The certified Maine North Woods, where money grows from trees

The certified Maine North Woods, where money grows from trees
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  This article appeared in a journal published by Elsevier. The attachedcopy is furnished to the author for internal non-commercial researchand education use, including for instruction at the authors institutionand sharing with colleagues.Other uses, including reproduction and distribution, or selling orlicensing copies, or posting to personal, institutional or third partywebsites are prohibited.In most cases authors are permitted to post their version of thearticle (e.g. in Word or Tex form) to their personal website orinstitutional repository. Authors requiring further informationregarding Elsevier’s archiving and manuscript policies areencouraged to visit:  Author's personal copy The certified Maine North Woods, where money grows from trees David Correia University of New Mexico, Department of American Studies, Ortega Hall, Albuquerque, NM 87131-0001, United States a r t i c l e i n f o  Article history: Received 2 June 2008Received in revised form 22 January 2009 Keywords: Forest certificationMaine North Woods (MNW)Timberland investment managementorganizationsReal estate investment trusts a b s t r a c t Beginning in the 1990s, private ownership in Maine forestland shifted from a number of corporate own-ers to a patchwork of timber investment management organizations (TIMOs) and real estate investmenttrusts (REITs). This transformation reflected restructuring trends in the paper and pulp industry. Duringthis same period, forest certification increased to levels that today make Maine one of the most certifiedstates in the United States with nearly 8 million acres certified by one of a number of certifying entities.This paperexamines the contradictory tensions of these trends. Specifically, the conservation goals of cer-tification are undercut by increased investment in timber resources characterized by new financialinstruments focused on return on investments. The increased use of first-party, industry-based certifica-tion suggests that the antagonisms between capital and conservation are being resolved in ways thatundermine the purported conservation goals of forest certification standards.   2009 Elsevier Ltd. All rights reserved. 1. Introduction The Maine North Woods (MNW) is an industrial forest. Over90% of Maine’s 19.8 million acres are forested—the highest per-centage in the United States. Of that forested amount, 97% is clas-sified as productive timberland. And 90% of all productivetimberlands in the MNW are privately owned and operated fortimber production. The numbers attest to the MNW as a forest de-voted and managed almost exclusively for the growth and extrac-tion of wood fiber for paper and pulp production ( Jin and Sader,2006, p. 177). A walk in the MNW woods with an industry foresterprovides an even more telling illustration. The instrumental phrase‘‘wood on the stump” is used commonly by foresters to talk aboutthe trees in the forest. The dominant language of forest economicsreflects the industrial view of the MNW and the character of thecommodities produced. This arrangement is a function, and longhas served the needs, of industrial and commercial forestry.Beginning in the 1970s, however, a series of biological and eco-nomic challenges to the Maine forest products industry precipi-tated an economic restructuring in ownership and management.The Spruce Budworm epidemic ravaged timber resources through-out the 1970s and early 1980s. Industry responded to the epidemicwith extensive clear cutting (Acheson, 2000, p. 148). These prac-tices intensified conflict between industry and conservation orga-nizations and culminated in the Maine Forest Practices Act of 1991, which limited clear cuts on private timberlands. Meanwhile,as a result of increased international competition, Maine forestproducts firms experienced lowered demand for their products.The resulting industry-wide restructurings have had far-reachingconsequences for Maine’s forests and forest economy. Transformedownership patterns and new real estate and investment-focusedland owners have increased the anxiety over the sustainability of the MNW as a ‘‘working forest” (Wolf and Klein, 2007).But this is only half the story. The ecological and economic chal-lenges to industrial forestry that forced firm restructurings amidintensified conservation pressures provided also an opening forregulatory restructuring. Environmental non-governmental orga-nizations (ENGOs), no longer content to rely on government to reg-ulate the industry, developed forest certification models in theearly 1990s that offered an ENGO-led alternative to the kind of state regulation of forest resources that had long bedeviled effortsto resolve the thorny environmental politics of forest regulation inplaces like Maine. The Forest Stewardship Council (FSC) wasfounded in 1993 as one of the first certifiers of best practices inthe forest industry. 1 FSC first certified timberlands in Maine in thelate 1990s. The trail FSC blazed was one that they promised wouldlead a market-disciplined industry to better conservation practicesand outcomes. Despite the market friendly (or at least focused) premise of for-est certification, industry interests were alarmed by the conserva-tion focus of FSC and its exclusion of industry in the creation of criteria for assessment. In the United States the American Forest& Paper Association (AF&PA), the forest industry trade group,spearheaded the establishment in 1995 of the Sustainable ForestryInitiative (SFI) designed as an alternative certification regime toFSC. Participation in SFI is a requirement for membership in theAF&PA. SFI began certifying forests in Maine shortly after FSC. 0016-7185/$ - see front matter    2009 Elsevier Ltd. All rights reserved.doi:10.1016/j.geoforum.2009.03.001 E-mail address: 1 See Gulbrandsen (2004), Eden (2009), and Klooster (2005) for more detailed analyses of FSC. Geoforum 41 (2010) 66–73 Contents lists available at ScienceDirect Geoforum journal homepage:  Author's personal copy The differences between these two regimes are significant (Table1). The ten principles upon which FSC is based are rooted in 56 cri-teria established by regional and national working groups. The cri-teria provide a road map for social, environmental and economicgoals that include protecting indigenous peoples land tenurerights, worker rights, provisions to exclude the use of genetically-modified organisms and the conversion of natural forests to plan-tations. Forest managers pursuing certification hire independent,third party certifiers who apply the assessment criteria to deter-mine certification eligibility. In contrast SFI was initially estab-lished as a first-party, industry-designed and operatedcertification framework modeled on the process-based (not perfor-mance-based) InternationalOrganization ofStandards (ISO) 14,000Environmental Management Systems (EMS) protocols (Cantrell,1998). Since 2002 SFI has established third-party standards forassessment and moved to increase the independence of its certifi-cation standards from the AF&PA. Despite these reforms, criticsnote troubling credibility problems with SFI. A 2005 United Na-tions report on global forest certification chided SFI for lacking‘‘meaningful minimum performance-based standard[s] . . . ade-quately protecting rare and endangered species and addressing so-cial issues” (UN, 2005, p. 18). The report also noted that althoughby 2003 SFI had developed more stringent assessment mecha-nisms, including independent assessments and evaluations todetermine eligibility for the certification standard, SFI was stilldominated by forest industry interests and perhaps most troublingof all, the report noted ‘‘[c]ompanies can customize the standardused to assess them thereby compromising the independence of certification” (UN, 2005, p. 18). In contrast, FSC largely has satisfiedcritics interested in protecting forest ecologies or forest dependentcommunities. The UN applauded FSC’s efforts to establish crediblesocial and environmental standards created through broad-basedparticipation among groups interested in environmental, economicand social issues.FSC and SFI are not alone; a number of different certificationschemes compete in some countries, collaborate in others or com-bine their efforts in still more. The Program for the Endorsement of Forest Certification (PEFC) was developed as an alternative to FSCin EU countries and today certifies millions of hectares largely inEU countries. Canada’s forest trade association, as with AF&PA inthe United States, also developed an alternative to FSC with itsCanadian Standard Association (CSA). Eden notes in a forthcomingarticle about UK forest certification that the UK Woodland Assur-ance Standard, begun as an alternative to FSC, eventually coalescedwith FSC into a single national standard. In the UK case study, Edencites the heterogeneous network of scientists, activists and eco-nomic interests that established FSC as a dense network of actorsthat together produced a credible governance scheme binding to-gether science and policy and recognized by consumers and pro-ducers alike (Eden, 2009).In Maine, unlike in the UK, FSC and SFI have not combined cer-tification efforts. FSC was the early certifier in Maine. While certi-fied forests have steadily increased by total acreage in Maine sincethe late 1990s, many timberland owners have shifted from FSC toSFI and most new timberland owners are now enrolling with SFI(Fig. 1). The transition from independent certification to indus-try-designed certificationhas occurred alongsidecontinuedand in-creased restructuring and land ownership transitions in the MNW.These new patterns of ownership are characterized largely by theentry of institutional investors into Maine’s timberlands. TimberInvestment Management Organizations (TIMOs) and Real EstateInvestment Trusts (REITs) have taken advantage of the sell-off of timberlands by paper companies that sought to cash in on timber-land reserves as a means to infuse cash into firm restructurings  Table 1 Summary of principles and objectives for forest certification. FSC principles SFI objectives1. Compliance with applicable laws and treaties 1. Ensure long-term harvest levels based on scientific information2. Demonstrated, uncontested and clearly defined Land Tenure and Use Rights 2. Ensure long-term forest productivity and conservation of forest resources throughreforestation, soil conservation and afforestation3. Recognition and respect of Indigenous Peoples’ rights3. Protect water quality4. Enhancement of social and economic well-being of forest workers and localcommunities 4. Manage wildlife habitats and contribute to biological diversity through stand- andlandscape-level measures5. Sharing of benefits derived from the forest5. Manage visual impact of harvesting and forest operations6. Reduction of environmental impact of logging activities6. Manage in a manner that recognizes the special qualities of participants lands7. Appropriate and continuously updated management plan7. Promote the efficient use of forest resources8. Monitoring to assess the condition of the forest and the social andenvironmental impacts of management 8. Broaden sustainable forestry through procurement programs9. Maintenance of High Conservation Value Forests (HCVFs) 9. Improve forestry research, science, and technology10. Plantations must contribute to reduce the pressures on and promote therestoration and conservation of natural forests10. Improve the practice of sustainable forest management through training andeducation programs11. Commitment to comply to laws and regulations12. Encourage public to participate in sustainable forestry13. Promote the continual improvement in the practice of sustainable forestry andmonitor, measure and report performance Source : FSC (2009)  Source : SFI (2009) Maine Certified Timberlands 1995 - 2005 (by acres) 01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0001995 2000 2001 2002 2003 2004 2005  Year  SFI/FSCSFIFSC Fig. 1.  Sources : Maine Forest Service; Maine Forest Certification AdvisoryCommittee. D. Correia/Geoforum 41 (2010) 66–73  67  Author's personal copy (Table 2). The trend is reflected nationwide. From 1981 to 2005,forest products companies sold 60% of their landholdings, reducingownership from 58 million acres to 21 million acres (Switzer,2006).As this paper demonstrates, the logic and practice of certifica-tion and recent patterns of investment in Maine timberlands pro-vide an explanation for how the industry-friendly SFI standardhas overcome the critics and conservation pressures and heteroge-neous network density of FSC to emerge as the dominant player inforest certification. In addition, although forest certification is, asCashore (2002) describes it, a non-state, market driven form of authority, the state as been a major player in shoring up SFI cred-ibility and shifting regulatory authority. State-sponsored efforts toencourage market-based regulatory mechanisms in Maine’s forestproducts industry have accommodated, through the state’s accep-tance of industry-designed certification standards, increasedinvestment and production in the forest products industry andundermined FSC efforts to establish certification authority.Whereas certification efforts by FSC seek a market-based mech-anism to impose conservation practices on Maine’s forest productsfirms, industry-designed certification standards, backed by newinstitutional investors, have effectively obscured transparency insustainable forest practices and now serve the financial imperativeof investor return rather than the goal of forest conservation.Moreover, the forest products industry has used certification to at-tachnew values toindustrialforestry—namelythat industrialfirmspossess a unique ability to manage the MNW in ways that both in-crease economic returns and as a direct result of this economicactivity achieve improved environmental services and function inregionalforest ecosystems.This logic draws on thepremise of mar-ket-based conservation to position intensive industrial forestry,and the profit position of large firms, within the rubric of sustain-able forest management. Most significantly, the acceptance of industry-designed standards for forest certification further drawsregional biophysical processes within the orbit of global financialmarkets. These industry-defined ‘‘sustainable” forest practices al-low forest products firms to harness the language of certificationto shroud industrial forest practices in a veneer of sustainability.This paper is organized into three parts. In the first section Iexamine the logic of forest certification and the political economyof market-based conservation with an emphasis on the MaineNorth Woods. I argue here that the histories of FSC and SFI inMaine reflect not merely a struggle to become the non-state, mar-ket-driven authority in forest certification, but instead has been astruggle to define and control the conditions and relations of pro-duction in the forest sector. The next section expands on this pointby examining the logic of certification. I suggest that forest certifi-cation serves as a form of economic rent. I argue here that forestcertification can only harness market forces by engaging in certainkinds of rent-seeking behavior. One consequence of this has beenthe ability of forest industry firms to present themselves as ecolog-ically focused actors. Third, I examine the land ownership changesand certification issues in Maine from the perspective of new insti-tutional investors. This portion of the paper seeks to understandthe structure of the forest products industry in Maine as a wayto further understand how industry versions of sustainable for-estry have gained traction. In this section, I pay careful attentionto forest sector restructuring in Maine and the impact of thisrestructuring among forest certification actors. As investor-focusedlandowners bought millions of acres in Maine from paper compa-nies, FSC found increased resistance to conservation standardslinked to production practices.The final section is based on a review of the business andindustry trade press, analysis of timberland investments by indus-try journals and lastly through in-depth interviews with threeinstitutional investment portfolio managers, two paper mill man-agers and one timberland manager. Although the number of inter-views conducted was small, this reflects the disproportionatecontrol of timberlands by institutional buyers. The three fundmanagers interviewed were among the largest institutional own-ers of MNW timberlands. Their arguments and explanations re-lated to certification in Maine are compelling for a number of reasons. First, prior to the arrival of TIMOs and REITs in Maine,a small number of large paper companies owned millions of acresin the MNW. While the type and focus of timberland landownershas changed in the MNW from an interest in timber reserves toinvestment potential, one pattern has remained the same: theMNW remains a forest owned largely by a relatively few, wellcapitalized owners. Three of the five largest TIMOs in the UnitedStates maintain huge landholdings in Maine. Between June andAugust of 2007, I conducted telephone interviews with three of these portfolio managers (none of whom lived in Maine). Thefinancial managers were selected because they had recently pur-chased for their funds at least one million acres from paper com-panies divesting in Maine timberlands. All three funds maintainedSFI certification for all timberlands.In addition to fund managers, I interviewed one mill managerand one corporate paper purchaser. These interviews were not in-tended to provide generalizable knowledge about the role of millsand corporate consumers in the development or acceptance of cer-tification regimes but rather they provided background informa-tion on issues related to certification demand and the way othercertification actors reacted to changing landownership patterns.All of the interviews offered a preliminary view of the conflict overcertification amid a rapidly changing set of ownership arrange-ments in Maine. The fund managers, for example, ratified trendsand patterns identified first in the financial press and literature:command and control over production via SFI certification has be-come a key strategy to blunt conservation pressures while preserv-ing, and even expanding, return on investment.  Table 2 Selected major timberland sales in Maine 1998–2006 (in acres). Seller 1998 1999 2000 2003 2004 2005 2006 BuyerSAPPI 908,000 Plum CreekInternational Paper 245,000 1,100,000 Clayton Lake Woodlands LLC (1999), GMO (2004)Bowater 656,000 380,000 McDonald Investment Company (1998), Inexcon (1999)Georgia Pacific 446,000 Yale University Pension/McDonaldChampion 913,000 International PaperMeadWestvaco 629,000 WagnerIrving 230,000 TimberstarFraser 240,000 Forestland GroupPingree 105,000 TimberstarTotal (acres) 1,564,000 1,071,000 913,000 629,000 1,100,000 470,000 105,000 Sources : Timberland Markets, Timberland Reports.68  D. Correia/Geoforum 41 (2010) 66–73  Author's personal copy 2. Sustainable forest management and the logic of forestcertification ‘‘Forest Stewardship Council over my dead body.” 2 Forestcertificationisanon-stateformofresourcemanagementreg-ulation organized according to, ideally, a set of biogeographicallyspecific principles and prescriptions for sustainable forest manage-ment (SFM). The development, implementation, and auditing of SFMprinciples undera forest certification regime require,accordingto Gulbrandsen (2004), a shift from government to  governance  instate–society relations that diffuses authorityto delineate the forestmanagement regime along market/regulatory axes. The logic of for-est certification begins with the premise that environmentalimprovements follow when market forces are harnessed to compelsustainable practices. A shift in standardized industry practices to-ward certified sustainable forest management, according to this lo-gic, rests with increased consumer awareness and demand forsustainable products. Ecolabeled products, the argument goes, arederived from sustainable practices established by independentadjudicators and guaranteed through third-party auditors that al-lows producers to capture price premiums in a parallel ‘‘green”market. Despite the ‘free market” rhetoric attached to certificationregimes, the moral economy upon which such an arrangement isbased requires layers of assessment, auditing, and chain of custodyguarantees. As Mutersbaugh (2004, 2005) has shown in the case of organic coffee production and certification in Oaxaca, Mexico, thesemarket arrangements work to transform labor processes, restruc-ture social relations of production, transform rent relations andreinforce access to production inputs by powerful commercial ac-tors. Such arrangements reflect the complex local/global politicaland economic geographies of certification regimes that must unfoldbefore the utility of a certification ecolabel can emerge. These socialpractices reflect local geographies that ‘‘operate in vastly differentpolitical, biophysical and socioeconomic settings” (Gulbrandsen,2004, p. 78). Maine, more that any other US State, is embracing certificationas an official policy dealing with the political challenges inherentto forest ownership changes. In July of 2003, Maine Governor JohnBaldacci launched the Maine Forest Certification Initiative with thegoal of improving forestry practices while at the same timeexpanding market access for local forest products firms. This featwas to be accomplished through the labeling of certified forestsand certified forest products. One interesting aspect of the Maineinitiative has been its willingness to accept multiple and compet-ing certification programs, both independent and industry-led(Brusila, 2005). With over 7 million acres in a variety of market-based certification programs in 2003, the initiative set a goal of achieving at least 10 million by the end of 2007.In the Maine context certification does not operate, contraStringer’s (2006) assessment of the resource periphery context,as avalue-addingformof productioninput.No differentiating mar-ket premium exists. 3 Rather, certification has emerged as a form of green branding of forest management and forest products withoutany increased return on investment. In other words, forest certifica-tion in Maine does not operateas a scarcity-producing mechanism orvalue-adding mechanism, but rather as a method to reinforce controlover the production process. The ongoing conflict between forms of certification in Maine re-flects the struggle to define the standards governing forest ecola-beling and thus the political legitimacy and authority to remake(or defend) production practices. FSC standards have been devel-oped among a body that largely excludes public sector and indus-try interests and rests on outcome-based audits. Conversely, SFIdeveloped standards through a body dominated by industry relianton process-based standards, not outcome-based expectations con-firmed independently through on-site audits. While the efforts of moral economy conservation organizations like ForestEthics andrecent decisions by large paper purchasers such as L.L. Bean to re-quire FSC-certified paper suggest the development (or at least thepossibility) of demand pressures, FSC as a certification label hasbeen unable to establish substantial market demand over SFI inMaine (Turkel, 2007). Recent shifts away from the FSC third-partyscheme toward the industry-based certification program of SFIsuggest that in the Maine context certification operates within aframework characterized by weakly developed demand for certi-fied forest products among the large paper purchasers. This hasbeen reinforced by general and continued disagreement regardingdefinitions of SFM. Such an arrangement (i.e., the lack of a marketpremium) limits the scarcity-producing ability of an idealizedexogenous forest certification label.Despite the continued absence of market premium, acres in cer-tification have grown in Maine. This growth almost entirely hasbeen a result of increased enrolment in SFI. The SFI-based versionof sustainability draws on the ‘‘working forest” tradition of theMNW to suggest that challenges to the forest products industryare equally threatening to forest ecology. Therefore, efforts to in-crease the economic potential of the MNW promise also the possi-bility of an improved forest ecosystem. 4 Through this argument, thedefense of forest ecosystem health is transferred to industry andaway from conservation interests. In this way, as will be more fullydiscussed below, FSC is painted as a flawed political body while SFI,drawing on the same logic, is seen as an ecological body (as extendedthrough forest economics by the SFI logic of SFM). This has beenreinforced through the legitimizing role of the state. An additional barrier for FSC is that in Maine, as elsewhere, pa-per and pulp provides a particularly challenging industry in whichto establish certification as an alternative forest regime. The indus-try is dominated by large timberland owners and paper producersand large purchasers. While most large purchasers of paper, lum-ber and specialty wood products have established corporate pur-chasing policies that mandate percentages of sustainably-sourcedforest products, these policies reflect a defensive tactic born of the tension between the need for return on investment againstongoing external efforts to force forms of ‘‘green” corporate capi-talism (Emel, 2002). While this motivation does suggest a marketforce for sustainable forestry, the layers of corporate policy, differ-ential certification audits, chain of custody limitations, and greenimage branding illustrate one set of limitations to market-basedconservation. 3. Commodity certification as rent seeking  A central argument of this paper is that certifying naturethroughlabelsand seals serves as onemeanstocapture surplusva-lue in the production of forest commodities effectively hijackingthe conservation rhetoric of certification. Though the explicit goalof forest commodity certification, and social regulation more gen-erally, is not to appropriate surplus value produced by forest prod-ucts firms, the logic of market-based conservation rests on theargument that defining and controlling the conditions of production leverages the power of the market to efficientlyproduce beneficial environmental outcomes in ways that may be 2 TIMO portfolio manager interview with author, August 2007. 3 This claim is based on a review of the industry press, interviews with onecorporate paper purchasing officer and three institutional investment portfoliomanagers conducted from June–August 2007. 4 For the industry’s argument about ecology and economy under an industrydesigned SFM framework, see Cantrell (1998) and Wallinger (1995). D. Correia/Geoforum 41 (2010) 66–73  69
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