Public investment is the key to sustainable forestry.

Where timber plantations were once logged intensively on short rotations, older and more complex forests now stand on the 9,400 acres owned by the van Eck Forest Foundation in Oregon and California. The new practices store more carbon and offer ideal stream conditions for salmon as well as habitat for marbled murrelets and northern spotted owls. Legal agreements called working forest conservation easements (WFCEs) protect these forests from conversion to agriculture or development, and the van Eck easements include prescriptions that also guarantee improved forest management, including growing older trees, into the future.

In defiance of the false jobs-versus-environment dichotomy, these forests produce millions of board feet of timber each year, supporting loggers, truck drivers, mill workers, foresters, and biologists. Selling carbon credits from its California forests adds another income stream for the Van Eck Forest Foundation.

The practice of “long rotations” means growing trees longer before logging them. It extends the length of a harvest cycle from a short “financial rotation age” that maximizes net present value to a longer “biological rotation age” that maximizes timber production as well as carbon storage, habitat, and water quality.

Economists call the ecological harm of intensive short-rotation logging a market failure. That is, when the environmental benefits are accounted for, long rotations increase the wealth of society as a whole by more than enough to pay landowners to delay harvest. Of course, though, without countervailing action, such payment does not occur.

Meanwhile, timber companies do not have to pay the environmental costs of short rotations. These are often unseen “environmental externalities.” And long rotations’ ecological benefits, because they are public goods that everyone can enjoy whether or not they cut a check to the landowners and investors, suffer from a lack of adequate voluntary funding: the free rider problem. This means that timberland owners, for whom delaying harvest comes at a steep cost, can’t get paid for their work of stewarding these trees through long rotations. It’s a cycle that cheats the foresters, society, and the environment.

In ballpark figures, fixing the short-rotation market failure on the 8 million acres of private industrial forest in western Oregon and Washington would cost around $16 billion.1 That sounds steep, until one learns that it would generate around $40 billion in carbon storage benefits alone.2 That is over 100 percent return on investment.

Is there a way to fix this market failure? Economists have traditionally recommended two kinds of solutions: regulate companies or privatize benefits. Starting with the second option, Sightline examined seven existing mechanisms that Cascadians could use to pay landowners what it costs them to grow older forests, incentivizing those landowners to do so while also supporting the ecological benefits regional residents and people around the globe so appreciate about their forestlands. While we did not perform a robust quantitative analysis that accounts for feedback and equilibrium effects, we did examine the current size and shape of these mechanisms and we compared them with both the carbon storage benefits of long rotations and their costs to landowners.

Because forest health and carbon storage are public goods that are vulnerable to free-riding, voluntary mechanisms alone—carbon markets, sustainable sourcing, sustainability certifications, and impact investing—cannot meet the scale needed to fix the short-rotation market failure. (In other words, these voluntary markets also suffer from market failure.)

But two existing and time-tested US federal programs could. The Forest Legacy Program (FLP) and the Healthy Forest Reserve Program (HFRP) could pay landowners for long rotations at the scale needed to fix the short rotation market failure. FLP appears to be more...