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.

Understandably, “forest certification” remains a rather obscure issue to most Americans.  Its regulation, however, significantly impacts the price consumers pay for wood products, not to mention the struggling domestic timber industry.

So what is “forest certification?”  It simply refers to formal recognition from organizations like the Sustainable Forestry Initiative (SFI), the American Tree Farming System (ATFS) or the Forestry Stewardship Council (FSC) that a particular business responsibly manages its property in a way that promotes sustainability.  Those three certification groups set different benchmarks, some more achievable for various landowners than others.  A free and open certification market that allows businesses to choose the system that best fits their profile, and allows consumers to choose, has resulted in a larger amount of “green” products in consumer and building markets.  Additionally, the number of acres of certified land grows by millions of acres each year.

A vocal group of environmental activists, however, only endorses FSC certification and seeks to make it a monopoly while demonizing the competing forest certification systems.  Those activists successfully bullied Fortune 500 companies into accepting the exclusive use of FSC-certified products, and many government and rating agencies only recognize and award green “credits” to forest products recognized by FSC.  As a result, the market becomes distorted, with real costs for producers of wood and the environment, and fewer choices for consumers.  And in an unfortunate turn of events, recent government overreach prevents a majority of American businesses who took the time and invested their resources to achieve certification from entering green markets.  The U.S. Green Building Council’s (USGBC) LEED rating system only recognizes FSC-certified wood as sustainable, which means SFI or ATFS timber cannot enter LEED projects.  Even though the USGBC is a nonprofit group, many government agencies now accept its word as gospel, and make its standards binding for receiving contracts.

That weakens the incentives for landowners to certify their land, because if they cannot market their goods in LEED markets, why bother to absorb the real costs (financial, time, compliance) associated with certification?  If SFI and ATFS goods are blocked from green markets, and the cost of FSC-certification is too steep, many businesses will opt out altogether.

The better policy is to encourage sustainable development of our nation’s forests by recognizing all credible forest certification program options.

Whether having arrived at these policies out of ignorance or simply succumbing to outside pressure, policymakers should accordingly reverse the policy that amounts to a de facto FSC monopoly in certain markets.  A recent study by the American Consumer Institute estimated the costs of carrying that policy to its endpoint.  Namely, if FSC-certification was made a binding requirement for American forests, consumer welfare losses would occur in a number of markets, totaling $10 billion for wood products and $24 billion for paper products markets each year.

It is therefore incumbent that the government stop picking certification monopoly winners and losers in this market.  The timber industry, small businesses and consumers deserve much better.

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.