Tax credits make eco-logging pay

  The trouble with logging these days is that it's hard to make a profit while still looking out for forest health. That may change, at least in some depressed Northwest timber towns, thanks to a federal program that usually helps blighted urban neighborhoods.

In May, the U.S. Treasury Department gave $50 million in federal tax credits to the Portland-based nonprofit Ecotrust (HCN, 3/17/97: Working the watershed). Ecotrust will use this "New Markets Tax Credit" to attract investment money. The group will then purchase forestland near regions with high unemployment and poverty rates, and hire locals to restore salmon streams and carry out careful logging designed to maintain older, larger trees. Investors can claim a 39 percent tax credit over seven years.

The purchased land is likely to have already been clear-cut and replanted, and it may take decades before the trees yield much profit. But thinning them now can lead to a more diverse, valuable forest later, says Bettina von Hagen, vice president of Ecotrust's natural capital fund. In the meantime, the tax credit will make up for reduced revenue from slower logging.

"The forest can produce a little smaller return, but still a good return for the investor," says Grant Munro, president of a timber-management firm in Port Angeles, Wash., that is working with Ecotrust.

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