Wisconsin's Century-old Model of Sustainable Forestry Comes Under Pressure

 

According to an article this week by the Journal Sentinel, Milwaukee, Wis., USA, for more than a century, family-supporting jobs have grown on trees in Wisconsin.

The newspaper made the point that this is not a smattering of jobs, but the most private-sector jobs the state has ever known: jobs in logging, lumber, furniture making, pulping, papermaking, and the printing presses for the nation's books, magazines, and catalogs. If employment linked to forest products represented a single sector, Wisconsin would have the largest in the nation.

According to the Journal Sentinel, long before scientists determined that a stand of carbon-sponging trees is the best known bulwark against global warming, Wisconsin had invented an economic ecosystem that reforested the state after it had been clear-cut from south to north by timber barons a century earlier. Even today, 84,177 jobs in the state rely on timberland.

But during the past decade, Wisconsin's business-driven model of renewable forestry, along with the methodical replanting and regeneration that fueled it, has begun to reportedly unravel on multiple fronts:

• As the nation's leading papermaking state, Wisconsin feels the disruption caused by digital media acutely. The state's ink-on-paper economy has been shrinking for over a decade — pulpwood is the largest volume consumer of Wisconsin-grown timber — while the 2008 housing meltdown was so severe that sawmills and lumber works have yet to fully recover. 
• Family-owned woodland, which accounts for more than half of the state's forests, is being inherited by a generation that is less inclined to maintain the land as "working" forests — those that feed paper mills and saw mills — and more inclined to sell it off piecemeal.
• Wall Street investors have been buying up forestland in Wisconsin and other states, then parceling it and flipping it. Some of the land becomes subdivisions and golf courses, and some is held by investment funds that sell it in far less time than it takes a tree to reach harvesting maturity.
• Globalization of the economy since the 1990s has increased competition from warmer climates such as South America and southern Asia, which can grow pulpwood more efficiently than Wisconsin, where brutal winters annually interrupt growth cycles

"You can buy a barge full of pulp from a pulp mill in Brazil and ship it to a paper mill in Wisconsin more cheaply than a pulp mill in Wisconsin can produce it from a timberland 20 miles away," said Al Sample, president of the Pinchot Institute for Conservation, a nonprofit forestry research organization in Washington, D.C.

The American share of pulpwood and timber exports in international markets "has declined since the 1990s" and isn't expected to recover as paper and printing production shifts to China, according to a report this year from the U.S. Forest Service.

The economic, environmental, and recreational implications of all the changes are still working themselves out.

There so far has been no dramatic falloff in Wisconsin's timberland, for instance: After decades of expansion, forests now cover nearly half the state's 35.5 million acres — 17.1 million acres, larger than the state of West Virginia. But the trend appears to have plateaued, and some economists expect the acreage covered by trees to begin receding, barring another shift in the economic fundamentals.

"This is a quiet revolution," Sample said. "There isn't an economist, in Wisconsin or anywhere, who can tell you with any certainty what that landscape will look like when the dust settles."

The economic shifts remain invisible to those who can drive for hours in northern Wisconsin and see nothing but evergreens and fiery fall foliage at this time of year. Timber stacked on flatbed trucks and freight trains remain a common sight.

But the jobs that sustain the woodland communities are disappearing. Since 2001, employment in logging, pulp, paper, printing and all forms of lumber and furniture has fallen by a third, a loss of more than 41,000 jobs.

The sparsely populated counties of northern Wisconsin bear the state's highest rates of unemployment. Their tree-based economy also helps explain why Wisconsin perennially ranks as a slow-growth state for overall job creation.

"The industry, not to use a pun, is deeply rooted in our state history. It's a huge part of the economy in northern Wisconsin, where there's nothing waiting in the wings to replace it," said Thomas Hittle, an executive at Steigerwaldt Land Services Inc., one of the biggest managers of private forestland in the Northwoods. "It's on everybody's mind up here."

Wisconsinites also appear to be planting fewer trees. The state's three sprawling state-run tree nurseries, which routinely sold 20 million to 30 million native species plantings every year throughout much of the 20th century, barely sell 4 million a year today, a jarring drop that has occurred just within the past few years. The state Department of Natural Resources is shutting two of its three nurseries.

Asked to explain the plunging demand, DNR officials note that frequent ownership changes and subdivisions lead to forest fragmentation. Also, government subsidies for ethanol have prompted some landowners to switch to corn. "We've seen a lot of conversion from forest to agriculture," said Carmen Hardin, chief of the DNR's forestry science section.

The decline hasn't shown up yet in the total forestry cover, which has held steady in recent years. But experts at the DNR suspect it will become evident soon.

"My suspicion is that we'll be flat or declining over the next few years," said DNR analyst Andy Stoltman.

Private-sector tree nurseries in Canada also have intruded on some of the DNR's market. Plus, with Wisconsin coming off a century-long reforestation success story, the state might have replanted to its limits.

 

 

 

Photo: Kenny Anderson places two-year-old jack pine seedlings into bins at Griffith State Nursery in Wisconsin Rapids. The state plans to close the nursery amid plunging demand for tree seedlings. 

In terms of raw acreage, the state's family tree farmers collectively rank as the dominant class of woodland owners, representing nearly 10 million of the state's 17.1 million forested acres.

But those individuals are getting older and have middle-aged children with their own families, often living in another state. And the new generation often has less enthusiasm for forestry. Pinchot Institute researchers say family-held woodlands are in the throes of the largest generational transfer of ownership in history, in Wisconsin and other timbered states as well.

"The latest generation is disconnected from the land," said Fred Souba, a veteran forester from Wisconsin Rapids.

Souba, 65, who spent much of his career procuring pulpwood for Wisconsin River paper mills, has watched the changes in family tree farming. "These are cultural changes," he said. There is a new generation of absentee owners who don't share the "land ethic," he added.

Surveys confirm the disconnect. The most recent data from the state dates to a poll from 2007, which found that nearly 60% of all individual forest owners in Wisconsin at that time were age 55 or older.

Siblings of the inheritance generation "demonstrate some high levels of internal disagreement on important aspects of managing family forests," the survey found. Over half the Wisconsin families surveyed with multiple children had siblings who disagreed on how to manage land and how long to hold it, which often prompts parents to subdivide the land into smaller parcels for each child.

"The majority of offspring of Wisconsin family forestland owners are not connected to the land, have not been involved in the management of the land but still expect to inherit the land from their parents," according to the study.

Half would sell their share for "need for cash" reasons and 37% would sell if they needed to cover the cost of a family medical situation.

While families are still collectively the dominant owners of Wisconsin's forests, paper mills led the state's centurylong reforestation, pioneering the Wisconsin model of stewardship out of economic necessity.

But the mills have been selling off their timberland wholesale, more than a million acres, after decades of stable stewardship. By 2012, when Wausau Paper Corp. sold its last 80,200 acres of timber holdings, there were no longer any significant industrial forests held by any of the paper companies.

The biggest single private buyer in the last decade was Plum Creek Timber Co., a publicly traded institutional investor (NYSE: PCL). At one time, 551,000 acres of Wisconsin trees were parked in its investment portfolios.

When trees become financial assets, they compete with other forms of investment. Global money moves with digital speed, but trees demand unusual investor patience. They pay dividends only when they are harvested, which for the fastest-growing softwood species in the upper Midwest is 25 years, quickly rising to 50 years or longer for many hardwoods.

So the money managers who hold working forests typically are expected to liquidate their land holdings after a decade or so, with no way to know whether future owners would want a stand of young growing trees, which in turn reduces the incentive to replant after a harvesting.

In Plum Creek's case, it acquired 307,000 acres from the former Consolidated Paper Inc. and 244,000 acres from the former Nekoosa Papers Inc., both powerhouse producers of publishing-grade paper in their heyday. From 2002 to 2007, no other nongovernment entity held as much land in Wisconsin as Plum Creek.

It didn't stay that way, however. Plum Creek resold its timberland, with the best prices going to tracts on streams, lakes or highways, and today holds only 11,000 acres in the state.

Asked via email by the Journal Sentinel about the divestitures, a spokeswoman for Plum Creek responded, "While Plum Creek has been pleased to own and manage land in Wisconsin for many years, over time, the company has focused its timberland acquisitions in places where returns for its assets are more favorable."

Plum Creek said it sold most of its Wisconsin holdings to Timber Investment Management Organizations. TIMOs, as they are known, are common in Wisconsin. They look for returns either by selling timber, selling land or holding the land as it appreciates in value. Some well-funded conservationists operate their own TIMOs as a way to preserve working forestland, but most are funds that divest their holdings after about 10 or 12 years.

The parcels that change hands, of course, don't include those owned by counties, the state or the U.S. Forest Service. But government-owned timberland amounts to only 5.15 million of the state's 17.1 million acres of forest cover.

Few know the state's timberland history better than 87 year-old George Mead II of Wisconsin Rapids.

Mead's grandfather, George W. Mead, grew Consolidated Paper into the biggest papermaker in North America. It invented glossy coated paper in 1935 and revolutionized magazine publishing. At its peak, Consolidated operated six large mills in Wisconsin and several others just over the state line, making it one of the region's leading job creators for generations.

The Meads were also pioneers in renewable forestry, a point of family pride. After timber barons of the 19th century had clear-cut one county and then moved on to the next — supplying the timber that built Chicago, Milwaukee, St. Louis and the cities of the Great Plains — the landscape was barren, nothing but tree stumps as far as the eye could see.

Mead's grandfather helped plant Consolidated's first tree nursery in 1923 in Biron, which became so prolific that it began to supply state and federal forestland.

Mead recalls how his own dad, Stanton Mead, recruited Emmett Hurst, a Syracuse University grad with a forestry degree, as one of the first private-sector foresters in the Great Lakes states. "The trees grew and grew and grew as a result," Mead said.

Speaking in his family's wood-paneled museum in Wisconsin Rapids, Mead shows a 1987 document from the mill's Timberland Division that inventoried the scores of foresters, crews, nursery staff and fleets of harvesters — even a "Tree Farm Family program" that offered forest management assistance to family tree farmers, who supplied the paper company with most of its pulp.

And so it was that forest stewardship in Wisconsin grew out of the demands of the state's oldest and biggest employers. What was good for business turned out to be precisely what was good for the environment.

"For a forest manager, everything I want to achieve — the vigor and habitat and health — I couldn't do if I didn't have a place to sell that timber," said Hittle at Steigerwaldt Land Services.

The state even created a tax break in 1927 that made long-term investment in forest lands viable. Today, 3.3 million woodland acres still enjoy some tax advantage, with 1.08 million acres of that open for recreation and entitled to the maximum tax break.

Although the Wisconsin model was founded as a pro-business initiative, its basic tenets decades later were replicated by international conservation groups including the Natural Resources Defense Council and the Forest Stewardship Council. Scientists note that a 25-year-old acre of healthy forest in Wisconsin can absorb 6,529 pounds of carbon dioxide annually.

"Trees and wood are still the world's best and proven way to capture and store carbon," the U.N. says in its world forestry report. "They hold significant potential to mitigate climate change."

The "Age of Paper" in Wisconsin according to the newspaper, peaked and plateaued from 2000 to 2005, followed by a precipitous decline.

Mead sold Consolidated to Finnish papermaker Stora Enso Oyj in 2000. In 2007, Stora Enso resold to a private equity firm, which created NewPage Corp. and began closing mills. Loaded with billions in debt, NewPage filed for bankruptcy in 2011, emerging with new owners, who then sold again last year. Nekoosa, meanwhile, was sold to Georgia Pacific in the 1990s, and then resold to Domtar Corp., which closed one of its three Wisconsin River mills.

But the paper industry's legacy in this half-timbered state remains immense — from forestry schools to federal forest research labs. Wisconsin was home to Sierra Club founder John Muir and the poet laureate of the renewable forestry movement, Aldo Leopold, whose 1949 classic, "A Sand County Almanac," explores the balance of man and nature, economics and ecology.

"To those devoid of imagination, a blank place on the map is a useless waste," Leopold wrote, "to others, the most valuable part."