Looming job losses should concern everyone, especially those in an obscure industry like forestry, which, though not as glamorous as, say, oil field wildcatting or tornado chasing, is nevertheless essential to the health of the U.S. economy. Forestry is a crucial industry for the obvious reason that it provides employment for hundreds of thousands of Americans who find, harvest and craft the raw material for homes, offices and so many other products. Those products are used every day by billions of people around the globe.
As it happens, the forestry industry also provides a useful illustration of the problems created by monopolies, according to a new study from George Mason University's EconoSTATS program. There are currently three main forest certification standards programs recognized in the U.S., including the American Tree Farm System, the Forest Stewardship Council, and the Sustainable Forestry Initiative. These programs govern how forests are managed and harvested.
An effort is on to make FSC the dominant standard in the U.S. Big Green environmentalists are aggressively lobbying Congress to make it the sole accepted standard for U.S. forestry. That would be a mistake because, the George Mason study found, more than 31,000 jobs would be lost in Oregon. In Arkansas, the other state studied by the George Mason researchers, the losses could reach 10,000. Profitability in the Oregon forestry industry would drop by as much as 46 percent and by as much as 26 percent in Arkansas.
A big part of the problem is the complexity and vagueness of the FSC standards. "When policies are vague or open to interpretation by either the industry or the regulator/auditor, uncertainty arises," George Mason's Wayne Winegarden said in the study's forward. "Regulatory uncertainty is the enemy of business growth, whether that business is manufacturing, finance or forestry."
Another consequence of FSC's variability and vagueness is heightened potential for environmental harm. Granting monopoly status to the FSC would provide a strong incentive for U.S. companies to seek timber products from cheaper foreign suppliers in countries with lax or no forestry certification programs. "The result is greater environmental degradation from a global perspective," according to Weingarten. "Thus, the FSC program imposes large economic costs and greater global environmental degradation unintentionally creating the worst of both worlds."
"Effectively managing global forests, including U.S. forests, is a daunting task. And, the stakes are high. Poorly applied policies could incent excessive forest degradation. Alternatively, they could create problems of unemployment and declining incomes. In the worst of both worlds, poorly applied policies could simultaneously injure the environment and create significant economic harm," Weingarten warned.
Competitive markets are the best way to provide goods and services to consumers. If only one certification program - FSC - is recognized in the U.S., the resulting monopoly would not only harm the economy, but also the environment itself. A range of forestry certification program options for authorities to choose from would provide a more effective and productive balance between environmental and business concerns, leading to better regulatory practices.