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Study analyzes Forest Service contribution to local economy


By Michael Howell

The U.S. Forest Service has released a report examining the contribution of the Bitterroot National Forest to the valley’s economy. The author of the report, Krista Gebert, Regional Economist for the USFS Northern Region, says the study results indicate that the Bitterroot National Forest is a good contributor to the local economy. The major portion of that contribution, according to Gebert, is due simply to the number of people employed by the national forest and the wages they spend locally as well as ongoing operational expenses. Of course, a portion of the contribution also comes from employment generated in the private sector by the agency’s timber management program.

The report begins by pointing to the national backdrop within which the local economy operates. First off the federal government at the national level is operating at a deficit. While total revenues are running at about $2.3 trillion, federal spending has ballooned to about $3.6 trillion.

“This has put every federal agency under extreme scrutiny in terms of their budgets,” said Gebert, “and the Forest Service is no exception.”

Two statistics that have a direct relation to local forest timber related revenues and operations are the nationwide statistics on new housing starts and the unemployment rate. New housing starts plummeted nationally in 2007, dropping significantly below any year since 1969. One result of this decline in housing starts is a corresponding drop in demand for timber, resulting in a drop in value for logs. Subsequently the revenue for logs off the national forest may drop even if the amount of timber being harvested goes up. Harvest on the Bitterroot National Forest did reach 9.6 million board feet (mbf) in 2011, up from the 8.7 mbf annually the previous two years. Timber production is expected to rise even further in 2012 to a projected 14.5 mbf.

National unemployment rates show an inverse curve compared to housing starts. The “natural rate” nationally is estimated at from 4 to 6 per cent, which was maintained from 2001 to 2008, but these numbers shot from about 4.5% in 2007 to 10% by the end of 2009. It has shown a slight decline since then but never dipping below about 8.5% where it currently stands. Ravalli County’s unemployment rate was 8.8 per cent in November 2011.

The drop in housing starts leads to a drop in demand for timber and results in declining jobs. The number of timber industry jobs as a percentage of total employment dropped from about 5.5% in 1998 to just over 2% in 2009.

In Montana in 2004 there were 9,875 workers employed in the timber industry, generating $412 million in worker earnings. There were 215 active timber related facilities. The Montana log home sector was the largest among the western states, generating $82 million in sales. In 2009, the number of workers had dwindled to 7,050 and worker earnings had dropped to $276 million. Active facilities dropped from 215 in 2004 to 126 in 2009. Log home industry sales fell by three quarters in that period to $20 million.

The average annual wages in timber sectors in 2010 in Missoula and Ravalli Counties combined was $34,866 in the forest and logging sector and $36,658 in the wood products manufacturing sector. Forest and logging jobs amounted to 3% and woods product manufacturing 9%, respectively, of the total employment in the combined counties.

Between 2004 and 2009 Ravalli County lost three of its five lumber facilities. The number of log home facilities dropped from 20 to 9. Log furniture facilities dropped from 8 to 3.

According to Gebert, not mentioned in the report, is how job loss on the forest is compounded by the modern machinery being used that requires less people on the ground.

“However, there is pent up demand and when the economy improves Montana is one of the dwindling number of western states with a functional, integrated forest products industry,” states the report.

There are other economic benefits related to the national forest in addition to timber harvesting. There is grazing. Currently, about 1,300 cows with calves graze on 20 different range allotments scattered over all four ranger districts.

There also is the revenue brought into the community through recreation, tourism and travel. According to the report, travel and tourism related businesses such as passenger transportation, retail trade, arts, entertainment and recreation, as well as accommodations and food, represent a combined 15.5% of total private employment in Ravalli County. Unlike the timber related industries, the number of private sector jobs in these industries has remained fairly stable from 1998 to 2009.

Average annual wages in the combined Missoula and Ravalli County area is $16,103 in retail trade, $34,139 in passenger transportation, $16,348 in arts and entertainment businesses and $13,633 in accommodation and food services. These constitute 2.7%, .1%, 2.6% and 10.1% of the total jobs in the area.

There is also the revenue going into the community that is related simply to having a large government agency located there. There are employee salaries, a large portion of which is spent in the community and the non-salary expenses of the agency for supplies and services which are purchased in the community.

Federal employees in the joint county area represent 3% of the total jobs in the area. The total of all government jobs, including military, state and local, is around 11% of the total jobs in the area.  Gebert notes that the average pay for federal employees in the area is higher than the average pay for jobs in the tourism and recreation industry and higher than for state and local government employees. Although it is the lowest number of jobs compared to state and local government it pays out the highest total wages, about $58,577 average per job in 2010 in the combined county area compared to $37,860 in state wages and $36,035 in local wages.

The Forest Service also contributes a large amount of money annually to the county, between $2.6 to $3 million annually over the last three years in revenue sharing, land payments and other payments under special acts.

Under the Recovery Act, for instance, the Bitterroot National Forest has over the past year added new fire rings, picnic tables, 14 campsites, and parking areas, doubling the size of the Three Frogs Campground, refurbished the Wood’s Cabin, installed a new boat ramp and improved the Three Sisters Group site at Lake Como. It has updated the older forest buildings and facilities at the East Fork Guard Station as well as adding new interpretive and trailhead signs, conducted the Middle East Fork Hazardous Fuel Reduction and the Swift Creek Thinning projects, improved miles of roads and reconstructed three bridges at Indian Creek, Sheepshead Creek and Swift Creek, spending nearly $10 million forest wide.

“The Forest Service contribution to the economy can’t make or break a community,” said Gebert, “but it is a very important contributor.”

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