Cutting trees to save the forest

Leveraged buyouts are the newest tool in forest restoration

  • A timber faller trims out a redwood on The Conservation Fund's Garcia River Watershed property

  • The Garcia River winds through The Conservation Fund's property


GARCIA RIVER WATERSHED, CALIFORNIA - Chris Kelly is having an Al Gore moment. As he eases his truck down a rugged logging road on California's North Coast, the state program director for The Conservation Fund, a nonprofit environmental group, is talking about global warming, carbon offsets and the fate of the planet.

While he talks, a forester named Scott Kelly, who is running a logging operation here, and I have our eyes peeled out the windows for a more immediate peril: A redwood tree that a logger, somewhere up the hill, is about to drop in our direction. There's a final snarl of the chainsaw, followed by the butt-puckering sound of the tree's heartwood cracking and the redwood beginning its fall toward whatever lies below.

Chris snaps out of his reverie and hits the accelerator. Scott, who's spent two decades in the woods, softly chides, "That never works."

"You run right into it?" Chris asks.


Chris Kelly has a lot on his mind. The Conservation Fund has recently become the proud owner of some 40,000 acres of forest in Mendocino County. Now, Chris' job is to log it. It's a counterintuitive proposition, but also one that is helping to leverage scarce conservation money to protect the area's redwood and Douglas fir forests. Each redwood that Kelly cuts, many of them the younger, smaller trees, will fetch an average of $105 at the lumber mill. Kelly can then use that money to restore streams where endangered salmon spawn, repair forest roads - and pay down the millions of dollars in loans that he used to buy the forests.

Scott Kelly, no relation to Chris, says, "We're gonna let it grow as much as we can and log a little bit - just enough to pay the bills." Earlier that day, the three of us waded through a tangle of logging slash to watch a sawyer administer the coup de grace to another towering redwood. The tree hit the ground with a mighty whumpf, and the moment felt a little like a scene from an old Budweiser commercial.

Scott paused for effect, and then said: "That one's for you, Chris."

After nearly two decades of putting together real estate deals for conservation organizations, Chris Kelly has developed an eye for the often-paradoxical opportunities of timber country.

Much of the forestland on the North Coast is consolidated in the hands of timber companies that have been more than happy to clear-cut it - a situation that, in the standard green version of the story, is plainly bad. But Kelly was intrigued by the fact that just a handful of owners held so much of the land on the North Coast. Unlike other parts of California, where a conservation group might spend decades assembling a decent-sized parcel from fragmented chunks of land, timber country provided ready-made, tens-of-thousands-of-acre targets of opportunity as timber companies started divesting their properties.

"From a landscape conservation standpoint, that's fantastic: You can go out and buy 23,000 acres - a third of the Garcia watershed - in one deal," Kelly says. "You can recover coho salmon in the Garcia with that one deal."

From a financing perspective, however, it is a nightmare. There is no way that public agencies, such as the state park system, or environmental nonprofits could afford to buy and maintain that much land outright. "So whaddya do?" Kelly mused. "Well, these are forests, after all: They grow, and" - being redwood forests - "they grow vigorously."

Kelly decided to act like a timber company, getting loans to buy forests, and then paying back the loans by logging the trees - or at least some of them. The strategy wasn't entirely Kelly's brainchild. But until they bought a forest, he says, "it was an abstract concept." "Nobody was doing it in a way that people pointed to and said, 'That's what we mean.' "

The Conservation Fund's foray into the timber business is a gigantic exercise in considered pragmatism. "It's not like we're taking pristine, old-growth forests and using them to pay off loans," says Chris Kelly. "These are beat-up properties" - many of which have already been logged two or three times.

The Conservation Fund has cordoned off a third of the Garcia River Forest as an ecological preserve. On the rest, it's using a meticulous logging technique called selection forestry - in part because the timber company that previously owned the property "high-graded" it, taking out the biggest, best timber. Now, says Kelly, "You gotta kind of make your living by poking around and finding trees (big enough to sell to a mill)."

As they go, loggers are also cutting younger trees to thin the forest and open up space for the remaining trees to grow bigger. Then, Kelly says, you have to "really hold your breath for a decade" until the trees reach merchantable size.

It is a labor-intensive process. "We take about 30 to 35 percent of the (trees), so you gotta cover three times the acres to get the same amount of logs. And that's inherently more expensive. It's cheaper," Kelly says, a little ruefully, "to clearcut."

Scott Kelly and an assistant marked each tree that will be cut on this 300-acre harvest, carefully considering which ones are ready for the mill, which should be cut to allow others to grow bigger and which should be left to provide habitat for spotted owls and other wildlife. "You don't go out and mark trees just for yucks," Scott says. "And by the end of it, you've seen every tree. You have a lot of time invested in this." Each time a logger cuts a tree, he pencils his initials onto the butt end of the log so Scott can do quality control.

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