The largest natural capital investment in the world

 

The world is a dangerous place, not because of those who do evil, but because of those who look on and do nothing. Albert Einstein

 

Annually, Canadian provinces authorize the harvest of about a million hectares and then require the reforestation of this area. During this current wood market down-cycle, the area harvested and the area reforested has declined by 35-40%[1]. But over the past decade climate change has resulted in more area being disturbed by the ravages of insects, fire and disease than in any time since glaciation. In western Canada alone (British Columbia, Alberta and the Yukon) Mountain Pine Beetles have left some 20 million hectares of dead standing forests. In the US, several pine related insect species have followed similar climate change vectors and devastated an even larger area.

Harvesting has a directly identifiable causal agent, and the government jurisdiction who grants the forest license holds the harvester responsible to replace, on exactly the area from which they benefited, the public capital they removed. Climate change, on the other hand, has an indirect human cause, making it difficult to identify polluters and hold them accountable, especially given the complexities of forest ecosystems and the behaviour of forest insects, disease or fire and the causal role of shifting climate patterns. It is also difficult to predict where climate devastation will concentrate; the location randomness of climate change makes the silviculture stimulus required to restore affected areas a sovereign or national obligation. This is especially true when the scale of restoring the devastation exceeds the capacity of one state or province to deal with it.

Ultimately, the responsibility to regenerate national forest areas requires a partnership between the province/state and federal governments.  The opportunity for biomass, carbon credits and other direct public good benefits, such public private partnerships (PPP), invites the revival of concepts like the thirties’ Civilian Conservation Corp, which protected and revitalized ecosystem services and wilderness parks. A similar youth cohort today would recreate natural wealth and safeguard human well-being.

The US is Canada’s primary lumber market and its housing price bust resulted in the worst down cycle in Canada’s forest industry history; from 2004 to 2009 exports to the US declined 65%². This US market decline has had an impact on all wood producers worldwide.  "Stabilizing and Healing the Housing Market" is the title of Chapter 4 in President Obama’s 2012 Economic Report of the US President published by the Whitehouse for the Congress and the fascinating chart (Figure 4-1) below is taken from that Chapter.

 

Red = The $2.5 trillion US subprime mortgage bust started in 2007, directly drove average       US national housing prices down and triggered the unwinding of the global financial system,    which pushed housing prices lower than any US bust in the last century;  

Blue =  New England bust: which started in 1989;

Orange = California bust: which started in 1990; and

Green = The Great Depression: which started in 1930. (see the article on ‘A Global Civilian  Conservation Corp’  in this issue) 

The President’s report focuses on recalibrating federal mortgage and rental programs to stabilize the housing market, but the 12 year cycle concept of the chart sends a signal we may be at the bottom of this current housing crisis and wood demand down-cycle. While twice burnt thrice shy industry cynics may take little comfort in correlating 12 year cycles, bigger factors than US real-estate asset prices drive long-term wood price trends.

In 1972, The Limits to Growth used a global supply/demand model to predict that the growing population’s demand would exceed the earth’s limited supplies, resulting in sustained real price increases for all resources. During the previous three quarters of a century raw resource prices decreased steadily due to new resource discoveries, an industrial era of continuous efficiency improvement, material substitution from new technologies and buyer/distributor consolidation.

 

By 1980, Julian Simon, an economist who asserted that inventive, adaptive humans in a free market would never run out of anything essential, challenged worried environmental scientists to bet against the trend of decreasing commodity prices.  Paul Erlich, author of The Population Bomb (1968), and John Holdren, now Obama’s climate science advisor, took Simon up on his bet. By 1990, the five commodities they picked had all fallen in real prices by an average of 50%, while the global population grew by 900 million. Real resource prices continued to decline to the end of the century.

What is interesting about this story is that if Erlich had waited until today, Simons would have lost the bet, as four of the five commodities’ prices have increased since1980. The most striking change in the resource economy during the first decade of the 21 century is that the long pattern of annual price decreases is dramatically over. Virtually all resource prices have increased by several hundred percent, except wood.

 

What drove the past decade of resource price increases was not the human population reaching seven billion, but the number of global consumers doubling from one to two billion. It is not meeting the Millennium Development Goalsto ameliorate extreme poverty by 2015 that has driven price increases, but the emergence of the new economies of South Korea, Brazil, South Africa, India, Vietnam, China & Taiwan. From now, until 2050, when the world population peaks at 9 to 10 billion, demand will continue to exceed supply if the rate of new consumers per decade remains in the order of 1 billion. But global consumer demand is not the only force driving wood prices.

 

Lodgepole Pine pinus contorta (Pl) is a remarkable pioneer species. The first conifer to regenerate after a fire or other disturbance, Pl grows so vigorously it was the lowest cost to free growing option for BC forest licensees. Some unusual growth secrets were recently confirmed by Dr. Chris Chanway at UBC after ten years of study. Lab trails tracked strains of nitrogen fixing bacteria that co-evolved within Pl chlorophyll cells, accounting for up to 70% of the young pine trees’ growth in nutrient deficient soil. Pine is a remarkable species and the world has learned it can depend on it for many things.

 

In the 1800’s, pioneers adopted First Nations’ fire biome deer management practices to burn forests for rangeland and prospecting. At the turn of the century, BC’s standing inventory of pine was about 300 million m³.  Managing for timber value during the following century led to fire suppression in these fire biomes, so that by 2000 the standing inventory of pine had grown to over 1 billion m³.  By 2012, twenty warm winters enabled super-populations of Mountain Pine Beetle (MPB) to feast on the pine laden tablelands and foothills leaving a standing dead pine inventory of 850 million (m³).[2]

 

Canadian pine was not the only victim of insect populations riding the vectors of climate pattern change. Andrew Nikiforuk’s Empire of the Beetle documents MPB march across North America from California to Alaska and MPB’s various beetle relatives’ assault on all other pine species across the continent; North America’s total standing dead pine inventory may be in the order of two billion m³.  

 

Dead standing pine inventory has a short ‘shelf life’. American timber companies protect profits by threatening Canadian forest companies against ‘dumping’ salvaged pine into US lumber markets. Both countries face the problem of more dead standing pine than wood demand.  Both countries look to bioenergy to get this fire hazard forest fuel off their fire-prone landscapes. BCs’ five years of salvage license offers have not lead to whole tree harvesting for bioenergy in the 17.5 million hectares of MPB’s dead standing pine.  Bioenergy companies claim they cannot afford the reforestation costs that come with harvesting (costs that increase with climate change).

 

Pl’s susceptibility to the MPB and pathogens like Dothistroma, removed Pl from the preferred planting species in pine`s traditional Biogeoclimatic Ecosystem Classification (BEC) zones, especially for getting regeneration beyond free-growing to maturity. Climate change patterns that induce warming have given other insects advantages; pathogens benefit from increased moisture while trees are being stressed directly by increased drought or snow-free cold snaps. Today’s climate change and long-term projections into each species full rotation life-cycle required BC to develop climatically adjusted seed and species for the changing BEC zones- an unprecedented and almost unthinkably complex modelling problem[3].

 

During the wood market down-cycle, reduced stumpage revenues resulted in cuts to BC’s Forest Service. Consequently, climate disturbances outpaced the capacity of the government to track impacts, much less survey and implement regeneration prescriptions. Once blind to what was happening and what had to be done, government communications became self-contradictory and seemed designed to obfuscate public discussions about the scale of the problem or the consequences of inaction. To date, no government publication dared consider the scale of funding required for the regeneration of existing and predicted forest disturbances. While a vigorous debate is presently underway about the unacceptability of inaction[4] in this era of economic uncertainty, no one has suggested how to pay for reforestation’s greatest challenge.

 

Each economic crisis seems to drain silviculture funding. In 2002, to rein in BC’s provincial deficit, the government rescinded legislation requiring the district manager to plan and reforest current fire and pest disturbances. It replaced that obligation with a 10-20,000 hectare planting program branded ‘Forests for Tomorrow’. Held up against the millions of hectares of MPB deforestation the Forests for Tomorrow program is as miniscule as a MP beetle- often described as the size of a grain of rice. BC’s Request for Proposals for Restoring Forest Carbon (see slide 19) to develop up to a 10,000 ha public/private partnership to match bioenergy harvesting with restoration of forests, may help. But BC’s slow growing forest credits will not provide the billons that appear to be required. 

 

Alberta’s $600 million Bioenergy Producer Credit Program is more in line with the scale of the initiatives required, but it has still to lead to MPB clearing in the provinces five year old infestation and fund restoration. Unlike what Alberta requires from forest harvesters, its oil sector is not required to reforest the geographically defined seismic lines, well sites and oil development sites beyond some grass seeding, even though it is clear who is responsible for the deforestation and who should pay to restore; growing the reforestation program beyond forest harvesting in Canada’s oil and gas province remains a challenge.

 

US bioenergy transport subsidy of $40/tonne stimulated some forest fuel cleaning in fire prone biomes, but uptake barely scratched the forest climate crisis. Where are the 100,000 acre PPPs between agile restoration, climate credit, bioenergy corporations and adaptive state and federal governments?

 

The scale of forest disturbances from pests, fire and disease across North America is biologically unprecedented in post glaciation forest history[5]. This makes modelling appropriate restoration prescriptions extremely difficult, but persuading investment in natural capital of this scale has a political precedent in Roosevelt’s Civilian Conservation Corps. It does not take imagination to understand the value of employing youth, whose unemployment rate is over 20% and whose skill mismatch demand. In other highly deforested countries like Greece and Spain, youth unemployment is 35% and 45% respectively; a contributing factor fuelling the dissent of those involved in the recent occupy movement, which illustrated the imminent need to redesign current systems, in a way which could, and should, include large-scale reforestation stimulus.  

When comparing options for economic stimulus, we know ecological benefits are as important to human well-being and the future of geopolitical peace as economic benefits. Human well-being depends on biodiversity, clean air and water, precipitation patterns, soil stability, forest absorption of carbon dioxide, aerosols, chemical toxins and fertilizers, and of course, timber and fibre values.

 

Last summer’s 100 days over 100^oF and extreme drought burned 5 billion Texas trees which need replanting. However, it is not always reforestation that creates ecosystem health. Texas grassland fire protection allowed mesquite to invade and there bioenergy removal can restore deep rooting, soil building, moisture holding, and long grass prairie ecosystems. Food, fuel and fibre security result from restoring each local climate driven forest and range ecosystem disturbances appropriately across North America.

 

To contrast the Alberta oil sands, the largest capital project in the world, which is dislocating hundreds of thousands of temporary tradespeople from across Canada, a national reforestation and soil restoration program could be distributed across Canada. A national, natural renewal program would not be lumped into short, urgent time periods rife with inefficiencies, boom-bust cycles or skill matching disconnects, but could be smoothed across time to match the professional development of the ecosystem restoration cohort deployed into the program. 

 

In Canada, where natural resources are the provinces’ responsibility, the federal government must help solve a national crisis that has hit one province exceptionally hard. BC is the logical place to start a national program, but this structural solution to change can apply to all of Canada’s forests. Restoring ecosystems is critical for intergenerational equity beyond than natural resource reasons, it is also important to help our youth confront challenges.

 

Longitudinal studies show chronic unemployment affects youth for entire lifetimes. Let us not stand by mute witness to North America’s climate crisis in our forests and grasslands. Rising to the challenge of the largest ecosystem restoration project in the world is the best economic investment in intergenerational equity and sustainability. The Civilian Conservation Corps may not inspire the $100 billion Facebook generation; we have to each re-ignite our own youthful imagination and will for adventure, and to remember how, during a global depression, President Roosevelt wrestled despair, dust storms and drought to a standstill from his wheelchair.