Freedom Line Blog

All too often, cowed policymakers throughout the U.S. blindly accept the assertions and demands of environmental extremists as somehow representing mainstream opinion or scientific fact.  With the new LEED v4 standards approved earlier this month by the U.S. Green Building Council (USGBC) providing the latest example, it’s time for those policymakers to finally apply scrutiny to LEED and how it continues to negatively affect our domestic timber industry.

As we’ve documented before, LEED standards institutionalize a destructive bias against the vast majority of American timber, which receives certification by alternative systems.

Unfortunately, too many members of the public also associate LEED with “green” without serious thought.  But as we noted, LEED has the effect of raising the prices of timber, reducing consumer choices, threatening jobs and growth and favoring overseas competitors at the expense of domestic businesses.  The market gets distorted without yielding any corresponding environmental benefits.

Even though it has been “rebranded,” the folly of LEED remains its preferences for timber certified by the Forest Stewardship Council (FSC).  Its “leadership extraction practices” credit is only eligible for those using “wood products [that] must be certified by the Forest Stewardship Council or USGBC-approved equivalent.”  Builders that use FSC timber are more likely to enter LEED building projects than others.

The problem for our domestic timber industry is that 90% of FSC timber comes from abroad.  Policies that enforce LEED therefore increase the chances of foreign wood entering American building markets than would normally be the case under a true free-market in which FSC-certified products compete on a level playing field with Sustainable Forestry Initiative (SFI) and American Tree Farm System (ATFS)-certified materials.    The combined SFI and ATFS-certified forestland in the U.S. outnumbers that of FSC by millions of acres, so a pro-FSC framework automatically disadvantages a majority of Americans in the forest products industry in order to benefit a much smaller minority.

Moreover, the financial costs of this FSC-centric framework are considerable for American consumers, our broader economy, and the environment.  For example, FSC wood costs 15-20% more than other types of timber, according to numerous estimates.  The American Consumer Institute (ACI) estimated that making FSC-certification a binding requirement for American forests leads to $10 billion in annual consumer welfare losses for wood products.  Another recent study by EconoSTATS similarly determined that mandatory FSC standards would lead to 41,000 job losses in Oregon and Arkansas alone.  And in ecological terms, importing lumber from countries such as Brazil and Russia, where FSC is active, entails significant transportation costs.  FSC also enforces lower standards for certification in those countries, and many Asian and South American nations lack environmental safeguards that are taken for granted in the U.S.

In effect, the FSC framework displaces high-quality domestic lumber for foreign wood harvested under questionable circumstances.

While the U.S. Green Building Council (USGBC) ignored the input of hundreds of local, state and federal officials, conservationists, small and large businesses and academics who called for a revision to LEED’s treatment of domestic timber, a number of states are taking action on their own.  In the last few years, Maine, Georgia, Florida, Oregon, Alabama, Mississippi and Tennessee have taken steps to nullify or mitigate the negative effects of LEED.  Through legislation and executive orders, these states are opening up building markets to larger amounts of timber certified by credible standards like ATFS and SFI.

The more states that follow in their footsteps, the better.

This week, in an official comment filed with the U.S. General Services Administration (GSA), CFIF called for reform or replacement of the Leadership in Energy and Environmental Design (LEED) standard endorsed by the GSA.  Americans deserve a building certification system that is more fair, open, evidence-based and that uses consensus-based standards.

Although the issue of forest certification remains rather obscure to most Americans, its regulation significantly impacts the price consumers pay for wood products, not to mention America’s struggling domestic timber industry.  Unfortunately, a vocal group of environmental activists only endorses Forest Stewardship Council (FSC) certification, and prefers it as a monopoly, while irrationally demonizing competing forest certification systems.  Among other things, those activists successfully pressure Fortune 500 companies into accepting the exclusive use of FSC-certified products, and many government and rating agencies to only award green “credits” to forest products recognized by FSC.

That policy causes the market to become increasingly distorted, with real costs for producers of wood and the environment, and fewer choices for consumers.  A recent study by the American Consumer Institute estimated the costs of carrying that policy to its endpoint.  Namely, FSC certification as a binding requirement for American forests means consumer welfare losses in a number of markets, totaling $10 billion for wood products and $24 billion for paper products markets each year.  Another destructive consequence of the FSC monopoly is that wood from almost 75% of America’s certified forests is placed off-limits.  While that single-source arrangement benefits the FSC and activists, it imposes significant costs on the domestic forestry industry and discourages competition.  That’s because FSC holds foreign landowners to lower standards than U.S. foresters.  For example, harvesting 600-year-old Russian trees occurred on FSC-certified property.  Such an arrangement discriminates against domestic foresters and increases the likelihood of builders seeking foreign suppliers of wood.  In fact, 90% of FSC’s certified land is found abroad, making it fairly easy for businesses to access foreign timber.  Typically, the government interferes with the market to ostensibly protect American industries.  Here, sadly, it is relying on an unaccountable third-party to do the opposite.

The current LEED policy also jeopardizes American jobs;  penalizes smaller landowners who use other certification systems;  discourages the use of many common building materials and other products that are regularly found in construction projects, such as PVC piping, foam insulation, heat reflective roofing and LED lighting face.

Meanwhile, there exists little to no clear environmental benefit to using FSC over alternatives like SFI or ATFS.  A recent study published in the Journal of Forestry examined the impact of FSC and SFI forest certification in North America, and found few differences in land management outcomes of those two alternative systems.  Additionally, the League of Conservation Voters, National Alliance of State Foresters and National Association of Conservation Districts also favor a more level playing field for certification.   Those groups possess much better on-the-ground expertise than the activists who come from marketing backgrounds and lack credentials pertaining to land management or environmental science.

We conclude:

We already witness too many government policies picking winners and losers in the marketplace.  For the federal bureaucracy to allow a third-party environmental group to do so is appalling.  Given USGBC’s agenda and arbitrary actions, it is reckless to empower that organization to dictate a government-sanctioned standard, especially when that standard stifles growth and kills off American jobs during this time of economic uncertainty…  LEED in its current incarnation as the government-approved standard is simply unacceptable.  American consumers, small businesses and our domestic timber industry deserve much better, and the era of the USGBC’s taxpayer-subsidized monopoly must end.”

Meanwhile, in an excellent Forbes commentary this week, George Mason University fellow Jon Entine echoes our view.  Entitled “Forestry Labeling War Turns Ugly as Greenpeace Bungles Logging Industry Attack,” Entine neatly examines the contradictions and tensions contaminating the current forest certification regime:

Policies regarding the procurement of timber, use of building codes and what businesses can sell to their customers should be informed by facts and science, not scare tactics. Greenpeace’s deception is only the latest propaganda effort that has muddied rather than clarified the issues surrounding forestry practices. With a majority of forests lacking certification, we need common-sense incentives and more certification options to achieve sustainable forestry management goals. Consumers and the general public deserve much better than the disinformation campaigns that have shadowed this debate.”

Fortunately, the GSA review period offers the opportunity to return credibility to the building certification system.

A new study confirms something we’ve highlighted here at CFIF in recent weeks:   The environmental activist campaign to grant the Forestry Stewardship Council (FSC) a monopoly over forestry certification standards in the United States would (1) substantially raise costs for American consumers, (2) threaten domestic jobs, (3) disproportionately punish American producers, (4) increase importation of foreign wood and (5) paradoxically incentivize use of less environmentally-friendly materials.

A little background: The clear majority of certified timber in North America is not certified by FSC.  Instead, it is certified by credible certification programs, such as the Sustainable Forestry Initiative (SFI) and American Tree Farm System (ATFS).   Some environmentalist groups, however, have commenced a campaign to strongarm U.S.  businesses into only using wood and paper products that satisfy the FSC’s preferred standard.

The problem?  As confirmed by the new study, an FSC certification monopoly would threaten domestic industry, cost American jobs and raise prices for consumers.  Entitled The Monopolization of Forest Certification:  Do Disparate Standards Increase Consumer Costs and Undermine Sustainability?, the study vividly and alarmingly summarizes its findings:

• The FSC certification seems to be significantly more costly than other standards, thereby raising producer costs and consumer prices in the range of 15% to 20%, as well as upsetting the balance between sustainability and economic viability;
• The FSC standard in the US appears to be stricter, and therefore more costly, than standards applied overseas, thereby disadvantaging US producers and raising retail prices for American consumers; and
• If a FSC standard becomes a regulatory requirement for US forests (through edict or non-market pressures from outside groups), consumer welfare losses would occur in a number of markets, including an estimated loss of $10 billion per year for wood products and $24 billion per year for paper products markets.”

Rather than subject ourselves to a foreign monopoly with such destructive consequences, the preferable alternative is to continue competition between certification programs – which will spur economic and consumer benefits.

This new study substantiates that and comes at an opportune time as the U.S. Green Building Council (USGBC) has just opened up their discriminatory LEED process for public comment.