Why the commodities market doesn’t incentivize good forestry—and what we can do about it.
The new terminal at the Portland International Airport has been celebrated for the advanced engineering of its long-span timber roof, as well as for sourcing the wood from local and regional tribes, communities, and families practicing regenerative and restorative forestry. There is just one problem, explains architect Jacob Dunn in this recent article: in nearly all cases, the Port of Portland (the terminal’s owner-operator) was only able to pay standard market prices for this wood.
Because wood is a commodity, explains Dunn, it is indexed at a certain price—so landowners practicing sustainable, climate-smart forestry sell wood into the market at the same price as industrial landowners who are clearcutting the maximum acreage allowed by law.
A better wood valuation system would compensate practitioners of regenerative and restorative forestry for the additional benefits they provide to the environment, climate, and society. To build a world in which climate-smart forestry is the norm, not the exception, we must unlock markets’ capacity to price wood not just according to species and grade—but also based on whether the originating forest was managed to maximize ecological, human, and planetary health.
Celebrating the Portland Airport’s wins
The Port of Portland deserves to be lauded for prioritizing the provenance of its wood and actively purchasing timber sourced from local, ecological forests. Its purchasing choices were a marked shift from the usual practices of large-scale infrastructure projects, where a client typically prefers to work with a single supplier. Instead, the Port of Portland embraced a heterogonous group of suppliers, relying on a clear mission to guide its purchasing: that the terminal not only be an exemplary model of engineering and design, but also showcase the diversity of Pacific Northwest forestry products and the sustainable forestry practices that shaped them.
The Port’s efforts to prioritize local and sustainable forestry were no small feat. To make this sourcing happen, notes the article, a project team struggled for six years to understand the different forest owners in the region, the variety of wood they could provide, and how the characteristics of that wood could align with the project requirements.
The Port also tried to fairly reward foresters prioritizing forest health over immediate financial gains when it could. Dunn explains that when Skokomish tribal wood went to a silent auction, the Port let one of its mills know how much it valued Skokomish forestry practices, asking the mill to bid competitively. With this support, the mill was able to up the bid at the last minute, securing the wood.
Why is traceability so difficult?
However, in most cases, the Port was not able to fairly reward forest owners for their restorative and regenerative practices. The reasons for this are complex but start with the fact that wood rarely goes directly from a forest to the end user. Instead, wood is typically delivered to a log yard where it is mixed in with wood from a variety of forests – effectively ending its traceability. By the time the wood reaches the end user, it has gone through many hands, divorcing the product from the forest it grew in (and from its many social, cultural, and environmental layers) and turning it into a nameless commodity product, which then gets indexed at a market-imposed price.
Commodities, by definition, lack character and stories. Once wood is commodified, it is incapable of valuing any forest management practices above and beyond the current norm. While this loss of traceability and identity may have market efficiency benefits, the practice begins to feel absurd in a world where forests are increasingly being asked to perform the important role of climate change mitigation. Critically, forests can only act as natural climate solutions if they are managed ecologically, rather than with a laser focus on providing maximum returns on investment.
Can the Portland Airport serve as a model for others?
While the Port of Portland ultimately succeeded in sourcing from responsibly managed forests and ensuring traceability, the six years required to set up the project and identify the right community and tribal suppliers limits the scalability of this approach. Most organizations do not have the will, resources, or time to replicate the Port of Portland’s efforts – nor should they have to. Further, the Port’s inability to pay a premium for wood from sustainably managed forests reveals a critical flaw in the wood value chain that should be addressed.
Both the successes and challenges of the experiment raise valuable questions, including: how can we transform wood value chains so they incentivize sustainable forestry?
A call to action
To start, we need greater traceability in wood supply chains. One of the ways to do this is by following the Port’s example—utilizing direct sourcing that shortens the literal and symbolic distance between our forests and our homes. By bypassing existing marketplaces nd setting up partnerships with small owners and tribes, an end user could pay a forester directly and then work directly with a mill to transform the wood. Alternately, an end user could contract with a trusted, neutral integrator who knows which foresters in the region are practicing sustainable forestry and who could coordinate between the foresters, mill, and any other key value chain businesses. As more end users in more regions prioritize direct sourcing, we anticipate that information about forestry practices within key regions will become more easily available, reducing the time and energy required for this approach.
However, from the Portland Airport case study, we know that because of how commodity markets currently operate, even when traceability is established, end users can still struggle to appropriately reward sustainable foresters. A new forest product category could solve this challenge by embedding all relevant forest-level information (carbon, biodiversity, indigenous people’s rights, water) within a label such as “climate smart wood.” Such a category could be designed within existing wood certification schemes (Forest Stewardship Council, Programme for the Endorsement of Forest Certification, Sustainable Forestry Initiative, etc.), more easily justifying a fair premium for the product. The category could assure wood buyers that a forestry product was grown and harvested not just without harm—but also with the most regenerative and restorative practices.
For new methods and systems to evolve, we need real world experimentation and actors to begin the work. The Portland Airport case provides us with just that. Now it is up to the rest of us to learn from that experiment, iterate on it, and continue to work on transforming value chains to become more ecological, more regional, and more supportive of forest communities.
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