Model developed for The Nature Conservancy

Infrastructure Investment to Promote Forest Restoration and Mitigate Fire Risk in Washington’s East Cascades

WFE 2018 Tom Baribault (M), Mark Rasmussen (M), Aaron Paul (T)

Problem Statement

Washington: 2.2 million acres burned 2012-2015

Wildfire risk mitigated by restoration treatments

The Nature Conservancy: combine restoration and industry /

economic objectives

Infrastructure investment to promote forest conservation

Regional Wildfire Impact

2008-2018 wildfires

Perspectives

Conservation perspective # Acres Costs

($/acre)Yields (Mbf,

$/acre) Returns, risk

Conservation

Collaboratives

Investors

TNC stakeholder positions

Model Objectives

1. How much volume is there on the landscape?

2. How much of (1) is:

i. legally available?

ii. practically available?

iii. already allocated?

3. Supply available under what conditions—source ownership, transport cost, stumpage value, mill destinations?

4. Adequate to support facility with 105 MMbf annual capacity?

Model StructureIn place

InventoryUSFS FIA

LEMMASilvicultural

Rx

USFSWA DNR, DFWTNC

Land Allocations

USFSNSO NRF, DispPhysical

Travel Cost AccessibilityMill locations

Cutout valuation

WA DNRLogging costs

Forestry

GeospatialEconomic

Synthesis

Restoration Scenarios TNC

ForestEconomics

Module

Geospatial Module

Combined Model

Eligible AreaTreated Area

Potential MbfScenario Mbf

Demand balance for existing millsSupply for new infrastructure

Model Inputs & Assumptions

Forestry: inventory accuracy & resolution, growth model suitability

Economic: current log prices, log price forecast, logging & haul costs, landowner interest in harvest

Geospatial: ownership, logging system, legal & land use exclusions, road proximity, haul route optimization, hexagon aggregates

Industrial: species & log preferences, mill longevity, stated regional demand, apportioning

Scenarios: status quo, restoration needs, complete

Land Allocations

OwnershipForest typeWatershed

Wildfire Impacts

Travel Time

Process DiagramForest Composition Cell Haul costs to facility Facility competitive zones

Model Summary

Required to:Assign value to every eligible allocation x forest typeCalculate logging and haul costs, timber yieldsApportion volume to existing and/or new mill infrastructure

Outside scope: Build stands or serve as a forest management toolHarvest individual stands or areas, optimize volume flowsAccommodate privately negotiated exchange among millsQuantify uncertainty in growth/inventory, or propagate uncertainty

Vocabulary

Scenario: restoration intensity

Case: location of infrastructureCase 0: No new facility

Cases 1-6: New facility of 105 MMbf annual capacity at 6 possible locations

Treatment: acres restored within a scenario-case combination

Stumpage: Delivered Price – (Logging Cost + Haul Cost)

Scenario Definitions

Scenario 1: status quo

Harvest levels reflect last 5 years, ~130 MMbf / year

Source primarily private, Tribal land; limited public land

Scenario 2: TNC restoration needs assessmentRestoration objective of 800,000 to 900,000 acres

Source primarily USFS, WA DNR land via stewardship contracts

Scenario 3: complete restoration treatment across study region

Highlighted OutputsSpecies and log size classes

4 to 6 6 to 12 12 to 16 16+ DFW no owls 9,358,439 12,754,673 106,377 - DNR dispersal 83,332 3,977 - - DNR HCP 14,065,922 21,358,394 766,791 - DNR CF no owl 112,489 169,638 11,800 - DNR NRF 503,642 958,146 4,265 - DNR FC owl 86,665 167,326 143 - Oth. Federal 6,673,505 12,660,362 3,093,419 749,424 Private 27,134,876 86,936,366 32,396,060 6,866,529 Tribal Colville 17,990,992 94,639,096 53,787,173 13,424,132 Tribal Yakama 24,194,223 147,161,889 99,502,389 23,156,550 USFS low int 7,221,971 6,729,845 56,793 - USFS high int 17,227,311 23,116,233 5,068,334 1,824,921

Ownership Scenario 1

DFWL

Highlighted OutputsImpact on existing forest industry

Delivered Logging Haul StumpageYakama FP 370.88$ 131.22$ 57.22$ 182.44$ Vaagen Col. 395.34$ 138.54$ 85.18$ 171.62$ New Mill 379.42$ 149.70$ 46.43$ 183.30$ Boise KF 387.42$ 167.94$ 138.08$ 81.39$ Hampton Dar. 383.30$ 152.97$ 122.02$ 108.31$ Hampton R. 383.53$ 133.67$ 77.61$ 172.25$ Boise OR, PR 305.36$ 151.58$ 152.34$ 1.43$ Boise KF 304.06$ 134.02$ 105.39$ 64.65$ Zosel LC. 367.84$ 144.40$ 44.76$ 178.68$ Columbia RC. 747.89$ 140.69$ 174.28$ 432.92$

Price or cost / MBFDestination Mill Sc2 Case 5

Stumpage priceadvantage

Expanded capacityCompetitionfor volume

Highlighted OutputsImpact on existing forest industry

Yakama Forest Products

New Mill

Vaagen Bros. Colville

Highlighted OutputsAcres treated by scenario, Rx

MMBF MMBF/yr LoadsNone 616,196.2 2,841.8 142.1 568,364 Omak 781,879.2 4,789.8 239.5 957,967 Leavenworth 798,005.2 4,805.6 240.3 961,124 Wenatchee 797,182.7 4,799.4 240.0 959,876 Cle Elum 799,962.2 4,801.7 240.1 960,345 Ellensburg 799,068.9 4,802.4 240.1 960,472 Chelan 790,207.6 4,782.1 239.1 956,416

New Mill Location

Treated AcresHauled Volume

S1: no restoration advantage

S2: 165,000 acre advantage

Highlighted OutputsSupporting accelerated restoration pace

Delivered Logging Haul StumpageNone 1,073.8$ 422.2$ 268.0$ 383.6$ Omak 1,811.1$ 723.9$ 459.0$ 628.2$ Leavenworth 1,823.3$ 716.6$ 375.0$ 731.7$ Wenatchee 1,819.9$ 718.7$ 390.1$ 711.1$ Cle Elum 1,823.5$ 713.0$ 362.5$ 748.0$ Ellensburg 1,823.7$ 712.4$ 362.0$ 749.3$ Chelan 1,811.1$ 723.2$ 421.0$ 666.9$

New Mill Location, S2

Price or cost, $US million

S1: up to $68 million advantage

S1: up to $366 million advantage

Highlighted OutputsOptimizing facility placement

Delivered Logging Haul StumpageNone 1,570.4$ 614.0$ 363.2$ 593.2$ Omak 2,287.0$ 938.5$ 477.8$ 870.7$ Leavenworth 2,281.1$ 915.5$ 400.8$ 964.8$ Wenatchee 2,266.4$ 907.2$ 409.7$ 949.5$ Cle Elum 2,294.0$ 909.7$ 394.4$ 989.8$ Ellensburg 2,270.0$ 891.9$ 394.7$ 983.4$ Chelan 2,263.9$ 919.8$ 434.1$ 910.0$

New Mill Location

Price or cost, $US million

Delivered Logging Haul StumpageNone 363.43$ 142.09$ 84.06$ 137.27$ Omak 370.22$ 151.93$ 77.35$ 140.94$ Leavenworth 370.77$ 148.80$ 65.15$ 156.82$ Wenatchee 370.70$ 148.38$ 67.02$ 155.30$ Cle Elum 370.81$ 147.05$ 63.76$ 160.00$ Ellensburg 370.68$ 145.65$ 64.44$ 160.58$ Chelan 370.57$ 150.56$ 71.06$ 148.95$

New Mill Location

Price or cost $ / MBF

(Scenario 2)

Δ $23/Mbf stumpage advantageΔ $21/Mbf haul cost advantage

Highlighted OutputsValue of cutout

(Scenario 2)

Negative Stumpage:Scenario 2 Case 3

Highlighted Outputs

Conclusions

New infrastructure supports:

• Restoration: 550,000 acres reduced wildfire risk

• Volume: 2,200 MMbf additional harvest

Example pilot project: A-Z Stewardship Contract, USFS (Colville NF), Vaagen Brothers

Model suggests adequate accessible-available-legal inventory to support facility, meet supply requirements set by investor groups

Acknowledgements

The Nature Conservancy: Commissioned study

LEMMA/GNN: Provided treelists

USFS: Provided input on Rx, allocations

WA DNR: Provided input on Rx, allocations

The Beck Group: Regional mill species preferences