Managing Red Alder in the Douglas-Fir Region: Some Possibilities

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1 Reprinted from the JOURNAL OF FORESTRY Vol. 81, No. 12, December 1983 Managing Red Alder in the Doglas-Fir Region: Some Possibilities Robert F. Tarrant, Bernard T. Bormann, DeanS. DeBell, and William A. Atkinson ABSTRACT - We compare the present net 1\'orth (PNW) of each of six theoretical systems for managing red alder (Alns rbra) ll'ith PNW of fertilied and nfertili:ed Doglas-jir (Psedotsga meniesii) systems in continos mana&ement. Under the comlitions specified for this analysis, the most profitable system ( PNW = $623 per acre) is Doglas-fir commercially thinned and fertilied tice in a 45-year rotation. In the next most profitable system (PNW = $578 per acre), red alder is gron to salo& sie in 28 years and folloed by Doglas1i'r, thinned tice bt not fertilied, in a 45-year rotation. The remaining six systems range doll'nard from PNW = $527 (nfertilied Doglas-fir) to PNW = -$251 (red alder in continos 13-vear rotation). The conditions nder hich malf?ed red alder systems are eqally profitable ith Doglas-fir inclde increases in either real interest rate, alder stmpage price, or the cost of nitrogen fertilier, or a decrease in the time reqired to gro\1' red alder to minimm salog sie. Doglas-fir has been the mainstay of the forest indstry in the coastal Pacific Northest for more than a centry. Old-groth logs have provided a sperior ra material, especially for samills and plyood plants. Recent stdies sggest, hoever, that the availability of softood satimber in the Doglas-fir sbregion of the Pacific Northest ill decline over the next several decades (Adams and Haynes 198). Conseqently, both softood and hardood species previosly considered less serviceable than Doglas-fir are being reexamined as possible sorces of lmber, veneer stock, and chips for plp or particle board (Resch 198). Red alder is the major hardood tree in the Doglasfir region. Here, abot 3 million acres no spport an estimated 6.8 billion cbic feet of nmanaged red alder. This resorce provides ra material for a relatively small indstry hich provides frnitre and cabinet stock, cargo pallets, veneer core stock, and chips. The Northest Hardood Association reports that in member mills the manfactre of red alder lmber increased sbstantially from , and has remained stable thereafter despite the distressed economy (personal commnication ith David A. Seiter, secretarymanager, Northest Hardood Association, November 1982). Hoever, red alder is still far less important economically than Doglas-fir. In general, markets are not ell established, nor has there been significant prodct development. Frther, December 19 3/JOURNAL OF forestry/7 7

nmanaged alder stands (fig. 1) freqently contain crooked boles, reslting in nsable ood. The volme of merchantable timber per stand is loer, and logging costs are higher, than for conifers.

2 nmanaged alder stands (fig. 1) freqently contain crooked boles, reslting in nsable ood. The volme of merchantable timber per stand is loer, and logging costs are higher, than for conifers. As a conseqence, managing for alder is often assmed to be less profitable than for Doglas-fir or estern hemlock (Tsga heterophylla). Why, then, shold foresters consider managing red alder? We believe that an increasing amont of information from research, a predicted decline in softood timber availability and qality, and both short- and long-term economic and biological considerations indicate a need for ne approaches to prodcing ood and fiber in some Pacific Northest forests. In this article, e compare several proposed management systems. First, e briefly revie and docment pertinent attribtes of red alder. Next, e describe the assmptions e made for prposes of analysis. We then examine ho changes in yield, stmpage price, and interest rates might affect the profitability of red alder systems compared to Doglas-fir. Finally, e smmarie or conclsions abot the profitability of thes six theoretical systems for managing red alder either alone or in combination ith Doglas-fir vs. the profitability of Doglas-fir alone. Attribtes of Red Alder Characteristics of red alder hich sggest its potential vale in intensively managed forests inclde rapid jvenile groth, a capability to improve soil fertility and strctre, a presmed capacity for rapid genetic improvement, and sitability for a ide range of prodcts. Rapid early groth of nmanaged red alder is ell docmented. Seedlings may gro 3 feet or more in their first year; they may reach 3 feet by age 5 years and more than 7 feet by age 2. On ell-stocked sites of high qality, mean annal increments may approach 15 ft 3 per acre for 2- to 4-year rotations. Frthermore, projections based on early performance of research plantings, reslts of thinning trials, and gains obtained by spacing other species sggest that groth rates and sable yields of managed stands ill be mch higher (DeBell et al. 1978). For example, trees in a 12-year-old red alder plantation on the Oregon coast average 5. 4 inches in diameter hereas trees in nmanaged natral stands do not normally reach this sie ntil age 2. Similarly, 26-year-old trees in a red alder stand in estern Washington, spaced at age 7 to 16 feet by 16 feet, no average 11.2 inches in diameter. Normal yield tables indicate that trees in natral stands do not attain this sie ntil age 36. Over most of the Doglas-fir region, readily available nitrogen is not sfficient for optimm tree groth. Urea has been applied over more than I million acres to alleviate this nitrogen deficiency, hich ndobtedly ill become more serios if Doglas-fir is cropped continosly. An alternative remedy is throgh biological nitrogen fixation. In symbiosis ith root-nodle bacteria, red alder "fixes" atmospheric nitrogen on most sites in amonts from 3 to more than 3 ponds per acre annally. This added nitrogen can increase the groth of Doglas-fir (Tarrant 1961, Miller and Mrray 1978). Frther. rapidly decomposing leaves, branches, and dead alder roots release plant ntrients and provide organic matter to improve soil strctre and porosity. In addition. red alder may be the Northest tree most Figre I: Unmanaged red alder stands stems and lo volmes of merchantable (USDA Forest Service photo.) acre. ideally sited for rapid genetic gain per nit of time and effort (Stettler 1978). Biological traits hich spport sch optimism inclde early sexal matrity, annal seed crops, and rapid jvenile groth. Improvement of groth rate, capacity to fix nitrogen. bole form, and cron shape ill all be significant aspects of programs for genetic improvement of red alder. The ood is sed in a variety of ays (Resch 198). Primary prodcts inclde lmber, veneer. plp chips, fel, and bark. The lmber is easily converted into frnitre, cabinets, case goods, pallets, novelties, and other minor prodcts. Chips can be plped by several processes: kraft. acid slfite, Permochem, and kraft green liqor. Obviosly, these biological characteristics sggest that red alder might be valable in intensively managed forests. The final test. hoever, mst be economic: nder management might it compete ith Doglas-fir to provide an eqally sefl ra material? If so, nder hat circmstances? Procedres and Methods of Analysis Management systems Eight management systems are considered in this analysis. To are for continos cltre of Doglas-fir, three for continos cltre of red alder, and three for alternately cropping red alder and Doglas-fir. These systems are modifications of those proposed by DeBell et a!. (1978) and Atkinson et a!. (1979). Fir 45 is a standard indstrial prescription for Doglas-fir: plant 4 seedlings per acre, thin commer- 788/JOURNAL OF FORESTRY/December 1983

3 cially at ages 29 and 35 years, and harvest by clearctting at age 45 years. Fir 45 +N is Fir 45 pls 2 ponds per acre of nitrogen as synthetic fertilier applied each time the stand is commercially thinned. These to options are baselines to hich other options may be compared. In Alder 13, red alder seedlings old be planted at 9- by 9-foot spacing (54 per acre), and the stand old be clearct for plpood at age 13 years. Alder 2 old begin ith seedlings spaced at 12 by 12 feet (3 per acre) and old be clearct for fel or plpood at age 2 years. In Alder 28, seedlings old be planted at 15- by 15-foot spacings ithot later thinning. Salogs old be harvested at age 28 years. Systems Alder 13 :Fir 45, Alder 2 :Fir 45, and Alder 28:Fir 45 each combine Fir 45 ith the specified red alder system as alternate cropping systems. Economic assessment Profitabilities of the eight management systems are compared in a present net orth analysis (disconted retrns mins disconted costs) ith a perpetal time horion. All costs and retrns are based on best estimates of yields, costs, and stmpage prices for managed stands. Expenditres and retrns are disconted at 7-percent real annal interest, a rate commonly sed in the forest indstry. Stmpage prices are assmed to increase I percent annally over the first fll rotation. Internal rates of retrn are also calclated for each management system. This is the rate at hich an investment gros toard the evental retrn, and may be sed as an alternative to present net orth hen ranking economic effectivenes. All analyses are made on a pre-tax basis. Sensitivity analysis is sed to evalate the inflence of several factors on present net orth of the to continos Doglas-fir systems and the to most profitable systems containing alder. We also determined the effect a higher cost of nitrogen fertilier old have on the profitability of fertilied Doglas-fir compared to other systems. Yields Yields are based on site indices of 165 feet (I -year basis) for Doglas-fir and 1 feet (5-year basis) for red alder (table 1). Region-ide fertilier trials have indicated that abot to-thirds of sch sites respond to nitrogen fertilier (Miller and Fight 1979). Moreover, e believe sites of this qality are capable of groing red alder to desirable sies ithin the time frames proposed. Doglas-fir yields are generated from a managed stand simlator (DFIT) (Brce et a!. 1977). The DFIT model is also applied to Fir 45 +N, and estimates,a yield increase of 6.3 percent above nfertilied Doglasfir (Fir 45). For the three management systems that inclde both red alder and Doglas-fir, e assme that Doglas-fir yields folloing the 13-year, 2-year, and 28-year alder rotations average 5, 1, and 12.5 percent greater, respectively, than that of continos, nfertilied Doglas-fir. In the sensitivity analysis, the increase in yield of Doglas-fir folloing the 28-year alder rotation varies from 5 to 2 percent. We believe the pper limit of this range is reasonable; it represents a prodctivity increase of abot one site class (165 feet to 195 feet). In a mixed planting of Doglas-fir and red alder on land of mch loer qality, height groth and site index of Table 1. Average tree sie and anticipated stand yield. Management system (species and rotation length in years) Years Ft. ln. Ft.3 Ft.3 Fir 45 29b ,319 35c ,526 Fir 45 +N 29b ,319 35c , ,58 Alder " 2,246" Alder ,435 Alder ,91 Alder 13:Fir 45d ,246 29b ,47 35c , ,813 Alder 2:Fir 45d ,435 29b ,497 35c , ,13 Alder 28:Fir 45d ,91 a 29b ,539 35c , ,245 All volmes are expressed as CV4 (cbic volme to a 4-inch top) ith the exception of Alder 13, for hich volme is expressed as CVTS (cbic volme total stem). b First commercial thinning (d.b.h. and volmes refer to ct trees only). c Second commercial thinning (d.b.h. and volmes refer to ct trees only). d Increases in groth rate of Doglas-fir folloing alder rotation of 13, 2, and 28 years are assmed to be 5, 1, and 12.5 percent, respectively. Table 2. Cost assmptions per acre for economic analysis (1981 dollars). (Data on file at Forest Research Laboratory, Oregon State University, Corvallis, Oregon ) Item Cost Dollars Initial site preparation for all systems 12 Site preparation for Doglas-fir folloing alder 6 (system Alder 13:Fir 45) Site preparation for Doglas-fir folloing alder 8 (systems Alder 2:Fir 45 or Alder 28:Fir 45) Doglas-fir planting costs (4 trees per acre) 96 Red alder planting costs (54 trees per acre) 18 Red alder planting costs (3 trees per acre) 6 Red alder planting costs ( 194 trees per acre) 39 Fertiliation cost (2 lbs. nitrogen per acre) 55 Annal costs of management 3 Doglas-fir trees ere improved by the eqivalent of one site class over an adjacent pre Doglas-fir plantation (Miller and Mrray 1978). Estimated yields for alder crops in Alder 13 and Alder 13:-Fr 45 are those of DeBell et al. (1978); yield estimates for alder in other systems, developed by the same methods, are compatible ith groth data from precommercially thinned natral stands and yong plantations. Costs and stmpage prices Cost assmptions are based on a srvey of 1981 costs for forest management in the Pacific Northest (table 2). In most analyses, the cost of nitrogen fertilier is assmed to increase at the same rate as inflation. Bt becase there is some concern that it may rise at a higher rate, fertilier cost as varied in one analysis. December 1983/ JOURNAL OF FORESTRY 1789

4 .... Doglas-fir stmpage prices sed in this analysis are an approximate average of information gathered from a ide variety of pblic and indstrial sorces (jig. 2A). Alder stmpage prices are more difficlt to estimate becase crrent prices reflect a limited market, poor tree form in nmanaged stands, increased logging costs de to difficlt terrain and lo volme of sable ood in ild stands, as ell as crrent timber sale and bidding practices. Moreover, alder stmpage prices have increased over the past several years partly as a reslt of expanding markets. The potential net retrn on stmpage from managed alder in an expanded market is assmed to increase over crrent stmpage prices (jig. 28) as follos: timber in stands averaging 6 inches in d. b. h. is assmed to be at $1 per cnit, hereas nmanaged alder of this sie has negligible or negative vale. Stmpage price for managed alder averaging 9 inches in d.b.h. is assmed to be abot $2 per cnit; in nmanaged stands, timber of this sie has negative vale except near metropolitan centers, here prices of $2--$25 per cnit have been obtained for fireood. Stmpage prices in alder stands managed for salogs are assmed to be $6 per cnit, abot 25 percent higher than crrent prices for nmanaged alder and abot 2 percent loer than the prices paid for Doglas-fir trees of a similar sie hich ere removed in commercial thinnings. These assmed prices for managed alder also vary in the sensitivity analysis at 6, 8, and 1 percent of the price of Doglas-fir logs of similar volme. Profitability of the Systems Under the conditions assmed in this forecast, the present net orth of each of the eight theoretical management systems ranges donard from $623 per acre (Fir 45 + N) to a negative retrn of - $251 per acre (Alder 13) (table 3). Profitability ranking is Fir 45 +N > Alder 28:Fir 45 > Fir 45 > Alder 28 >Alder 2:Fir 45 >Alder 13:Fir 45 >Alder 2 >Alder 13. All for systems aimed at prodcing salogs have sbstantially greater present net orth than the for hich prodce plpood or felood. These latter systems are not profit-competitive ith those designed to gro salogs. Present net orth ith a fixed interest rate is consid!:.(!: 6 8..(f a. (! <t a. :E I- en.. en <t _J (! 2 4 a. (! 2 :E 1n _J <t -2 A Jllllllll AVERAGE TREE VOLUME I. I AVERAGE TREE VOLUME ALDER 13 ALDER 2 ALDER 28 SYSTEM Figre 2A. Stmpage price of Doglas-fir. 2B. Crrent stmpage price of red alder. Tree volmes are in cbic feet. Table 3. Mean annal Increment (MAl), present net orth (PNW), and internal rate of retrn (IRR), for eight management systems inclding Doglas-fir, red alder, or both. Vales are per acre. Management system MAl PNW IRA Ft.a Dollars Percent Continos rotations Fir Fir 45 +N ered an appropriate criterion of investment performance Alder < for indstrial forest oners (Gansner and Larsen 1969). Alder Internal rate of retrn is a method of assessing economic Alder effectiveness hen a minimm acceptable rate of Alternating rotations Alder 13:Fir retrn is soght. Alder 2:Fir An analysis of the internal rate alters the profitability ranking of the present net orth analysis. Here, Alder 28:Fir 45 prodced the highest percentage rate of investment groth, folloed by Alder 28, Fir 45 +N, then Fir 45 (table 3). We performed sensitivity analysis pon the to most profitable systems that inclde red alder, Alder 28:Fir 45 and Alder 28 (table 4). Comparisons ere made ith all variables held constant at best-estimate levels. Alder 2B:Fir THE AUTHORs--Robert F. Tarrant is professor, Department of Forest Science. Oregon State University, Corvallis Bernard T. Bormann is research plant physiologist. USDA Forest Service, Jnea. Alaska. Dean S. DeBell is research project leader. USDA Forest Service. Olympia, Washington. William A. Atkinson is tbrestry research manager, Cron Zellerbach Corporation, Wilsonville, Oregon. Varying the interest rate alters the profitability ranking of the systems. Lo interest rates generally favor those ith Doglas-fir only, hile high rates favor alternate cropping and continos alder prodction. Profitability of the alder systems increases sharply, relative to Doglas-fir, hen alder stmpage price is increased ifigs. 3A, B; 4A. B), and hen alder rotation length is decreased (figs. 3C, D; 4C, D). The cost of N fertilier old also affect profitability, especially if the price of natral gas shold rise. Large increases in fertilier cost cold redce the profitability of Fir 45 +N (fig. 5). Ths, hen all other variables are held at best-estimate levels and N fertilier prices are raised at an annal rate of 5. 8 percent above inflation, /JOURNAL OF FORESTRY/December 1983

5 Table 4. Break-even vales for to alder salog sys 7 tems vs. to Doglas-fir salog systems. <{ ' -< FIR 45 + N :X I- FIR 45 Consideration P e rc e nt I- ALDER 28 Real interest rate Minimm acceptable I- rate of retrn Vl Fertilier price 4 increase above inflation 8.6 a.. 1 Alder stmpage price ALDER 2: FIR 45 as percent of price assmed for same - sied Doglas - fir Y e ars Alder salog rotation length c A : --: c ---5./ D ===9 ':/ ALDER STUMPAGE PRICE ( $/CUNIT) ALDER ROTATION LENGTH (YEARS I Figre 3, A-D. Sensitivitv analvsis-a!der 28 mins Fir 45 and Fir 45+N. at interes t rates of5. 7, and 9 percent. ALDER STUNPAG PRICE ALDER ROTATION LENGTH INCREASE IN OOUGLAS f\r YIELO 1$/CUNITI (YEARS) foclow!ng ALDER tpercentl Figre 4. Sensitivity analysis-alder 28:Fir 45 mins Fir 45 and Fir 45 + N, at interest rates of 5. 7, and 9 percent. Alder 28:Fir 45 replaces Fir 45 +N as the most profitable system. Fertiliation is not profitable if N costs rise at an annal rate of 7.1 percent above inflation. The idea of sing biological alternatives to synthetic fertiliers in forest management is not ne, nor is concern over the high consmption of energy in fertilier se. Smith and Johnson (1977) sggested that an important objective for silvicltral research shold be learning ho to transform more nitrogen into ammonim ions that at;e readily available to tree roots. ANNUAL INCREASE IN N FERTILIZER COST ABOVE INFLATION (%) Figre 5. Effect of increased N-fertilier cost on present net orth. Blankenhorn et al. (1978) conclded that the only ays to save energy in silvicltre are by redcing the amont of fertilier sed or by sing it more efficiently. Brks (1979) said similarly that improvements to, or sbstittes for, chemical fertilier offer the qickest ay to energy savings in forest management. The increase in yield of Doglas-fir anticipated after a rotation of alder inflences relative profitability less than does either the stmpage price or the rotation length, especially at interest rates of 7 and 9 percent (fig. 4). Ths, the qestion can be asked: is the fertiliing effect of alder a relatively minor inflence on profitability? The case might be arged from the reslts of present-net-orth evalations at interest rates of 7 percent or more. We believe, hoever, that these reslts illstrate the inadeqacy of present-net-orth analysis as a means of dealing ith long-term biological considerations. Alder management has the potential to contribte importantly to the biological ell-being of Northest forests. Moreover, only small changes in costs, prices, and yields mst occr to make crop rotation of red alder and Doglas-fir an economically viable alternative to continos cropping of Doglas-fir. What is needed to develop this potential? First, the practicalities of groing red alder nder management need to be tested. Wold cltre of alder in niformly spaced plantations (fig. 6, p. 792) improve tree form? What abot log qality in the rotations aimed at solid ood prodction? Will prning be needed? Might establishing alder stands on gentle terrain and developing xpertise in harvesting small stems redce logging costs? Research programs in the Pacific Northest are addressing these qestions. We consider this effort to be ell jstified in vie of the role that alder cold play in a matre forest economy. Literatre Cited ADAMS, D. M., and R. W. HAYNES The 198 softood timber assessment market model; strctre, projections, and policy simlation. For. Sci. Monogr. 22, 64 p. ATKINSON, W. A.. B. T. BORMANN, and D. S. DEBELL Crop rotation of Doglas-fir and red alder: a preliminary biological and economic assessment. Bot. Ga. 14(sppl. ):S 12-S I 7. BLANKENHORN, P. R., T. W. BOWERSOX, and W. K. MURPHEY Recoverable energy from the forests. TAPPI 61(4):57-6. (Contined on page 792) December 1983/JOURNAL OF FORESTRY/791

$Fixre 6. A red alder plantation at axe 1 years. Trees hal'e straixht boles and a\'eraxe 4 inches in diameter and 35 to 4 feet in heixht. (USDA Forest Sen ice photo.) BRUCE, D., D. J. DEMARS, and D. L.$

6 Fixre 6. A red alder plantation at axe 1 years. Trees hal'e straixht boles and a\'eraxe 4 inches in diameter and 35 to 4 feet in heixht. (USDA Forest Sen ice photo.) BRUCE, D., D. J. DEMARS, and D. L. REUKEMA Doglas-fir managed yield simlator-dfit ser's gide. USDA For. Serv. Gen. Tech. Rep. PNW p. BURKS, J. E. Ill Energy reqirements for silvicltre. P in North America's Forests: Gateay to Opportnity. Proc. Soc. Am. For. Ann. Conv DEBELL, D. S.. R. F. STRAND, and D. L. REUKEMA Short-rotation prodction of red alder: some options for ftre forest management. P in Utiliation and Management of Red Alder. USDA For. Serv. Gen. Tech. Rep. PNW-7. GANSNER, D. A.. and D. N. LARSEN Pitfalls of sing internal rate of retrn to rank investments in lilrestrv.. USDA f'or. Serv. Res. Note NE p. MILLER, R. E.. and R. D. FIGHT Fertiliing Doglas-fir forests. USDA For. Serv. Gen. Tech. Rep. PNW-83, 29 p. MILLER. R. E., and M. D. MURRAY The effects of red alder on groth of Doglas-fir. P in Utiliation and Management of Red Alder. USDA f'or. Serv. Gen. Tech. Rep. PNW-7. RESCH, H Utiliation of red alder in the Pacific Northest. For. Prod. J. 3(4): SMITH, D. M.. and E. W. JoHNSON Silvicltre: highly energyefficient. J. For. 75: STETTLER, R. f' Biological aspects of red alder pertinent to potential breeding programs. P in Utiliation and Management of Red Alder. USDA For. Serv. Gen. Tech. Rep. PNW-7. TARRANT, R. F Stand development and soil fertility in a Doglas-firred alder plantation. For Sci. 7:

nson ge Spe ornia, Dan D. Marcum Farm Advisor, Shasta County Roger B. Benton County Director, Siskiyou County INTRODUCTION

nson ge Spe ornia, Dan D. Marcum Farm Advisor, Shasta County Roger B. Benton County Director, Siskiyou County INTRODUCTION IRRIGATING ALFALFA FOR MAXIMUM PROFIT Irrigati Univer laine R. and Dra ty of Ca nson ge Spe ornia, cialist Davis Dan D. Marcm Farm Advisor, Shasta Conty Roger B. Benton Conty Director, Siskiyo Conty INTRODUCTION