Potential Regions Favorable For Forest Investment

Pacific Northwest Region of the United States

Location:   The Pacific Northwest Region is comprised of the states of Oregon and Washington.

Area:    The total forested land area of the Pacific Northwest Region comprises about 44 million acres in the 2 states (42% of the total land area).

Forest Characteristics:    Most forests in the region have evolved with and been shaped by natural disturbances.  Historically, wildfire of varying frequency and scale was the most significant.  Wind is an important issue in coastal stands while insects and disease have been significant natural agents of change in drier forest types.  Fire suppression and timber harvest since 1900 have resulted in shifting species composition and stand structures, sometimes with undesirable effects on forest vigor.  The region’s historical focus on timber production is being realigned as population growth and issues such as old-growth preservation, ecosystem management, forest health, threatened and endangered wildlife species, and clearcutting draw increased attention to the way forests are managed.  While the current focus is on restricting management of public lands, it is likely that private lands will be called on to offset the diminished public role in forest industry.  

Ownership:   About 50% of the forestland in the Pacific Northwest Region is privately owned.  Forest Industry holds 60% of these lands.  Small and non-industrial owners hold about 40% of the total.  

Forest Inventory:    The standing timber volume in the Northwest is estimated to be 244,000,000,000 cubic feet, where 178,300,000,000 cubic feet are on the west side of the Cascade Mountains.  Douglas-fir accounts for roughly 50% of the west side volume

Climate:   The combination of seasonal climate controls, proximity to the Pacific Ocean, and physiographic features provide the Pacific Northwest with remarkable climatic variation.  The ocean is a major influence on the climate, serving as a source of moisture and as a control of temperature extremes.  Air masses eastbound from the ocean extend their effects over the entire region, although with diminishing magnitude as distances increase and mountain ranges intervene.  During the summer, an atmospheric high-pressure is located just off the coast, which results in relatively dry summers.  In the winter, the high-pressure zone moves southward, permitting storms to sweep over the area.  This regional pattern produces a climateof relatively mild, wet winters and dry summers.  The average annual precipitation ranges greatly from 60 to 80 inches near the coast, 40 inches in the western lowlands to less than 20 inches on the east side.

Major Forest Types and their Silvicultural Systems:   The Pacific Northwest forests are primarily  utilized for  structural products like dimension lumber and plywood and residual fiber products like oriented-strand board and particleboard. There is a small but highly specialized sector of the market that produces high-value forest products like export clears.  This sector has traditionally been size-dependent, as it has utilized the rapidly less available old-growth and second growth forests.  The following is a list of the major forest types in the Northwest and the general silvicultural systems they are managed under.

Present Markets and Market Values;:   For the past century, the Pacific Northwest has produced the finest lumber and other solid forest products from typically the largest and highest caliber softwood trees in the world.  Old growth and Second growth Douglas-fir forests have stood alone as the most productive forest resources in modern times.  As these stands have been either harvested or set aside and protected from cutting, the forest industry has had to adapt to new parameters.

The dramatic reduction in public standing timber supply from publicly-owned forests and an evolving environmental climate have been overshadowed by the collapse of the export market to the Pacific Rim and increased domestic competition from the south and Canada.  Pacific Northwest stumpage prices are below long-term trend levels right now.  There is a tremendous opportunity to invest at these present price levels to achieve substantial returns as prices ultimately rebound with housing starts and return to historical trends.

Northeastern Region of the United States

Location:   This region is comprised of the six New England states, Maine New Hampshire, Vermont, Massachusetts, Connecticut, and Rhode Island, as well as New York.

Area:   Forests dominate the northeastern landscape, covering nearly 51 million acres (72% of the total land area).

Forest Characteristics:    Abundant and uniformly distributed precipitation and a glaciated landscape of generally fertile soils are highly favorable for forest growth.  The unique combination of ecosystems, cultural history, ownership and socioeconomic factors creates an extraordinary diversity of forest conditions that demand an equal variety of silvicultural systems.

Ownership:   Northeastern forests are owned almost exclusively (93%) by private entities, ranging from the large industrial holdings of over a million acres in northern New England to small woodlots of a few acres associated with suburban residences.

Forest Inventory:    The standing timber volume in the Northeast is estimated to be 60,724,500,000 cubic feet, where 34,490,500,000 cubic feet is hardwood and 26,234,000,000 cubic feet are softwood.

Climate:    The Northeast is a cool humid region.  The prevailing west-to-east air mass movement results in a typically continental climate.  Differences in climate within the region are caused by the north to south temperate span and dramatic ranges in elevation.  Precipitation is abundant and evenly distributed over the year.  Average annual precipitation ranges from about 32 to over 52 inches,with most of the region having 40 inches or more.  Soil moisture deficiencies seldom occur.

Major Forest Types and their Silvicultural Systems:   Northeastern forests lend themselves well to managing for high-value forest products.  Due to the past ownership patterns, widely variable past harvesting practices and land-use history, most traditional silvicultural systems need to be modified to fit each forests characteristics.  The following is a list of the major forest types in the Northeast and the general silvicultural systems they are managed under.

Growth Rates:   In an average Northeastern Region forest, mean annual increment for all species will range from 3.5 to 11.2 cubic meters per hectare per year.  This wide variation is due to species composition and site differentiation. 

Present Markets and Market Values:    The Northeastern Region forest products market is predominantly served by many small mill operations and only a few larger ones.  The development of niche markets and selective specialization have allowed the region to remain competitive while other regions depend on increased production as their salvation.  The wood supplies simply could not be maintained in the Northeast for production to be the determining factor.  Spruce-Fir and White pine dimension  lumber are the products most dependent on production quotas, as they are the most widely traded.  The extremely valuable quality hardwood products are the direct opposite.  Quality jumps in grade can be exponential in value.  From a supply and demand standpoint, the Northeast is at an equilibrium.  Prices for nearly every product are at historically high levels, yet the growth of the manufacturing base remains relatively static.  From an investment standpoint, a forest owner who manages his or her forest to produce high-value products, there will be a mature, specialized and competitive market waiting for the end result.