July 1 2026

Forest Economics By Gary Schneider

Discussing any type of change in forest practices brings to mind hearing people make the case against solar and wind energy. People will often talk about how expensive solar and wind power are compared to the price of equivalent power produced by hydro, diesel, coal, or nuclear. The problem is, we’re comparing apples to oranges.

We’ve subsidized those other forms of energy for decades, so they have a distinct advantage over newer technologies. But more importantly, we don’t assign costs to the damages caused by the older technologies. For example, burning diesel and coal add significant amounts of carbon into the atmosphere that we’ve never put a price on. In addition, there are health costs associated with burning these fuels that we don’t factor in at all. Hydro dams can cause irreparable damage to fish habitat and often release huge amounts of carbon when they flood the land needed to make the reservoir. And don’t get me started on nuclear. There are clear health risks associated with mining uranium and despite decades of promises, we still don’t seem to know how to safely deal with nuclear waste.

Getting back to forests, there is no argument that you make the most money from a forest by clearcutting it. There are certain economies of scale that come into play when you liquidate an asset. But depending on the forest type and age, you may not be able to derive any income from that land for 40-60 years.

We often talk of forests as being money in the bank. The wise investor takes the interest generated by the investment. Withdrawing everything and trying to build back that investment is not a sound strategy. And government actually encourages this strategy by pouring lots of taxpayer dollars into replacing that forest with unsustainable conifer plantations.

There is lots of science that says when you clearcut a forest and expose the soil to sunlight and drying winds, you lose organic matter and nutrients. Yet when we are doing the equation on how much money we make from a clearcut, we don’t factor that in because we are not very good at understanding the value of carbon and nutrients. And because we don’t understand it, we act as though these things are not important.

Wildlife is another part of this equation that we do a very poor job of valuing. Otherwise, why would we continue to allow contractors to cut down woodland during the prime bird breeding season, which certainly contravenes the federal Migratory Birds Convention Act.

What is the value of the air and water that are cleaned by a forest, compared to the effects of a clearcut? And how much water is stored in a functioning forest that can help recharge our groundwater instead of running off as surface water?

Two books I’ve been reading really bring home these points. Ronald Colman’s What Really Counts makes a strong case for a different look at economics.

“So, although GDP values a forest only when its timber is cut down and sent to market, full-cost accounts see declines in the capacity of the standing forest to sequester carbon, recycle nutrients and protect watersheds, soils, and habitat as a “depreciation” of natural capital.”

James C. Scott’s Seeing Like a State has an excellent section on the European history of forest mismanagement. The book is subtitled “How Certain Schemes to Improve the Human Condition Have Failed” and it delves into much more than just forests. But his research into the German “scientific” forestry, planting pure stands of Norway spruce and Scots pine, showed something interesting. Moving from chiefly deciduous forests into conifer plantations initially paid off with increased yields. It was only after the second and third rotations where serious problems arose.

“Even in the realm of greatest interest – namely, the production of wood fiber – the consequences of not seeing the forest for the trees sooner or later became glaring. Many were directly traceable to the basic simplification imposed in the interest of ease of management and economic return: monoculture. Monocultures, as a rule, are more fragile and hence more vulnerable to the stress of disease and weather than polycultures are.”

If we are losing productivity by clearcutting and putting in conifer plantations, shouldn’t that be part of the equation? If we are creating less resilient forests, is that not a true cost of doing business that has to be factored into our cutting practices?

If not, we will continue acting as though our harvesting practices have no negative consequences, only economic benefits. That is a dire road to keep travelling down.