On any given day, one only needs to look outside to see the positive effect that recreation has on individuals and society. The chance to reduce stress, exercise body and mind, and interact with others in an outdoor setting provides millions of Americans with numerous benefits directly related to their health, happiness and productivity.
Forestlands in particular offer the opportunity to partake in numerous unique activities. Millions of Americans each year take to the woods to camp, picnic, hike, hunt, fish, horseback ride, study nature, photograph wildlife, and on and on.
Check out this link from the Florida Cooperative Extension Service for the rest of the article: http://www.sfrc.ufl.edu/Extension/pubtxt/ssfor4.htm
Tuesday, September 29, 2009
Friday, September 11, 2009
The Theory That Self-Interest Is the Sole Motivator Is Self-Fulfilling
New York Times
February 17, 2005
ECONOMIC SCENE
By ROBERT H. FRANK
A NEW YORKER cartoon depicts a well-heeled, elderly gentleman taking his grandson for a walk in the woods. "It's good to know about trees," he tells the boy, before adding, "Just remember, nobody ever made big money knowing about trees."
If the man's advice was not inspired directly by the economist's rational-actor model, it could have been. This model assumes that people are selfish in the narrow sense. It may be nice to know about trees, it acknowledges, but it goes on to caution that the world out there is bitterly competitive, and that those who do not pursue their own interests ruthlessly are likely to be swept aside by others who do.
To be sure, self-interest is an important human motive, and the self-interest model has well-established explanatory power. When energy prices rise, for example, people are more likely to buy hybrid vehicles and add extra insulation in their attics. But some economists go so far as to say that self-interest explains virtually all behavior. As Gordon Tullock of the University of Arizona has written, for example, "the average human being is about 95 percent selfish in the narrow sense of the term." Is he right? Or do we often heed social and cultural norms that urge us to set aside self-interest in the name of some greater good?
If the search is for examples that contradict the predictions of standard economic models, a good rule of thumb is to start in France. During my recent sabbatical in Paris, I encountered many such examples, but one in particular stands out. One mid-November afternoon, I asked my neighborhood wine merchant if he could recommend a good Champagne. It was the week before Thanksgiving, and my wife and I had invited a few American friends to our apartment for a turkey dinner.
He just happened to have an excellent one on sale for only 18 euros. (Normal price, 24 euros.) Fine, I said, and then asked if he could also recommend a bottle of cassis, since I knew some of our guests would want a kir royale - a cocktail of cassis and Champagne. In that case, he said, I would have no need for the high-quality Champagne, because no one would be able to tell the difference once it was mixed with cassis. Well, then, what should I buy? He brought back a bottle that he said would be just right for the purpose.
That particular Champagne, however, was not on sale. When he told me it was 20 euros per bottle - 2 euros more than the better one - an awkward pause ensued. Though I thought I knew the answer, I felt I had to ask whether a kir royale would taste worse if made with the better Champagne. He assured me it would not. And because I knew that some of us would be drinking our Champagne straight, I bought several bottles of the better one. He did not protest, but I could feel him reclassify me as yet another American barbarian.
For many French, the logic of the self-interest model is trumped by an aesthetic principle about what Champagnes are right for specific applications. This particular principle leads to a better outcome over all, because it directs the best Champagne to the uses in which quality matters most. So even though I personally was better off for having ignored the merchant's advice (because I got to drink a better Champagne and spent less), at least some of the better Champagne I bought was wasted.
France is, of course, not the only place in which the self-interest model's predictions fall short.
Most Americans, for example, leave tips even after dining in restaurants they will never visit again. We take the trouble to vote in presidential elections, even though no single individual's vote has ever changed the outcome in any state. We make anonymous donations to charity. From society's perspective, our willingness to forgo self-interest in such instances leads to better outcomes than when we all act in a purely selfish manner.
Does what we believe about human motivation matter? In an experimental study of private contributions to a common project, two sociologists from the University of Wisconsin, Gerald Marwell and Ruth Ames, found that first-year graduate students in economics contributed an average of less than half the amount contributed by students from other disciplines.
Other studies have found that repeated exposure to the self-interest model makes selfish behavior more likely. In one experiment, for example, the cooperation rates of economics majors fell short of those of nonmajors, and the difference grew the longer the students had been in their respective majors.
My point is not that my fellow economists are wrong to stress the importance of self-interest. But those who insist that it is the only important human motive are missing something important. Even more troubling, the narrow self-interest model, which encourages us to expect the worst in others, often brings out the worst in us as well.
Perhaps the theories of human behavior embraced by other disciplines influence their practitioners in similar ways. A core principle of behavioral biology, for example, is that males are far more likely than females to engage in "extra-pair copulations." Does teaching this model year after year make male biologists more likely to stray?
Several years ago, I attended a dinner with a group of biologists that included a married couple. After describing the research about how economics training appears to inhibit cooperation, I asked whether anyone had ever done a study of whether males in biology were more likely than scholars from other disciplines to be unfaithful to their partners. The uncomfortable silence that greeted my question made me wonder whether I had stumbled onto a data point relevant for such a study.
But if biologists are like economists in being influenced by their own theories, they are different from us in another respect: Their most cherished hypothesis is much less likely than ours to be contradicted by the French.
Robert H. Frank is an economist at the Johnson School of Management at Cornell University and the author, most recently, of "What Price the Moral High Ground?"
February 17, 2005
ECONOMIC SCENE
By ROBERT H. FRANK
A NEW YORKER cartoon depicts a well-heeled, elderly gentleman taking his grandson for a walk in the woods. "It's good to know about trees," he tells the boy, before adding, "Just remember, nobody ever made big money knowing about trees."
If the man's advice was not inspired directly by the economist's rational-actor model, it could have been. This model assumes that people are selfish in the narrow sense. It may be nice to know about trees, it acknowledges, but it goes on to caution that the world out there is bitterly competitive, and that those who do not pursue their own interests ruthlessly are likely to be swept aside by others who do.
To be sure, self-interest is an important human motive, and the self-interest model has well-established explanatory power. When energy prices rise, for example, people are more likely to buy hybrid vehicles and add extra insulation in their attics. But some economists go so far as to say that self-interest explains virtually all behavior. As Gordon Tullock of the University of Arizona has written, for example, "the average human being is about 95 percent selfish in the narrow sense of the term." Is he right? Or do we often heed social and cultural norms that urge us to set aside self-interest in the name of some greater good?
If the search is for examples that contradict the predictions of standard economic models, a good rule of thumb is to start in France. During my recent sabbatical in Paris, I encountered many such examples, but one in particular stands out. One mid-November afternoon, I asked my neighborhood wine merchant if he could recommend a good Champagne. It was the week before Thanksgiving, and my wife and I had invited a few American friends to our apartment for a turkey dinner.
He just happened to have an excellent one on sale for only 18 euros. (Normal price, 24 euros.) Fine, I said, and then asked if he could also recommend a bottle of cassis, since I knew some of our guests would want a kir royale - a cocktail of cassis and Champagne. In that case, he said, I would have no need for the high-quality Champagne, because no one would be able to tell the difference once it was mixed with cassis. Well, then, what should I buy? He brought back a bottle that he said would be just right for the purpose.
That particular Champagne, however, was not on sale. When he told me it was 20 euros per bottle - 2 euros more than the better one - an awkward pause ensued. Though I thought I knew the answer, I felt I had to ask whether a kir royale would taste worse if made with the better Champagne. He assured me it would not. And because I knew that some of us would be drinking our Champagne straight, I bought several bottles of the better one. He did not protest, but I could feel him reclassify me as yet another American barbarian.
For many French, the logic of the self-interest model is trumped by an aesthetic principle about what Champagnes are right for specific applications. This particular principle leads to a better outcome over all, because it directs the best Champagne to the uses in which quality matters most. So even though I personally was better off for having ignored the merchant's advice (because I got to drink a better Champagne and spent less), at least some of the better Champagne I bought was wasted.
France is, of course, not the only place in which the self-interest model's predictions fall short.
Most Americans, for example, leave tips even after dining in restaurants they will never visit again. We take the trouble to vote in presidential elections, even though no single individual's vote has ever changed the outcome in any state. We make anonymous donations to charity. From society's perspective, our willingness to forgo self-interest in such instances leads to better outcomes than when we all act in a purely selfish manner.
Does what we believe about human motivation matter? In an experimental study of private contributions to a common project, two sociologists from the University of Wisconsin, Gerald Marwell and Ruth Ames, found that first-year graduate students in economics contributed an average of less than half the amount contributed by students from other disciplines.
Other studies have found that repeated exposure to the self-interest model makes selfish behavior more likely. In one experiment, for example, the cooperation rates of economics majors fell short of those of nonmajors, and the difference grew the longer the students had been in their respective majors.
My point is not that my fellow economists are wrong to stress the importance of self-interest. But those who insist that it is the only important human motive are missing something important. Even more troubling, the narrow self-interest model, which encourages us to expect the worst in others, often brings out the worst in us as well.
Perhaps the theories of human behavior embraced by other disciplines influence their practitioners in similar ways. A core principle of behavioral biology, for example, is that males are far more likely than females to engage in "extra-pair copulations." Does teaching this model year after year make male biologists more likely to stray?
Several years ago, I attended a dinner with a group of biologists that included a married couple. After describing the research about how economics training appears to inhibit cooperation, I asked whether anyone had ever done a study of whether males in biology were more likely than scholars from other disciplines to be unfaithful to their partners. The uncomfortable silence that greeted my question made me wonder whether I had stumbled onto a data point relevant for such a study.
But if biologists are like economists in being influenced by their own theories, they are different from us in another respect: Their most cherished hypothesis is much less likely than ours to be contradicted by the French.
Robert H. Frank is an economist at the Johnson School of Management at Cornell University and the author, most recently, of "What Price the Moral High Ground?"
If a Tree Falls in a Forest, Does It Generate an Adequate Return?
By Daniel Rohr, CFA | 09-11-09 | 06:00 AM
This is the first of two articles on timberland investments, one area of the broader forest product industry. In Part I, we will introduce readers to the asset class, its risk and return characteristics, and recent investment trends. We'll also take a brief look at publicly traded timberland owners Weyerhaeuser (WY), Plum Creek Timber (PCL), and Rayonier (RYN), which collectively own 16 million acres of United States timberland.
Timberland is an unusual asset. In some ways, it's a lot like a copper deposit or oil reservoir, since resource extraction can be deferred, allowing inventories to be "warehoused" when pricing is soft without risk of obsolescence or spoilage.
In other ways, timberland assets share more in common with corn or sugar cane fields. If managed properly, investors can expect a steady stream of cash flows into perpetuity, whereas a copper deposit or oil reservoir ceases to generate income when the ore runs out or the well runs dry.
Like the corn or sugar cane field, timberland investments also include an option value embodied in the land beneath the trees (or crops, as the case may be). If the land's value for "higher and better use" (e.g., property development) exceeds the net present value of future logging cash flows, the investor is best served by selling the land for alternative use.
Another way to look at these two components of timberland value creation is to think of the asset as we might a convertible bond. Timberland possesses the continuous (albeit variable) cash flows of a bond, but also the capital appreciation upside of a stock. Regardless of how you prefer to look at it, timberland's unusual qualities make for an interesting set of risk and return characteristics.
Timberland Risk and Return
Before we take a look at timberland from a risk and return perspective, we should caution that there's no perfect data set with which to do so. Timberland isn't traded in deep, liquid markets like stocks and bonds, and no parcel of timberland is exactly the same. Price discovery, therefore, is neither instantaneous nor all that reliable. Initial attempts to develop timberland performance data took place in university economics, agriculture, and forestry departments, where researchers constructed a variety of synthetic return series based on log prices in a particular region. More recently, through the efforts of institutional investors and academics, we've seen the emergence of timber indexes, notably the NCREIF Timberland Total Return Index and the now-defunct Timberland Performance Index.
The NCREIF return series, initiated in 1987, has since become the accepted benchmark for the asset class. The NCREIF Timberland Total Return Index, as the name suggests, includes an income component and a capital appreciation component. The total return data, which are publicly available on NCREIF's Web site (the income and capital appreciation components are not), are presented in the following table.
A quick glance at the annual returns should quicken the heart of any profit-seeking investor. A hypothetical investor who put $10,000 into timberland in 1988 would have ended up with $158,096 by the end of 2007, assuming he or she could duplicate the NCREIF results. Before taxes and fees, an investor in the S&P 500 would have seen his or her initial $10,000 pile grow to $93,341. And that's before the dark days of late 2008. On a risk-adjusted basis, timberland looks even better, boasting a set of risk and return characteristics that would make Bernie Madoff blush. The following table presents a standard set of performance metrics for timberland and an investor's typical toolkit of asset classes covering the 20-year period of 1988 through 2007. Worth noting is that, for reasons intrinsic to the NCREIF data (timberland appraisals are typically conducted annually), we used the annual return series for each data set--not ideal, but a sacrifice we must make for the purposes of undertaking this comparison.
Institutions Follow the Money
Not surprisingly, timberland's attractive combination of strong returns, low variability of returns, and relatively strong correlation with inflation caught the attention of large institutional investors, ranging from groundbreaking Yale endowment manager David Swensen to the country's largest pension plan, CalPERS. Following the lead of trailblazers like Swensen, total institutional timberland investments increased from about $1 billion in 1989 to $8 billion in 1999 and about $14 billion in 2002. Latest estimates put the cumulative number close to $40 billion.
Where does timberland fit into institutional portfolios? Most institutions include it in their real asset allocation, a broad category that includes assets ranging from real estate to commodities like oil and gold. Harvard's endowment includes a 9% target allocation to timberland (up from 2% in 1998). CalPERS allocates about 34% of its inflation-linked asset class to timberland as well as 10%-20% of its real estate portfolio, a substantially larger share than it allocated to timberland a decade ago.
Such is their desire to obtain timberland exposure that institutional investors like Harvard and CalPERS have dominated the buy side of major timberland deals over the past several years. According to the timberland transaction database maintained by Forestweb, timberland investment management organizations--the appointed agents of pension plans and endowments--have accounted for all but one of the 14 purchases greater than 500,000 acres since 2003 (a total of about 15 million acres).
So who's doing the selling? Primarily, the forest product industry: paper and packaging companies like International Paper (IP) (5.6 million-plus acres sold for $6.6 billion in 2006) and MeadWestvaco (MWV) (323,000 acres sold for $400 million in 2007) and lumber manufacturers like Temple-Inland (TIN) (1.6 million acres sold for $2.4 billion in 2007). According to the U.S. Forest Service, by 2006, nearly 80% of forest product industry land had been snapped up by timberland investment management organizations and real estate investment trusts, marking nothing less than a complete overhaul of the once fully integrated forest product industry's supply chain. Today, just a handful of publicly traded forest product companies still have substantial timberland investments. Among the top 10 largest nongovernment timberland owners, only three are not timberland investment management organizations: Weyerhaeuser, the only classic forest product company on the list, and timber real estate investment trusts Plum Creek Timber and Rayonier.
It's fairly clear from the preceding table that the market assigns substantial value to timberland holdings. If it didn't, Plum Creek would trade a much lower multiple, closer to that of Weyerhaeuser or Rayonier, which derive a much smaller portion of their earnings from timberland. Given what we know about timberland's risk and return profile over the past 20 years, perhaps it's not surprising that the market assigns Plum Creek this kind of premium multiple.
But should it? How should we value timberland and the companies that own it? We need to consider what the next 20 years might look like for timberland. With the transition from industrial to investor ownership of timberlands now nearly complete, is the capital appreciation of the past two decades a one-time, fund-flow-driven occurrence? Or do timberland values have more room to run? On the cash-flow front, what does the uncertain outlook for housing starts mean for lumber-related income? Will the secular decline in paper demand hurt timberland owners? And what about the prospect of deriving energy from wood in the form of power generation or biofuels? Fundamentally, we'll need to address questions of supply and demand, both for the products made from wood as well as for timberland itself. In Part II of our look at timberlands, we'll attempt to do so.
This is the first of two articles on timberland investments, one area of the broader forest product industry. In Part I, we will introduce readers to the asset class, its risk and return characteristics, and recent investment trends. We'll also take a brief look at publicly traded timberland owners Weyerhaeuser (WY), Plum Creek Timber (PCL), and Rayonier (RYN), which collectively own 16 million acres of United States timberland.
Timberland is an unusual asset. In some ways, it's a lot like a copper deposit or oil reservoir, since resource extraction can be deferred, allowing inventories to be "warehoused" when pricing is soft without risk of obsolescence or spoilage.
In other ways, timberland assets share more in common with corn or sugar cane fields. If managed properly, investors can expect a steady stream of cash flows into perpetuity, whereas a copper deposit or oil reservoir ceases to generate income when the ore runs out or the well runs dry.
Like the corn or sugar cane field, timberland investments also include an option value embodied in the land beneath the trees (or crops, as the case may be). If the land's value for "higher and better use" (e.g., property development) exceeds the net present value of future logging cash flows, the investor is best served by selling the land for alternative use.
Another way to look at these two components of timberland value creation is to think of the asset as we might a convertible bond. Timberland possesses the continuous (albeit variable) cash flows of a bond, but also the capital appreciation upside of a stock. Regardless of how you prefer to look at it, timberland's unusual qualities make for an interesting set of risk and return characteristics.
Timberland Risk and Return
Before we take a look at timberland from a risk and return perspective, we should caution that there's no perfect data set with which to do so. Timberland isn't traded in deep, liquid markets like stocks and bonds, and no parcel of timberland is exactly the same. Price discovery, therefore, is neither instantaneous nor all that reliable. Initial attempts to develop timberland performance data took place in university economics, agriculture, and forestry departments, where researchers constructed a variety of synthetic return series based on log prices in a particular region. More recently, through the efforts of institutional investors and academics, we've seen the emergence of timber indexes, notably the NCREIF Timberland Total Return Index and the now-defunct Timberland Performance Index.
The NCREIF return series, initiated in 1987, has since become the accepted benchmark for the asset class. The NCREIF Timberland Total Return Index, as the name suggests, includes an income component and a capital appreciation component. The total return data, which are publicly available on NCREIF's Web site (the income and capital appreciation components are not), are presented in the following table.
A quick glance at the annual returns should quicken the heart of any profit-seeking investor. A hypothetical investor who put $10,000 into timberland in 1988 would have ended up with $158,096 by the end of 2007, assuming he or she could duplicate the NCREIF results. Before taxes and fees, an investor in the S&P 500 would have seen his or her initial $10,000 pile grow to $93,341. And that's before the dark days of late 2008. On a risk-adjusted basis, timberland looks even better, boasting a set of risk and return characteristics that would make Bernie Madoff blush. The following table presents a standard set of performance metrics for timberland and an investor's typical toolkit of asset classes covering the 20-year period of 1988 through 2007. Worth noting is that, for reasons intrinsic to the NCREIF data (timberland appraisals are typically conducted annually), we used the annual return series for each data set--not ideal, but a sacrifice we must make for the purposes of undertaking this comparison.
Institutions Follow the Money
Not surprisingly, timberland's attractive combination of strong returns, low variability of returns, and relatively strong correlation with inflation caught the attention of large institutional investors, ranging from groundbreaking Yale endowment manager David Swensen to the country's largest pension plan, CalPERS. Following the lead of trailblazers like Swensen, total institutional timberland investments increased from about $1 billion in 1989 to $8 billion in 1999 and about $14 billion in 2002. Latest estimates put the cumulative number close to $40 billion.
Where does timberland fit into institutional portfolios? Most institutions include it in their real asset allocation, a broad category that includes assets ranging from real estate to commodities like oil and gold. Harvard's endowment includes a 9% target allocation to timberland (up from 2% in 1998). CalPERS allocates about 34% of its inflation-linked asset class to timberland as well as 10%-20% of its real estate portfolio, a substantially larger share than it allocated to timberland a decade ago.
Such is their desire to obtain timberland exposure that institutional investors like Harvard and CalPERS have dominated the buy side of major timberland deals over the past several years. According to the timberland transaction database maintained by Forestweb, timberland investment management organizations--the appointed agents of pension plans and endowments--have accounted for all but one of the 14 purchases greater than 500,000 acres since 2003 (a total of about 15 million acres).
So who's doing the selling? Primarily, the forest product industry: paper and packaging companies like International Paper (IP) (5.6 million-plus acres sold for $6.6 billion in 2006) and MeadWestvaco (MWV) (323,000 acres sold for $400 million in 2007) and lumber manufacturers like Temple-Inland (TIN) (1.6 million acres sold for $2.4 billion in 2007). According to the U.S. Forest Service, by 2006, nearly 80% of forest product industry land had been snapped up by timberland investment management organizations and real estate investment trusts, marking nothing less than a complete overhaul of the once fully integrated forest product industry's supply chain. Today, just a handful of publicly traded forest product companies still have substantial timberland investments. Among the top 10 largest nongovernment timberland owners, only three are not timberland investment management organizations: Weyerhaeuser, the only classic forest product company on the list, and timber real estate investment trusts Plum Creek Timber and Rayonier.
It's fairly clear from the preceding table that the market assigns substantial value to timberland holdings. If it didn't, Plum Creek would trade a much lower multiple, closer to that of Weyerhaeuser or Rayonier, which derive a much smaller portion of their earnings from timberland. Given what we know about timberland's risk and return profile over the past 20 years, perhaps it's not surprising that the market assigns Plum Creek this kind of premium multiple.
But should it? How should we value timberland and the companies that own it? We need to consider what the next 20 years might look like for timberland. With the transition from industrial to investor ownership of timberlands now nearly complete, is the capital appreciation of the past two decades a one-time, fund-flow-driven occurrence? Or do timberland values have more room to run? On the cash-flow front, what does the uncertain outlook for housing starts mean for lumber-related income? Will the secular decline in paper demand hurt timberland owners? And what about the prospect of deriving energy from wood in the form of power generation or biofuels? Fundamentally, we'll need to address questions of supply and demand, both for the products made from wood as well as for timberland itself. In Part II of our look at timberlands, we'll attempt to do so.
Idled lumber plants may get second life in bioenergy business
by Tom Robertson, Minnesota Public Radio
September 3, 2009
Bemidji, Minn. — Canadian-owned Ainsworth Lumber Company permanently shuttered its plants in Bemidji, Grand Rapids and Cook earlier this year, and now those communities are wondering what's next for the huge, idle plants.
Things are tough right now for northern Minnesota's wood products industry. Demand for lumber is near an all-time low. Some entrepreneurs are betting the answers will be found in biofuels and the emerging green economy.
The former Ainsworth plant in Bemidji once churned out a plywood-like product called oriented strand board. Now the factory is eerily quite, except for the high-pitched hum of the overhead lights. But that will soon change.
A Bemidji company called The Idea Circle has purchased the plant and plans to turn it into a bio-energy park for emerging green businesses.
Vice president Robin Larson plans to reuse one of the plant's biggest assets -- a row of huge dryers, once used in the manufacturing process.
"They're 10-feet tall, they're 60-feet long," she said. "There are three of them and they have the capacity today to be able to handle 300,000 tons of woody biomass a year.
Larson said that woody biomass -- including everything from tree limbs, tree bark, and even dead wood -- could be converted into wood pellets. It's a fuel that's become popular for heating homes and businesses in Europe but has so far been slower to catch on in the U.S.
Company officials say the former Ainsworth facility is ideal for producing wood pellets or other bio-based fuels. The existing building is 400,000 square feet; about the size of four football fields, all under one roof. There's a railroad spur and a 12.5 megawatt co-generator capable of producing electricity.
This facility might be a good investment, but it's risky for The Idea Circle, a workforce development company that's never invested in a venture this size before.
CEO Mary Eaton is tight-lipped about other potential tenants, but said several enterprises will be up and running by next year. The company is exploring relationships with manufacturers, higher education, research and testing services and other companies interested in using northern Minnesota's forest resources for renewable energy.
Eaton said the political and social climate in the U.S. makes it a good time to invest in renewable energy. She said there may be stimulus money or other government incentives available down the line but for now the venture is being funded by private investors.
"It's a calculated risk whenever you do something of this nature, but I do think it's inevitable," Eaton said. "I think in the 70s we went through a crisis and oil prices came down and we all forgot about it. And now we've gone through another couple of crisis and we really believe that the United States is ready to step up and look at alternatives."
Those same green energy ideas are being floated at the other two former Ainsworth plants in Cook and Grand Rapids, both of which are still for sale. A non-profit group called the Itasca Economic Development Corporation might purchase the plant in Grand Rapids. Interim President Diane Weber said wood pellets and other green industries are at the top of their list.
"Oh if not now, when?" Weber said. "With the money that's available these days [and] the incentives for renewable energy companies and green companies, there's never going to be a better time."
Some in the wood products industry are cautious about the pace of biomass energy development. Wayne Brandt is executive vice president of the Minnesota Timber Producers Association. Brandt said he supports bioenergy, but the industry should focus on using the main parts of trees for high value products like oriented strand board, lumber and paper.
"What we would like to see is the bioenergy markets develop naturally so they are sustainable over time, and not be forced to where the economics don't make sense long term and you have projects starting up and shutting down," Brandt said. "In the case of ethanol, we've seen ethanol plants built that have never run, so we wouldn't want to see that happening in this area."
Brandt said things like wood pellets and other biofuels add value to northern Minnesota's forests, but it isn't enough to save the timber industry from its current slump. That will depend largely on whether the nation's housing construction market makes a rebound.
http://minnesota.publicradio.org/display/web/2009/09/02/lumber-plants-biofuels/
September 3, 2009
Bemidji, Minn. — Canadian-owned Ainsworth Lumber Company permanently shuttered its plants in Bemidji, Grand Rapids and Cook earlier this year, and now those communities are wondering what's next for the huge, idle plants.
Things are tough right now for northern Minnesota's wood products industry. Demand for lumber is near an all-time low. Some entrepreneurs are betting the answers will be found in biofuels and the emerging green economy.
The former Ainsworth plant in Bemidji once churned out a plywood-like product called oriented strand board. Now the factory is eerily quite, except for the high-pitched hum of the overhead lights. But that will soon change.
A Bemidji company called The Idea Circle has purchased the plant and plans to turn it into a bio-energy park for emerging green businesses.
Vice president Robin Larson plans to reuse one of the plant's biggest assets -- a row of huge dryers, once used in the manufacturing process.
"They're 10-feet tall, they're 60-feet long," she said. "There are three of them and they have the capacity today to be able to handle 300,000 tons of woody biomass a year.
Larson said that woody biomass -- including everything from tree limbs, tree bark, and even dead wood -- could be converted into wood pellets. It's a fuel that's become popular for heating homes and businesses in Europe but has so far been slower to catch on in the U.S.
Company officials say the former Ainsworth facility is ideal for producing wood pellets or other bio-based fuels. The existing building is 400,000 square feet; about the size of four football fields, all under one roof. There's a railroad spur and a 12.5 megawatt co-generator capable of producing electricity.
This facility might be a good investment, but it's risky for The Idea Circle, a workforce development company that's never invested in a venture this size before.
CEO Mary Eaton is tight-lipped about other potential tenants, but said several enterprises will be up and running by next year. The company is exploring relationships with manufacturers, higher education, research and testing services and other companies interested in using northern Minnesota's forest resources for renewable energy.
Eaton said the political and social climate in the U.S. makes it a good time to invest in renewable energy. She said there may be stimulus money or other government incentives available down the line but for now the venture is being funded by private investors.
"It's a calculated risk whenever you do something of this nature, but I do think it's inevitable," Eaton said. "I think in the 70s we went through a crisis and oil prices came down and we all forgot about it. And now we've gone through another couple of crisis and we really believe that the United States is ready to step up and look at alternatives."
Those same green energy ideas are being floated at the other two former Ainsworth plants in Cook and Grand Rapids, both of which are still for sale. A non-profit group called the Itasca Economic Development Corporation might purchase the plant in Grand Rapids. Interim President Diane Weber said wood pellets and other green industries are at the top of their list.
"Oh if not now, when?" Weber said. "With the money that's available these days [and] the incentives for renewable energy companies and green companies, there's never going to be a better time."
Some in the wood products industry are cautious about the pace of biomass energy development. Wayne Brandt is executive vice president of the Minnesota Timber Producers Association. Brandt said he supports bioenergy, but the industry should focus on using the main parts of trees for high value products like oriented strand board, lumber and paper.
"What we would like to see is the bioenergy markets develop naturally so they are sustainable over time, and not be forced to where the economics don't make sense long term and you have projects starting up and shutting down," Brandt said. "In the case of ethanol, we've seen ethanol plants built that have never run, so we wouldn't want to see that happening in this area."
Brandt said things like wood pellets and other biofuels add value to northern Minnesota's forests, but it isn't enough to save the timber industry from its current slump. That will depend largely on whether the nation's housing construction market makes a rebound.
http://minnesota.publicradio.org/display/web/2009/09/02/lumber-plants-biofuels/
Tuesday, September 1, 2009
Finding Smells That Repel
Check out this link to the Wall Street Journal about why mosquitoes like some people more than others:
http://online.wsj.com/article/SB10001424052970204660604574378933761528214.html?mod=yhoofront
http://online.wsj.com/article/SB10001424052970204660604574378933761528214.html?mod=yhoofront
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