SPEECH USDA Forest Service Washington, D.C.

The Forest Service's Role in Markets for Ecosystem Services
Forest Service Associate Chief Sally Collins
Portland Katoomba
Portland , OR — June 8, 2006

I would like to begin by thanking Michael Jenkins and Bettina Von Hagen for inviting me here today. Both are extraordinary leaders in forestry conservation and partners we are proud to have joined with on a number of ideas and initiatives.

Why Are We Involved?
The most common question I get when I talk about ecosystem markets is, “Why is the Forest Service involved?” The second question is, “Does the Forest Service expect to sell carbon credits off national forest land?” I think that’s because most people think only about the 193 million acres of national forest land when they think of us. And there’s no doubt that these lands abound in ecosystem goods and services. For example, we manage:

• 5 million acres of wetlands,
• 200,000 miles of fishable streams,
• 28 million acres of wild turkey habitat,
• 80 percent of the elk and bighorn sheep habitat in lower 48 states,
• 50 percent of the nation’s trout and salmon habitat, and
• drinking water for more than 60 million people.

So, clearly these lands are important sources of ecosystem goods and services. But the U.S. Forest Service also has a significant role to play in research and development and in supporting private, state, local, and tribal forest ownerships.

Actually, our mission reads, “to sustain the health, diversity, and productivity of the nation’s forests,” all 749 million acres of them in the United States . What we know is this: To protect biodiversity, clear air, and clean water, we have to manage ecosystems across landscapes, the public lands alongside the private.

Of course we have lots of work to do on national forest land to restore it to a healthy condition, given the threats from climate change, invasive species, and uncharacteristically severe fire, as well as from insects and diseases. Yet, despite all these challenges, we will always have our national forests and grasslands.

But it’s another story on private lands; hence our interest in ecosystem services markets. Today, the U.S. timber industry—small and large—is in transition. Large timberland owners are selling land in huge quantities, and small family-run operations are failing everywhere. Some of this has to do with increased costs and international competition; some with rising real estate values. In any case, the future of these lands is uncertain. And with real estate investment trusts buying so many of these lands, we can guess that many of them will not remain forested.

During the 1980s, the average loss of working farms and ranches to development nationwide was more than 3,000 acres per day; during the 1990s, the average loss rose to more than 5,000 acres per day. Focusing only on the threat to forests, in the next 25 years, we estimate that more than 44 million acres of private forests in the lower 48 states will be at risk of development. That is an area about the size of Pennsylvania and West Virginia combined.

We are looking to market-based approaches such as trading for ecosystem services credits to mobilize the investments needed to protect and restore these lands. So we have been diving into this, sometimes over our heads, but immersed nonetheless.

Very simplistically, trading ecosystem services is predicated on two things: having ecosystem services and a market. The Forest Service is uniquely positioned to help provide ecosystem services. As forest and rangeland managers, we specialize in knowing how land management practices affect ecological systems. We also house the largest forestry research and development organization in the world.

With respect to markets, we must at the very least understand what it takes to establish them, partly because we need to know how federal actions—including our own—affect private markets for ecosystem services. We know that:

• Markets require uniformity or consistency in the products for sale;
• Robust markets require keen attention to transaction costs, especially those inadvertently or unnecessarily imposed;
• Markets require opportunities for price discovery and transaction oversight;
• It can help to have aggregators who bundle services, particularly where landownership patterns are highly fragmented; and
• Markets require strong accountability and monitoring.

We also know—from watching these markets worldwide over the last decade—that they do not develop automatically. They require careful intervention … helping beneficiaries of the ecosystem services understand the need to invest in providing the services they depend on. The link between provider and beneficiary is key.

What Are We Doing?
At the Forest Service today, we are working hard to understand all this—frankly, with respect not only to biodiversity, but also to water quality, carbon, wetlands, and other ecosystem services markets that are emerging around us. Let me share with you a few things we are doing:

1. Over the past three years, we have put all of our senior leadership through seminars on global forestry trends. Many of you here have participated in those; and Forest Trends, of course, helped to develop them.
   
   
2. Also, at the Forest Service’s Centennial Congress last year, loss of ecosystem services was a top concern voiced by partners from all over the country. We followed up by hosting three focus groups, where we listened to our partners’ ideas and explored some of the opportunities for creating markets for ecosystem services. There was universal support for further exploring ecosystem services markets.
   
   
3. We are looking into estimating the dollar value of ecosystem assets and annual services on Forest Service lands. Our Forest Service scientists are working with University of Florida researchers on this question. Not surprisingly, a preliminary estimate of the value National Forest System lands is in the trillions of dollars.
   
   This exercise—an assessment of embodied energy based on work by H.T. Odum—calculates ecosystem value through the hidden energy captured in the organization and construction of living things. Just think of the energy going into producing a species over evolutionary time!
   
   What I find most intriguing is the comparative value of biodiversity relative to other values like water. I n the case of one particular forest, the value of its more than thirteen hundred species was found to be 120,000 times larger than the value of its surface water. Of course, such evaluations are based on assumptions that are open to question; my point is that the value of biodiversity can be surprisingly high.
   
   
4. We are considering using Forest Service lands as laboratories to test some market-based ideas, using the national forests for fuels treatments, biomass utilization, and carbon credits pilots. The Regional Foresters and Station Directors are moving ahead with these ideas.
   
   
5. We are testing forest certification on several national forests.
   
   
6. We are going to ensure, over the next year, that all our paper and wood products purchases are from companies and places that harvest legally and sustainably.
   
   
7. Finally, the Forest Service will use the greenhouse-gases protocols established by the Department of Energy to develop an overall inventory of our greenhouse gas emissions. Over the next year, the national forests and other Forest Service locations will establish an emission baseline, and they will be expected to monitor reductions.

Clarifying Purpose
I’ll close by saying this: Sometimes the most surprising shifts are the ones that happen by accident. I think that is what is happening for us in the Forest Service as the idea of ecosystem services is introduced. As the era of large-scale, industrial-type timber production has drawn to a close and the organization has shifted focus to restoration, ecosystem services has provided a kind of clarifying purpose—a small but important shift in our thinking.

I think, as new forest plans are developed, that we will begin to see a new language emerge. The concept of multiple-use management could once again evolve, this time refocused, perhaps, on sustaining multiple ecosystem services.

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