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May 4, 2000, Thursday

SECTION: PREPARED TESTIMONY

LENGTH: 2710 words

HEADLINE: PREPARED TESTIMONY OF GERALD J. GRAY VICE PRESIDENT FOR POLICY, AMERICAN FORESTS

BEFORE THE SENATE ENERGY AND NATURAL RESOURCES COMMITTEE SUBCOMMITTEE ON FORESTS AND PUBLIC LAND MANAGEMENT

SUBJECT - UNITED STATES FOREST SERVIES'S STEWARDSHIP CONTRACTING

BODY:
Dear Mr. Chairman and Members of the Subcommittee:

I am Gerry Gray, Vice President for Policy at American Forests, the oldest national citizens conservation organization in the U.S. The mission of American Forests is to help people improve the environment with trees and forests. We do this through programs that provide information, tools, and resources to urban and rural communities to protect, restore, and maintain healthy ecosystems. Over the past five years, we have worked with many partners in rural forestbased communities to advance understanding of community-based approaches to ecosystem management. Stewardship contracting has been an important tool in many of these community-based efforts. I am delighted to be here today to present some of our views on Forest Service stewardship contracting.

My comments are based in part on a policy agenda for "Ecosystem Restoration and Maintenance" that American Forests recently adopted. Two of our ten policy goals in the agenda relate directly to this hearing. They are: Increase public and private investment in ecosystem restoration and in building the capacity of communities to maintain healthy ecosystems; and, Promote the creation of an ecosystem workforce through training and apprenticeship programs and new job opportunities.

We view the Forest Service stewardship pilot projects as efforts to test innovative contracting mechanisms in different contexts in order to learn where and how they can be useful in pursuing these broad goals. We would like to thank the Chairman and the Subcommittee for holding this hearing. It is an important forum for local and national interests to discuss what has been and will be learned through the pilot projects. We are especially pleased that the Subcommittee has chosen to take a broad look at stewardship contracting, exploring how these mechanisms can help meet the goals of ecosystem management, restoration, and employment opportunities on the public lands.

Our Vision for Stewardship Contracting

We think about stewardship contracting as a new federal contracting tool that is part of a larger vision. It is a tool that: Provides a means for implementing ecosystem management by shifting the focus of management from producing resource outputs to achieving desired future conditions; Emphasizes quality performance on the land by encouraging the selection of experienced contractors, skilled workers, and an appropriate technical approach, and the use of multi-year, multi-task contracts; and, Contributes to sustainable communities by promoting training and job opportunities for local workers and encouraging the development of private-sector businesses as part of a restoration economy.

A Tool for Ecosystem Management

Since the early 1990s, stewardship contracting has often been described as a tool for achieving "desired future conditions" or "end results" on the land. This focus on desired future conditions was intended to differentiate stewardship contracts from timber-sale contracts, which focus on targeted levels of resource output. As community-based forestry groups and practitioners began to get involved with stewardship contracting, particularly groups based in the West, they began to see it as a useful tool for the Forest Service to do ecosystem management.

For us, and for our community-based partners, the health of the land- maintaining its capacity to provide ecological services for all species, human and non-human-is the primary emphasis of ecosystem management. Stewardship contracting projects, therefore, focus on the objective of restoring and maintaining the health of the land. However, they also recognize that the health of the land and the well- being of adjacent human communities are interdependent. Therefore, although resource outputs are not the primary focus, they are still an important pan of stewardship projects. They are considered a "byproduct." A major purpose of stewardship contracting is to identify potential byproducts (e.g., timber and non-timber products) and to put them to the best possible use for local communities, while ensuring sustainable harvesting practices and capturing value-added locally.

A key issue for stewardship contracting has been whether and how to use "goods for services" mechanisms in which the value of byproducts are exchanged for the value of services provided by a contractor. We have a concern about "goods for services" when it becomes the primary mechanism and focus of a stewardship project because we believe it can open the project to questions about having the wrong incentives for good land stewardship. However, as a means of generating revenue through a project and reinvesting those revenues back into the same area for land services, we believe it is an important mechanism. There is simply too little funding available from other sources to not explore and use this mechanism in a prudent way. In general, we prefer stewardship contracts that sell byproducts under separate contracts rather than exchanging values with the same contractor.

One of the most important elements of stewardship contracting pilots is the monitoring process. Monitoring represents the commitment by project participants to learning and accountability. It reflects a shared belief that these projects are experiments--that they will be adaptive and respond to information gathered through the monitoring process. We have worked with our community-based partners in promoting innovative monitoring approaches, such as multiparty and all party monitoring, that also provide significant benefits in building trust among diverse community participants and in addressing the interests of distant stakeholders. We believe these monitoring approaches will essential to the future success of stewardship projects, and we are pleased that Congress called for multiparty monitoring in the Section 347 language authorizing the Forest Service stewardship pilot projects.

Emphasizing Quality Performance on the Land

While stewardship contracts contrast with timber-sale contracts, they can be seen as building on existing service contracts, which focus on land services or improving resource conditions on a site. Two ways in which stewardship contracts expand on service contracts are their emphasis on "best value" contracting, which focuses on quality performance and technical approach, and their strategic effort to "bundle" service contracts so that contractors can perform multiple tasks on a site over multiple years, or a more flexible timeframe.

"Best value" contracting looks at getting the best quality service on the land for the best price, rather than taking the lowest bid for a contract. Basic criteria for assessing "best value" are past performance, technical approach, and price.

Past performance means considering a contractor's experience, qualifications, and record of previous work. The technical approach proposed by a contractor suggests his or her commitment to the land and community. Elements to consider in assessing this approach include: equipment to be used; commitment to meeting or exceeding desired future conditions on the land; intended use of low-value species, nontimber forest products, and other byproducts; commitment to hiring skilled workers, such as graduates of ecosystem workforce training programs; and commitment to hiring workers from adjacent rural communities.

The ability to "bundle" contracts is intended to move the Forest Service away from contracting for a number of independent land services on the same site, often to different contractors. It is intended to allow an individual contractor to work on a site through a more holistic approach, performing multiple tasks over a longer period of time. This encourages the development of contractors and workers who have a broader set of skills for ecosystem management (i.e., contract workers who become ecosystem workers). It also provides workers in rural communities with longer duration work and a more reliable source of income, helping to strengthen the link between stewardship of the land and community well-being. Finally, bundling contracts provides administrative efficiencies for the federal agency involved by allowing it to work with fewer contractors and longer-term contracts.

Promoting Community Capacity, Local Jobs, and a Restoration Economy

Stewardship contracting is a means of contributing to the development of sustainable rural communities through contract activities that, in addition to restoring and maintaining healthy ecosystems, help build and sustain community capacity, provide a source of income and employment for local workers, and provide contracts and byproduct resources for private businesses as pan of a restoration economy. Contracting procedures could be designed to: Promote community capacity by encouraging, or requiring, the use of contractors and workers who have graduated from skill training programs, such as Jobs In the Woods and other ecosystem workforce training programs. This would not only build the human capacity of the individuals going through the training programs but also the institutional capacity of the organizations-such as local nonprofit groups or community colleges-that establish the training programs.

- Provide preferences for awarding contracts to small or micro businesses in rural communities adjacent to the projects and to contractors who hire workers from adjacent rural communities. These procedures would provide jobs and income to rural communities near to locations where the work is being done.

Stewardship contracting on public lands can provide a stimulus for the creation of a private-sector economy based on ecosystem restoration and maintenance. A significant and long-term commitment by the federal government to stewardship projects on public lands would send a positive signal to private-sector entrepreneurs and investors interested in a restoration economy. Small businesses and contractors that developed to do stewardship contracting on public lands could market their services to private landowners who are in need of land restoration services and who might prefer to use trained restoration workers. A variety of small and micro business might also develop around the processing and marketing of the byproducts of stewardship. Small-diameter timber, low-value tree species, and non-timber forest products, might be processed in rural communities, capturing the value-added benefits. These final products might then be marketed directly from businesses in rural communities, building on their selling power as sustainable products from community-based restoration projects. This is the type of strategy being developed by a consortium of community groups in the Pacific Northwest working together on the Healthy Forests, Healthy Communities initiative.

Funding for Stewardship, or Ecosystem Restoration and Maintenance

We view stewardship contracting as an important tool that can help work toward a vision integrating the ecological health of public forest lands and the social and economic well-being of rural communities. As I explore several funding options below, it is important to keep in mind that these funds would be directed toward the larger vision and may be delivered through mechanisms that complement stewardship contracts, such as grants and cooperative agreements with local nonprofit groups and agencies, or financial assistance programs for small businesses. For example, a number of our community-based partners have used grant funding through the Forest Service's Economic Action Programs-especially Rural Community Assistance-- o develop the local capacity to put together stewardship contracting pilot projects. In addition, technical assistance from the Forest Service, particularly the agency's Forest Products Laboratory, has been essential to community groups trying to develop the local capacity to process and market the byproducts of stewardship projects.

With their emphasis on restoration and maintenance, stewardship contracting activities often cost more than the amount of revenue they might generate through the sale of byproducts. Therefore, other sources of funding are needed to help support these activities. Below are several options for consideration. They are based on information and ideas from a national workshop on community-based ecosystem management that we convened in 1998: - Increased federal appropriations for agency programs that support ecosystem restoration and maintenance activities. There is interest currently among policymakers in increasing agency program budgets for this purpose. We would especially like to thank the bipartisan leadership of this subcommittee, and the full committee, in signing a letter to the Interior Appropriations Subcommittee for this purpose. However, uncertainties inherent in the annual appropriations process make it unsuitable for achieving the vision described above. That vision requires a significant and longer term commitment of funding, if possible. The creation of a permanent federal account to fund stewardship projects is another option. Congress is considering such an account for land acquisition and other conservation programs under the Conservation and Reinvestment Act (CARA). This account would use offshore oil revenues as a source of funding. The Administration has also announced a Healthy Investments in Rural Environments (HIRE) proposal which would create a permanent account for ecosystem restoration and job creation using funds in several existing trust funds, plus a significant annual appropriation. Another option to be explored is innovative mechanisms to obtain resources from those who benefit directly from the ecological services provided by federal forest lands. Federal forests provide ecological services to the public-such as clean air, clean water, fish and wildlife habitat, recreational opportunity, and carbon sequestration- which have significant economic value. Often these economic values are poorly understood, but in some cases the values are relatively clear and mechanisms could be developed to generate revenues from beneficiaries. One of the most promising potential sources of revenue are beneficiaries of water resources from federal forest lands. The Sierra Nevada Ecosystem Project (SNEP) estimates that more than 60 percent of the $2.2 billion worth of commodities and services produced annually by the ecosystem relate to water, yet the downstream beneficiaries of that water-use return none of the economic value back to the ecosystem for restoration and maintenance. There is significant interest among community-based practitioners in looking at questions such as who benefits from ecological services provided by public lands, what is their ability and willingness to pay for ecosystem restoration and maintenance activities, and what institutional barriers constrain efforts to obtain payments for these purposes. Finally, local private-sector businesses making investments in developing services, products, and markets based on stewardship activities are another essential source of funding. These private- sector efforts will largely determine whether communities will be able to build and sustain the capacity for a restoration economy. Innovations in private-sector investment generally apply new technologies, often small-scale and labor intensive, to increase product values and to market products from rural communities, thus capturing value added rather than exporting it. These innovations include: marketing the "byproducts" of stewardship activities to consumers as products that help to sustain both healthy forests and communities; using new technologies to process small-diameter and traditionally low-value trees in order to focus on their unique qualifies for high-value products, such as flooring and furniture; and harvesting, and marketing a variety of mushrooms, herbs, medicinals, decorative greens, and other special forest products.

Thank you for the opportunity to share our views on stewardship contracting and our larger vision for ecosystem restoration and maintenance. Once again, we appreciate the Subcommittee's ongoing interest in these issues.

END

LOAD-DATE: May 6, 2000

Document 49 of 151.


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