Nature Conservancy Seeks to Unite Environmental and Economic Interests to Restore Ecological Health of Arizona Forests
Up to $20 Million in Tax Credits Available to Strengthen Market for Small Diameter Trees
Phoenix, AZ...May 20, 2004 - In response to the poor ecological health of many Arizona forestlands, The Nature Conservancy of Arizona is teaming up with public agencies and economic development entities to utilize valuable tax credits to help develop a local market for the small diameter trees that are overcrowding Arizona’s forests.
Despite the fact that a consensus has emerged that much of Arizona’s forestlands is unhealthy and at-risk of unnaturally severe wildfires, progress on improving forest health and wildlife habitat has been slowed largely due to the lack of markets for low-value, small diameter trees. Without a market for these trees, the per-acre cost of improving forest health has been a significant barrier to progress.
To address this challenge, The Nature Conservancy of Arizona is working with the USDA Forest Service, the state of Arizona and local economic development organizations to develop options for utilizing an innovative federal tax incentive program to help finance private businesses interested in harvesting and using small diameter trees in northern Arizona.
“This is a creative, innovative approach designed to help break the impasse slowing progress on improving the health of Arizona’s forests,” said Pat Graham, the Conservancy’s Arizona state director. “This approach, if done properly, will harness the power of conservation science, sustainable economic development and complex business financing to improve wildlife habitat, protect communities and create jobs in rural Arizona. By working together and building trust we can improve forest health at a scale that will truly make a difference for Arizona’s communities and wildlife.”
The tax credits, available through the New Market Tax Credit program of the U.S. Department of the Treasury, were created to encourage business investment and job creation in low income or economically disadvantaged communities. The program’s goal is to attract capital from the private sector and empower people who live, work and invest in communities to make decisions about what type of ventures will create the most jobs and grow the local economy.
Earlier this month, a partnership between The Nature Conservancy and Coastal Enterprises, Inc. (CEI), a Maine-based community development financial institution, was awarded $64 million in New Market Tax Credits by the Treasury Department. Up to $20 million worth of those tax credits may be available to create incentives for investment in restoring the health of Arizona forests. The Conservancy successfully has utilized these tax credits in Maine for a conservation and sustainable forestry project.
Through its partnership with CEI, the Conservancy helps develop prospective business ventures that will produce economic benefits for economically depressed rural areas and meet key ecological objectives, such as improving wildlife habitat in Arizona’s forests. The Conservancy does not receive any direct financial stake in businesses receiving tax credits through the Conservancy-CEI partnership.
As currently envisioned, the tax credits could be used in northern Arizona to help support one or more businesses in developing a manufacturing facility to produce wood products using small diameter trees.
Taylor McKinnon, forest conservation program manager for Grand Canyon Trust said, "The long-term health of Arizona's ponderosa forests ultimately requires restoring natural surface fires. But in many locations, safely restoring fire will first require thinning small diameter trees. By helping community-scale industries that use small diameter wood, New Market Tax Credits can at once help local economies and the restoration of Arizona's fire-adapted forests."
Harv Forsgren, regional forester for the Southwestern Region of the USDA Forest Service said, “The task before us – to restore the health of southwestern forests and help communities protect themselves from wildfire – is enormous. To be successful we must have public support to manage our forests and private business involvement to reduce treatment costs. This partnership with The Nature Conservancy will help facilitate both of those outcomes.”
The Conservancy has stepped forward to help lead this project because of its international experience in science-based conservation programs and extensive fire management program operated in partnership with forestry and fire professionals around the world. In addition, the Conservancy has a strong history of collaboration with diverse public and private partners to achieve effective, measurable on-the-ground conservation results.
This project comes amidst a number of related developments in Arizona and across the nation. Congress recently passed the Healthy Forests Restoration Act, and the USDA Forest Service is working on a plan to treat over the next ten years about 150,000 acres in the Apache-Sitgreaves National Forest. The agency also will begin revising all of its forest plans in Arizona and New Mexico during the next two years. In 2003, Governor Janet Napolitano created a Forest Task Force to make recommendations on how best to restore forest health and reduce wildfire risk. The state legislature is considering bills developed by both the governor’s and legislative task forces.
The Conservancy’s proposal is receiving wide support from government leaders.
Governor Napolitano said, “The scale of forest restoration that is envisioned for Arizona is unprecedented. However, the benefit to communities is unquestionable, and the risk of doing nothing is completely unacceptable. This effort provides a clear path to move forward in a way that results in both a healthier forest and healthier rural economies. And it is this collaboration of government, business and the environmental community that will ensure our long-term success.”
U.S. Senator Jon Kyl said, “This is an important and creative approach to achieving the Healthy Forest Initiative in a timely way, because it works hand in hand with the U.S. Forest Service’s directive to thin the forests, generate income through economically productive strategies and reduce the threat of severe fire danger while they restore forest health. I applaud The Nature Conservancy for their ingenuity in helping us tackle this critical problem.”
Earlier this year, the Conservancy made use of the New Market Tax Credits program to conserve more than 240,000 acres of working forestland in Maine’s Northern Forest.
In Maine’s Katahdin Region, the tax credits were used to conserve important wildlife habitat and support an investment in long-term sustainable forest management, wood supply and jobs. Under the initiative, the Conservancy provided financial assistance to the former Great Northern Paper. In return, Great Northern transferred 41,000 acres in the Debsconeag Lakes wilderness area to the Conservancy and placed a conservation easement on 200,000 acres of forestland along the western and southern boundary of Baxter State Park, ensuring public access, traditional recreational uses, sustainable forestry, and no future residential or other ecologically incompatible development.
In the Maine example, the Conservancy’s goal was to bring conservation and economic development together to protect and improve wildlife habitat and to help sustain the economic backbone of timber-dependent rural communities. Similar objectives will drive the Arizona project.
One likely region to benefit from this investment is the White Mountains area. Joe Papa, executive director of the White Mountain Regional Development Corporation said, “This initiative fits well with our goal to create new and lasting jobs for rural Arizona. It helps those communities that have been devastated by past fires move forward, and allows a measure of protection to other places where forests and people come together.”
The White Mountains are considered a conservation priority for The Nature Conservancy for several reasons: 1) the region contains the highest concentration of perennial streams in Arizona; 2) it includes the headwater tributaries of the Little Colorado, Salt, and Gila Rivers; and 3) it has one of the greatest densities of rare aquatic and riparian-dependent animals and plants in the Southwest.
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