12 



So if you look at it in those terms, it is now below-cost, but it is 

 actually a significant economic benefit to have these sales go for- 

 ward. 



I do think we need to address the issue of what the cost is, how- 

 ever, because I think the allocation of cost to the timber sales is 

 what is driving this problem from a perception standpoint. As I 

 mentioned, these timber sales are done at fair market value. They 

 are done through competition. Why, then, is national forest land 

 timber costing so much more to produce than the private sector 

 timber is costing to produce? 



I think the answer is obvious. There are a tremendous number of 

 costs which are allocated to these timber sales which are not tradi- 

 tional costs which would be allocated if you were accounting for 

 them as being purely for the purposes of growing timber. 



This is especially true in the White Mountain National Forest, 

 where we have such a huge usage in the area of citizens just 

 coming to visit, and a significant amount of the cost, I believe, that 

 drives the valuation of this timber in the process of accounting for 

 this is a function of items which would be undertaken anyway in 

 order to protect the White Mountain National Forest whether or 

 not timber sales occur. And if you start to back out those costs, 

 then you will get the fair market value price to be more in line 

 with a profitable undertaking than it is today. 



There are, for example, the costs of the number of reviews which 

 must be gone through before the sale can be made. In many in- 

 stances, there are appeals of the sale procedure by environmental 

 groups that are concerned about the idea of selling timber at all in 

 the national forest. Well, that creates a situation much like the 

 person who kills both his parents and then throws himself on the 

 mercy of the court as an orphan, because the price is being driven 

 up on one hand by the appeal process, and then on the other hand 

 the claim is made that the sale should not occur because losses are 

 occurring as a result of the high prices. That doesn't seem right 

 and doesn't seem fair. 



So it seems to me that if we wanted to correct this situation, we 

 should look at the process of accounting for timber sales and 

 maybe reform the process by which we assign value to the timber 

 sales and establish the basis of the cost of the timber sales. And in 

 doing that, I think there should be two elements basically eliminat- 

 ed from being allocated to the price of the timber. 



The first element is the price and the costs which drive the price 

 up in the area of what I would call the "Earth First' 'appeal proc- 

 ess — at least in New Hampshire, we could call it the "Earth First" 

 appeal process. 



The second is that we should eliminate expenses which are asso- 

 ciated with activities which would be undertaken anyway. In the 

 White Mountain National Forest, huge amounts of dollars are 

 being allocated to the timber sales which are for expenses that we 

 think would be undertaken anyway simply to manage the national 

 forest. And if you backed out those two numbers, then I think you 

 would end up with a basis which would show that the fair market 

 value price, which is what is being paid for the timber, is a price at 

 which the Federal Government is making money. 



