Communicating Issues and Ideas Important to the Management of Montana's State Forest Lands THE ROLE OF GENETICS IN FOREST IMPROVEMENT What is the role of genetics in our forestry op- erations? What genetic consequences of our actions do we need to consider? Actually, every decision we make involving trees--our harvest systems, regeneration, thinning (when we do it), planting, tree marking, and site preparation-has genetic consequences. Genetics and tree improvement mean much more than the formal activities of tree improvement carried out at the west- ern larch potted orchard, at the ponderosa pine orchard, or by the Inland Empire Tree Improvement Coopera- tive. Genetics are important for the obvious reason that characteristics of the parent can be passed on to or in- herited by the offspring. Different tree characteristics have different heritabilities, as shown in the table be- low. Consequently, poorly formed, rotten, cull trees that may be of little or no timber value are likely to pass these negative characteristics on to the offspring they produce. Fast growing trees may or may not produce offspring with rapid growth. Thinning, natural regeneration, partial cutting, and uneven age management are the areas where we can most easily make good or bad genetic selections. When conducting these activities, we should remember the “asymmetry of response” concept put forth by several geneticists (Libby 1989; Howe 1989). The asymmetry of response describes the difference in the relative ease with which we can make positive or negative changes in the growth characteristics of trees. The assertion is that it is much easier to make negative changes than positive changes. The risks are not inconsequential. Some estimates suggest that a 15 percent reduction in growth can easily occur from one generation to the next when allowing natural regeneration from poor grow- ing genotypes. Why does this matter? Well, with our increasing emphasis on natural regeneration and partial cutting, we need to make certain that the best trees (phenotypes) provide seed for the next stand. The trees we leave may produce seed, but they also produce pollen. Both seed and pollen carry the genetic makeup of the parent tree. Consequently, the impact extends from the area around a parent tree where a cone may fall to the range of pollen dispersal. The characteristics that make for good wildlife trees often result in a tree of lower value for wood products. When leaving wildlife trees, we should consider the Characteristic Heritability Weak Moderate Strong Diameter growth mmmm Height growth Specific gravity Susceptibility to disease Susceptibility to insects Growth form f W^m mmssm ? Source: Howe 1 989. risks posed if trees of low timber value provide the ge- netic material for regeneration. We might want to con- sider interplanting to reduce the risk of reproduction by trees of poor genetic material. We might want to con- sider damaging some trees that are otherwise healthy, vigorous, and of high value in order to leave trees that are appropriate for wildlife but do not pose the risk of reproduction by phenotypically (and possibly genotypi- cally) poor individuals. Genetically, the most risky endeavor we undertake is uneven age management. When uneven age systems are appropriate, we need to make certain the trees we leave behind are not genetically inferior. For example, it is unacceptable to assume that smaller trees in a stand are younger; they must be bored for us to be certain (Howe 1989). Stands that appear to be uneven aged should be verified before we treat them as uneven aged stands. Although uneven age management is appropri- ate in some situations, we need to complete the neces- sary work to ensure that we are not making a dysgenic decision. Spring/ Summer 1996 As we conduct our operations, we need to recog- nize the genetic consequences of our silvicultural prac- tices. References Howe, G. E. 1989. Genetic effects of even-aged and uneven-aged silviculture. Paper presented at the National Silviculture Workshop, July 1989, at Petersburg, Alaska. Libby, W. J. 1989. Some tradeoffs among tree improvement, high-grading and genetic conserva- tion. Unpublished manuscript, 1989, at Univer- sity of California, Berkeley, Calif. A BRIEF OUTLOOK ON THE ECONOMICS OF TREE PLANTING The Department of Natural Resources and Conser- vation (DNRC) manages the State’s forested lands: (1) to generate revenue for the school trust funds, and (2) to ensure the long-term revenue-generating potential of the land. Consequently, DNRC employees need to consider the economic implications of our practices and activities. Regenerating the stands that are harvested is one area where economics figures prominently This article presents some plausible economic scenarios re- garding plantation establishment. The purpose is to encourage thinking about the economics of regenera- tion, in the broad sense - not to provide a definitive set of answers to all of our questions about regeneration. Selecting a Regeneration Strategy Regeneration is one phase in the continuing cycle of renewable resource utilization. Harvest methods should always be selected with a consideration of the economic consequences of harvesting and then 2 re-establishing a stand of trees. Selection of harvest and regeneration methods should ensure the develop- ment of a future stand that will provide a positive re- turn to the trust when harvested. For example, if the cost of establishing a plantation exceeds the expected discounted future value of the stand, another method of harvest and/or regeneration should be considered. The time to consider this is during sale planning, not after the harvest. Some economic factors to consider when selecting a regeneration strategy are: Cost of establishment Length of rotation Growth potential or future yield Discount rate Future value of stumpage Most of our control over the future value of a stand derives from our ability to control regeneration costs. Forest Management Newsletter We determine the regeneration method and the treat- ments necessary to accomplish our regeneration goals. We can shorten or extend the rotation, thus impacting the volume harvested and the economic return. We can also influence growth potential through various treatments. Rapid juvenile growth can be en- couraged through various site preparation treatments; long-term growth can be improved by using genetically improved seedlings. The proper choice of a species for regeneration-choosing to plant fast growing serai spe- cies, for instance, instead of relying on a slower grow- ing tolerant species that is already present-can make a big difference. Interaction of Economic Factors In this article we look at variable regeneration costs, variable rotation length, two site productivities, and three stumpage appreciation rates. One factor not con- sidered is the risk of failure associated with attempted plantation establishment. Variable costs somewhat ad- dress this issue, but, to keep the analysis simple, we are assuming that the dollars invested in regeneration will yield a successfully established plantation. In practice, the risk of plantation failure should be considered. Regeneration Costs Three distinct estimates of regeneration establish- ment costs are outlined in this article. The three costs--$150, $275, and $400 per acre- were selected to represent a possible range. The $ 1 50-per-acre cost rep- resents planting at a 12- x 12-foot spacing (302 trees per acre), seedling production costs of $0. 1 9 per tree ($190 per thousand), planting costs of $0.28 per tree, and administration costs of $0.02 per tree. This gives an “in-the-ground” cost of $0.49 per tree or about $ 150 per acre. The same production, planting, and administration costs were used for the $400-per-acre cost. Additional assumptions include spot treating the area with Pronone at a cost of $0. 10 per tree and netting at a cost of $0.32 per tree. Finally, let’s assume planting at a 10- x 10-foot spacing. Thus, 435 seedlings times $0.91 per tree equals approximately $400 per acre. The $275-per-acre cost is halfway between the costs under the other two scenarios. Growth Potential To keep the analysis simple, we estimated one av- erage productivity for west-side ponderosa pine and another average productivity for Northwest Land Of- fice (NWLO) ponderosa pine. These figures are 70 cubic feet per acre per year for the west-side and 85 cubic feet per acre per year for the NWLO. We then ran the SPS growth model to produce these growth rates on a 100-year rotation. Discount Rate We used a discount rate of 4.01 percent. The dis- count rate represents the future value of a dollar in rela- tion to the value of a dollar today. In other words, a dollar today is worth 4.01 cents more now than it will be one year from now. Stumpage Appreciation Rate We know that over the last several decades the value of stumpage has increased at a rate of around 2 percent over inflation. Of course, we don’t know the future value of stumpage. So, we looked at plausible values ranging from no increase, through a 1 .5 percent increase, and up to a 3 percent increase. Most economists agree that stumpage values will increase somewhere within this range. Within the range presented, you can make your own assumption regarding the future value of stumpage. Land Expectation Value Land expectation value (LEV) is simply the net present value of a treatment looked at over an infinite number of rotations. LEV allows us to compare the economic desirability of different alternatives. A posi- tive LEV means the investment is growing in value faster than the discount rate. A negative LEV means that the discount rate is greater than the growth of the investment’s value. Generally, a positive LEV means the project is a good investment, while a negative LEV means the opposite. 3 Spring/ Summer 1996 Figure 1 Projected Returns for Varied Costs & Yields with Stumpage Appreciation Rate 0% Mid Yield Cost $150 Mid Yield Cost $275 o-„ -o Mid Yield Cost $400 High Yield Cost $150 High Yield Cost $275 High Yield Cost $400 80 100 Stand Age in Years First are the generalities: • LEV changes over time because growth rates change. • Higher stump- age appreciation rates give higher LEVs. • Higher growth gives higher LEV. • Higher estab- lishment costs decrease LEV. What else can we see? If stumpage does not increase in value, we have very few situations where planting will yield a posi- tive LEV (Figure 1). With minor exceptions, the only scenarios that crease faster than infla- tion. The importance of an increase in stumpage value is readily apparent when looking at the other two charts. If stumpage appreciates at 1 .5 percent, we show a positive LEV over a broad range of ro- tation lengths, yields, and regeneration costs (Figure 2). The 1.5 percent figure is certainly not unrealistic given past performance. If stumpage increases at 3 percent over inflation we show some extremely high LEVs of over $3,000 per acre, even at the high- est regeneration costs (Figure 3). We also see a longer economic rotation. However, very few economists would argue for the use of such a high appreciation rate, and few, if any, forest- Figure 2 Projected Returns for Varied Costs & Yields with Stumpage Appreciation Rate 1.5% 400 Mid Yield Cost $150 Mid Yield Cost $275 Mid Yield Cost $400 a. _ High Yield Cost $150 High Yield Cost $275 High Yield Cost $400 -200 -400 -600 80 100 Stand Age in Years The Charts yield a positive LEV are those with low establishment costs (i.e., $150 per acre), rotations between 60 and 90 We combined the variables into charts so we could years, and high yield sites. Interpolation shows that look at the range of possibilities. What can we see? regeneration costs over about $290 will never result in a positive LEV, if the value of stumpage does not in- 4 4000 Forest Management Newsletter ers would be willing to support such high timber values. Still, who would have predicted the fluc- tuations witnessed in the last 10 years? 3000 What Does All This Mean? Basically, we need to consider the future value of the stands we are cre- ating. In difficult situa- tions, on harsh sites, it may not be possible to generate a positive LEV if we plant the site. A non-regeneration harvest, or one that relies on natu- ral regeneration, may be a better economic decision. On other sites, particularly those with high growth po- tential and low establishment costs, we may be able to Figure 3 Projected Returns for Varied Costs & Yields with Stumpage Appreciation Rate 3% > 2000 e o *X3 3 o g. 1 1000 -1000 80 100 Stand Age in Years Mid Yield Cost $150 '-'■■a Mid Yield Cost $275 ~-o Mid Yield Cost $400 High Yield Cost $150 High Yield Cost $275 High Yield Cost $400 incorporate planting as a LEV-increasing treatment. The important thing is that we consciously make these decisions during sale preparation. FERTILIZATION AND PLANTING This spring we are installing trials to examine the effects of fertilization at the time of planting. Individual packets of fertilizer are being placed in planting holes at several sites across our ownership. The packets for these trials were provided free of charge by Reforesta- tion Technologies International of Monterey, Califor- nia. The packets resemble a tea bag. Each one contains 10 grams of: ‘nitrogen .............. 16 . . . percent ‘potassium 8 . . . percent ‘phosphorus 6 . . . percent ‘sulphur 2.69 percent ‘iron. 0.64 percent ‘zinc ..... — .... 0.54 percent ‘manganese 0.15 percent They also contain humic acid, Vitamin Bp and a plant auxin (naphthalene acetic acid) known to promote rooting. The fertilizer is a coated, slow release formulation that does not release unless adequate moisture is present. This helps prevent fertilizer burning. The purpose of the trials is to determine to what extent time-of-planting fertilization can increase early growth. If the treatment increases growth sufficiently to save us a year of netting maintenance, it should more than pay for itself. Other benefits may include increased survival, more rapid site occupancy, and earlier canopy closure. WESTERN LARCH INDOOR POTTED SEED ORCHARD The indoor larch orchard produced a relatively large amount of pollen and number of seed cones this spring. Pollen was collected and controlled pollination con- ducted on all the seed cones. Thus, we should produce several thousand seeds of improved western larch for the first time this fall. The value of protecting the orchard indoors, in a greenhouse, was demonstrated this spring when tern- 5 peratures dropped to near zero, with wind chills in the minus 20 degree range. The pollen and seed cones were just beginning to develop and would have been killed by the cold, which would have eliminated any chance of producing seed this year. Grafting of new clones was completed, bringing us to the number of parent trees we want. At full ca- pacity, the orchard will produce an estimated 2 mil- lion seeds from the three breeding zones. Spring/Summer 1996 PONDEROSA PINE SEED ORCHARD Last year the ponderosa pine orchard produced over 180 pounds of seed. Approximately 120 pounds were produced by zones 4 and 5, while zone 6 produced about 60 pounds. Germination test results reveal germina- tion rates of 68 percent for zones 4 and 5 and 76 per- cent for zone 6. Seeds per pound averaged 9,330 for zones 4 and 5 and about 9,000 for zone 6. ROOT GROWTH POTENTIAL MEASUREMENTS Styro-7 seedlings for Bisson and Starvation creeks, as well as some S-4’s from the Plum Creek Nursery, were potted, watered, and grown in the larch greenhouse for approximately two weeks. Then the roots were washed clean, and new root tips were counted. Gener- ally, root potential measurements are based on roots that are over 1 cm in length. We counted both those over 1 cm and those under 1 cm. The results are shown in the table below. While it doesn’t appear that we have a serious prob- lem, it is obvious that the number of roots is lower for our seedlings and substantially lower in the case of roots longer than 1 cm. in seedlings from Starvation Creek. Although this is only one measurement of seedling vigor or health, it does indicate that we have a less viable seedling. Still, it should be no cause for alarm. We will follow the development of bud break in the remaining seedlings and complete another root growth measurement when the bud break observations are done. Location Number of Seediinqs Average No. Roots >1 cm Average No. Roots <1 cm Bisson 13 14.8 25.8 Starvation 13 7.4 28.1 Plum Creek 10 18.9 46.7 This is the first of periodic newsletters designed to communicate issues and ideas important to die management of the State of Montana's forest lands. If you have an idea or issue you would like to see discussed or would like to write something to include in a future newsletter, you’re encouraged to do so. Send your comments, etc., to Scott McLeod, Forest Management Bureau, preferably in electronic format. Why is this first Forest Management Newsletter filled with forest improvement (FI) information? The newsletter was initially developed to be a "Forest Improvement Newsletter." However, it was subsequently decided to change the emphasis to cover any and all issues within forest management, including FI. Thanks go to the members of the FI Team — Dan Cassidy, Rob Ethridge, Scott McLeod, John Shotzbetger, Charlie Stevens, Steve Wallace, and Garry Williams— -for coming up with the idea. Persons with disabilities who need an alternative, accessible format of this document should contact DNRC at the address below. Phone 406 542-4269 • fax 406 5424274 150 copies of this document were published at an estimated cost of $.17 per copy. The total cost of $35.50 includes $25.50 for printing and $10 for distribution. 'ttetwlette t Department of Natural Resources and Conservation Trust Land Management Division 2705 Spurgin Road Missoula, MT 59801 Communicating Issues and Ideas Important to the Management of Montana's State Forest Lands