Contract Overview, April 2007

Background

In August 2004 the Apache-Sitgreaves National Forests awarded a 10-year Stewardship Contract to thin 150,000 acres of primarily small-diameter ponderosa pine trees, emphasizing WUI areas surrounding communities in the White Mountains of Arizona.  The contract was awarded to Future Forest, LLC, a local partnership of WB Contracting and Forest Energy Corporation. This Stewardship contract is designed to restore forest health, reduce the risk of fire to communities, reduce the cost of forest thinning to taxpayers, support local economies and encourage new wood product industries and uses for the thinned wood fiber.

Collaboration with state and local organizations, citizen groups, conservation organizations and other stakeholders is critical and on-going for the Forests.  In 1997 a diverse group of community members formed the Natural Resources Working Group to build consensus on forest restoration.  The Arizona Sustainable Forest Partnership remains an important discussion group with wood product industry representatives.  Community Wildfire Protection Plans covering all of the communities near the Forests are complete and prioritize forest restoration treatments.  Collaboration with citizens and conservation groups has resulted in 70,500 acres of NEPA analysis completed in 2005-2006 with no appeals, or litigation and only 1 objection filed, which was easily resolved.

Successes

The 10-year guaranteed supply of wood fiber enables wood product businesses to invest in equipment designed specifically to treat and mill small diameter wood. Six Forest Products Laboratory grants of $250,000 each have been awarded to White Mountain-based businesses in the last two years.  These grants are a vital source of “seed-money” to purchase equipment and technologies to utilize and manufacture value-added products from small-diameter wood.  One half of the trees being thinned are between 5” and 9” in diameter.  On some task orders, 50% of the wood fiber thinned is 5” inches in diameter or less.  The federal funds invested in these enterprises reduce the cost of forest restoration treatments and make landscape-scale treatments possible.  Prior to the Stewardship contract, forest restoration costs were up to $1,100 per acre.  The thinning cost is now approximately $550 per acre, depending upon the treatment prescription.

As of February 2007, task orders for the thinning of over 25,300 acres have been issued, 16,000 acres of thinning completed, and 300,000 green tons of biomass removed. Products created from the thinned wood fiber include wood pellets for home and industrial heating, animal bedding and compost materials, wood moulding, structural lumber, paneling, wood pallets and biomass to generate electricity.  Show Low-based Forest Energy Corporation increased their wood pellet mill capacity by 50% and recently doubled their supply contract with the Home Depot.  Several industrial wood pellet heating customers are on line, including the town of Eagar offices, and the Apache-Sitgreaves Supervisors Office. 

The 3 mega watt Eagar Bioenergy plant opened in 2004 and uses 50,000 green tons of limbs, tops and small trees annually.  Arizona power companies have contracted with a local company to add a 20 mega watt bioenergy plant in Snowflake that will use 170,000 green tons of biomass annually.

The Stewardship legislation authorizes the USDA Forest Service to work collaboratively with a multi-party community monitoring board to assess the economic, social and ecological impact of the contract.  The first year economic, social and ecological assessments are complete, and the second year findings should be available soon. The assessments were conducted by independent scientists under contracts.

University of Arizona economic development professor Dr. L.J. Gibson just completed the first year economic assessment of the Stewardship contract.  His analysis reveals that the 13 businesses directly working on the Stewardship contract support 450 full-time jobs in Arizona and 318 of those full-time jobs are in the local area.  These 13 businesses spend over $12 million for goods and services in the local White Mountains region. The forest was awarded the Governor’s Award for Excellence in Rural Economic Development in August, 2006.

Challenges 

The biggest challenge is funding the task orders each year.  The minimum contract guarantee is for 5000 acres, at an average of $550/acre or $2.75 million.  Our goal is to thin at least 15,000 acres per year at $8.25 million.  Although this price is very good for mechanical thinning, it is still a large sum of money in times of declining budgets. 

We recently met with members of the wood products industry, Arizona Sustainable Forest Products, Northern Arizona Wood Products Association, Northern Arizona University and ERI, members of several conservation organizations and the Governor’s Forest Health Task Group to discuss the potential for attracting larger industry into Northern Arizona, which could pay more for the 5” – 12” diameter material.  The guaranteed wood supply of the contract has attracted several larger industry proposals, but they would all need at least twice the wood supply that the A-SNF alone could produce.  It is time to look at a larger scale of wood utilization that would include 4-5 forests and tribes.

The Northern Arizona Wood Supply Study will be a collaborative partnership between all the interests listed above, with public involvement, to see what potentials there are for landscape level treatments.  The idea would be to have a larger player, such as oriented strand board, that could help underwrite thinning costs, while still preserving wood supply for the community-based wood products industries that we have already attracted.

Topics For National Consideration

The A-SNF feels that part of our national role is to help other forests and regions who are considering stewardship contracting as a tool.  Elaine Zieroth and Kate Klein are on the National Woody Biomass Team and hosted a tour in August.  Several line and staff officers have given presentations at countless workshops and conferences and have made service trips to help others regions and tribes.  Long-term stewardship contracting can be useful and successful in other locations where you have strong public support and partnerships and commitment from industry to work in a collaborative environment.