This post is the second in a series related to the Q4 2021 Forisk Research Quarterly (FRQ), which includes forest industry analysis, timber price forecasts, and featured research on timber supplies in the Pacific Northwest.

When investing in timber assets, we either invest in established forests with mature wood markets, or we invest in areas that require development of the forests and/or wood markets. And when disaster strikes – whether a fire or hurricane or recession – we must evaluate potential disruptions relative to our current assets, market and strategy, or those specific assets and markets under consideration for future investment. The 2020 wildfire season was one of the worst in recent history in the Pacific Northwest. Wildfires in Oregon and Washington burned over 1.9 million acres in 2020, a 220% increase over the ten-year average. In Oregon, impacts to privately held timberland were particularly severe, representing 30% of the 1.3 million acres burned in the state, according to the Oregon Department of Forestry.

When natural disasters impact timber supplies and wood markets, such as the wildfires plaguing the U.S. Pacific Northwest, we go through a process of asking simple questions rooted in economic fundamentals[1]:

• Big or small? In other words, how impactful, whether positive or negative, would we expect this disruption or change to be on forest supplies or wood demand?
• Long or short? What is the likely duration, whether positive or negative, of this disruption or change on supplies or demand (in the market or industry)?

 

Forisk updated projections of private sawtimber inventories in the Q4 2021 Forisk Research Quarterly publication for coastal Washington and coastal Oregon. Using data from the U.S. Forest Service, Oregon Forest Resources Institute, and Forisk’s Western Silviculture Survey, we incorporated impacts of the 2020 wildfire season on timber inventories in Oregon.

The impact of the 2020 wildfire season in Oregon is long-term, but small at a state-level. The fires decreased the private sawtimber inventory in Oregon by 575 million board feet in 2021, or by less than 1%. The fires reduce timber inventories for years to come and will result in long-term impacts. By 2035, we estimate sawtimber inventories will be 2.2 BBFT lower due to the fires. Although at a state and regional level the fires have minimal impacts on timber inventories, they can have large impacts at the local level, or at the tract level, and they could have larger impacts in future years if wildfire seasons continue to be severe.

To learn more about the Forisk Research Quarterly (FRQ), click here or call Forisk at 770.725.8447.

 

[1] Baker, S. and B. Mendell, “Wood Supply Chain Impacts from the Coronavirus Pandemic: Regional Analysis and a Case Study.” Forisk Research Quarterly Q4 2020.