Characteristics and Functions: Southeastern Alaska
Current Acreage: Only about 2300 acres of Southeastern Alaska's wetlands (less than five one-hundredths of a percent) have been affected as a direct result of logging activities.2 In addition, about 19,000 acres of forested wetlands have been logged and converted to shrub wetland. Once vegetation reestablishes itself in the logged area, there may not be any reduction in wetland values, but in the interim there can be some environmental effects from erosion.
Trends: Prior to passage of the Tongass Timber Reform Act of 1990 (TTRA), the Fish and Wildlife Service estimated that an additional 10,000 acres of wetlands would be lost if the full 1.75 million acre harvest proposed by the Forest Service for the Tongass were actually completed. However, the TTRA removes some of the subsidies supporting timbering in the Tongass, and hence, the full 1.75 million acres may not be harvested. Further, the TTRA mandates certain changes in logging practices which have the potential to reduce wetland losses and other environmental effects in the Tongass. Recently, however, the Forest Service has increased timber harvesting in low volume class sites which include wetlands.
In Southeastern Alaska, urban development and logging have been the principal causes of wetland loss and degradation. Wetland effects of logging can result from clearcutting, construction of logging roads, and the building and use of transfer sites for transporting logs by waterways.
The actual harvest of trees converts needle-leaved, evergreen, forested wetlands to deciduous shrub wetland types. Only about five percent of the land harvested for timber in Southeastern Alaska is wetland.4 The conversion from forested to shrub wetlands may not result in a long-term loss of any wetland values, only a conversion from one set of wetland functions to another. However, before trees and shrubs re-establish themselves, erosion can occur, clogging waterways frequented by salmon and other anadromous fish. Logging in upland areas can also result in sediment eroding into watercourses.
Road construction can cause loss and degradation of freshwater wetlands. To date, 3500 miles of roads have been built in the Tongass. Since 1980, construction has averaged about 100 miles of new roads per year and 34 miles of reconstruction.5 About 1050 miles of roadways occur in wetland areas. The FWS estimates that roads account for about 2000 acres of direct wetland loss. In addition to the direct losses, roads often alter the hydrologic regime. Culvert placement, for example, usually alters waterflows on both the uphill and downhill sides of a road. Roads also isolate wetland areas, and activities during construction can cause erosion and the silting of streams.
The construction and use of log transfer sites result in loss of wetlands. Much of the harvested timber is stored onshore and then transported on waterways to various destinations for processing. Wetlands are lost to the construction of onshore storage areas, loading platforms, and docks. Transferring logs from land to water or boats requires a facility that extends from the shore out to the water. The FWS estimates that the 90 sites active in 1985 had directly destroyed about 300 acres.6
Secondary environmental impacts associated with log transfer sites include the accumulation of bark debris and concentration of organic compounds in estuaries. Bark strips away as logs are dumped into the water and rafted for temporary storage. The FWS estimates that the bark has degraded about 176 acres of substrates, reducing the biota along with the food and cover used by other water-dependent species. This constitutes a small but ecologically significant portion of the estuarine area in Southeastern Alaska. Organic compounds leaching from the logs also serve to degrade water quality. High concentrations of organic compounds have been measured at the transfer sites and dissolved oxygen concentrations measured in coastal waters have been below Alaska's minimum standard. Concern that the bark accumulation and log leachates reduce estuary and fishery productivity is leading to stricter regulations related to the siting and operation of transfer facilities.
Large-scale logging did not begin on the Tongass until the 1950s. At that time the Forest Service awarded 50-year timber contracts to two companies, Ketchikan Pulp Company (KPC) and Alaska Pulp Company (APC).7 The Forest Service had never before entered into contracts of such long duration.8 In an effort to increase timber-related employment in Southeastern Alaska, Congress included a section in the Alaska National Interest Lands Conservation Act (ANILCA) of 1980,9 which further stimulated logging by mandating that the Forest Service make 4.5 billion board feet (bbf) available for sale and harvest from the Tongass every ten years.
Since enactment of ANILCA, the market demand for pulp, the main product from Alaska's timber, has fluctuated, as has employment in Alaska's timber industry. Employment in the industry has varied from 1800 to 3500. In one recent year, Alaska paid more than $4 million in unemployment benefits to out-of-work loggers and one-third of this went to nonresidents. Although markets are slowly improving, between 1982 and 1987, only 44 percent of the timber prepared for harvest by the Forest Service was sold. Nonetheless, ANILCA required the Forest Service to try to process the full 450 million board feet (mmbf) every year.
The tourist industry in Southeastern Alaska employs more people than fishing or logging. The area's fisheries account for $100 million in revenue annually. Prior to passage of the TTRA, timber harvesting designed to meet the statutory quota posed a threat to these long-term revenue-generating activities.
The manner in which the Government determines stumpage fees (the price paid by logging companies for timber to be harvested) and sells timber tracts results in a subsidy to the timber industry. First, areas to be harvested are designated and the timber is appraised. In Alaska the Forest Service uses the residual value appraisal method for estimating the value of standing timber. Logging industry production costs (cutting, road construction, hauling, milling and an allowance for profit and risk) are subtracted from the anticipated price for the industries' final products (milled lumber and pulp) to arrive at the appraised value for the standing timber. The Forest Service advertises the appraised price, solicits bids, and awards a contract to the highest bidder. The appraised price is the minimum acceptable bid. Because this method for determining stumpage fees does not take account of the Government's costs for managing the forests and administering the sales, many sales occur below cost and a subsidy is granted to the timber industry. The TTRA reduces, but does not eliminate this subsidy.
Until recently an additional subsidy was available to timber companies through "emergency rate redeterminations" (ERR). If market prices for timber products fell sufficiently to eliminate the contractor's allowed margin for profit and risk, the Forest Service could retroactively lower the stumpage fee to ensure a profit. The system was asymmetric, because no adjustment was made if the selling prices for finished lumber or pulp products rose during the period of a contract. Consequently, while timber contractors could benefit from rising market conditions, the Government lost revenue retroactively from past timber sales when markets declined. An ERR has only been triggered once and only on the Tongass, but the reduction in the stumpage fee was sizeable, and the rebate to APC and KPC was in excess of $71 million.10 In 1990, the Forest Service revised the procedure so that 1) it is no longer retroactive and now applies only to unharvested timber, and 2) it is symmetric for long-term contractors, i.e., the Federal Government shares in both rising and falling markets.11
With ANILCA, Congress also established a permanent appropriation, the Tongass Timber Supply Fund, which gave the Secretary of Agriculture access to $40 million annually to maintain the annual 450 mmbf harvest. From 1982 (when the Timber Supply Fund was initiated) through 1987, the Tongass received $234 million to prepare timber sales, manage timber, develop harvest technology, and build roads prior to sales. Road building, at $150,000 per mile, was the largest expense. Road construction costs alone sometimes exceeded the value of the timber to which the road led. Critics of this policy contended that roads were built to prevent further wilderness designations and to reduce objections when logging contracts were let in these areas.12 The TTRA eliminates the automatic, annual, $40-million appropriation to the Tongass Timber Supply Fund, and returns the Tongass timber program to the normal Congressional appropriations process.
ANILCA also authorized a $5 million revolving low interest loan fund for harvesters of national forests in Alaska to acquire new equipment and design new technologies for timber harvest. The TTRA did not address this provision.
Although almost half the national forests lose money on their timber sales, the loss in the Tongass has been the greatest of all. Between 1970 and 1982 the Federal Government spent over $375 million to make Tongass timber available, while charging the timber industry less than $63 million. From 1981 to 1989, the average cost of the Tongass timber program was $127.54/mbf (in 1990 dollars), while average receipts were $4.62/mbf. In addition to discouraging the wise use of timber, this substantial subsidy led to the loss and degradation of some of Southeastern Alaska's wetlands and fishery resources.
The Tongass Timber Reform Act of 1990 ended the non-competitive nature of the pricing practices on the Tongass, terminated some timbering subsidies, and mandated that logging be conducted in a more environmentally sound manner. The most significant aspects of the Act relative to timber harvesting and impacts on wetlands are the elimination of both the automatic $40 million appropriation to the Tongass Timber Supply Fund and the mandate to harvest 4.5 billion board feet of timber from Tongass every decade. The TTRA requires that the existing long-term contracts with the two pulp companies (KPC and APC) be modified so that the price for standing timber be comparable to what it would have been under competitive bidding. The TTRA contains two important features to protect wetlands and fishery resources: it prohibits commercial logging in certain key fish and wildlife habitats, and establishes a 100-foot minimum buffer zone adjacent to both sides of anadromous fish streams and their fish-bearing tributaries.13
The General Accounting Office has reported that one requirement in the TTRA has not been implemented properly (GAO 1991). As timber contractors build roads in national forests, they earn "purchaser road credits" which can be used to pay for harvested timber.14 These credits can be applied during the term of the contract or transferred to another of the purchaser's timber contracts in the same national forest. Typically, timber contracts run 3 to 7 years, and any road credits not exercised during that period are lost. Because the two long-term contracts in Alaska apply to very large areas and extend over 50 years, APC and KPC have been able to accumulate all their road credits and apply them against their stumpage fees. The TTRA directs the Forest Service to modify APC's and KPC's contracts so that road credits are determined in the same manner as they are under standard, short-term contracts. The GAO contends that the contracts should have been modified so that road credits could not be carried forward from one harvest area to another. The Forest Service interprets the TTRA differently and maintains that it has complied with the Act.
Mandatory harvesting provisions in the Alaska National Interest Lands Conservation Act and the price-setting policy utilized by the Forest Service have been the major incentives promoting logging in the Tongass. These subsidies artificially bolstered the region's troubled logging industry. Even with the subsidies, however, fluctuating market demand produced wide variations in employment and output.
The Tongass Timber Reform Act of 1990 ended the non-competitive nature of the pricing practices on the Tongass, terminated some timbering subsidies, and mandated that logging be conducted in a more environmentally sound manner. The most significant aspects of the Act relative to timber harvesting and impacts on wetlands are the elimination of both the automatic $40 million appropriation to the Tongass Timber Supply Fund and the mandate to harvest 4.5 billion board feet of timber from Tongass every decade. The TTRA is likely to result in significant changes in the way the Tongass is managed.
Concurrently with passage of the TTRA, the Forest Service has been revising the Tongass Land Management Plan (Plan). The draft Plan and Environmental Impact Statement (EIS) were published in June, 1990, and a supplement to the draft Plan and EIS was published in September, 1991, in response to the changes required by the TTRA. The Plan provides several management scenarios, involving a variety of land allocations, levels of timber harvest, and trade-offs between timber harvest and levels of wildlife protection. The FWS hopes that the final Plan will improve the protection of the Tongass and its wetlands.
Although the excesses on the Tongass associated with timbering are being addressed, there is a potential threat to Southeastern Alaska's wetlands from mining. The Panhandle is a highly mineralized zone. Large deposits of gold, silver, copper, molybdenum, and other ores have been found. Some are in production, while others are in the exploratory or developmental stages. River-borne pollution from mining in Canada also has the potential to affect Alaskan waters. The degree of impact to the Tongass ecosystem will depend upon the protection provided by the Forest Service while it facilitates mineral development.
Bayha, K. 1987. Loss of Wetlands in Southeast Alaska. Background Report. U.S. Department of the Interior, Office of Policy Analysis, Washington, D. C., 12 pp.
Emerson, P., et. al. 1984. The Feds Can't See Their Losses for the Trees. The Wall Street Journal. November 14.
U.S. General Accounting Office. 1991. Contractual Modification Requirements of the Tongass Timber Reform Act, GAO/RCED-91-133, Washington, DC, March 20, 29 pp.
U.S. General Accounting Office. 1990. Process for Appraising Timber Offered for Sale Needs to Be Improved, GAO/RCED-90-135, Washington, DC, May 2, 50 pp.
2 Road construction and the development and operation of log transfer and storage facilities.
3 If petroleum development occurs on the Arctic National Wildlife Refuge, there will be wetland effects there, too.
4 The existing Tongass Land Management Plan calls for an increase in timbering on poorly drained soils.
5 These unpaved logging roads are designed specifically for moving vehicles and equipment for timber harvesting.
6 The Service assumes that 58 abandoned sites have recovered. Prior to passage of the TTRA, there were another 228 sites identified for possible development over the next 50 years, with an additional expected wetland loss of 456 acres. As a result of the provisions in the TTRA, these losses may be smaller.
7 KPC is owned by the Louisiana Pacific Corporation and APC is owned by the Japanese Alaska Pulp Corporation. In the early 1980s, Federal courts found these two timber companies guilty of conspiracy to manipulate timber prices and to force smaller companies out of the logging business on the Tongass, a violation of the Sherman Antitrust Act.
8 The USFS entered into some long-term contracts in the contiguous United States in the period prior to World War II. The contracts on the Tongass were the last and longest of the long-term contracts.
9 Sections 705(a) and 705(b)(1).
10 In June, 1982, the Forest Service granted KPC an ERR covering the period 1979-1984. The rate for spruce, which made up most of the harvest, was reduced from $114.96/mbf to $2.87/mbf. Based on Forest Service data, the Department estimated that KPC received a rebate on 352 mmbf which it had cut prior to the ERR. Assuming that all 352 mmbf were spruce, KPC's rebate would have been $39.5 million. Between June, 1982 and 1984, KPC cut an additional 175 mmbf at the reduced rate. Similarly, in March, 1983, the Forest Service granted APC an ERR covering the period 1981 to 1986. APC's stumpage fee for spruce was reduced from $215.96/mbf to $2.26/mbf. Using the same procedure as above, the Department estimated that APC received a rebate of $31.9 million on 149.1 mmbf harvested prior to the ERR and a rate reduction on 196 mmbf which it harvested between March, 1983 and 1986.
11 For smaller, independent contractors the process remains asymmetric with rate redeterminations occurring only in declining markets.
12 In one case, after the court issued an injunction on building a road on the uninhabited island of Kuiu, south of Admiralty, the Forest Service granted the Alaska Pulp Corporation a permit to build the road itself. The case is now in the courts. In another case, the Forest Service spent $7 million to prepare for a timber sale in the Couverdon District, but failed to attract a single bid.
13 No buffer zone existed previously.
14 This is not a subsidy. Timber contractors bear the cost of constructing access roads to harvesting sites. However, under the Forest Service's system for billing contractors, the estimated road construction costs are initially added to the stumpage fee to determine the "gross price" for timber. As roads are constructed, the estimated road construction costs are credited to the contractor's account and can be used to pay for timber.
15 BLM and the Forest Service are developing PACFISH to guide management of watersheds so as to provide habitat conditions that contribute to recovery and sustained natural production of Pacific salmon and steelhead, thus, averting the need to list these species under the Endangered Species Act.
16 RHCAs include those areas of the landscape most important to the healthy functioning of watersheds and associated fish habitat. These are recognized as particularly sensitive areas, and are managed to protect watershed, riparian and fish habitat form and function. Those activities that are incompatible with these objectives are prohibited or modified within RHCAs. Because compatible commercial and development activities are allowed, the economic costs of achieving the environmental goals are reduced.