Ecology, economics, and politics together define and constrain opportunities for the Alaska forest products industry. Ecology limits potential timber harvest paths and non-timber benefits over time. One kind of ecological limit is the tradeoff between potential harvest levels over time. Another kind of ecological limit is the tradeoff between timber harvests and non-timber forest benefits such as fish and wildlife and scenery. The tradeoffs we make between ecologically possible levels of timber harvests over time and ecologically possible combinations of timber and non-timber benefits are political decisions. Ecology sets broad limits to possible Alaska timber harvest paths over time. But within these broad ecological limits are narrower political limits that reflect the choices we are willing to make about tradeoffs over time and tradeoffs between timber and non-timber benefits. Economics-factors beyond our control that affect costs and prices-limits the profitability of different potential future paths for the forest industry. "Economically possible" future paths for the Alaska forest products industry-those that could be profitable without public subsidies-are constrained by a number of factors. We sell into world markets at prices that reflect world demand conditions as well as our competitors' costs. Many of our costs are higher than our competitors' costs. Because the Alaska forest products industry is small and not very diversified, we cannot utilize our timber as profitably as we could if the industry were larger and more diversified. These economic constraints beyond our control mean that only some of the future paths for the forest products industry that are ecologically possible are economically possible. Politics, decisions made th rough the public policy process, also affects the forest industry in many ways. Politics sets physical limits on timber harvests, but may also provide subsidies to the forest products industry. Political choices about when, where and how public timber is sold affect costs of harvesting and manufacturing. Similarly, political choices on the total volume offered for sale, imposes its effects on the scale of the industry. Primary processing requirements limit some potential uses of timber but make others more profitable by lowering costs of raw materials for instate manufacturing. Politics will continue to influence the Alaska forest products because most Alaska forests are publicly owned, and most Alaskans (and many other Americans) have strong interests in how Alaska forests are used. To create a healthy forest industry we should try to create an economic and political environment in which a healthy industry can evolve. A healthy industry is more likely to evolve if (a) we can build a broad political consensus over a reasonable balance in the uses of Alaska's forests which accepts timber harvesting at a scale sufficient for profitable utilization of different grades of timber to evolve; (b) we can reduce the risk investors face as to their ability to acquire timber in the volumes they need, of the species and grades they need, at the times they need it, and at costs they can plan for; (c) public timber is sold to the highest bidder, so that timber is acquired by those companies that are able to make the most profitable use of it; (d) we avoid placing specific restrictions on how, when and where timber is utilized, and allow it to be used in ways which are most profitable and which can adapt to changing market opportunities; (e) we do not subsidize the forest industry; and (f) we invest in basic research on opportunities for wood utilization to take advantage of the resources we have and of changing technology and markets.
