Below-Cost Timber Sales on Federal and State Lands in Oregon: An Update

July 28, 2016

Economic Analysis Shows Below-Cost Timber Sales in Oregon are Becoming More Severe

The revenue from timber sales on public lands in western Oregon covers less than 2 percent of the costs, according to recent research from Natural Resource Economics, an economic consulting firm.

The research found that costs materialize when federal and state officials execute below-cost timber sales, i.e., sell timber on public lands at prices that fail to cover the costs to taxpayers, households, and businesses. Logging of public lands can generate many types of costs:

  • Timber-sale administrative costs
  • Reductions in quantity of streamflows
  • Reductions in quality of streamflows
  • Negative impacts on outdoor recreation
  • Intensification of climate change
  • Reductions in value of nearby private property

Outcry over below-cost timber sales during the 1980s led to Congressional investigations and restrictions, and the issue largely disappeared from sight in the 1990s, with implementation of the Northwest Forest Plan that covers 25 million acres of federal forests in western Washington, Oregon, and northern California. Concern over below-cost timber sales has recently reemerged with publication by the Bureau of Land Management (BLM) of its Proposed Resource Management Plan for the 25 million acres it manages in western Oregon. The agency proposes to log more than 8,000 acres per year, receiving timber-sale revenues of about $6,400 per acre. The costs, though, will total more than $370,000 per acre. Thus, the timber-sale revenue will cover less than 2 percent of the costs.

Timber sales by the Oregon Department of Forestry and U.S. Forest Service probably have similar below-cost characteristics.

"The analysis shows that below-cost timber sales, widely criticized decades ago, are continuing," said Ernie Niemi, who conducted the research. "Since then, however, the costs of logging have grown much faster than the revenues, so the net costs are much more severe." Niemi is President of Natural Resource Economics, a consulting firm based in Eugene Oregon.

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