Two major conservation groups come up with very different figures for the losses. The Wilderness Society says that the agency lost $200 million on timber. The Sierra Club says the losses are closer to $800 million.
So who is right? None of the above.
When measured strictly by returns to the U.S. Treasury minus costs paid out of the U.S. Treasury, the Forest Service lost about $503 million on its 1996 timber sale program. This compares to about $455 million in 1995.
If you don't want to count the $240 million in payments to counties as a cost, then the loss was just $262 million. But counties are paid "in lieu of property taxes," and who doesn't count taxes as a cost? To be fair, a large chunk of the county payments--about $125 million--was paid to placate Northwest counties as a part of the spotted owl settlement, and that share, at least, is not truly attributable to timber.
Why are other people's answers so different? The Forest Service fudges its data in two ways. First, it counts all receipts, even though only a small share of receipts--less than 30 percent in 1996--makes it to the Treasury. The rest are kept by the Forest Service to spend mostly on timber-related activities or paid in the form of road construction rather than in cash.
Retained receipts and purchaser roads account for $383 million of the difference between the Forest Service's calculations and those of the Thoreau Institute.
Second, the Forest Service assumes away a large share of road costs and certain other costs as "capital investments." The only problem is that the agency is never going to earn any income to pay back those investments. Investments are only worthwhile if they result in more income later.
The Wilderness Society accounted for the roads problem but not the receipts problem. The Sierra Club overestimated many costs. For example, it counted a $56 million transfer from the K-V fund to the Treasury as a transfer in the other direction. It also counted $37 million in "timber sale support" costs even though it had already counted those costs in another item, "timber sales."
The Sierra Club did count two costs that probably should be in TSPIRS but were not: road maintenance and landline location. But the Club counted all landline location and two-thirds of road maintenance costs against timber, when half is a more reasonable estimate of both.
In the end, the final numbers count for less than the simple fact that everyone now agrees that most forests, and the Forest Service as a whole, loses money managing a resource that most private landowners and many other public agencies manage at a profit. The real question is how to fix this problem.
One spur to reform is that fact that in 1996 payments to counties were $82 million more than actual cash returns to the Treasury. This was the first time in the Forest Service's history that it did not return enough to pay counties, much less any of the costs paid by taxpayers. This means that Congress has to appropriate funds to pay the counties--something it might choose not to do in the future, which would jeopardize county support for the Forest Service.
At least 18 forests returned negative amounts to the Treasury in 1996. This can happen when the forests decide to spend more money on Knutson-Vandenberg or salvage sale activities out of sale revenues paid in a previous year.
The results can be startling. Four forests took back more than $1 million in 1996, and two of those took back more than $10 million. The Deschutes returned minus $10 million and the Gifford Pinchot minus $13 million. These negative returns certainly contributed to overall timber sale losses.
According to the Forest Service's calculations, 34 forests earned a profit in 1996. Our recalculations bring this down to just 7 forests.
Some of those seven forests were flukes. The Allegheny makes money every year, and the Siskiyou and Umpqua tend to be profitable as well. The Texas forests make money sometimes and lose sometimes.
The Humboldt was reported to make money this year, but actually this forest was combined with the Toiyabe. The "profits" are from payments on sales before the combination.
The other two questionably profitable forests are the Wasatch-Cache and Uintah. These two forests each report abnormally low expenses, probably because their timber costs were actually paid by some other office.
So the truth is that just four national forests made money. This is a bit unfair to the "spotted owl" forests, which are saddled with enormously high payments to counties as a part of the Northwest forest plan (their counties are paid a declining fraction of the historic rate so that they have a change to adjust to the new reduced rates of timber sales.) But even if payments to counties are not counted, only three spotted-owl forests--the Six Rivers, Shasta-Trinity, and Siuslaw--end up in the black.
Nationwide, if you don't consider county payments a cost, only three more forests end up appearing profitable: the Inyo, Mississippi, and Monongahela.
A total of 117 forests reported having timber sale programs in 1996. (This does not count the accounting "remnants" from forest mergers, such as the Challis and San Juan. These are shown in the tables for completeness, but aren't included in the figures for number of forests losing.)
The number number of forests is down from previous years because the Forest Service paired together several forests, including the George Washington and Jefferson, the Challis and Salmon, and the Humboldt and Toiyabe, in order to reduce administrative expenses.
This didn't reduce administrative expenses by much. Timber-related overhead, including expenses of the regional and Washington offices, totaled to $243 million in 1996. This is up from $237 in 1995.
The numbers shown in the downloadable tables are based exclusively on the Forest Service's own data. Three sources of data were used:
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