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This project evaluates the costs and benefits of the Forest Stewardship Council’s
(FSC) forest certification for a large timber management organization (TIMO). FSC
certification is a voluntary, market-based program that promotes sustainable forest
management through third-party certification.
The TIMO in this case study manages 3.3 million acres of land certified under FSC,
and this project evaluated both the direct and indirect costs and benefits of certification.
This project was able to quantify the direct and indirect costs and benefits of forest
certification through surveys, financial analyses and regression analyses.
On average, forest certification is a net-positive program for the client, earning
an estimated $771,000 of additional annual revenue. Certification premiums paid for
finished wood products are significantly higher than certification premiums for certified
stumpage. Certified wood products receive an overall price premium of 10.5% while
the premium for certified stumpage ranges from 1.6-4.3%. Price premiums for finished
wood products are considerably higher for domestic sales than for export sales. The
domestic sale of finished wood products generates a statistically significant price
premium of 30.0% as compared to the statistically significant but much lower premium
for exported wood products of 3.4%.
This project provides evidence that there are financial incentives for forestland
owners to maintain forest certification. FSC has marketed both the ecological and
financial benefits of maintaining forest certification. Previous studies of forest
certification have generally concluded that the ecological benefits of forest certification
are clear but that the desired financial benefits have not yet materialized. This
project demonstrates that a large timberland owner can receive meaningful financial
benefits from its forest certification program.
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