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.

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.

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.

We at CFIF have filed an official public comment with the United States Green Building Council (USGBC), opposing imposition of an economically-destructive and scientifically-dubious monopolistic LEED certification standard:

On behalf of 300,000 supporters and activists throughout the nation, the Center for Individual Freedom (CFIF) respectfully but firmly exhorts the United States Green Building Council (USGBC) against monopolistic LEED certification standards, including many of its proposed LEED v4 standards, that rely on biased and scientifically-dubious policies, raise prices, reduce consumer choice, cost American jobs and harm domestic industry in favor of overseas competitors.  American consumers and businesses are entitled to make informed choices, and to act upon them in purchasing decisions.  Free and open certification processes that allow businesses to choose the system that best fits their profile, and allows consumers choice in the marketplace, will increase ‘green’ products available in consumer and building markets.”

As we point out, environmental ideologues seek to impose a Forest Stewardship Council (FSC) certification monopoly.  As part of that campaign, they’ve pressured Fortune 500 companies, as well as federal, state and municipal governments to satisfy their agenda.   As a consequence, the market has become increasingly distorted, with real costs for domestic producers of wood products and fewer affordable choices for consumers,  but no measurable environmental benefit.  That policy also penalizes businesses that invested in alternative certification systems; favors foreign competitors in places like Russia, China and Brazil; discourages use of common building materials and products regularly found in construction projects like PVC piping, foam insulation, heat-reflective roofing and LED lighting; and jeopardizes American jobs, which explains why the International Association of Machinists and other unions whose rank-and-file members’ jobs are at risk favor recognition of other certifications than solely FSC to ensure the viability of tree farms in rural communities.

Fortunately, many in Congress agree with CFIF.  A bipartisan group of 74 legislators wrote the GSA and objected to the proposed changes.  Another letter from 56 members of the House to GSA Administrator Dan Tangherlini objected to the changes, and stated the agency should reconsider the USGBC’s LEED rating system should the proposed changes occur.  In addition, at a July 19 House Government and Oversight Committee hearing, Congressional leaders raised concerns over the restrictive and arbitrary LEED process and the high costs the proposed changes will impose on American manufacturing and other sectors vital to U.S. economic recovery.

Additionally, a new USA Today special report found little link between “green buildings” and learning or energy use:

The green-school boom, a powerful and often costly phenomenon, is being driven largely by the Green Building Council, whose promise of student improvement and long-term cost savings has support from environmental and health advocates, teachers unions, school designers and the Department of Education. …  But a USA TODAY review of school-test records, LEED-certification documents and research reports shows little correlation between “green schools” and student performance or energy use.”

Although the objective of constructing more energy-efficient buildings may be a laudable goal, the closed process by which LEED standards are determined exacerbates the potential adverse economic effects listed above.  Meanwhile, other, alternative green building ratings systems place greater reliance on data, science and a consensus from various stakeholders.  Therefore, the better policy is to encourage sustainable development by recognizing all credible certification program options.

Earlier this year, we examined how land management regulations for our forests significantly alter economic activity in timber markets.  Since that time, more recent reports and studies underscore the importance of maintaining a level regulatory playing field, and how policies based on faulty assumptions can have economic and environmental consequences.

Specifically, forest certification programs like the American Tree Farm System (ATFS), Forest Stewardship Council (FSC) and Sustainable Forestry Initiative (SFI) recognize when a landowner or business complies with benchmarks that signify responsible forest management.  Tree farmers and businesses seek “certification” from these groups to preserve their property and sell “green” goods in the market.  Numerous studies and testimony from land managers and conservationists support all three systems as beneficial to the environment.  However, environmental activists continue to pressure private companies and government officials nationwide to favor FSC over the other two programs, which themselves certify tens of millions more acres of forests in America than FSC.

Specifically, the U.S. Green Building Council’s (USGBC) LEED system only defines FSC-certified wood as sustainable.  As a result, SFI or ATFS timber cannot enter LEED projects, of which there are more than 13,000 nationwide.  The USGBC is nominally a nonprofit organization, but local, state and federal agencies accept its guidelines without question, and mandate them in building projects.

The National Legal Policy Center underscored the wrongheadedness of that framework in a recent white paper entitled “The Ethics of Forest Certification: When Unintended Consequences Result.” The paper explains the anti-competitive nature of the LEED system, and how it forces taxpayer dollars to finance projects to benefit a private organization – FSC – over its competitors.  Additionally, the paper questions whether consumers get a “bang for their buck” when they pay price premiums in excess of 15% for FSC wood.  These questions occur due to documentation of “clear-cuts” of forests on FSC-certified land overseas, and the fact that FSC recognizes 90% of its forests in countries outside the U.S. – many of them with lower environmental standards.

The American Consumer Institute published another study, “Comparing Forest Certification Standards in the U.S.,” which highlights how the actual practices of certification programs in the U.S. do not always match public perceptions.  The study shows auditors for FSC readily acknowledging discrepancies between FSC’s implementation on the ground, and how land managers and FSC differ on common definitions for forestry terms.   This confusion leads to companies “leaving clumps of unmerchantable trees in scattered areas, usually in riparian areas, draws and inaccessible corners” on FSC property in the southern U.S.”

Given the anti-competitive nature of the current LEED rating system, the negligible environmental benefits of an FSC-only regime and the misinformation resulting from these frameworks, the time is long overdue to support a level playing field that allows all certification programs to compete equally among consumers, businesses and foresters.

A freer market would be a better market.

Last week, RealClearPolicy.com graciously ran our commentary “End the USGBC Green Certification Monopoly,” in which we asserted that adopting the proposed LEEDv4 standard in its current incarnation as the new government-approved rule is unacceptable, and called for the era of the USGBC’s taxpayer-subsidized monopoly to come to an end.

Now, a damning USA Today analysis concludes that the certification regime allows thousands of “green” builders win tax breaks, exceed local restrictions and win expedited permits with meaningless, easy and low-cost steps:

Across the United States, the Green Building Council has helped thousands of developers win tax breaks and grants, charge higher rents, exceed local building restrictions and get expedited permitting by certifying them as ‘green’ under a system that often rewards minor, low-cost steps that have little or no proven environmental benefit, a USA TODAY analysis has found.

The council has certified 13,500 commercial buildings in the U.S. as green and become one of the most influential forces in building design by helping persuade public officials and private builders to follow its rating system, known as LEED.  More than 200 states, cities and federal agencies now require LEED certification for new public buildings, even though they have done little independent and meaningful research into LEED’s effectiveness. LEED can add millions to construction costs while promising to cut utility bills and other expenses.”

Importantly, the analysis also highlights the self-interest that often underlies such LEED advocacy:

There are now LEED-certified breweries, stadiums, dormitories, bus depots, parking garages, shopping malls, libraries, fire stations, warehouses, boathouses, locker rooms and prison buildings.  LEED’s growth has been driven partly by the building council itself, a 13,000-member non-profit chiefly run by architects, builders and building suppliers. Many specialize in — and profit from — the type of design the council certifies and promotes. The council collects up to $35,000 in fees for each LEED certification.  Building council members have boosted their own LEED-related businesses by helping persuade officials to require or reward LEED certification.  LEED also helps developers market buildings to tenants and investors and collect higher rents and sales prices, University of California economist Nils Kok said.

‘A lot of the fuel for LEED, to be honest, is marketing advantage,’ said Bill Walsh, executive director of the Healthy Building Network, which promotes non-toxic building materials. ‘People are interested in how they get the (LEED) credits, not in thinking deeply about it.'”

As one illustration, the study notes, “The most popular LEED option – earned in 99.7% of the buildings – has no direct environmental benefit but generates millions of dollars for the building council by giving one point if a design team has a LEED expert.”

In other words, government-facilitated, make-work cronyism at its worst.

This report merely confirms CFIF’s point:  LEEDv4 is an unacceptable government-imposed standard, the USGBC’s monopoly must end, the core mission of LEED must be reformed and the federal government must allow greater flexibility and the use of alternative green building certification systems.

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.

In an interview with CFIF, Steve Pociask, President of the American Consumer Institute Center for Citizen Research, discusses his organization’s new study, “The Monopolization of Forest Certification” and the consequences of “green certification” monopolies on consumer welfare.

Listen to the interview here.

Join CFIF Corporate Counsel and Senior Vice President Renee Giachino today from 4:00 p.m. CDT to 6:00 p.m. CDT (that’s 5:00 p.m. to 7:00 p.m. EDT) on Northwest Florida’s 1330 AM WEBY, as she hosts her radio show, “Your Turn: Meeting Nonsense with Commonsense.”  Today’s guest lineup includes:

4:00 (CDT)/5:00 pm (EDT):  Ryan Wiggins, Field Director for American Majority Action’s Pensacola Liberty Headquarters:  Engaging Citizens in the Political Process;

4:30 (CDT)/5:30 pm (EDT):  Stephen Pociask, President, American Consumer Institute Center for Citizen Research:  Cost of Going Green and LEED;

5:00 (CDT)/6:00 pm (EDT):  Bay Buchanan, Political Strategist, Pundit and Author:  Election 2012;  and

5:30 (CDT)/6:30 pm (EDT):  Timothy Lee, CFIF:  TalktoYourPilot.com and SCOTUS Affirmative Action Case.

Listen live on the Internet here.   Call in to share your comments or ask questions of today’s guests at (850) 623-1330.

Tree farmers and small business owners have much to celebrate from a recent executive order signed by Georgia Governor Nathan Deal, which broadens the eligibility criteria for timber used in state government building projects and maintenance. 
 
The order allows a larger number of wood products from Georgia forests to be utilized in state construction and building projects, protecting jobs in the state’s timber industry and reducing costs for taxpayers by opening the market to products certified by the American Tree Farm System and the Sustainable Forestry Initiative (SFI), certification programs currently not recognized by the U.S. Green Building Council’s LEED standards.
 
By ending USGBC’s LEED monopoly on “green” building wood certification, which effectively governs materials used in the overwhelming majority of public building projects nationwide, Georgia has rightly chosen competition and an open marketplace for forest products over monopolistic control by a non-profit environmental group that increasingly seems driven more by ideology and influence rather than sound science and economic common sense.
 
Recognizing that the “LEED rating system unfairly awards its wood certification credits only to products certified to the Forest Stewardship Council (FSC)” – the preferred certification program of extreme environmental groups that notoriously ignore the economic and employment impacts of their agendas – Governor Deal’s executive order officially acknowledges that “all forest certifications will equally help promote sustainable forests” and requires that “the design, construction, operation and maintenance of any new or expanded state building shall incorporate ‘Green Building’ standards that give certification credits equally to forest products grown, manufactured, and certified under the Sustainable Forestry Initiative, the American Tree Farm System and the Forest Stewardship Council.” [emphasis added]

The order comes at a time when LEED standards are becoming more closely scrutinized by elected officials and land managers.  Governor Paul LePage of Maine issued a similar executive order at the end of last year, and a growing, bipartisan group of elected officials are insisting the USGBC stop showing preference to FSC.   Environmental activist groups favor FSC over other systems, although it is questionable whether an FSC-only approach produces net environmental benefits or costs.  Economic logic and real-world practice suggests that a discriminatory FSC-only policy does hurt in terms of increased prices for consumers and forestry jobs. 

Favoring one standard over others upsets the delicate balance that must take place between sustainability and economic viability.  Georgia and Maine understand as much and have acted accordingly.   More states and the federal government should quickly follow their lead. 

Given the fragile state of the American economy, taking steps to break the LEED/FSC-monopoly will provide relief for taxpayers and landowners nationwide, who will be able to sell their goods in a larger number of markets.