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The Forest Bank

Great Lakes Grant #GL-985905-01

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Executive Summary

The Center for Compatible Economic Development was engaged by the Great Lakes National Program Office to test the feasibility of the Forest Bank concept at two sites within the Great Lakes basin.  Previous and match funding allowed us to narrow our field to the two target sites.

The Forest Bank idea is an innovative concept that could provide a market-based tool for conservation of important forest land while helping to keep it economically productive.

Given the complexity of the idea and the many variables that will impact on the potential success of a Forest Bank, our goal was to create a rigorous methodology for analyzing sites and providing a clear and honest assessment of their potential.  We believe that we have succeeded in this aim.

Potential sites were identified initially based on scientific and conservation criteria.  Subsequent analyses looked at the functional and operational aspects of the forest resource, landowner patterns, timber markets and other issues that would affect potential sites.  Our clear intention was to find a site or sites that would be suitable places to implement a pilot Forest Bank with a high likelihood of success.  As we identified obstacles to success at any given site, we dropped it from the process and concentrated our effort and resources on the remaining sites.  Thus, our analysis for each of the sites is of varying intensity as warranted by its potential for implementation.

The direct outcomes of the work completed for the EPA are:

  1. We created and field-tested a comprehensive, comparative methodology for assessing potential Forest Bank sites;  
  2. We pursued analyses of these sites as long as they had potential for implementation.  This included:  
  • Identifying an initial suite of 27 potential sites based on ecological and landscape criteria;  
  • Using preliminary criteria to pare this to nine sites, and consolidating some of those sites to create a complex of sites, or a megasite;  
  • Analyzing critical aspects of the remaining nine sites and eliminating sites that fell out of the process for various reasons identified in the report and the appendices;
  • Completing a detailed forest feasibility analyses at the two sites with the best potential;  
  • Developing a full financial analysis and pro forma for the site we feel is the best option for pilot implementation in the Great Lakes basin, outlining a set of issues affecting the site, and identifying critical parameters and benchmarks for moving forward.
  1. We generated legal and financial frameworks for operationalizing the Forest Bank in the pilot stage.  
  2. We created a clear sense of the core business operations that a Forest Bank must undertake to be successful financially and ecologically.

Our analysis leads us to believe that the best place to pilot a Forest Bank in the Lake States is on the Wisconsin/Michigan border in a site that would begin with the Kakogan and Bad River watershed.  This site would likely also encompass over time the western counties of Michiganís Upper Peninsula (in a potential cooperative effort with the Western Upper Peninsula Forest Improvement District) and the Land-o-Lakes district on the border of both states.  We feel no other sites present a good potential to pilot the Forest Bank concept, though a handful of sites show potential in future if the pilot sites prove successful.

The potential exists to implement The Forest Bank in a second site around the Tug Hill in northern New York.  There are some key conservation infrastructures that need to be developed still, so it is not a good place to pilot the Bank concept.  Over time, as the Conservancy is able to build its presence on the Tug Hill, we believe Forest Bank could be a good strategy for conservation there.

It will be extremely important in moving the Forest Bank concept forward that we pilot the concept at the three or four sites with the very best potential for success.  Early success will help us build the concept into a national program for the conservation of working forest lands.  In this sense, the implications of our feasibility analysis have gone beyond the Great Lakes basin to encompass all of the potential sites we are exploring for implementation, and our interest in committing to implementation in the Kakogan project depends on its relative likelihood for success when weighed against other sites nationally.

It is clear to us at this point is that The Forest Bank is a concept with great potential that should be implemented and grown.  The support of GLNPO has helped us to build the business concept and clarify our expectations and requirements.  It has materially advanced our efforts to develop a market-based tool for forest protection and to assess sites for their feasibility. Whether or not it leads us to pilot testing in the basin itself, the feasibility work has clearly given us a handful of potential sites for expansion if and when we prove the concept in the pilot phase.  For these reasons, we feel the project has been very successful.

Questions regarding this report should be directed to:

Karen Rodriguez, Environmental Protection Specialist
U.S. Environmental Protection Agency
Great Lakes National Program Office
Technical Assistance & Analysis Branch
77 W. Jackson Boulevard (G-17J)
Chicago, Illinois  60604

Duane Heaton, Environmental Scientist
U.S. Environmental Protection Agency
Great Lakes National Program Office
Monitoring Indicators & Reporting Branch
77 W. Jackson Boulevard (G-17J)
Chicago, Illinois  60604



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