Slim margins

 Note: This article is a sidebar to this issue's feature story, "The War on Wildfire."

SISTERS, Oregon — From the cab of his Timberjack harvester, logger Scott Melcher eyes a clump of skinny ponderosa. He scans the trees, calculating which will grow fastest if he leaves it standing, which might be stunted, which will pay its way out of this forest on the east side of the Cascades.

Melcher makes his selection, pushes a button on a control panel, and moves the grapple into a steel embrace with a 12-inch-diameter pine. A retractable saw blade slices through the tree near its base. Working a joystick and more buttons with remarkable grace, he rotates the tree horizontally and pushes it through a series of blades that strip the limbs and bark. Then, he lays the pulp log gently on a pile and moves on to the next tree in the stand.

With a chainsaw, Melcher could thin an acre of these woods in a day. Using the harvester machine, he can accomplish 10 times as much. Sixty percent of the logs he decks — those between 5 and 16 inches in diameter — are destined for a sawmill 70 miles away, where they’ll bring $300 per 1,000 board-feet. Those smaller than 5 inches will bring just $25 a ton when chipped at the mill.

If Melcher is lucky, he will make a modest profit on this job. More likely, he says, he’ll break even after paying for fuel and labor. Still, the project keeps a crew of six employed in winter, when things are slow for loggers over on the west side of the Cascades.

As old-growth timber sales dwindle on the Northwest’s public land, and as the Forest Service turns its focus toward "forest health" projects, logging contractors such as Melcher increasingly look to small trees and thinning sales. The question is: Do they pencil out?

A new formula

Melcher, a third-generation logger, has been doing fuel-reduction projects for four years. This particular one is for the Deschutes Land Trust, which buys up area timberland and invests in its long-term restoration. Melcher, his brother, Robbie, and their business partner, Jim Cota, also work on the Deschutes National Forest; his company did most of the thinning and brush removal completed last winter for the Metolius Basin demonstration project.

The Melcher Logging Co. produces about 40 million board-feet a year — enough to keep 33 employees busy, plus the independent truck drivers who haul their logs to the mill. So far, thinning provides just 15 percent of that. But things may change: The Deschutes National Forest is preparing to thin another 12,000 acres in the Metolius Basin, and a project outside the basin will treat 32,000 acres.

To make thinning sales of low-value trees work economically, the Forest Service can’t put them out to bid in the usual way and expect the timber’s value to draw bidders (HCN, 1/17/00: Experiment takes the cut out of logging). Instead, the agency uses "stewardship contracts," which pay logging contractors by the acre to take some trees out and leave others behind. The Forest Service had experimented with such contracts before, but the Healthy Forests Restoration Act gave it permanent stewardship-contracting authority.

"They know we aren’t going to get much value (from the logs), so they pay for the services we provide — thinning and biomass removal and hand-piling of limbs," says Melcher. On the Metolius, the Forest Service paid him $150 to $400 per acre, depending on the wood removed. "If there’s more value coming off the land," he explains, "we charge less for the service."

One way to increase the value would be to find a use for the large quantities of limbs, branches and needles that litter the ground after thinning. Right now, most of the slash sits in tall piles until it dries and the weather is cool and moist enough to burn it safely. But this woody biomass can also be burned to generate power.

Can biomass pay?

Biomass electric generation has obvious environmental benefits: less air pollution, less damage to watersheds, less risk that slash burns will get out of control. But the economics are daunting. Transportation costs make biomass more expensive than other energy sources, and very few power plants currently employ it.

In conjunction with the Healthy Forests Restoration Act, Congress has authorized the Forest Service to spend $5 million annually between 2004 and 2008 on grants to help communities and small businesses use biomass. The agency has awarded a number of grants in Oregon, including one to the Confederated Tribes of Warm Springs, which plans to expand generation at its sawmill to eventually produce 15 megawatts of electricity.

Much of that biomass could come from fuel-reduction programs on the nearby Deschutes. Melcher wants to be a supplier — if he can figure out how to make it pay. The cost of cutting and transporting stacks of skinny trees is far higher than that of larger trees, he says. Chipping them on site with portable chippers is a possibility, but most chip vans can’t navigate steep, twisting forest roads.

And even if biomass becomes economical, there could be a downside, according to a May 2005 report by the Government Accountability Office. Mass harvest of the skinniest trees could lead to overuse of mechanical treatment at the expense of prescribed burning, and it could increase erosion, stream sedimentation and access into remote roadless areas. And environmentalists wonder: Does it make sense to use gobs of gasoline to get biomass out of the woods?

Meanwhile, Melcher says a little more flexibility in thinning contracts would go a long way. "What eats on me is, when I cut through these stands, I cut a lot of future," he says. "If I take out little 12-inch trees, I’m cutting vibrant young trees." And logging a few of the bigger pines, he says, can make the difference between profit and loss: "If we can take a few 16-inch trees, it helps pay for the operation. Maybe we can take enough volume out of this one stand to pay for the thinning in another stand."

• Wildlife