Forest Service: Forest Products Modernization Effort and Followup to Appraisal Question

Steve Wilent recently asked a question here

The Forest Service is developing a “market based” approach to timber sale appraisals that will aim to improve alignment between local market conditions and appraisal metrics.

I assumed that they’d been doing this all along. Anyone have insights?

I contacted the Forest Products Modernization team, and they responded promptly with much good info. Thank you! Here’s a link to their information. Also, they have newsletters, and you can get them by signing up with them at “forestprod_modernization@fs.fed.us”. I attached newsletters from July and November FPM_At_A_Glance_November2019

FPM_AtAGlance_July2019_final  here. Note to Larry: there is a great deal about the workforce.

Where We Are Going?
• People: We are partnering with Human Resources Management to improve recruitment and retention of employees, developing and expanding training resources including academies and task books for career advancement, addressing qualification disparities in the forester and forestry technician series, and increasing the capacity of existing staff through consolidation and streamlining of certifications.

• Technology: We are modernizing the Timber Information Manager application; deploying new technologies (handheld data recorders, tablets, and lasers); expanding the use of geospatial and remote sensing (e.g., Light Detection and Ranging and unmanned aerial systems) for inventory, monitoring, boundary designation, and volume estimation; and partnering with the Chief Information
Office to expand Wi-Fi and broadband access to forest and district offices to support digital and networking capabilities.

• Business Change: We are simplifying contracts and appraisals to mitigate challenges associated with low-value material and increase timber sale outputs; leveraging employee, partner, and private industry expertise to improve program and project management skills across the agency; establishing a cross-deputy working group focused on forest products markets and utilization to help us better evaluate timber sale viability and mitigate issues with low-value material; and scaling up lessons learned and best practices for use of GNA, stewardship agreements, and designation by prescription.

• Policy: We are updating our timber management directives to reflect new authorities and provide clear direction and technical guidance on new procedures; coordinating with the Environmental Analysis and Decision Making (EADM) team to streamline the integrated resource analysis, proposed action development, and National Environmental Policy Act (NEPA) analysis steps of timber sale planning; and working with the Office of Regulatory Management Services to maintain a searchable, web-based agency policy library.

Now onto the detailed technical appraisal answer:

Answer:
The Forest Service has been researching a market-based approach as an alternative to using the results of past sales for establishing the Base Period Price (BPP) for the Transaction Evidence Appraisal (TEA) System. The TEA system is used in all Regions of the Forest Service except Region 10 (Alaska).  TEA uses a BPP as a starting point for the appraisal that is based on high bids from sales in the recent past. [More precisely, the BPP is the volume weighted average high bid for sales in the base period.]  When there are insufficient sales to develop a reliable BPP or when there is a lack of competition for sales, it is reasonable to doubt whether “fair market value” is being established by the normal transaction evidence procedures.

An appraisal is an estimate of fair market value (36 CFR 223.60) and is used to establish the minimum stumpage value for the sale of National Forest timber (36 CFR 223.61). The research led to pursuing alternative methods for establishing that base period price, such as using a market based approach.  The approach that was taken was not to develop an entirely new appraisal system, or build a single, national appraisal system.  Instead, a process was developed to establish BPP based on the relationship between lumber market indices and stumpage prices.  The resulting market-based BPP represents the fair market stumpage value that would otherwise have been established by the high bids the Forest Service received from actual sale transactions.  The BPP, however it is established, is further adjusted by sale specific and local market conditions to approximate a fair market value, and establish a rate for advertisement.

The new approach has shown value in test cases where the current TEA approach resulted in no bid sales due to price, and where competition or the number of previous sales was lacking for a  reliable appraisal of fair market value.

Now, I am going on the proverbial limb here as to my understanding, so please correct or add if this context is incorrect.

1) There is some requirement to try to sell trees that might be cut for say, fuel treatments or hazard trees. To do that the FS has to jump through required “timber sale” hoops.
2) However, there may be no current history to use and there might only be one potential purchaser.
So they had to figure out some other way to derive fair market value.

 

16 thoughts on “Forest Service: Forest Products Modernization Effort and Followup to Appraisal Question”

  1. Sharon, thank you for digging into this.

    “partnering with the Chief Information Office to expand Wi-Fi and broadband access to forest and district offices to support digital and networking capabilities.”

    Some offices are still using dial-up Internet connections?

    Reply
    • No, they are not using dial-up. But they are using hard-wired connections for each computer/printer/etc. That was OK during the era when everyone (mostly) had desktop computers. But now with laptops, and the increased use of electronic devices like tablets and smart phones, having wifi in the office can be a big help.

      Reply
  2. I think this is were purchaser/community meetings are essential for the Forest Service to better understand forest products sale potential.

    Reply
    • The Forest Products Modernization effort has included meetings with purchasers and has solicited a lot of input/feedback from purchasers.

      Reply
      • As a purchaser of FS timber sales that has not been my experience. (More than likely they just don’t listen.)
        I would like to see monthly sales of forest products of all sizes and shapes, from firewood, thinning, fuel reduction, to old growth salvage, from a few thousand bft to several million.
        I do not believe giving one purchaser all the timber projects in a forest and over a decade to operate them will revive the infrastructure we need to manage our forests.
        Bringing back the green sheet small timber sale contract would also help.
        But it going to take a few years for the infrastructure to evolve after most of it was eliminate by Northwest Forest Plan.
        The FS should realize it that it manages one of the most valuable timber resource in the world and that we can produce a hugh variety of products from these forests and also help maintain its ecological value.b

        Reply
        • Bob –

          What data are you relying on for your argument that the Northwest Forest Plan eliminated “most” of the infrastructure within the range of the northern spotted owl?

          While it is true that there was a constriction of milling infrastructure on the westside, those changes were already well under way before the NFP. Today, there remains “excess” capacity in western Oregon; wood products infrastructure in WA and CA are more appropriately scaled to the need in those states.

          On the other hand, there is much less infrastructure in eastern Oregon and Washington than there used to be; and it is here that long-term stewardship contracts have in fact functioned to retain that infrastructure on the landscape: without it, there is no question that the last mill in the Southern Blues (in John Day, OR) would have been shuttered long ago.

          But that’s just my corner of the world: others may have different opinions relevant to other regions.

          Reply
  3. “Note to Larry: there is a great deal about the workforce.”

    They’ve already thrown Forestry Technicians in Timber under the log trucks. There aren’t many permanent timber positions for Forestry Technicians across the country. The highest you can now expect to go is GS-7, because there just aren’t any GS-8 jobs around. You cannot get “time in grade” to get to a GS-9. I once had a pathway but, Forestry Techs now have to get 12 months experience as a GS-8, to get to a GS-9. (Most Timber Sale Administrator jobs now go to Foresters at the GS-9 level)

    Reply
    • That has been recognized and is being discussed. Especially in relation to sale administrators and how some regions do not have the GS-8 technician jobs that allow employees to compete for GS9 technician jobs, which means that they have to move to another region – and that is expensive in lots of ways.

      Reply
  4. If the FS really wants to better align their programs with restoration needs, they need to do more projects that are NOT commercial logging projects. In a study of restoration needs in the Blue Mountains of Oregon, researchers found that only a small subset of needed restoration activities are “profitable,” so it makes no sense to let logging economics determine restoration priorities. If we restore primarily those areas that have commercial-sized logs and fail to treat the thousands of acres of areas that need restoration but lack economic return, we will not be accomplishing real restoration which requires carefully and strategically choosing the subset of the landscape that can be treated to provide the greatest gain (both ecological and fire hazard reduction) for the least ecological “cost” in terms of soil, water, wildlife, carbon, and weeds. Rainville, Robert; White, Rachel; Barbour, Jamie, tech. eds. 2008. Assessment of timber availability from forest restoration within the Blue Mountains of Oregon. Gen. Tech. Rep. PNW-GTR-752. Portland, OR: U.S. Department of Agriculture, Forest Service, Pacific Northwest Research Station. 65 p. http://www.fs.fed.us/pnw/pubs/pnw_gtr752.pdf (“Hoping to boost their economies and also restore these forests, local leaders are interested in the economic value of timber that might be available from thinning treatments on these lands. … [W]e found that on lands where active forestry is allowable, thinning of most densely stocked stands would not be economically viable.” ).

    Reply
  5. Here’s what I find extremely frustrating about the forest products modernization process (well, I find many things frustrating about it, but here’s the one I’m picking on today): it expressly did not include an examination of the stewardship contracting authorities. As the Forest Service moves away from timber sales and towards hazardous fuels reduction and long-term stewardship contracts, both of which are designed to achieve ecological objectives that may not have a commercial value (e.g., there is either low- or no-value wood coming off), it really needs to have a much better understanding of the objectives of these contracts, which is not “low value” (e.g. lowest bid to the government).

    I have been told stewardship contracts weren’t part of FPM because those contracts are let by AQM – which is another aspect of this that really needs to be daylighted and addressed.

    Finally, I’ve also recently learned that all contracting for the Forest Service will be centralized within USDA (unclear what happens with AQM), which will make “local decisions” involving contracting, appraisal, and bidding all that more opaque and inflexible.

    All of which begs the question: was FPM just another navel-gazing exercise, without policy improvements delivered to the field?

    Reply
    • I share a lot of your concerns about FPM. It has been going on for at least 2 years now and while the newsletter always has lots of things in it, not much has been happening, and sometimes it seems like the interest is in showing that something was changed, but not necessarily that something was improved. I have been through many change efforts during my FS career – most of them were pretty fun and got rid of a lot of unnecessary things. My experience with FPM so far has certainly not met the standard that the other efforts did!

      Reply

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