SPEECH USDA Forest Service Washington, D.C.

Ecosystem Services: A New Perspective on Forestry
Associate Forest Service Chief Sally Collins
National Silviculture Workshop
Ketchikan , AK—May 7, 2007

It’s a pleasure to be here today. I’m here to give you my view—and the view of Forest Service leadership in general—on ecosystem services. Thanks to Bob for his persistence in getting me here; it is always a pleasure to be in Alaska.

It seems like you can’t go to a meeting of natural resource professionals today without ecosystem services being on the agenda. Nor can you pick up a newsletter or bulletin without seeing at least one article devoted to carbon and forests. The March/April issue of “Western Forester,” the publication of SAF in Alaska and the Pacific Northwest, was devoted almost entirely to ecosystem services, with the feature article by Bob Deal and Cindy West. After reading it, I kind of wondered why I was even speaking today—the entire piece does a great job of capturing the highlights of ecosystem services.

So, in light of that, this is what I’d like to do today:

1. First, ask you to take the large view—globally, nationally—and look at what’s changing—ecologically, economically—in forests and forestry that prompts this dialogue.
   
   
2. Next, what the notion of ecosystem services is, what markets exist today, and a little about how they work.
   
   
3. Finally, the role the Forest Service can play in considering ecosystem services—both the market and the nonmarket implications of looking at our work through an ecosystem services lens.

Disturbing Trends
In the past decade, we have seen some disturbing ecological trends—trends that seem to be accelerating faster than we can respond to with the tools we currently have. For example:

• The fire and fuels situation is worsening. In the last 5 years, six states have seen their largest fires in history. Last year, almost 10 million acres burned, the most since the 1950s.
  
  
• You are the last group I’d need to say anything to about forest pests and diseases. About 70 million acres nationwide are at risk from 26 different insects and diseases, to say nothing of the uncharacteristic scale of beetle kill.
  
  
• These factors are exacerbated by climate change. In parts of the West, the last part of the last century was the wettest in the last millennium, followed by warming and drying. Now add to this the predicted global effects of anthropogenic greenhouse gases: shifts in snow cover, seasonal timing, precipitation, wind patterns, and storm severity . This combination of circumstances is already feeding many of today’s problems. It could contribute to future changes of dramatic proportions.

The fluctuations we are seeing—and will likely see for years to come—are tending to fall outside what we’ve grown to fondly know as the historical range of variability. Seems less than a decade ago that we were dismissing the idea of treating HRV as a goal in our management; now it is quickly becoming merely one source of information among many for decisionmakers to consider, in some places even less relevant than ever.

There are also some major economic trends driving changes in forests and forestry:

• Natural forests are giving way to intensively managed plantations as the major source of the world’s wood. In the United States, fully 50 percent of our softwood harvest is expected to come from 9 percent of our timberland base by 2050, mostly in the U.S. South. Plantations now supply about a quarter of the world’s timber, and in 20 years it is expected to be half. This will come mostly from overseas, where the factors of production are cheaper. In Brazil and Indonesia, it takes a fraction of the land needed in the United States to produce a given quantity of wood fiber, a result of faster growing trees and shorter harvest times.
  
  
• Global markets for wood are increasingly driving investment in forests and forestry, and much of that investment is going overseas. According to a MeadWestvaco study a few years back, it was actually cheaper to produce timber in Europe or South America and import it to Baltimore , Maryland , than to produce it in North Carolina or Virginia . Another study showed only three countries having more expensive forestry than the U.S. South. That has implications for forestland ownership in the United States. Why own and manage your own forestland when cheap wood is plentiful and looks to be even more so in the future. In the 11-year period from 1995 to 2006, about 80 percent of private industrial timberland in the United States was sold, and much of it went to TIMOs and REITs. But the future ten years from now on our forested land base is uncertain.
  
  
• Many of these trends have resulted in loss of milling capacity nationwide. It has decreased 25 percent in the past decade or so and close to 50 percent in the West. With this loss of capacity and proximity, it is difficult for the Forest Service to find buyers for small-diameter wood on many national forests. Due to the same lack of buyers, small woodlot owners across the country are also losing an important income stream that helps them stay on their land.
  
  
• Internationally, deforestation rates in many large forested countries are disturbing, due to the aggressiveness of both legal and illegal timber harvesting as well as forestland conversion to agriculture. China’s growth is driving the demand. Deforestation leads to a massive release of carbon into the atmosphere, loss of critical habitat, and the degradation of drinking water supplies. Illegal logging further depresses U.S. timber markets as well, with a lot of less expensive wood on the international market.
  
  
• Finally, demand for wood products in the United States is relatively flat, not just due to the temporary decline in the housing market, but due to long-term trends.

Forested landscapes are increasingly unable to deliver the full range of services that people want and need—not just in the United States, but around the world. According to the United Nations Millennium Ecosystem Assessment, 60 percent of the world’s ecosystem services are in decline. For example, 25 percent of freshwater use worldwide is unsustainable.

Reframing Forestry
So what does all of this mean for forest management in the United States? As exports of forest products decrease, imports increase, demand for wood in the United States slowly grows, and plantation production in the Southern Hemisphere comes into play—and real estate values steadily rise—it will challenge our ability to keep forested lands forested. Industrial timberlands have played an important role in providing ecosystem services, as have family forests and public lands managed for forest products. It becomes less a matter of should we have commercial timber production than can we, given today’s global markets.

So to me the question becomes—how do we establish value in our forested landscapes? If not timber, then what? Because it would appear that the market could drive forests—large blocks of land that provide countless societal benefits—from the landscape. We need to find a way to steer this contraption before that happens.

So this is where ecosystem services becomes interesting.

The Millennium Ecosystem Assessment captured clearly what the notion of ecosystems services is. For me, this seemingly subtle shift in perspective has profound ramifications: It fundamentally changes how we might speak of and execute conservation practices in the future. Four categories of ecosystem services are presented in the Millennium Assessment:

1. supporting services like nutrient cycling or soil formation;
   
   
2. provisioning services like food, water, wood, or biofuels;
   
   
3. regulating services like flood control or fire control; and
   
   
4. cultural services like recreation and aesthetics.

I think we have always understood ecosystems to be much more than provisioning services. But I also believe that, over the years, the provisioning function has become a predominant focus of our management. Yes, we have recognized other ecosystem services, such as the regulating or cultural functions—the need to protect habitat for all wildlife, for example, and not just for game and sportfish, or the need to protect aesthetic values. But we mainly treated these as values to be mitigated for as we pursued our primary interest in providing the many products coming from forests.

So to me the notion of ecosystem services is fundamentally new in four different ways:

• First, it lets us envision ecosystems as a form of capital—natural capital. Natural capital pays dividends in the form of ecosystem services—the benefits people get from ecosystems. When we alter ecosystems, we change the services they deliver. As a society, we need to protect that natural capital, both public and private, just as we protect and invest in built infrastructure like roads, dams, and reservoirs.
  
  
• Second, framing what we do in this way lets us conceptualize all the benefits from ecosystems—benefits that people traditionally took for granted, like clean air and water, habitat for wildlife, and outdoor recreation.
  
  
• Third, all of these services meet the wants and needs of people, letting us better integrate people into what we do. Ecosystem service places people and their needs at the center of ecosystems. It is not about managing nature for nature’s sake, but rather about valuing the benefits people get from ecosystems. In this way, we can determine the ecological processes and functions needed to deliver those services and then manage forests for those processes and functions.
  
  
• Fourth, by placing the wants and needs of people at the center of what we do, we can begin to conceptualize them as values—and we can begin to measure those values, maybe even to some degree in terms of dollars and cents. And if we can assign market value to ecosystem services, then we have a better chance of protecting them.

Valuing Ecosystem Services
That last point is crucial. If we can find a way of attaching market value to ecosystem services, then maybe we can help stop the predicted decline of forests and even reverse it, particularly on private land, which accounts for almost 60 percent of America’s forests.

Carbon Markets. Carbon markets appear to hold huge potential. In explaining how carbon markets work, I’m going to oversimplify a bit for clarity’s sake. There are basically two markets for carbon today: the voluntary market (where there is no regulated “cap” on carbon emissions) and the regulatory market (where there is a cap). Here is how they work:

• On the voluntary market, an individual or group that wants to voluntarily offset the "carbon footprint" from their travel, organizational operations, or industrial functions can buy carbon offsets—in other words, can invest in projects that sequester carbon, like afforestation, or that offset fossil fuels emissions, like solar power. Worldwide, voluntary market investments were worth more than $100 million last year alone. Lots of organizations are doing this: the Super Bowl, the Academy Awards, Intel, Starbucks … I’ll talk about this a little more in a few minutes because national forests are already in this game.
  
  
• Regulatory markets for carbon were inspired by the Kyoto Protocol—which, as you know, the United States did not sign. The concept had earlier been tested in the United States through caps on sulfur emissions. In these markets, caps on emissions are imposed on certain economic sectors, like energy production or manufacturing, and if a company cannot meet its set requirement for emissions reductions, it can purchase these from others who have exceeded their requirements. Hence the term “cap and trade.” During the first three quarters of 2006, regulatory carbon markets doubled in size, reaching $21.5 billion worldwide. Forestry-related emissions reduction in Kyoto signatory countries is very limited, although this is currently being reevaluated.

As you probably know, California recently passed a law that includes a mandatory carbon cap, as does a multi-state scheme in the Northeast. Both initiatives include forestry offsets, as does the voluntary Chicago Climate Exchange. Although forestry holds huge potential, very little of the voluntary market includes forestry offsets—only 2 percent of the trading on the Chicago Climate Exchange includes carbon offsets of any kind.

There is a growing consensus on the need for a national approach to regulating greenhouse gas emissions. Congress is currently considering more than two dozen bills, and action may be sooner rather than later. Investors would love to come into the United States with forestry projects, as I learned recently on a trip to meet with one of these firms on Wall Street.

Frankly, forestry could easily be left out of a mandatory carbon trading program by Congress for many of the same reasons it was essentially left out of Kyoto. I think that would be a huge missed opportunity for our nation’s forest landowners, and we are currently working to advance that understanding.

Other Ecosystem Services Markets. But it’s not all going to be carbon. We have made advances in a number of areas, such as safe harbor agreements, wetland mitigation banking, and nutrient trading. These three types of ecosystem services markets were pioneered in the United States, and there is a great appetite for them to expand.

• For endangered species, prices have ranged from $3,000 per acre for fox habitat to $125,000 per acre for habitat with a breeding pair of red-cockaded woodpeckers . These are financial incentives to “grow” habitat.
  
  
• Wetland credits have traded from as little as $4,000 to as much as $125,000 per acre, an incentive to “grow” wetlands.
  
  
• The Forest Service recently signed an agreement with EPA on nutrient trading in water markets. As you know, forests trap and absorb nutrients before they reach streams. This is a highly refined, more watershed-based market approach.

Forest Service Role
Let me end with this: What can the U.S. Forest Service do?

Around Earth Day a few weeks ago, every magazine you picked up had an article that listed the 10, 20, 101 things you could do to help the environment. In that spirit, I’ll list 10 things we can and are doing (there are many more):

1. Help establish a framework for the trading of ecosystem services. We are helping to develop consistent standards, trading methods, accounting principles, and so on. We did this, for example, in helping the Administration develop the 2007 Farm Bill.
   
   
2. Be the best source of information on forests. For example, we are providing policymakers with information on the positive role that forestry can play in a cap-and-trade system.
   
   
3. Experiment on the national forests. If we want to propel markets for ecosystem services, we need to use the national forest land as a laboratory for testing ideas. As we speak, we are already doing this on the Mendocino National Forest and through arrangements that individual units in the National Forest System have with organizations in the private sector, including the National Forest Foundation’s Carbon Neutral Fund, the Carbon Fund, and the Chicago Climate Exchange.
   
   
4. Get market savvy. New markets for ecosystem services, including bioenergy, require that we understand not only how to manage forests to reduce nitrogen in water or sequester carbon, but also how nutrient banking works.
   
   
5. Reduce our own environmental footprint as an agency. Be the environmental leader we expect others to be.
   
   
6. Lead in research in answer to critical questions about climate change, about carbon sequestration and storage, and about other ecosystem services.
   
   
7. Refresh our language. Much of our vocabulary for speaking about the growing and tending of forests came from the production forestry era. It’s not very suitable for talking about how to provide ecosystem services. At best, it is confusing; at worst, inaccurate. Language reflects culture, defining and subtly perpetuating beliefs. At the very least, we should be aware that how we speak about forests can reinforce practices and a mindset that might need to evolve.
   
   
8. Rethink forest plans—what goes into them and how we consider them. Instead of alternatives that examine various management proposals, maybe we build scenarios that consider the possible effects of climate change and look at how to assume a sustainable flow of ecosystem services from the landscape in light of that. Flows of services might include water quality, pollination, flood regulation, carbon sequestration, and so on.
   
   
9. Resist the impulse to jump on the ecosystem services bandwagon in response to the Forestry Blues—but also resist the impulse to dismiss it as the latest in a series of attempts to redefine forestry. It is what it is, and forestry in America and the world is what it is.
   
   
10. And this is my final point: Learn as much as we can, as fast as we can—understand what is really going on in forestry today. Do what you are doing here at this conference; be leaders in the Forest Service in this area. Be in the middle of it, the people whom others turn to for advice and information. Learning means reading, talking to people who are doing work on ecosystem services, and striving to understand as much as you can.

This is no time for wishful thinking. We have important work to do, and we need to learn, study, experiment, and develop the science and practices needed to help sustain our nation’s forests into the future.

It is as simple—and maybe complex—as that.

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