Playing the forest card

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How does Oregon’s forest sector figure into the State’s economic future? I get this question a lot. The current housing downturn, along with years of discord over federal forest policy, have hurt the forest products industry, particularly in Eastern Oregon where only a handful of mills still operate and unemployment pushes into the mid to high teens.

Given these circumstances, it comes as no surprise that I am often asked whether the push for sustainable products and practices is just an additional burden on an already besieged industry, or whether it actually offers an opportunity for market leadership.

In response, I should first point out that, in a global context, Oregon’s forest sector remains strong. Oregon is still the nation’s top lumber producer, and home to world-renowned forestry institutions, including the country’s top-ranked forestry school (Oregon State University) and the World Forestry Center, which draws visitors from around the globe to our profession’s most prestigious conferences.

Measured in production or knowledge, Oregon’s forest cluster contributes beyond state borders. The growing demand for sustainability provides an opportunity to expand our position as a global leader. In doing so, we can restore forest ecosystems and revitalize rural communities at home; trade renewable products and sustainable technologies with other regions; and create prosperity for our state.

Overall, the trend toward sustainability is positive for forest products. Wood is renewable and has a favorable carbon footprint compared with competing building products, not to mention competing energy sources.

Woody biomass energy will continue to play a major role in meeting state and federal renewable portfolio standards, and Oregon is well positioned not only to generate wood-based green energy, but also to incubate and grow technologies and companies in this space.

Forest products include more than wood, of course. The demand for carbon sequestration, water storage, biodiversity and wildlife habitat is expected to increase as society adapts to climate change, and the values of non-timber resources will rise in-kind. The hunt for market-based solutions to environmental problems has started already and will grow over time, rewarding innovation.

Oregon’s history of slogging through complex environmental policy questions can present a competitive advantage over other regions that are confronting these challenges for the first time. Oregon’s forest cluster includes science and policy expertise that has been honed through decades of debate, research and practice.

Capitalizing on this advantage means identifying new traded-sector opportunities with application both inside and outside Oregon. Other states and regions may not possess Oregon’s green ethos but, as they confront both climate change and policies dealing with climate change, for instance, there will be market disruptions that can create opportunity for Oregon.

An obvious example is renewable energy. In the decades ahead, the world will increasingly obsess over ways to locate inexpensive sources of low-carbon, renewable energy to displace fossil fuels. Oregon not only has abundant forests and sources of woody biomass (forest thinnings, for example), it has decades of experience using mill waste and other wood residuals in the manufacture of renewable energy. Further, it is home to top-tier research facilities including the Wood Innovation Center, making it well positioned to incubate and grow technologies and companies to generate green sources of heat, electricity and biofuels. The impact would be both local, providing jobs in economically depressed, timber-dependent rural communities, and global as we export renewable feed stocks and power, along with sustainable technologies, in response to climate change policies around the world.

This is just one example of how Oregon’s forest sector may benefit from the emerging global interest in sustainable products.

My perspective as a forestland investor with broad geographic holdings is that, no matter what opportunities and challenges are presented by the focus on sustainability, most other states and regions would readily swap positions with Oregon. Our rich and diverse forests, institutions and track record provide enviable competitive assets.

What we need are innovative economic development strategies that seek to grow and diversify, not replace, our existing forest cluster — the second largest employer in the state and our most important rural industry. Look for future columns from me on strategies that leverage Oregon’s competitive advantages, creating opportunity from innovation and sustainably managed natural resources; and strategies that engage Oregon in global problem-solving, giving us outsized influence on issues that matter.

Matt Donegan is co-president and co-founder of Forest Capital Partners. He serves on the Oregon Board of Higher Education, the Oregon Innovation Council, the Oregon Global Warming Commission, the Oregon Business Council, and the Steering Committee of the Oregon Business Plan.