The 2012 Forest Report An Economic Assessment of Oregon’s Forest and Wood Products Manufacturing Sector Prepared for: Oregon Forest Resources Institute July 31, 2012 Forest Sector Economic Assessment Team Mark Rasmussen Roger Lord Brandon Vickery Mason, Bruce & Girard Inc. Charles McKetta Dan Green MaryAnn Green Forest Econ Inc. Tom Potiowsky Northwest Economic Research Center, Portland State University Darius Adams Greg Latta The Department of Forest Engineering, Resources and Management, Oregon State University Roy Anderson Bill Mitchell Dan Mak The Beck Group Table of Contents Tables and Figures ......................................................................................................................................... i Executive Summary ...................................................................................................................................... iv Introduction .................................................................................................................................................. 1 Chapter 1: Oregon’s Forest Sector Supply Factors ....................................................................................... 7 Section 1.1 — Forest Resource Conditions ............................................................................................... 8 Section 1.2 —Employment, Income and Status of Oregon’s Forest Sector ........................................... 20 Section 1.3 — Regional Analysis of Oregon’s Forest Sector ................................................................... 45 Section 1.4 — Forest-Sector Manufacturing .......................................................................................... 58 Literature Cited ....................................................................................................................................... 76 Chapter 2: Oregon’s Forest Sector Demand Factors .................................................................................. 79 Section 2.1 — Wood Product Demand ................................................................................................... 80 Section 2.2 — Biomass Energy and Biofuels ......................................................................................... 100 Section 2.3 — Forest Affiliated Assets .................................................................................................. 109 Literature Cited ..................................................................................................................................... 112 Chapter 3: Oregon’s Forest Sector Operating Environment ..................................................................... 115 Section 3.1 — Forest Sector’s Institutional Culture .............................................................................. 116 Section 3.2 — Investment and Innovation ........................................................................................... 122 Section 3.3 — Tax Revenue Generated by Forest Sector ..................................................................... 129 Literature Cited ..................................................................................................................................... 138 Chapter 4: Summary of Stakeholder Interviews ....................................................................................... 139 Chapter 5: Summary and Recommended Actions .................................................................................... 147 Section 5.1 — Summary ........................................................................................................................ 148 Section 5.2 — Recommended Actions .................................................................................................. 154 Appendices ................................................................................................................................................ 159 Appendix I — Abbreviations and Acronyms ......................................................................................... 160 Appendix II — Oregon Forest Sector Economic Impact Modeling ....................................................... 162 Appendix III — Field Data Collection for Recalibrating Economic Models ........................................... 168 Appendix IV — Economic Impact Summary Table ................................................................................ 172 Appendix V – Acknowledgements ........................................................................................................ 177 Endnotes ................................................................................................................................................... 179 The 2012 Forest Report Tables and Figures Tables Chapter 1 Table 1.1-1: Forestland area in Oregon by ownership (acres), 2008 ............................................................ 8 Table 1.1-2: Annualized gross growth, mortality and net growth (million cubic feet) for all timberland in western and eastern Oregon, 1976, 1999 and estimated 2001-05 ............................................................ 15 Table 1.1-3: Annualized gross growth, mortality and net growth (cubic feet per acre) on timberland in Oregon by ownership and region for two most recent USFS FIA inventory measurements ..................... 16 Table 1.1-4: Approximate areas of forestland by Fire Regime Condition Class in Oregon and Oregon regions......................................................................................................................................................... 17 Table 1.2-1: Forest-sector employment, income and industrial output, 2012 – direct, indirect and induced effects (income and output in millions of dollars) ........................................................................ 22 Table 1.2-2: Jobs and income — forest support activities .......................................................................... 23 Table 1.2-3: Jobs and income — primary forest products manufacturing ................................................. 27 Table 1.2-4: Jobs and income — secondary wood products ...................................................................... 33 Table 1.2-5: Jobs and income — transportation and distribution of forest products ................................ 37 Table 1.2-6: Jobs and income — forestland management and forest-dependent industries .................... 39 Table 1.2-7: Forest sector industries directly linked to timber harvest (jobs per MMBF).......................... 41 Table 1.2-8: Employment of Oregon’s core forest sector, 2006-10 ........................................................... 43 Table 1.2-9: Shift in market share of Oregon’s core forest sector, 2010. ................................................... 44 Table 1.4-1: Active Oregon primary wood product facilities, 1988-2012 ................................................... 64 Table 1.4-2: Product sales value of Oregon’s primary wood product manufacturers, 2008 ...................... 66 Table 1.4-3: Labor cost comparison by region ............................................................................................ 72 Chapter 2 Table 2.1-1: Number of building permits in metro areas in Oregon, California and Washington, 2005-11 ....................................................................................................................................................... 82 Table 2.2-1: Volume of mill residues (BDT) produced in Oregon and end use, 2008 ............................... 101 Table 2.2-2: Summary of Oregon bioenergy facilities utilizing woody biomass ....................................... 103 Table 2.3-1: Categories of ecosystem services ......................................................................................... 104 Chapter 3 Table 3.3-1: Oregon’s forest harvest tax rates, 2004-12 .......................................................................... 131 Table 3.3-2: STF Severance Tax rates for western and eastern Oregon, 2004-11 .................................... 132 Table 3.3-3: Total revenue to Oregon counties, gross timber sale value and timber harvest volume from BOFL, 2001-11 ........................................................................................................................................... 134 Table 3.3-4: Total revenue to Common School Fund, gross timber sale value and timber harvest volume from CSFL, 2001-11 ................................................................................................................................... 135 Table 3.3-5: Total revenue contribution to Oregon counties through federal payments, 1994-11 ......... 136 Oregon Forest Resources Institute i The 2012 Forest Report Figures Introduction Figure 1: Conceptual diagram of Oregon’s forest sector and its operating environment ............................ 6 Chapter 1 Figure 1.1-1: Percent timberland area by ownership in western Oregon and in eastern Oregon ............... 9 Figure 1.1-2: Timberland area in Oregon by ownership ............................................................................. 10 Figure 1.1-3: Unreserved private timberland in Oregon (USFS) and private wildland forest area (ODF) .. 11 Figure 1.1-4: Growing stock inventory for all Oregon timberland owners ................................................. 12 Figure 1.1-5: Growing stock inventory for privately owned land in western Oregon and in eastern Oregon ...................................................................................................................................................................