Governor John Kitzhaber on The Future of Forest Policy in Oregon

Sustainable Northwest worked with former Governor John Kitzhaber to interview several timber executives across the range of ownerships along with several conservation leaders. These informal conversations were designed to collectively identify and understand the longer-term opportunities and challenges facing timber businesses and conservation organizations. Gov. Kitzhaber is highly regarded as a systemic thinker deeply concerned with finding enduring solutions to our natural resource challenges. Having been elected Governor four times, no one is better qualified to assess the political and policy

opportunities to secure a future in Oregon with thriving and robust timber businesses while also enhancing ecological outcomes from our mighty forests.

His thoughtful observations will be shared widely as we consider areas of mutual interest where both conservation and timber interests could benefit from fiscal, policy and private initiatives constructed on a foundation of respect, stability, and shared interest. We invite you to review his findings and think about how you might help us envision the future of forest policy in Oregon. At Sustainable Northwest, we expect that the outcomes highlighted in this report will help to inform and prioritize our work in the coming months and years.

Greg Block Sustainable Northwest 

The Future of Forest Policy in Oregon Summary of Findings

June 2021

Governor John Kitzhaber ______

Below is the summary of my findings after interviewing over two dozen people from the conservation community and the forest products industry around the future of forest policy in Oregon. The people I talked with represented a range of environmental organizations and perspectives, as well as diverse forest products stakeholders from TIMOs to integrated forest products companies to small forest land owners

While there remains a troubling lack of trust between many forest products industry stakeholders and the environmental community, there is also a genuine desire to find a way to bridge past differences and to create a new, more collaborative path forward.

This summary is not intended to be a consensus document, but rather a synthesis of the views and perspectives I encountered during my interviews, and some conclusions of my own regarding the challenges and opportunities involved in finding the common ground from which to build a shared future. It is my hope that this paper can serve as the basis for a larger and more productive conversation.

John Kitzhaber June 2021

Introduction

The current complexity of the forest products industry in Oregon, and its intersection with listed species, carbon policies and wildfire, creates both challenges and opportunities in terms of developing the framework for an economically, environmentally, socially and politically sustainable forest policy.

Our current forest management policies (e.g. the Oregon Forest Practice Act on private land) do not fully recognize this complexity or the changing nature of the industry itself. Furthermore, we continue to rely on governance tools (e.g. the Board of Forestry, established in 1911) and trade associations (e.g. the Oregon Forest Industries Council)

We cannot solve our problems with the same thinking we used when we created them.

Albert Einstein

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The Future of Forest Policy in Oregon Summary of Findings

that increasingly lack the capacity to manage the conflict that has resulted from the growing complexity within the industry and growing pressures from without.

It is also important to recognize that Oregon’s forests exist within the context of global trends and disruptive technologies which have led to a change in land ownership and investment patterns, a divergence of business models and management practices, across a landscape that reflects very different characteristics in terms of temperature, moisture and topography, all of which impact forest growth and resiliency. This is taking place as the urgency to address global climate change and increasing wildfire risk is intensifying.

To get a better sense for the contours of the solution space—and with the recognition that the solution may well be multifaceted—it will be useful to begin with a better understanding of the complexity itself. First, however, let me say a word about a uniquely Oregon asset on which we can build: our land use planning system and the impact that has had on the stability of the forest land base.

Stability of Forest Land Base

We should not underestimate the importance that our land use planning system has played in maintaining a stable forest land base. Oregon has the most stable forest land base in the country—and a stable land base is the foundation of forestry. Ninety-seven percent of the land designated for forest harvest in 1974 remained in forest use in 2014. Over that forty-year period, about 240,000 acres were lost, mostly to low density housing and commercial development. In short, our land use planning system is a tool, not available to most other states—a tool that could play a valuable role in crafting a solution. Ironically, however, the biggest advocates for land use planning today are urban constituencies, not the natural resource industries, something that will hopefully change.

A frequent refrain among landowners is that land use laws and forestry regulations should be viewed as a package, with a shared goal to promote the stewardship of working forests. To the extent forestry regulations are amended, with negative economic impacts to landowners, we should expect renewed and expanded calls from landowners to loosen land use laws to allow development to offset lost timber values.

Governance
By governance, I mean both the structures, institutions and processes through which we seek to resolve conflicts between legitimate values, and the way in which these conflicts are currently framed. I believe that governance is a central part of the problem, a factor which has been largely overlooked, yet which interferes with our ability to find shared solutions.

Governance Tools
In his book Gravity’s Rainbow, novelist Thomas Pynchon wrote, “If they can get you asking the wrong questions they don’t have to worry about the answers.” The right question is, “What’s a forest for?” The problem is that the answer has changed over the decades. Fifty years ago, there was general (though certainly not unanimous) consensus that the answer to the question “what’s a forest for?” was to produce commercial

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The Future of Forest Policy in Oregon Summary of Findings

products that create jobs, industries and communities. Today, the answer has expanded to include other values such as habitat for terrestrial and aquatic biodiversity, carbon sequestration, clean water, and recreation.

Unfortunately, as these values have evolved, the institutions through which this change must be managed have not evolved and kept pace. Furthermore, as the state has urbanized, so has its legislature and executive branch. Many elected officials have little familiarity with the issues facing rural communities or our natural resources industries. Furthermore, few of Oregon’s “citizen legislators” fully understand the growing complexity of this issue and, therefore get much of the information on which their decisions are based from natural resource industry trade associations or from environmental organizations. This lends to the polarization of the debate and narrows the solution space.

This dynamic is reflected in, and exacerbated by, the Board of Forestry, which operates in this highly politicized environment. Unlike many other state boards and commissions, which emphasize generalist skills and critical thinking, the BOF seeks natural resource industry/conservation expertise. This redundancy with staff expertise, predictably, invites board members into non-strategic decision-making and, often, outright advocacy.

Appointments to the Board of Forestry are not judged on whether they will bring to the board a thoughtful view of how best to balance competing values to arrive at sustainable solutions, but rather through the lens of whether they will support the timber industry position or the conservation agenda. For example, with the recent confirmation of new appointees to the BOF, the board will now be widely viewed as being “evenly split” between members who have close ties to the timber industry and those who do not.

This can be viewed as a form of “Panarchy,” the conceptual framework that tries to describe the behavior and interactions of complex systems—both social and biological— and the inherent tension between stability and change. Complex systems seek stability, but stability gets in the way of evolution and the ability to adapt to changing circumstances. And change is the byword for the forces converging on forest policy in Oregon: changes in land ownership, changing business models, climate change, and a change in wildfire risk. The pace and magnitude of these changes are undermining the institutional capacity to manage the change in a constructive way, simply moving the conflict among competing values from one venue to the next: from the legislature to the bureaucracy to the courts to the ballot measure—without ever dealing effectively with the issue itself.

Framing
For decades, the debate over forest policy (as well the debate over many other issues) has been framed within the constraints of a “war” metaphor: who wins, and who loses, whose side are you on, what jersey are you wearing. Reducing the complexity of this long-standing conflict to a binary choice between entrenched stakeholder positions at the opposite poles of a two-dimensional, zero-sum continuum between economic and environmental values, almost by definition frustrates the development of a sustainable

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The Future of Forest Policy in Oregon Summary of Findings

solution. On the contrary, this frame fosters an “us versus them” mentality—a sense of separateness and a politics of scarcity, which inevitably creates winners and losers, but does not resolve the underlying problem. Without evolving our governance structures to match the changes taking place around us, and without rethinking the way in which the debate is being framed, it will be difficult, if not impossible, to arrive at a shared future for forest policy in Oregon.

Global Trends / Disruptive Technologies

The impact of automation

In 1978, the timber industry employed 136,000 people in Oregon and Washington. Four years later, that number declined to 95,000. Due to automation, the number of workers needed to produce the same amount of lumber fell by about 20 percent between 1982 and 1991. This trend has continued and, of course, is not unique to the wood products industry. Because of automation, the increased price of timber, and constraints on log supply, there has been a thinning out of our mill infrastructure with the closure of more inefficient mills, particularly in NE Oregon. This makes it more difficult to maintain the capacity needed to improve forest health in that part of the state.

The shift to tree farms using an agricultural model Most of the world’s wood today is grown on tree farms in an agricultural model, as opposed to natural forests. At the same time, milling technology allows greater yield from smaller, less expensive trees, including the production of “engineered wood products” such as mass timber. The combination of plantation forestry and mill technology has resulted in smaller trees, shortened rotation cycles, the ability to produce more wood from a smaller footprint and a lower demand for larger trees, and wood harvested from natural forests.1 This kind of intensive forestry cannot be undertaken everywhere and is concentrated in the Southeastern U.S., Brazil, Southeast Asia and Oceania. Here in Oregon, the impact of these trends on the landscape can be seen in smaller trees and shorter rotations. Within a given watershed, the percentage of recently harvested,

or relatively young, forests have visibly increased, which can generate a negative response from some communities. Shift in Ownership Patterns REITs and TIMOs The wood products industry globally has generally moved away from an integrated business model to a “specialty” model with the different parts of the value chain—the land and trees, mills, wholesale and retail— owned and operated by separate entities. As

1 From an environmental perspective, plantation forestry allows the same amount of wood to be produced from a smaller footprint, and potentially allows natural forests to be managed for a broader array of ecosystem services.

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a consequence, forest ownership, globally and in the Pacific Northwest, has gravitated towards Real Estate Investment Trust (REITs) and Timber Investment Management Organizations (TIMOs), both of which are “forest specialists,” albeit with different

investment models.

REITs are publicly traded “operating companies” that own the forestland itself. They pay no corporate taxes, thus making them attractive investment vehicles. Investors can buy and sell shares, creating liquidity, without selling the forest itself, which creates more stability in the ownership of the land. The first timber REIT in the country was established by Plum Creek in 1999, following a change in tax laws encouraging timberland ownership for portfolio diversification. Weyerhaeuser formed a REIT in 2009 and merged with Plum Creek in 2016, becoming the largest private landowner in the United States. At this point, there are only three major REITs operating in the United States (Weyerhaeuser, Rayonier and Potlatch) with only Weyerhaeuser and Rayonier operating in Oregon (Weyerhaeuser is Oregon’s largest private landowner).

By contrast, there are a couple dozen TIMOs operating across the U.S., with several here in Oregon (including Greenwood Resources, and Hancock, which is Oregon’s second- largest private landowner). TIMOs are not operating companies. They do not own the forestland, but manage it on behalf of investors like pension funds, university endowments and foundation, most of whom impart environmental restrictions on TIMOs including forest certification requirements and audits, and /or ESG (Environmental, Social and Governance) standards and reporting requirements.

TIMOs manage private investments and, as such, do not face pressures to generate quarterly earnings the way that publicly-traded companies do. That means that foresters can defer harvest during down markets and resume harvest when the market recovers— a significant advantage financially, and a major benefit from an environmental perspective. However, TIMOs generally have shorter ownership horizons; 10 to 15 years is typical.

Performance Metrics for REITs and TIMOs

Understanding the performance metrics of these two business models is important—

particularly as it relates to the length of rotation cycles. Both REITs and TIMOs

generally seek to maximize “Net Present Value” (NPV), the standard metric in the

investment world. NPV, in turn, requires investments to generate a “hurdle rate” (i.e., a

minimum return-on-investment, e.g., 5% net of inflation). This is important to forest

policy because rotations depend heavily on this hurdle rate. Sophisticated forest models

calculate whether holding a forest stand, and allowing it to grow, generates this hurdle

rate (again, for example, if the forest will increase in value by 5% annually). If the

answer is yes, the model indicates the forest should continue to grow. If the answer is

no, however, the model signals harvest. This typically occurs as the forest matures, and

its annual % growth rate slows. On west-side forests, models typically indicate 35-45-

year rotations, and on east-side forests, models typically indicate 55-65-year rotations.

This description illustrates the importance of hurdle rate: the lower the hurdle rate, the

longer the rotation length. By removing a layer of tax, both REIT and TIMO structures

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The Future of Forest Policy in Oregon Summary of Findings

lower the hurdle rate, and encourage longer rotations, all else held equal. However, all

else is not equal.

Countervailing the lower cost of capital, is the advent of the disruptive technologies

mentioned earlier (small-diameter manufacturing, agricultural forestry). Landowners

are rewarded for shortening rotations, replanting forest plantations, and continuing this

process on a perpetual basis. Rotations can be extended, through carbon and other non-

timber values as discussed later, but it is very difficult for these economic values to

compete with the advantages yielded by technological advancements in milling and

forestry technology. For example, to extend a rotation by just 10 years, even with a

fairly low cost of capital of 5%, a forest owner would need to see a 50-60% increase in

combined timber and non-timber values, in order to simply break even.

To summarize, both REITs and TIMOs generally employ a “Net Present Value”

performance metric, but REITs must also generate quarterly earnings, sometimes at the

sacrifice of NPV. This, in large part, explains why TIMOs have grown more rapidly than

REITs—the “patient capital” employed by TIMOs provides a better fit for forest land

ownership. This advantage, however, is somewhat offset by the shorter term of

ownership for TIMOs versus REITs. With respect to forestry practices and rotation

lengths, the tax benefits of both REITs and TIMOs lower the hurdle rate of the NVC

calculation, with the general affect that rotation cycles are allowed to lengthen. Having

said this, the advent of small diameter manufacturing and agricultural forestry combine

to drive shorter rotations across the globe, including here in Oregon.

Other Industrial Forests

Although there has been a significant shift in land ownership toward “specialty”

business models like REITs and TIMOs, Oregon has retained important integrated

forest products companies, some of which have been here for a very long time. Stimson

Lumber Company began acquiring forest land in the Northwest in 1889. Roseburg

Forest Products was established in 1936 and Hampton Lumber in 1942. Most of these

companies have added inventory to their ownerships for decades, because their business

model depends on growing more volume than they are harvesting—and on having a

sustainable and predictable volume of logs coming into their mills. Because integrated

firms often own forests as “standing inventory” for their mills, their forest modeling

exercises generally favor steady harvest volumes, which provides less flexibility to

managed for non-timber values, including carbon or other goals that compete with

timber volume.

Given the longevity of many of these firms, compared to the newcomers and out-of-state

landowners, and the substantial jobs they provide through their manufacturing

many understandably believe that their important community and economic contributions are undervalued. Furthermore, many of them

feel that their efforts to manage their land on a sustainable basis, have never been completely recognized for the long-term ecologic benefits they provide. A number of factors may contribute to this perception. First, unlike pure forest owners, integrated firms remain active in public timber sales, from both state and federal forests, some of which are opposed by environmental groups. In addition, their focus on timber may

facilities, compared to TIMOs,

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The Future of Forest Policy in Oregon Summary of Findings

place mills in an adversarial position regarding carbon offsets and other policies that may threaten timber supply.

It is also important to recognize that, because these companies depend on a stable and predictable flow of timber, state lands play an outsized role within specific geographies, and for specific manufacturers. As we will discuss later, although state owned forests comprise only about ten percent of our overall forested landscape, they are disproportionally important to the economies of specific counties and towns. In the coastal forests of Northwest Oregon, for example, a number of companies have made significant capital investments on assumptions of steady timber supply, some of it from state forests. These same forests, however, possess important non-timber values (e.g. salmon habitat) which has contributed to the tension between the forest products industry and the environmental community.

million acres—or about 36% of Oregon’s private forest land, are held by some 140,000 small nonindustrial landowners. This critical forest landowner group holds great diversity of views and approaches about how they view their land. Some are “land rich but cash poor” and, in many cases, are counting on harvest from their land to help them with their retirement. Others place great value on the aesthetic and ecological features of their forest land.

Often their children don’t want to manage the forests. Fewer than half of them actually have a succession plan in place and the trend is for them to sell to the highest bidder. Current land use planning designation and favorable tax treatment are very important for these individuals to maintain their property as forestland. Furthermore, these lands have many low-gradient streams which provide important Coho habitat that would be damaged of this acreage were to be developed or intensively harvested.

Tribal Forests

Family Owned Forests

In addition to forest land owned by REITs, TIMOs and integrated forest products

companies, 3.7

Although less than 2% of Oregon’s forest land is managed by tribal governments, these sovereign entities have a legal standing when it comes to harvest activities taking place on “ceded” lands, where the tribes hold “reserved rights.” Ceded lands, are those on

which the tribes traditionally conducted hunting, fishing and gathering activities, but which were “ceded” or relinquished to the United States at a treaty signing or when a reservation was established. In many cases, the treaties guaranteed or reserved the right of Native Americans to continue to hunt, fish and gather in their traditional hunting and fishing locations, even if those areas are outside the reservations. These rights are referred to as “reserved rights.”

In Oregon, these ceded lands encompass the vast majority of federal forest land. For example, while the Reservation of the Confederated Tribes of Warm Springs encompasses 640,000 acres, they have 10 million acres of ceded lands in seven different national forests. Sovereign tribal governments must be consulted when management activities on these lands could potentially interfere with or adversely impact tribal reserved rights. Because Oregon’s nine federal recognized tribes were the original

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The Future of Forest Policy in Oregon Summary of Findings

stewards of our forests, because of their status as sovereigns, because of their legal standing as it relates to their reserved rights, and because of their unique knowledge, experiences and worldviews, a discussion of the future of forest policy would not be complete without the intentional inclusion of Oregon’s sovereign tribal governments in that conversation.

Other Impacted Parties One of the shortcomings that flows from the way the current forest policy debate is framed, is that the voices and perspectives of some parties who will be impacted by forest policy decisions, are not represented at most tables—which are generally dominated by those with political power. I have already mentioned sovereign tribal governments, as well as the diverse owners of family forests which alone account for 36% of Oregon’s private forest land. To these impacted parties, I would add a wide range of Oregonians, including many who are marginalized, and at higher than average risk linked to the pandemic and its economic impacts, and who do essential forest-related work. Therefore, as we explore how to reframe the debate in a way that moves beyond

the zero-sum, binary war metaphor, we should consider setting a table that also includes the voices of those who may not have “power,” but have valuable perspectives and will be impacted by forest policy decisions (see “Summary” and “Next Steps,” pages 12 and 13).

Land Management Practices / Divergent Business Models

Land Management

The total forestland base in Oregon is 29,656,000 acres.2 Of that, 60% is owned and managed by the federal government, 22% is managed by private industrial landowners, another 12% is managed by private non-industrial landowners (family forests), 4% is owned and managed by state and local governments and 2% is owned and managed by tribal governments. (See Interactive Oregon Land Ownership Map.)

Public forestlands in Oregon are primarily managed by three different agencies under three different management protocols. Federal lands are managed by the USFS, which falls under the jurisdiction of the U.S. Department of Agriculture, the BLM, which comes under the jurisdiction of the Department of the Interior. These departments—and indeed the agencies within them—have different legislative mandates; different constituencies and answer to two separate Cabinet Secretaries. In addition, there are the O&C lands, which are also managed by the BLM, but under the 1937 O&C Act. State lands, on the other hand, come under the jurisdiction of the Oregon Department of Forestry, have their own legislative mandate (the Greatest Permanent Value rule), are constitutionally required to generate revenue for the Common School Fund, and answer to the State Board of Forestry.

Diverging Business Models

Private forestlands, all of which come under the regulatory framework of the Oregon Forest Practices Act, are managed using three different business models, which in some

2 https://oregonforests.org/sites/default/files/2021-01/OFRI_2021ForestFacts_WEB3.pdf John A. Kitzhaber, MD

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The Future of Forest Policy in Oregon Summary of Findings

respects, are not compatible. Both REITs and TIMOs, as forest specialists, seek to monetize all forest values – not just timber harvest, but ecosystem services, carbon sequestration, and “highest best use” (HBU) strategies, which may result in a land use change from forestry to development. This is a fundamentally different business model than the one on which integrated forest companies are built. Their economic viability depends on a steady, predictable flow of timber and, therefore, they understandably view their forests as “standing inventory.” In addition to these two dominant business models, there are the 3.7 million acres of family owned nonindustrial forests that are managed in a variety of ways.

Timber Politics

The collision of the two dominant business models is particularly apparent in issues addressing climate change, including bioenergy and carbon credits. Paper mills fight bioenergy policies that increase competition for small timber, while millowners fight carbon credit policies that motivate landowners to reduce harvests. At the national level, these issues have forced landowners to form their own trade association apart from mills. At the state level, neither mills nor landowners have the critical mass to sustain their own trade associations so they have both traditionally relied on the Oregon Forest Industries Council (OFIC) as their common trade association.

Over the past few years, particularly around the climate legislation (HB 2020), OFIC was unable to reconcile the divergent interests, which resulted in some members leaving the association. The answer is not to create two separate trade associations, which further fragments and polarizes the effort to develop a sustainable forest policy, but rather to seek ways to enlarge the solution space.

Forest ownership and Annual Timber Production

Total Forest Land in Oregon = 29,656,000 acres3

Ownership Federal
State & Local Private Industrial Family Forests

Percent Land Base 60%

4% 22% 12%

Percent Timber Production4 14%

10% 65% 11%

The vast majority of annual timber production (75%) comes from private land. Furthermore, while at a level much less than private industrial lands, our state lands are producing a significant volume of timber when compared to federal lands. The 1,129,000 acres of state and local forest land is producing 10% of annual timber volume; while the 17,858,000 acres of federal forestland are producing only 14%. These realities

3 https://oregonforests.org/sites/default/files/2021-01/OFRI_2021ForestFacts_WEB3.pdf 4 Does not include harvest on tribal forestlands.

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The Future of Forest Policy in Oregon Summary of Findings

on private and state lands have caused some to look to federal public lands as the de facto conservation-base – they perceive these federal lands as the portion of the landscape that produces the habitat needs for fish and wildlife.

This attitude towards federal lands increases pressure for harvest on both state and private lands, and it masks the unique habitat needs on state and private lands as well as the efforts that have been made—and that could still be made—by landowners and managers to address this. Our current private, federal and state management framework results in a de facto zoning of Oregon’s forested landscape that does not necessarily correlate with species needs, with forest health, or with economic and local community values.

Characteristics of Oregon’s Forest Land Base

Oregon Coast and Western foothills of the Cascades (See Western Oregon Private Land Ownership Map) Over 80% of the annual timber harvest comes from this region, over half of it from the coast range itself. These forests mostly site 1 and site 2 on the forest site (productivity) index. The predominate business models are TIMOs, REITs and family forest operations. These forests have a much broader range of alternative values that can be monetized (carbon sequestration, ecosystem services) than do the forests in Southwest and Eastern Oregon. This makes coastal forests especially attractive to the “specialty” land owner business model. Listed species in Western Oregon include both fish species and birds (e.g., spotted owl, marbled murrelet).

Southwest Oregon

Inland from the coast, and south from southern Douglas County, the forests are much drier and less productive, mostly site 3. Much of the O & C land lies in this area, which is subject to a variety of disturbances, including drought, fire and insect infestations.

Eastern Oregon

Except for the upper elevations of the Blue Mountains, most of the Eastern Oregon forests are site 3 and site 4 — very slow growing and, in many cases overstocked with stands of younger fir and pine, the loss of older fire-resilient forest structure; a road system that has disconnected healthy hydrologic function, a reduction in watershed health, and a high risk of catastrophic fire. Most of the listed species in Eastern Oregon are fish species.

The Intersection of Land Ownership, Management, and Endangered Species

Managing the intersection between listed species and forest practices across the landscape is complicated by the fact that critical habitat does not necessarily align with patterns of forestland ownership and management. Let’s use salmonids as an example. When we compare the map of forestland ownership (See Interactive Oregon Land Ownership Map, page 3) to a sub basin map of Oregon’s watersheds each of which

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The Future of Forest Policy in Oregon Summary of Findings

represents an ecosystem. What becomes clear is that none of these watersheds align with the patterns of land ownership.

Sub basin map of Oregon’s watersheds

This misalignment becomes even more obvious when we look at a map showing Oregon’s critical salmon habitat. These fish don’t care who owns the land they are swimming through; or what political jurisdiction they are in; or which agency or statute guides how the lands are managed. All that matters to them is the quality of the watershed and of the aquatic environment.

Map of Oregon’s critical salmon habitat

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The Future of Forest Policy in Oregon Summary of Findings

What we can also see from this map, in terms of threatened and endangered salmon, is that this is not primarily a federal lands issue anymore and, to a large extent, is not just a forest issue. The fact that harvest on federal land dropped from almost 12 billion board feet per year when the Spotted Owl was listed, to about 2.5 billion board feet per year today,5 and that the number of listed salmon species has gone from one in 1995, to 22 listed today, suggests that we cannot fix this problem on federal land alone.

While the focus of salmonid protection has shifted to private industrial forestland and state forestland, we cannot ignore that much of the best habitat is in lower gradient streams, many of which are in the 3.7 million acres of forestland held by small nonindustrial landowners and in coastal floodplains—primarily agricultural land 6 and non-forest county and state land.

Summary

Our traditional approaches to forest management policy, and the way in which the debate is being framed, do not fully recognize the complexity and the changing nature of the industry itself, or the intersection of this complexity with listed species, climate change and the increasing risk of wildfire. Oregon’s forests also exist within the context of powerful global trends and disruptive technologies, which have led to a change in land ownership patterns, a divergence of business models and management practices, across a landscape that reflects very different physical and climatic characteristics.

In short, our current private, federal and state management framework does not correlate with species needs, with forest health, or with economic, social and local community values—nor does it fully recognize or reflect the additional risks and challenges posed by an era of climate change and the suppression costs associated with mega wildfires. These are the central reasons why we have failed to reach a steady-state solution to the longstanding conflict between the forest products industry and the environmental community.

This mismatch between our current forest policy and management framework—and the increased complexity and external pressures that were not present at the time these policies and governance structures were put into place—is reflected in growing conflict, divisiveness, confrontation, acrimony and dysfunction in our efforts to manage a valuable resource which for decades has helped to define our state.

We can see the symptoms of this polarization and dysfunction in:

• The billion-dollar lawsuit filed by counties against the state over timber

  management on state lands.

• The contention and delayed budget approvals for the Oregon Department of Forest due to conflicting visions and priorities regarding mission, forest stewardship and wildfire prevention.

  5 http://ecowest.org/2013/05/28/timber-harvest-falls-in-national-forests/
  6 Ecological Forest Management, Norman Johnson, Jerry Franklin, Deborah Johnson, page 219

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The Future of Forest Policy in Oregon Summary of Findings

• The longstanding controversy and repeated rejection of and/or delays in the confirmation of appointments to the Board of Forestry.

• The highly partisan and politicized environment in Salem, replete with walk-outs and recent acrimony specific to segments of the timber industry over proposed climate policy.

• And most recently, in the resignation of the State Forester and growing calls within the legislature to diminish the role of the BOF, to make the State Forester a gubernatorial appointment with senate confirmation, or to abolish the Board of Forestry itself.

  As mentioned in the section on “Governance” (page 2), our institutional capacity to manage change in a constructive way has lagged behind the pace of change that is overtaking us. Our current approach simply moves the conflict for one venue to the next— from the bureaucracy to the legislature to the courts to the ballot measure. While I fully understand and appreciate the frustration within the legislature about the current state of affairs, simply changing who appoints the State Forester, or eliminating the board of forestry altogether, would seem to be a continuation of what we’ve been doing for the past few decades.

  Some of these steps may eventually be justified, but I believe it would be a mistake to proceed without first gaining more clarity—and hopefully consensus—around the mission that will guide the future of forest policy in Oregon, the values we want to be reflected in that mission, and the outcomes we seek to achieve.

  Next Steps

  Form follows function. Architect Louis Sullivan

  To arrive at a potential solution set will require three separate but converging efforts: (1) reframing the debate in a way that moves beyond the binary war metaphor, and recognizes complexity and nuanced nature of the issues involved, (2) breaking down the complexity in which the policy debate is taking place, as a prelude to arriving at a shared vison for the future of forests and forest policy in Oregon, and (3) rethinking and redesigning our current governance structures in a way that supports a path to actually arrive at that future.

  Reframing the Debate

  The challenge here is to move beyond the two-dimensional choice between economic and environmental values, and to add the relative importance other legitimate values and voices to the mix — other “vectors,” if you will, running through a multi- dimensional “universe.”7 For example, other possible dimensions might include:

7 This concept comes from an essay by Peter Hayes, Metaphors Matter. John A. Kitzhaber, MD

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The Future of Forest Policy in Oregon Summary of Findings

• The relative priority of the well-being of, and opportunities for, people in rural, forest-dependent communities

• The relative commitment to intellectual honesty regarding the use of objective science

• The relative commitment to seeking and celebrating the common ground needed for diverse interests to live compatibly in any place

  This may not be the right “universe” of values or dimensions, but it serves to illustrate one way in which we might move beyond the zero-sum nature of the current debate and begin to constructively change the frame, and perhaps the metaphor in which that debate is now taking place.

  Breaking Down the Complexity

  Successfully building a shared future, also requires breaking down the complexity described in this paper. We need a more granular understanding of forest land ownership in Oregon, the divergent business models, investment vehicles and economic incentives involved, the range of forest management/harvest practices (and the constraints on those practices) being employed on public, private and tribal lands, the policy goals and regulatory framework currently in play on federal, state, tribal and private forestland, the intersection of listed species with this forested landscape, and the impact and implications of climate change and wildfire on forest policy.

  This will take some additional research, and then setting a strategically selected “larger table” to conduct a political analysis that looks at the landscape through new eyes that are open to a suite of new, non-traditional solutions.

  A larger table might be set around some agreements that could help define a potential solution space from which all stakeholders might begin to envision the transition to a

John A. Kitzhaber, MD

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The Future of Forest Policy in Oregon Summary of Findings

shared future for forests and forest policy in Oregon. Some of those agreements might include:

1. The need for a new conversation and a new management, regulatory and policy paradigm, given the complexity and the changing nature of the industry, and the intersection of this complexity with listed species, climate and wildfire.

2. The need to rethink governance structures.

3. The need for certainty.

4. The need for objective science.

5. The need to find solutions across the entire forested landscape.

6. The importance of land-use planning/tax policy.

7. The need to look outside Oregon and the Northwest for solutions.

Rethinking and Redesigning Governance Structures

The State’s primary avenues for shaping and implementing forest policy are the Oregon Department of Forestry, the Board of Forestry and the legislature.

As discussed in the “Summary” (page 10), there are a number of current indicators that reflect the polarization, dysfunction and mission ambiguity in our current governance and management structures that highlight the need for a reset and modernization.

Fiscal Challenges
The Department of Forestry is faced with a very real threat to its solvency due to heightened wildfire activity, cash outlays, and record receivables and reimbursement periods. This raises a number of central questions:

• How do we put the agency back on a sound fiscal footing?

• Who should pay for fire suppression: landowners, the general fund, other

  innovative revenue sources, or a combination?

• How will Oregon pay for the “wildfire debt” that has accumulated through climate change and fuel accumulation, given the chronic underfunding of the Department of Forestry, and other natural resource agencies?

John A. Kitzhaber, MD

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The Future of Forest Policy in Oregon Summary of Findings

• It is abundantly clear that we need a much more robust overall investment in forests and forestry, and we need to quantify the magnitude of the investment required.8 Where will the funding come from?

Coordination and Integration Challenges

• In era of climate change and megafires—and given Oregon’s land ownership

  patterns—there is a pressing need to rethink and redesign a better and more permanent coordination and integration between federal and state agencies, and the way this new arrangement will interface with the private sector and local communities.

• The impact of, and response to, climate and wildfire is not limited to forestry and the Department of Forestry. This highlights the need to develop integrated solutions across natural resource agencies and beyond, including health, energy, land use, environmental justice, etc.

• Is there value in revisiting the concept of a coordinated “Department of Natural Resources,” as opposed to a constellation of separate, autonomous natural resources agencies, all of which have their own constituencies?9

  A New Social Compact
  There is value in looking at more explicitly defining and updating the “social compact” between forest businesses, forest communities and the greater state population.

  Scope
  As a next step, a scoping process might be warranted. This would include, at the very least, (a) a review of relevant statutes and Administrative Rules and policies pertaining to the Department of Forestry and other agencies; (b) a brief benchmarking of approaches taken by other states; and (c) building off this paper, continue outreach with a specific focus on governance.

  _______

  The recommendations in this paper are not intended to replace or in any duplicate the promising work being done through the ongoing habitat conservation plan (HCP) processes for aquatic species on private forest land. If successful, the HCP process could help relieve longstanding tension, bring much-needed certainty for all parties, and provide a template for conflict resolution in the future.

  8 The magnitude of the investment will depend on the mission, values and outcomes reflected in our forest policy framework.
  9 We looked at this framework in the 1990s as we were putting together the Oregon Plan for Salmon and Watersheds, which required multi-agency coordination. While I think it is worth another look, we should not underestimate the complexity involved or the degree of agency “institutional resistance” to losing autonomy, even if such autonomy undermines the effectiveness of the agency in achieving its mission.

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