• A Good Cut

    Restoring the heavily harvested forests of Michigan's Upper Peninsula.
    By Ginger Strand
    Photographs by Drew Kelly
 

J

on Fosgitt strides into the forest outside Newberry, Michigan,

oblivious to the cold rain slicking his shaved head. “I expect great things from this gap,” he says, indicating a clearing of sawed-off trees.

This part of Michigan’s Upper Peninsula is farther north than Montreal, and it feels like it. The wet October air already has a wintry chill. But nothing dampens Fosgitt’s boundless enthusiasm for trees.

“Look at that white pine!” he cried on the way here, slamming on the brakes of his pickup. “That’s a dandy!”

Fosgitt is a tree-like presence himself, large and firmly planted, which is one reason his excitement about this forest clearing seems surprising. Sure, there’s a single towering white pine, but the rest of the space, 120 feet in diameter, is littered with tree stumps and piles of limbs. This is the site of a logging operation. And not just any logging operation, but one conducted on land owned by The Nature Conservancy, for which Fosgitt works as a forestry consultant.

Kevin Russell, a wildlife ecology professor, tramps into the clearing and nods in agreement with Fosgitt’s assessment. He hunches over in his raincoat to examine a thicket of waist-high saplings. White pines. Michigan’s most-storied tree, the white pine was logged nearly to local extinction in the 19th century. The trees are regenerating naturally here. And although it’s hard to believe that these treelets might one day tower to 150 feet, that is exactly why Jon Fosgitt created this gap.

“You’ve got some deer browse,” Russell says, pointing to some gnawed-down saplings. Russell is here as an auditor for the Forest Stewardship Council (FSC), the world’s most recognized timber-certification agency. An FSC stamp guarantees that a timber company harvests trees sustainably, pays a just wage, adheres to safety standards and maintains wildlife habitat. Even when the timber operation is run by the Conservancy, Russell’s job is to take nothing for granted. He’s on the lookout for signs of overharvesting or collateral damage. He’s making sure that logging roads have been constructed with care and waterways are not being polluted.

While the Conservancy’s parcel of commercial timberland in the Upper Peninsula (U.P.) is relatively modest—just a little more than 23,000 acres—the organization purchased an easement to protect 10 times that much land. The easement guarantees that the land will be sustainably logged in perpetuity.

To some, it may sound like the Conservancy has forgotten its mission. No one disputes that when all the acres and accompanying restrictions in the agreement are tallied, they add up to the biggest conservation deal ever inked in the state of Michigan—hence its nickname, “the Big U.P. Deal.” But logging is not some ugly downside to an otherwise sweet agreement. It’s at the very core.

Clearly this is not preservation as usual. This is something else—something that Fosgitt sees as not only the best thing for conserving forests in the U.P., but as a step toward revolutionizing logging practices and improving forest health nationwide.
Timber Rush

To anyone touching down at the tiny airport in Marquette, where huge piles of logs flank the runway, it’s obvious that the timber industry dominates Michigan’s Upper Peninsula. From the air there is no mistaking the plantations of jack pines, which march in cornfield-like rows. On the road, cars pass heavy logging trucks grinding up hills on the way to Newberry. Downtown Newberry features the headquarters for the Michigan Timbermen’s Association, a museum of logging and a restaurant called Timber Charlie’s. At the nearby Pine Stump Junction Cook Shack, where the barstools are hewn from whole logs, men in flannel workshirts eat chili and discuss the price of maple. Some are fourth-generation timber men.

While California had a gold rush, Michigan had a wood rush. Starting in the 1840s, Michigan’s white pines, sugar maples, beeches and yellow birches built and fueled the Midwest’s growing cities. They helped build the region’s railroads and the ships that plied the Great Lakes. And when they grew back, the trees were felled again to feed the mills of giant mining, lumber and paper companies.

“All of our big, beautiful trees got cut over a hundred years ago,” says Tina Hall, a Conservancy scientist in Michigan and one of the architects of the Big U.P. Deal.

Another historical shift began in the 1990s, Hall says, when the paper and lumber companies that owned much of the nation’s private forestlands began selling off their forest holdings. Big landowners like Georgia Pacific and International Paper determined they could make more money by selling their land, recouping the capital, and buying pulp or planks from the cheapest source.

At that time a new kind of buyer stepped in: timber investment management organizations (TIMOs), and their siblings, real estate investment trusts (REITs). These companies buy and hold real estate for a limited time—usually 10 to 20 years—on behalf of investors. After an allotted time, a TIMO typically realizes its investment by selling the land. Often the land goes to developers. A 2007 report by a consortium of nonprofit groups and universities, led by researchers at Michigan Tech, predicted that a significant percentage of the current commercial timberland in Michigan’s Upper Peninsula would likely be converted to housing or other uses. Such projections worried people like the Conservancy’s Hall, whose job is to protect the ecological health of the U.P.

“Subdivision is a bigger threat than timber mismanagement,” she says. In other words, even if land is clear-cut, trees will grow back. But after land is sold off for housing tracts, the trees are gone forever. And so are unbroken swaths of open space and wildlife habitat.

So Hall and others at the Conservancy got very interested when they heard that more than a quarter million acres of Michigan timberland were up for sale. All but a tiny remnant had been logged before, and the land was split up into many different tracts, but put together it connected more than 2 million acres of open space. It included that parcel of pristine land along the Two Hearted River, a Great Lakes tributary made famous by Ernest Hemingway. The Two Hearted watershed is home to hardwood forests, pine forests and the complex marsh ecosystems known as patterned peatlands.
The Conservancy and the state of Michigan joined forces to try to buy the land. But when the sealed bids were opened, the top offer was from a North Carolina-based TIMO called The Forestland Group. It could have been a crushing blow. Instead, it presented an opportunity. The Conservancy went into high gear, says Hall. “We decided to chase The Forestland Group.”

Adding Value
Shawn Hagan, a 30-year U.P. resident, heads The Forestland Group’s operations for the Great Lakes region. His particular TIMO, he says, isn’t just about holding the land and then offloading it. This TIMO’s investors actually want to improve it.

“We’re looking at it from the value perspective,” Hagan says. “What can we do before the end of this fund’s life to maximize value on the property: adding timber volume, adding value, adding infrastructure where appropriate.”

The Forestland Group bought the land in 2003 for a little more than $144 million. Almost a decade later, the TIMO, the Conservancy and the state hammered out the Big U.P. Deal. The company sold the sensitive lands around the Two Hearted River watershed to the Conservancy for $13.6 million. Those 23,318 acres of land will continue to be sustainably managed by the Conservancy as commercial timberland. That means that trees will be selectively harvested and sold, and the profits will be reinvested into the project or other conservation deals. On the rest of the nearly quarter million acres, The Forestland Group sold a conservation easement for almost $38 million to the Conservancy, which transferred it to the state for the same price. The easement’s terms restrict future development. A few areas—mostly waterfront parcels around some lakes—are available for low-density development. A limited number of such sales are permitted; future owners will be required to manage part of their land as commercial forest, harvesting timber and allowing public access to most of the land.

But the vast majority of the land cannot be developed at all and must continue as commercial forestland—with The Forestland Group and any future owners restricted to practicing sustainable forestry.

State officials and local people like the deal because it keeps the U.P.’s economy chugging along while maintaining vast tracts of healthy working forest—which are open to the public. The Conservancy likes the deal because much more land was preserved than the organization could have afforded to protect on its own.

But why would a TIMO go for the deal, burdening its land with such restrictions? For starters, money. The easement offered The Forestland Group a chance to realize a big chunk of its investment up front.

“Economically the deal made sense because of the influx of cash” from the Conservancy, Hagan says. And, he adds, his company believes that investors value the FSC stamp of approval because it signifies that the land is well-managed. For The Forestland Group, sustainable logging isn’t merely a nice thing to do for the planet; it’s also a smart thing to do for business.

Jon Fosgitt is counting on other businesses and investors to catch on to the double bonus of well-managed forests. The forester, who also holds a degree in rhetoric, argues persuasively that over the long term, sustainable forestry will pay. And he’s using the Conservancy’s 23,000 acres as a demonstration project to prove it.

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"For The Forestland Group, sustainable logging isn’t merely a nice thing to do for the planet; it’s also a smart thing to do for business."

Shawn Hagan, head of The Forestland Group’s operations, Great Lakes region.

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