Six years ago, the head of the Chilean Central Bank’s environmental accounting department, Marcel Claude, released an unsettling report on the state of Chile’s native forests. Unless timber-exploitation practices were improved, the report concluded, the country’s original forests would be destroyed within 20 to 30 years.

Chile’s Wood Products Association (Corma) wasted no time in calling for Claude’s removal. Indeed, he was soon fired. But ever since, Claude, as president of a sustainable-development think tank called the Terram Foundation, and other environmentalists and scientists here and abroad, have stepped up calls for improved forestry policies and practices.

Their work appears to be having an effect. Last August, Chile’s forest service (Conaf) announced an agreement with industry and environmental groups on the outlines of a sustainable-management law for native forests. Further, Conaf and industry executives say that by the end of this year, nearly two-thirds of all Chilean timber companies will have had their operations certified under the standards of the Forest Stewardship Council (FSC) or the International Standards Organization (ISO) 14001 system.

Also striking, the two timber projects to draw the strongest environmental opposition in recent years have languished. Idaho-based Boise Cascade canceled plans for a vast, oriented-strand-board and wood chipping mill called Cascada Chile, and Bellingham, Washington-based Trillium has delayed its Rio Condor project to log old-growth lenga on Tierra del Fuego.

It’s no surprise that efforts here to balance timber-industry opportunities with native-forest conservation have attracted growing attention. Chile is home to over one third of the world’s remaining old-growth temperate rainforest, with the bulk of the rest in the U.S. and Canadian Pacific Northwest. These rainforests are rare, covering a total land area just 3% the size of that of tropical rainforests. The environmental group Conservation International ranks Chile’s temperate rainforests among the world’s 25 biodiversity hotspots.

Says Juan Armesto, a University of Chile ecology professor: “The big problem is that the very Chilean forests with the highest biological value are in precisely the same areas that are most threatened by timber companies interested in substituting exotics, and [by] farmers who want to clear land for livestock grazing and other uses.”

Still, there are signs Chile’s forest-conservation equation may be changing. One came last February, when Boise Cascade announced it was canceling its Cascada Chile project.

The project called for an investment of $180 million to create what promoters described as among the largest timber mills of its kind in the world. The company had wanted to make and export to the United States each year some 530,000 cubic meters of oriented strand board, a type of fiberboard made of wood chips glued together and used in house construction.

Meanwhile, its junior partner, Maderas Condor, planned to export wood chips to Asia to the tune of 336,000 cubic meters a year. Wood chips currently are Chile’s leading native-forest product. Nearly 90% of Chilean wood chips are sent each year to Japan, where they are used to make paper and paper products.

The company attributed its about-face mainly to a depressed market for oriented strand board. Douglas Bartels, public relations coordinator for Boise Cascade, notes that with strand board production on the rise in the United States, the company concluded that prices in the coming years would not justify the Chilean project.

There also were other reasons—among them, environmental opposition. Green groups challenged Cascada Chile’s environmental-impact statement before a tribunal of the Canada-Chile Environment Commission, an agency formed as part of Chile’s 1997 free-trade agreement with Canada. Internationally, environmentalists branded Boise Cascade an enemy of native forests. In one protest, the San Francisco, California-based Rainforest Action Network (Ran) built a giant dinosaur and paraded it through Boise, Idaho. Demonstrators called Boise Cascade “the dinosaur of logging companies” for using logging practices they criticized as unsustainable.

And groups such as World Wildlife Fund, Greenpeace, Native Forest Network, Student Environmental Action Coalition and, most recently, Natural Resources Defense Council (Nrdc) made Chile’s native forests a top campaign priority. They pointed to company projections that Cascada Chile would double the country’s native-forest exports. Says Mike Brune, director of Ran’s Old Growth Campaign: “The age of predatory logging is over. If Boise Cascade does not adapt to the emerging values in the new economy, it will not be able to survive in the modern marketplace.”

Though Boise Cascade’s Bartels maintains green opposition to the project was only “a very secondary” reason for the cancellation, he says the Chilean government did not have a “clear position” on the project owing to a series of “environmental [requirements] originated by the incessant demands of a small group of non-governmental organizations.”

Opposition targets Trillium, too

Trillium’s project took shape much earlier than Boise Cascade’s—and with an entirely different spin. The company bought up 840,000 acres (340,000 hectares) of land in 1993 and 1994 in Chilean and Argentine Tierra del Fuego at bargain basement prices—reportedly for $42 million, or $51 per acre. Soon after, it announced it would create an “environmentally sustainable” enterprise that would market the native lenga wood and other products under the most rigorous green-certification standards.

The company has pledged to create “a balance between wood harvesting, ecotourism, and carbon sequestration.” Its plans call for, among other things, shelterwood cutting in which less than 1% of the total forested area would be harvested annually and up to half of each harvest area’s trees would be left standing to maintain forest canopy. In Chile, approximately 148,000 acres (60,000 hectares), or 23% of Trillium’s Chilean property, has been voluntarily set aside as biological reserves for eco-tourism. Additionally, about 173,000 acres (70,000 hectares) may be set aside as part of a carbon-sequestration project.

But Trillium’s promises have failed to soften opposition in Chile and Argentina. Green groups have questioned whether the company’s logging operation could be sustainable in the context of Tierra del Fuego’s fragile environment. They also have cited controversy over Trillium’s U.S. environmental track record, pressuring the company here and in the United States.

Financial difficulties are compounding Trillium’s problems. According to an Oct. 18 article in the Bellingham (Washington) Herald, the company owes $30 million to a Portland, Oregon-based financial firm, due this month, while several other firms already have filed foreclosure notices against Trillium in the past year. As a result, the company has sold buildings and land holdings in the United States, and its Tierra del Fuego plans—long in a state of flux—have become more uncertain than ever. In October, it closed its offices in Punta Arenas.

Since news surfaced earlier this year that Trillium might be in financial trouble, a band of environmental groups, including Defenders of the Chilean Forest, and U.S. forest protection groups Ancient Forests International and American Lands Alliance, have put together an “adopt-a-tree” campaign to raise money to buy Trillium’s forests outright. They have contacted prospective donors, but say they don’t have sufficient funding pledged and are unsure whether Trillium truly is ready to sell.

David Syre, majority owner of Trillium, told the Bellingham Herald in October he is open to offers from environmentalists. “If they want to send a written proposal, I’ll receive the letter and give it very serious consideration,” Syre said. “But to simply become a clown in an effort to raise money, I’m not going to do it.”

All eyes on native-forest legislation

Whether the Cascada Chile and Trillium sagas give way to meaningful and predictable forest-conservation policies here might hinge, at least in part, on the fate of efforts to enact sustainable-management legislation for native forests. Though the announcement in August of broad-based backing for a proposed law garnered front-page coverage, the initiative appears to be getting a cold reception from President Ricardo Lagos’ economic advisors.

Carlos Weber, who heads Conaf, says administration officials are balking at the proposal’s key provision: subsidies for landowners who adopt 40-year forest-management plans.

“We have reached an interesting stage,” Weber says. “Basically, we have come up with a protocol agreement between all the relevant actors for a native-forest law. We are discussing it with the Treasury. But if they don’t have enough money to finance the subsidies, it doesn’t make sense to go forward. The whole thing depends on the subsidies.”

The proposed law calls for a one-time payment to native-forest owners equivalent to $500 for each hectare they put under sustainable management. Subsidies also would be available for landowners who carry out reforestation with native species. Conaf’s aim is to have 25,000 acres (10,000 hectares) under subsidized management by the end of the first year, meaning an initial state investment of about $5 million. Conaf hopes that after the third year, the program will cover 124,000 acres (50,000 hectares) of native forest.

Conaf says there are 33.1 million acres (13.4 million hectares) of native forest in Chile more than 80% of it under private ownership. The agency says 5.97 million hectares is primary or adult forest, while the rest is re-growth forest (younger than 50 years) or a mix of primary and secondary growth.

Chile’s Wood Products Association (Corma) signed the protocol agreement for new native-forest legislation, but the industry group opposes any move to prevent landowners from replacing native stands with exotic pine and eucalyptus plantations, which now cover some two million hectares.

“The position of industry is that the landowners have the right to change the forest cover if they want to, but we agree that if the government wants [landowners] to keep the [native] forest, they have to compensate them,” says Corma Vice-President Fernando Raga. “So all of us agreed that the best way to move forward was with subsidies.”

The Forest Institute (Infor), a government research bureau, reports 68% of wood extracted from native forests in 1999 was destined for industry, with the rest used as firewood.

Conaf’s Weber says native-forest destruction occurs largely because private landowners lack economic alternatives. That, he says, is why subsidies are crucial.

And once a system of subsidies is in place, he adds, efforts must be stepped up to secure long-term markets for timber from the sustainably managed forests.

“In Chile, we do not have a forestry culture,” Weber says. “It is not common to manage forests. Without these subsidies, and without stable markets for sustainably managed forest products, the landowners are more likely to turn their forests into tree plantations, livestock grazing areas or agricultural farms.”

Hernán Verscheure, forest-program director for the Chilean group Committee for Protection of Flora and Fauna (Codeff) agrees the new native-forest law represents “a step forward.” However, Verscheure and other green advocates are disappointed the proposed law would not explicitly prohibit the conversion of native forests to exotic-species tree farms.

“The government’s lawyers all say that it is impossible according to Chile’s Constitution to have a law that prohibits the elimination of native forests on private land through substitution,” Verscheure says. “But we will keep trying to ban substitution in other ways.”

More broadly, conservation advocates point to a need to move past the prevalent attitude here that the economy is more important than environmental protection.

“We need a natural-resource policy, a declaration of conservation that we as a country can all agree on,” says Rene Reyes, who heads an association of forest engineers and is a leading forest ecologist in Chile. “Until that happens, the politicians will keep serving the interests of business first, communities and the environment second. But the fact is, economics and the environment are not incompatible.”