HomeMy WebLinkAboutCOM 0258.043 1996-1998 72c
Hawaii County Council ^ , .
Aug. 18, 1997
International Trends affecting Forestry Decisions in Hawaii
Leonard A. Newell
Pacific Islands Forester
USDA Forest Service, Institute of Pacific Islands Forestry
Honolulu, Hawaii
Chairman Ray, Honorable Council Members, Ladies and Gentlemen, I have been asked to speak on
this subject because I have thirty years of experience as a field and managerial forester, the last
twelve years of this experience in international tropical forestry. I have worked throughout Hawaii
and the tropical Pacific islands, in the Pacific-Asian countries of the Philippines, Indonesia, Malaysia
and New Guinea, and in Central America and the Caribbean.
The idea that international trends affect Hawaii is certainly not a new one. Our tourism industry in
1991 got a shock when the Iraq War and other factors scazed off our visitors from Asia and North
America, sending tourism revenue plummeting for more than three years. A more recent, and to this
island even more regrettable phenomenon was the collapse of the sugar cane industry, largely due
to cost pressures and competition from countries thousands of miles away.ln the economy of a state
or a country, everything is connected to the outside world, however some may wish it weren't so.
You as Council Members are now embroiled in controversy about how County-owned lands should
be used, and we all know there are strong feelings in support of traditional agriculture, of short-
rotation plantation forestry, and of longer-rotation quality hardwoods. My intent today is to show
how international economic trends in the timber industry are driving investment decisions, not to say
what these decisions should be. It is axiomatic that those who have investment funds and interest in
forestry in Hawaii are going to choose a forest plantation strategy that best meets their investment
objectives, and this means foregoing other options.
This graph, from Page 10 of the Groome-Poyry Forestry Investment Memorandum, shows two
remarkable trends that are not in dispute as faz as I know. Note the trends of increasing human
population and decreasing closed forest area, and relate this to what you know about the Law of
Supply and Demand. Is there an escape from the conclusion that the price of wood of all kinds and
grades can do nothing but increase? If there is, I fail to see it. This simple fact is driving.investor
interest in plantation forestry everywhere in the tropics. Hawaii is especially interesting to these
investors because it is politically stable, has roads, power, a skilled workforce and other advantages
not available in most tropical areas. The result is the current fluny of interest in forestry investment.
Your current controversy arises over the decision--by the first two companies having serious
investment capital and intentions--to plant short-rotation Eucalyptus trees. Why did they make this
decision? Probably because (1) there is an almost guazanteed market for the fiber, (2) risk of loss is
less due to a shorter period of exposure to storms etc., (3) the opportunity cost of investing for e.g.
seven years, as opposed to twenty or more years, is faz lower, and return on invested capital is faz
sooner, and (4) according to the G-P Report, which summarizes several in-Hawaii studies and is the
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definitive work on the subject to date, Eucalyptus species grow faster in Hawaii than elsewhere in
the world, as shown on this graph.
If there aze similaz data that show traditional agricultural uses in Hawaii having similar potential
market advantage, I am unaware of them. Effective interest in agricultural investment is modest, and
l hope will continue, because I too think that Hawaii's food prices are too high. But it takes investors
to come forward with funds and sound business strategies if land and other resources are to become
available for agriculture.
Taken together, these graphs will explain a lot of what you have been hearing from proponents of
Eucalyptus plantations. What you have heard from some people who oppose Eucalyptus, as I gather
from the press and reports of your hearings, appears to be largely polemics aimed at proving a
pazticulaz point of view--and perhaps to promote a particular book--while ignoring facts that don't
support the burden of the argument. I would be the last to argue that Eucalyptus or any introduced
species should be planted in or near natural forests in Hawaii. I would also be the last to condemn
the entire Genus to the status of a nemesis, as has been done here recently, when planted on former
cane lands that are presently in weeds.
I think the important thing to realize and to remember is that Hawaii is attracting forestry investment,
and we can work with that. It is important to listen to communities and what they want and don't
want, just as it is important to work with investors to get the best possible overall result for Hawaii
County: value-added processing of forest-grown material. I think we can do both, and more. I think
there should be enough wealth created by new working forests to employ many of Hawaii's rural
people, and help to restore Hawaii's native forests, while creating an attractive landscape and
keeping soil erosion within a small fraction of what it was under sugar cane. These goals may not
be enough for some, but they are realistic and achievable with what we have and what we know.
Thank you for your attention. I wish you well in. your deliberations. ,