The Economics of Forest Fuels Treatments: A Literature Review

1
The Economics of Forest Fuels Treatments A
Literature Review

• Rob Titcomb
• ECON 539
• Oregon State University

2
Introduction

• 1930s Forest Service policy of fire suppression
• Unintended consequences of policy
• Overgrown unhealthy forests
• Increased risk of forest fires / insects
  disease
• Objective of a Fuels Treatment

3
Economic problems with fuels treatments

• Low value of biomass
• Scarce distant markets
• Harvesting and Transportation costs
• Costs increase when diameter of trees decrease

4
The Healthy Forest Restoration Act (H.R. 1904)

• December 2004 Bush signed HFRA into law.
• Purpose 1 of act
• to reduce wildfire risk to communities,
  municipal water supplies, and other at-risk
  Federal land through a collaborative process of
  planning, prioritizing, and implementing
  hazardous fuel reduction projects (HFRA)
• Why has HFRA not been used more to treat more
  acres?
• Barriers to successful implementation of HFRA
• Finding the right methods and tools to conduct
  forest treatments (Forest Engineering RD 2005)
• Harvesting and Transportation Costs (OFRI biomass
  study 2006)

5
Objectives of Literature Review

• 1.) Identify where knowledge is lacking and make
  policy recommendations
• 2.) Examine what efforts have been made to
  minimize costs
• 3.) Determine if fuels treatments can pay for
  themselves

6
Summary of the Literature

• Factors affecting economic feasibility of
  treatments
• Type of harvesting system used
• Road accessibility
• Hauling distance and transportation to markets
• Market price of material

7
Literature Summary (cont.)

• Finding markets and purchasers is difficult in
  rural areas
• Fuels treatments must be designed to meet the
  needs of the forest type
• Value of small diameter trees is low

8
Analysis of the Literature

• Knowledge gaps
• Equipment manufacturing must improve to harvest
  and handle small material
• Policy Recommendations
• Price of Biomass must increase
• Biomass markets develop and be closer to the
  forest
• Hauling distances must decrease / gas prices must
  go down

9
Analysis (cont.)

• Efforts used to minimize costs
• Treatments must be individually designed to
  accommodate site specific needs
• Can fuels treatments pay for themselves
• Yes, it has been shown to be possible

10
Conclusion

• We are facing a forest health problem coupled
  with a forest economics problem.
• More active mgmt. is needed on the landscape
• HFRA can be improved through a revision of their
  statues and provisions to include the economics
  of fuels treatments
• Requires interrelated markets and industries to
  work together