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June 24th, 2013 1:48 pm
New Study Confirms Cost of LEED Wood Products Monopoly
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Excessive regulation has come under increased scrutiny at all levels of government, and rightfully so.  Overregulation cuts into job growth and economic dynamism, sapping American vitality at a time when we simply cannot afford it.  As CFIF has highlighted numerous times, that is particularly true in the wood products industry.  Specifically, the manner in which bureaucratic building codes categorize lumber ends up excluding many domestic businesses from participating in critical government projects.

As one prominent example, every year, more and more cities needlessly make Leadership in Energy and Environmental Design (“LEED”) certification mandatory in their buildings.

The U.S. Green Building Council (USGBC) developed the LEED standards, which are in turn biased in favor of wood certified by something called the Forest Stewardship Council (FSC).  That disadvantages the majority of American businesses in the forest products industry by potentially blocking them from city, state and federal projects.  That’s because most domestic tree farmers, suppliers and retailers utilize wood recognized by the Sustainable Forestry Initiative (SFI) or the American Tree Farm System (ATFS) rather than the FSC.

In recent years, numerous elected officials have petitioned the USGBC, urging a more rational and inclusive approach to American timber.  Absent such a course correction, American wood products will remain unfairly excluded from public construction projects, as authorities give market access to timber used by a small minority of American businesses.  Such a framework decreases private sector revenues and jobs.

Now, new research by Forisk Consulting, prepared for EconoSTATS at George Mason University, provides further evidence of the economic costs that FSC imposes on American landowners and consumers.  Their study evaluated the way in which forest certification standards affect how timber management in the South and Pacific Northwest, comparing the impact of FSC, SFI and ATFS standards on land managers in Oregon and Arkansas.

The results were striking.  In Oregon, according to the study, statewide implementation of FSC could result in 31,000 job losses.  And in Arkansas, forcing land managers to abide by the FSC standard could reduce state timber employment by up to 10,000 jobs.

Those results should not come as a surprise, given the structure of FSC.

Although FSC certification is more costly than alternative certification standards, paying more for FSC does not guarantee that consumers are getting an environmentally superior product.  Among other things, FSC audits take weeks longer to complete than other certification programs, which diverts resources from land management for foresters.  FSC land restrictions also reduce the amount of timber harvested per acre, which lowers the supply of lumber and raises prices for consumers.  Furthermore, as Forisk Consulting has previously documented, FSC written standards don’t always correspond to what auditors enforce.  As a result, landowners are often confused.  As one auditor noted, “most companies are leaving clumps of unmerchantable trees in scattered areas, usually in riparian areas, draws and inaccessible corners.”

Thus, the accumulating empirical data shows the detrimental effects of making FSC certification a requirement for land management and building requirements.   As the number of LEED projects increases, so do the costs of the current forestry certification framework.

Fortunately, policymakers can neutralize that trend by treating ATFS, FSC and SFI wood equally, rather than mandating the use of FSC timber in our buildings.  That will give more American businesses access to new markets, and encourage a competitive certification process that will result in more landowners seeking certification.  Ultimately, that will benefit both the economy and the environment.

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