero for tourism, the salmon industry and Chile's saw mills.

Clear-cut subsidy. The forestry business is still modest and almost entirely made up of Monterey pine and eucalyptus stands to feed sawmills. But there's still great risk, critics claim. That's because private landowners control most of the virgin forest and they have little economic reason to leave native trees alone.

In fact, Chile's forestry laws heavily subsidize cutting, according to Mauricio Fierro, a Chilean forestry and tourism consultant. He says landowners who take out slow-growing native trees can recoup up to 75% and, in some cases, 90% of the cutting costs--although a separate subsidy encourages native replanting.

Such payments have helped establish Chile's burgeoning pulp and board factories at the expense of taxpayers, Fierro charges, leading to massive planting of fast-growing monocultures such as Monterey pine over native hardwoods. With that change go the variety and splendor of Chilean hardwoods such as alerce, araucaria and coihue, which take decades, even a century, to mature. Development, too, has brought unintended consequences. "'What protected the coastal forests in the past was the lack of roads," Fierro says. "All that is changing."

Less than a third of the native forests currently fall under government oversight through Chile's National System of Protected Natural Areas, which was established in 1994. "Most of the national parks are protecting nothing but stones," Fierro says.

Regulators contend that the case made by environmentalists is overstated and doesn't consider the seriousness with which Chile's Corporacion Nacional Forestal (Conaf) takes the government's role in protecting resources. Carlos Ritter, Conaf's technical director in the hotly disputed 10th region, says his office has 2,000 case files tracking each landowner's plans for forest management. Cutting is allowed, he says, but under carefully monitored conditions that do not allow for clear cutting. In addition, Conaf has 40 technicians on a staff of 220 just to follow private lands and a healthy annual budget of $500,000. "We have the people. We have the vehicles. We have the software," Ritter asserts. "It's not as if we have forestry anarchy here. It's organized and under control."

Government forestry experts add that Chile's tree industry is undersized and should be encouraged. "Countries like Finland and New Zealand have forestry as 40% to 50% of their GDP [gross domestic product]," Forestry Institute Director Ignacio Cerda says. "In Chile, it's 3% to 4%. That's low."

Investment has not been lacking. Private forestry firms, both foreign and domestic, have dumped $3 billion into Chile to develop particleboard, plywood, fiberboard and veneers for export. As a result, the export value of Chilean wood is predicted to top $4 billion between 2000 and 2010. Pulp for paper is now more than half of the export value of Chilean wood, but value-added products such as doors and finished boards are picking up steam.

The sticking point: native trees versus plantations. Cerda says attempts to harvest native wood in Chile--as elsewhere in the world--are simply, and unfortunately, bad economics. He'd like to see either very strong management programs that would allow for more plantations or some kind of tax on salmon and tourism to pay landowners directly not to cut, as has been done successfully in Costa Rica.

But, says Cerda: "The first assumption you have to make is that if people are poor and hungry, they are going to cut down trees."