Manoa CTAHR NREM Presentation

Summary of Commercial Forest Products Activity in Hawaii : 

November 30, 2006 1 Summary of Commercial Forest Products Activity in Hawaii Stephen E.S. Smith Principal Forestry Management Consultants – Hawaii University of Hawaii – Manoa College of Tropical Agriculture and Human Resources Natural Resources and Environmental Management Thursday, November 30, 2006 All of the text in this presentation has been gathered, compiled and edited from public documents or from the private records, both conversation and text, of Stephen E.S. Smith. No attempt to verify or confirm this text with other sources has been made and as such should be considered the opinion of Stephen E.S. Smith as noted in the disclaimer at the end.

Commercial Forestry Activities in HawaiiPre Contact to the Present : 

November 30, 2006 2 Commercial Forestry Activities in HawaiiPre Contact to the Present Commercial Forestry Activities have played a small, generally unrecognized, but important and interesting role in the economic development of Hawaii Commercial Forestry Activities are positioned to play a larger role in the diversification of Hawaii’s economy as they mature in the 21st century

Early Polynesian Migrations : 

November 30, 2006 3 Early Polynesian Migrations

Modern Polynesian Voyaging Canoe, Hawaii loa, under Sail : 

November 30, 2006 4 Modern Polynesian Voyaging Canoe, Hawaii loa, under Sail Unable to secure two 50’ long koa logs in Hawaii, the hulls of the Hawaii loa are built of Sitka spruce, gifts from the Haida, Tlingit tribes and Sealaska Corporation

Captain James Cook off the Coast of Kauai - 1778 : 

November 30, 2006 5 Captain James Cook off the Coast of Kauai - 1778 Moment of Discovery Original Painting & Prints by Raymond A Massey Available at Ship Store Galleries Coconut Marketplace Kapaa, Kauai Hawaii

Reproduction - Great Room of Cleopatra’s Barge, the First Pleasure Yacht built in America : 

November 30, 2006 6 Reproduction - Great Room of Cleopatra’s Barge, the First Pleasure Yacht built in America Photo Courtesy of Peabody Museum Salem, MA

Ha‘aheo o Hawaii (Pride of Hawaii) under sail near Hanalei, Kauai : 

November 30, 2006 7 Ha‘aheo o Hawaii (Pride of Hawaii) under sail near Hanalei, Kauai Pride of Hawaii entering Hanalei Bay Original Painting & Prints by Raymond A. Massey Available at Ship Store Galleries Coconut Marketplace Kapaa, Kauai Hawaii

Selected 20th Century Commercial Forest ProductsActivities : 

November 30, 2006 8 Selected 20th Century Commercial Forest ProductsActivities

Hawaiian Mahogany and Pahoa Mill Company : 

November 30, 2006 9 Hawaiian Mahogany and Pahoa Mill Company 1908-1917 Puna, Hawaii Pahoa Mill Company circa 1913 Courtesy of Photograph Collection, Lyman House Memorial Museum and Mission House, Hilo, Hawaii

Hawaiian Mahogany and Pahoa Mill Company : 

November 30, 2006 10 Hawaiian Mahogany and Pahoa Mill Company 90 Million board feet of ohia to be delivered as 500,000 railroad ties annually for 5 years Santa Fe Railroad canceled contracts in 1917 after it was determined that ohia ties had a shorter than expected life in the dry southwestern deserts. Courtesy of Photograph Collection, Lyman House Memorial Museum and Mission House, Hilo, Hawaii

Hawaiian Fern Wood Co., Inc. : 

November 30, 2006 11 Hawaiian Fern Wood Co., Inc. 1950 –1966 Hilo, Hawaii Original sawmill production of tree fern for orchid growers and other agricultural uses Product line expanded to include eucalyptus irrigation pins for sugar plantations, albizia pallets for Hawaiian Airlines, tropical ash and silk oak furniture components, and koa, ohia and monkeypod lumber Company closed when SBA called a loan given to HFW for reconstruction after the 1960 Hilo tsunami

Blair Ltd. : 

November 30, 2006 12 Blair Ltd. 1946 – Present Hilo & Honolulu, Hawaii Millard Blair is credited with development of koa and monkeypod craft wood trade in Hawaii 1959 Purchased Corley portable sawmill and moved it to Kamehameha Schools land at Keauhou Ranch in Volcano, Hawaii. Lease payment at the time was $8 per thousand landed in Honolulu ($54.51 per thousand in 2006 dollars) Purchased HFW assets in 1966 and moved operation to Hilo in 1968. Closed Hilo in mid 1980’s. Factory and showroom still operating in Honolulu on Halekauwila St. Blair could be considered the longest operating forest products business in Hawaii

Dawson Lumber Company : 

November 30, 2006 13 Dawson Lumber Company 1966-1968 Hilo, Hawaii Honolulu pallet manufacturer obtained lease for majority of state owned eucalyptus on Hilo/Hāmākua coast and set up a band saw mill and resaw in Hilo Produced half thickness (weight control) E. robusta pallets for Dole Pineapple Company Defects in robusta lumber caused excessive pallet failure during service Mill and timber lease sold to Wood Slicing Corp

Wood Slicing Corporation dba States Veneer CompanyHawaiian Division : 

November 30, 2006 14 Wood Slicing Corporation dba States Veneer CompanyHawaiian Division 1968-1970 Kawaihae, Hawaii After the sale of Jones Veneer, Eugene, Oregon, to Georgia Pacific, Harold Jones purchased timber leases and mill equipment from Dawson Lumber Co. Sold DLC mill to Campbell-Burns and set up hardwood veneer plant Expense of supplying veneer to mainland markets forced addition of plywood plant for local markets Faced with a shortage of working capital after the death of Harold Jones, plant was offered for sale, but never sold

Hawaiian Timber Products, Inc.Campbell-Burns Wood Products Company : 

November 30, 2006 15 Hawaiian Timber Products, Inc.Campbell-Burns Wood Products Company 1969-late 1980’s Hilo, Hawaii Paul Campbell, retired Southern California homebuilder and Fritz Burns, a principal in the Hilton Hawaiian Village hotel, purchased Dawson Lumber Co. band saw and resaw and set up large facility in Hilo including planing mill, flooring plant and lumber storage sheds Produced 10 million bdft of koa in 6/8 months which languished in mainland warehouses due to miscut (too thin). Material eventually sold in Hawaii markets Orderly phase out of business began in 1984 due to shortage of raw material caused by environmental pressure

Maui Hardwoods, Inc. : 

November 30, 2006 16 Maui Hardwoods, Inc. 1969-mid 1980’s Puunēnē, Maui Built by Illinois sawmill owner and sawmill equipment manufacturer, Harley E. Halle Facility included 5 million bdft/annum sawmill, dry kiln, planing mill and pallet plant which employed 20 people Produced E. robusta and E. globulus lumber products Company was in financial trouble by 1976 due to sales & marketing problems related to poor eucalyptus product performance resulting in low price structure

Capital Chip Company, Inc. : 

November 30, 2006 17 Capital Chip Company, Inc. 1974-1978 Kawaihae and Pa'auilo Mauka, Hawaii Operated portable chipper on Hāmākua coast Chip storage facility at former plywood plant in Kawaihae shipped chips to Japan’s Oji Paper Company 12,000 BDU’s produced from 4 million bdft in 1976 By 1978 E. globulus timber resource exhausted and Oji found replacement E. robusta and E. saligna chips unacceptable Following a large fire in the chip pile, the business was closed

BioEnergy Development CorporationC. Brewer & Company, Ltd : 

November 30, 2006 18 BioEnergy Development CorporationC. Brewer & Company, Ltd 1978-1992 Hilo, Hawaii $7 million biomass project funded for 10 years by the U.S. Department of Energy, Short-Rotation Woody Crops Program Results published in 1992 USDA Forest Service Report, PSW-GTR-137, Short Rotation Management of Eucalyptus: Guidelines for Plantations in Hawaii 700 acres of plantation

BioEnergy Development CorporationC. Brewer & Company, Ltd : 

November 30, 2006 19 BioEnergy Development CorporationC. Brewer & Company, Ltd Biomass yields for 3 planting regimes: Dense pure eucalyptus: 620 stems/acre; 5 year rotation – 7.6 tons/acre/annum Wide pure eucalyptus: 360 stems/acre; 6 year rotation – 7.0 tons/acre/annum Mixed eucalyptus/albizia: e. 218 stems/acre, a. 311 stems/acre; 8 year rotation – 8.5 tons/acre/annum eucalyptus only

BioEnergy Development CorporationC. Brewer & Company, Ltd : 

November 30, 2006 20 BioEnergy Development CorporationC. Brewer & Company, Ltd

BioEnergy Development CorporationC. Brewer & Company, Ltd : 

November 30, 2006 21 BioEnergy Development CorporationC. Brewer & Company, Ltd

Woodfuels, Inc. : 

November 30, 2006 22 Woodfuels, Inc. 1980-1982 Hanahanapuni, Lihue, Kauai State lease of 330 acres blow down eucalyptus Contract to deliver 36,000 tons of chips/annum to Lihue Plantation, 250 tons/day during sugar off season; 125 tons/day during the sugar grinding season 5,401 tons delivered in 5 months January 1982, Lihue Plantation suspended delivery due to poor chip quality and slower than anticipated delivery

Waimea Canyon Timber : 

November 30, 2006 23 Waimea Canyon Timber 1984 Kōkee State Park, Kōkee, Kauai State lease and timber license for 14,000 acres of Hurricane Iwa blow down redwood, koa and eucalyptus awarded through public bid process for term of one year Under threat of a lawsuit for violation of their own Conservation District Use Regulations, State issues cease and desist order after 5 months of salvage logging

Bio Power Corporation : 

November 30, 2006 24 Bio Power Corporation 1983-1986 Puna & Waiākea, Hawaii Contracted to supply 4,000 - 4,500 tons of wood chips to Puna Biomass Power Co. after conversion of former sugar power plant from bagasse to wood chips 3,300 acre Puna ohia forest and 1,500 acre portion of State Waiākea eucalyptus forest are chip sources

Bio Power Corporation : 

November 30, 2006 25 Bio Power Corporation November 1984 Bio Power is supplying chips to produce 12 megawatts, enough to supply 12,000 Big Island residents November 1984 harvesting and chipping equipment in native ohia area set on fire July 1985 Chapter 11 bankruptcy filed 1986 operations cease and power plant converts to oil fueled power production

Current Activities : 

November 30, 2006 26 Current Activities 2001University of Hawaii study values Hawaii forest products economic sector at $30.7 million primarily generated from koa products made from salvage timber harvested on degraded forest generally in pasture lands on Big Island Forest products in top 5 for 2001 diversified ag businesses, above coffee, dairy, cattle, and papayas and below pineapple, sugar, seed crops and macadamia nuts. Using figures recently (11/25/06) released by NASS this $30.7 million in 2001 still places forest products 6th behind pineapple, seed crops, sugar, mac nuts, and coffee, but above cattle, dairy, algae, papaya and tomatoes.

Current Hawaiian Forest Products : 

November 30, 2006 27 Current Hawaiian Forest Products Lumber, Flooring, Molding, Veneer Furniture, Musical Instruments, Sculpture, Calabashes, Craft Items

: 

November 30, 2006 28 Below left - Typical koa logging terrain in Hawaii Above right - Large koa log

Typical Timber Processing Machinery currently utilized in Hawaii : 

November 30, 2006 29 Typical Timber Processing Machinery currently utilized in Hawaii

Forestry Related Activities : 

November 30, 2006 30 Forestry Related Activities above - Loading kiln with Koa lumber above – GPS inventory & survey work

Future Forest Products Activities : 

November 30, 2006 31 Future Forest Products Activities Eucalyptus planted on land leased from Kamehameha Schools and Parker Ranch in Hāmākua, Hilo & Kaū on the Big Island. Purchased by Hancock Timber Resource Group from project initiator Prudential Timber Investments. Recent public announcement of formation of Mauna Kea Fibres, a partnership of Fulghum Fibres (Augusta, GA) and Sumitomo Forestry Group (Tokyo, Japan). Trees will be harvested, chipped on Hawaii; then chips will be shipped and sold to Oji Paper in Japan. It is estimated that the tree farm will supply a ship load every 5 weeks on a year round basis. Additional uses will be sought for timber not suited for the premium chips that will be exported. Tradewinds Forest Products completed negotiations for hardwoods in State’s Waiākea Timber Management Area near Hilo on the Big Island and is pursuing its long planned veneer plant and cogeneration facility at O’okala 3,000 acres leased by Hawaiian Mahogany, Inc. on Kauai for eucalyptus, teak, mahogany, albizia & other assorted hardwoods tree farm. Approximately 1200 acres planted to date Koa Timber, Inc. EIS review and approval in anticipation of koa harvesting and reforestation activities on approximately 10,000 of the 13,129 acres of their agricultural and conservation land near Hilo on Hawaii island may be permanently stalled by litigation and bankruptcy of mortgage company Nearly 270 Landowners/land managers registered on UH forestry extension data base indicating increased private sector interest in forestry as a commercial and environmental endeavor in Hawaii

Future Forest Products Activities : 

November 30, 2006 32 Future Forest Products Activities Potential for additional timber sales of existing inventory on State and private land Additional afforestation on State and private lands, particularly former sugar and pasture lands

Additional Forestry Activities : 

November 30, 2006 33 Additional Forestry Activities Forest Certification ● Independent verification of forest management practices conceptualized in the late 1980s. ● Consumer demand for more environmentally & socially responsible businesses lead to emergence of third-party forest certification emerge in the 1990s as a credible mechanism for communicating the environmental and social performance of forest operations. ● A variety of worldwide independent organizations (governmental and non governmental) have developed standards of good forest management that are verified by independent auditors. Forest operations that comply with the standards are then issued certificates which verify that forests are well-managed and ensure that certain wood and paper products come from responsibly managed forests. ● Demand for wood and paper from certified well-managed forests is largely driven by business and government purchasing preferences, consumer interest in eco-labeled products, and ‘green building’ initiatives ● Economic result for certification to date is not a price premium for products, but access to new markets, increased volume in existing markets and improved public relations

Kamehameha Schools Honauanu Forest : 

November 30, 2006 34 Kamehameha Schools Honauanu Forest ● First certified forest (public or private) in Hawaii – 2006 ● Kamehameha received certificates in two categories: Certified Forests & Chain of Custody for 34,600 acre Honaunau Management Area ● Forest Stewardship Council FSC is Certification Agency; Scientific Certification Systems (SCS) is auditor Natural koa regeneration in FSC certified Honaunau Management Area January 2005

Ecosystem Services : 

November 30, 2006 35 Ecosystem Services Ecosystem Services are the processes by which the environment produces resources that we often take for granted such as clean water, timber, and habitat for fisheries, and pollination of native and agricultural plants. Whether we find ourselves in the city or a rural area, the ecosystems in which humans live provide goods and services that are very familiar to us. Ecosystems provide "services" that: moderate weather extremes and their impacts disperse seeds mitigate drought and floods protect people from the sun's harmful ultraviolet rays cycle and move nutrients protect stream and river channels and coastal shores from erosion detoxify and decompose wastes control agricultural pests maintain biodiversity generate and preserve soils and renew their fertility contribute to climate stability purify the air and water regulate disease carrying organisms pollinate crops and natural vegetation “Ecosystem Services: A Primer” From the Ecological Society of America (ESA): http://www.actionbioscience.org/environment/esa.html

Ecosystem Services Value Examples : 

November 30, 2006 36 Ecosystem Services Value Examples ● New York City is often defined as the “classic” case in point. “ Before it became overwhelmed by agricultural and sewage runoff, the watershed of the Catskill Mountains provided New York City with water ranked among the best in the Nation by Consumer Reports. When the water fell below quality standards, the City investigated what it would cost to install an artificial filtration plant. The estimated price tag for this new facility was six to eight billion dollars, plus annual operating costs of 300 million dollars -- a high price to pay for what once was free. New York City decided instead to invest a fraction of that cost ($660 million) in restoring the natural capital it had in the Catskills watershed. In 1997, the City raised an Environmental Bond Issue and is currently using the funds to purchase land and halt development in the watershed, to compensate property owners for development restrictions on their land, and to subsidize the improvement of septic systems.” http://www.actionbioscience.org/environment/esa.html ● In September 1999, “Environmental Valuation and the Hawaiian Economy” written by Brooks Kaiser, Nancy Krause, and Jim Roumasset was released by the University of Hawaii Economic Research Organization (UHERO). The publication notes a hypothetical situation on Oahu similar to that of the New York City endeavors when it writes: “In the case of the Ko‘olau forests, we consider a hypothetical major disturbance by a substantially increased population of pigs combined with a major forest conversion from native trees to the non-indigenous Miconea calvescens and a continuation of urban “creep.” This disturbance is assumed to reduce recharge to the Pearl Harbor Aquifer by 31% of the 133 million gallons per day that is currently attributable to the Ko‘olau’s. This implies that water use would have to decline and that O‘ahu would have to resort to desalination as a water source more than 35 years earlier than if the forests were to remain intact. The present value of the resulting cost increases varies from $1.4 to $2.6 billion, depending on the discount rate. If there were a complete deforestation, e.g. due to a devastating fire, the value of the lost recharge would be from $4.6 to 8.5 billion.” http://www.uhero.hawaii.edu/workingpaper/HawaiiEnviroEvaluation.pdf

Stephen E.S. Smith : 

November 30, 2006 37 Stephen E.S. Smith 25 years of experience in planning, and implementation of agricultural and silvicultural projects in Hawaii and internationally Recent Forestry Consulting work for: Prudential Timber Investments 1994 – 2000, 2002 Menasha Forest Products Group – 1999 Jaakko Poyry Management Consulting – 1998/99, 2001, 2003 & 2004 Hawaii Agricultural Research Center – 2002, 2004, 2005 & 2006 USDA Forest Service/Garden Island RC&D - 2003 Conservation Finance International/Specialized Forestry Services – 2005 Cleaves Biomass Services – 2006 Resource Management/Carlsmith & Ball - 2006 Other Private Mainland & Hawai‘i Clients 1999 - 2006 Founding Board Member, Hawaii Forest Industry Association. Currently President Associate Member, Society of American Foresters. Membership chair for Hawaii Chapter

Disclaimer : 

November 30, 2006 38 Disclaimer Stephen E.S. Smith, dba Forestry Management Consultants –Hawaii, makes this presentation to the University of Hawaii-Manoa, College of Tropical Agriculture & Human Resources, Department of Natural Resources and Environmental Management for their use during at a November 30, 2006 seminar. No responsibility is accepted for any other use. This report contains the opinion of Stephen E. S. Smith as to a Summary of Past Commercial Forest Products Activities in the State of Hawaii. Nothing in the report is, or should be relied upon as a promise by Stephen E.S. Smith as to the past, current, or future growth, yields, costs or returns of the forests or forest products. Actual results may be different from the opinion contained in this presentation as anticipated events may not occur as expected and the variation may be significant. Stephen E.S. Smith has no responsibility to update this report for events and circumstances occurring after the date of this presentation