Forest Industry Must Act to Benefit from Climate Policy

While there are risks for the forest products industry, it largely stands to gain from efforts to address global warming due to new opportunities for sustainable forestry, according to a report released here today by the World Resources Institute.

As U.S. policy regarding climate change continues to build momentum, industries from across the economy are investigating the potential impacts to their businesses. The forest products industry is somewhat divided on how to address climate policy, mainly due to uncertainty around the financial implications.

“The next year or two is an important window for climate change policy negotiations in the U.S. and internationally. The industry needs a coordinated effort to improve the position of sustainable forestry to become part of the climate change solution,” said Andrew Aulisi, director of the markets and enterprise program at WRI. “Anything past this window may be too late. Competing industries are already moving quickly on their positions.”

WRI’s report, Trees in the Greenhouse: Why Climate Change is Transforming the Forest Products Business, details how climate change may affect the forest-based products industry. It concludes that, should a price on carbon be established in the U.S., the forest industry should soon have measures in place to capture the resulting opportunities.

The forest industry’s concerns include:

• Opportunities for new revenue streams and markets for forest products that could benefit well-positioned companies.
• Changes in the biological productivity of forests in some regions due to climate change.
• Shifts in access to forestlands as they become more restricted and better managed.
• Opportunities for forest products to be designated as “low carbon.”

The report outlines several steps that the forest industry and investors should pursue to best position themselves for economic conditions under a climate change policy. It also acknowledges that climate change policies may also bring new risks to the industry, and that investors and companies should develop appropriate risk-hedging strategies.

In addition to providing preliminary answers for forest companies and analysts, the report is also informing WRI’s ongoing efforts to help companies evaluate the risks and opportunities arising from changes in ecosystems, such those to forests. WRI is currently building a new corporate partnership dedicated to advancing business strategies, markets, and public policies that align corporate performance and ecosystem stewardship.