Breaking up the Forest

Minnesota's private forests face the threat of being subdivided and developed. Conservation easements could keep some of them intact.

By John Myers
Photography by Tom Thulen

Drive down most any road in Minnesota's north woods and you'll see the signs of change. New address and road signs. No Trespassing signs. Land For Sale signs.

The north woods is being sold off, divided up, and developed into weekend cabins and retirement homes like never before. Conservation leaders say the state needs to act now or lose a big part of its forest heritage forever. The rapid breakup of large tracts of forest is being called a threat to ecological diversity as forest plots get smaller and more fragmented, eating away key habitat for birds and wildlife and making it harder to manage for threatened species. Development is endangering water quality because of erosion and runoff. And development means less land open for logging to supply the forest products industry. No Trespassing signs are closing off land to public recreation such as hunting, birding, and hiking.

"People may have noticed it near their deer camp or cabin. Land they hunted on for years suddenly is posted, and a new house goes up on it. But it's happening all across the forested counties," said Brad Moore, assistant commissioner for operations for the Department of Natural Resources.

Land Rush

Minnesota has about 9 million acres of public forest. But 42 percent of the state's forested land—about 7 million acres—is privately owned. And it's selling fast.

According to a report by the Blandin Foundation, the number of new recreational properties in northern counties jumped 25 percent from 1990 to 2000. In the Brainerd Lakes area, for example, the population is projected to grow by 48 percent over the next 25 years.

Buyers are paying more than ever for their slice of the north woods pie. Northern forest land prices have jumped a staggering 10 percent to 25 percent each year since 2000. Across the state average prices for undeveloped forest parcels of 20 acres or more have increased sixfold since 1989, from an average price of about $220 per acre to more than $1,300 per acre in 2004, according to a report by University of Minnesota forestry expert Mike Kilgore. Some prime forest land is going for more than $2,000 an acre.

"It used to be just waterfront that attracted this kind of attention and price, but not anymore," said Ron Nargang, state director of The Nature Conservancy, a nonprofit conservation group. "People are rushing to get their spot in the woods."

The Sellers

The most immediate concern, conservation and DNR officials say, is corporate-owned land still in large tracts, some of it already on the selling block. About 1 million acres held by corporations and trusts are at risk.

In 2005 Boise Cascade Corp. sold 309,000 acres of Minnesota forest, part of its nationwide sale of 2.2 million acres to get out of the timberland management business. The land went to a Boston-based investment firm, Forest Capital Partners, which owns forest land primarily for its investment value. Moore describes the sale as a "wake-up call" for Minnesota.

Other major landowners in Minnesota—including USX Corp., Minnesota Power, and Milwaukee-based investment firm Wolfwood Corp.—are selling land on the recreational real estate market. Their properties include acreage on Lake Vermilion and just off the North Shore.

So far, Potlatch Corp. and Blandin Paper (UPM-Kymmene) are hanging on to much of their land in the state. As Minnesota's largest private landowners, they own 319,000 acres and 175,000 acres, respectively. But Nargang, Moore, and others say it's only a matter of time before rising land prices, global pulp and paper economics, and Wall Street investment advisors pressure the companies to consider selling. Potlatch, which has sold most of its Minnesota mills, recently changed its corporate structure into a real estate investment trust, which offers business and tax advantages. Potlatch is also leasing about 124,000 acres for hunting and recreational use to pull more revenue off the land. That land in the past had been open, free of charge, to all hunters.

National Trends

The change in land ownership from old, established timber companies to investment companies and trusts and then to developers is a national trend that started in the northeastern United States and has spread across the Great Lakes region as land values rose. More than 13 million acres of private industry-owned forest land—an area equal to six Yellowstone National Parks—have been sold across the United States in the past decade.

"The picture changed when Wall Street looked at the value of the land and told the timber companies to sell. The value of the land for development far surpasses using the land as a source of trees for their mills," said Tom Duffus, Minnesota director of The Conservation Fund, a national group that helps fund land purchases for conservation.

State resource managers, conservation groups, community foundations, and others now are scrambling to take action. They're ready to spend millions of dollars to keep private forests from being developed to the point where wildlife, water quality, timber harvest, and public access are threatened. "We still have time, especially with the larger landowners and the bigger blocks, to step in and make a difference," Nargang said. "The longer we wait, the more fragmented our forest becomes."

New People in the Picture

Consider a 640-acre section of northern forest owned for decades by a paper mill company. It had been managed to grow trees to provide fiber for mills, but that also often benefited wildlife. The value of those big, undeveloped sections of industry-owned forest can't be overstated, said Nargang, because they link large blocks of state, federal, and county lands, creating a vast expanse of interior forest for wildlife.

Now picture the same 640 acres sold to an investment company or trust, then to a real estate developer, and then to 16 different families, 40 acres each. The first people to notice the change in ownership may be hunters and berry pickers who run into No Trespassing signs on land they'd been using for years. Then local loggers are likely to have problems. Instead of dealing with one company, they now must approach 16 owners—some with no intention of seeing their trees cut. If the loggers can't cut trees, the wood can't get to local mills.

From loggers, truckers, and paper mills to board plants, sawmills, and cabinet makers, the forest products industry is one of the largest employers across northern Minnesota. The Minnesota Forest Resources Council, a state board directed to advise the governor and public agencies on forest policy, has named the breakup of privately owned forests the most serious issue facing sustainable forestry—both ecologically and economically.

"It's a rapidly changing demographic, who owns the forest land and what they plan to do with it," said Dave Zumeta, executive director of the council. "There's far more international corporate ownership now too. Decisions are being made by people who have less history with the land and less connection to the local community."

Dislocated Wildlife

The displaced logger and the deer hunter may get lucky and find new forest to frequent. But some dislocated species of wildlife, such as northern goshawk and pine marten, may not find suitable habitat in fragmented forests. Instead of a few seldom-used logging roads, the subdivided 640 acres now has year-round access roads, 16 driveways, and clearings for 16 cabins.

"It makes it almost impossible to do real forest or wildlife management," Duffus said. "It's little things like dogs barking and yard lights and raccoons moving in. And it's big things like not being able to manage the land on a large enough scale for moose."

Invasive species such as crows, raccoons, and house cats typically don't thrive in large tracts of undeveloped forest. But each new driveway offers a pathway into the woods. Each new home site becomes a place deep-woods birds and other animals won't nest or frequent anymore. Invasive plant species such as garlic mustard hitchhike on all-terrain vehicles and construction equipment and thrive in forest openings.

More buildings in the woods also mean more urban interfaces—places where forest fires will burn more than just trees. Saving buildings has become the most difficult and expensive part of battling wildfires, officials at the Minnesota Interagency Fire Center say. Furthermore, buildings often take away the use of fire as a management tool, preventing prescribed burns that can restore the land for wildlife such as grouse and tree species such as jack pine.

"Draw a circle around all of those new cabins and take those lands out of the picture for a lot of wildlife*#8212;lynx, wolves, moose, some migratory birds," Nargang said. "Then draw a 500-foot circle around every new building in the woods, and now you can't hunt there any more because it's illegal to discharge firearms near buildings. We're changing the face of northern Minnesota."

Alternate Plans

No one expects to stop the development of Minnesota forests, to stop private land from being sold. But natural resources experts say options exist to keep the largest and best chunks of private forest intact.

One way is for the state or conservation groups to buy land as it comes on the market and use it to expand state parks, state forests, scientific and natural areas, and wildlife management areas. But the state isn't exactly flush with cash, Moore noted, and spending $1,500 or more per acre to buy more forest land for public ownership isn't high on the Legislature's priority list.

State property-tax incentives may encourage private owners to keep their land as working forests.

An option used often in Eastern states is conservation easements—voluntary land-protection agreements that keep the property in private hands and generating taxes. The state or conservation groups pay landowners not to develop their land. Conservation easements can permanently prevent development while securing public access, sustainable timber management, and ecological diversity.

Conservation easement payments average about 40 percent of the actual value of the land. The lower price for easements compared with land purchases allows more land to be protected, Duffus said.

Many corporate leaders like easements because they get the development value of the land upfront but keep title to the land, which continues to provide revenue and fiber from cutting trees.

In late November, Potlatch Corp. and the Trust for Public Land finalized a conservation easement to protect 3,100 acres of forest land near Brainerd. Potlatch received $3.5 million in federal and state funds to permanently restrict development and maintain the land for sustainable timber harvest. Penn Siegel, chairman and chief executive officer of Spokane, Wash.-based Potlatch Corp., said his company favors easements as a way to keep more land in timber production. "They make a lot of sense to us under the right terms," he said. "We get paid for the development rights. The public gets to have continued access. And 15 or 20 years down the road, the land is still going to be timberland and not a shopping center."

Big Push

The DNR is requesting $10 million in the state's 2006 capital bonding legislation to help purchase conservation easements on thousands of acres of private forest.

That funding will combine with a $6 million challenge grant made last summer by the Grand Rapids-based Blandin Foundation and another $1 million from the Surdna Foundation.

Bernadine Joselyn, director of public policy and engagement for Blandin, said the recent grant is one of the foundation's largest ever, and it will act as seed money to get Minnesota's conservation easement effort going on a large scale.

Some 75,000 acres—much of it still in large, undeveloped tracts and adjacent to public land—will be targeted for easements in and around Itasca County.

A coalition of the DNR, conservation groups, the Blandin Foundation, and forest scientists will determine which of the largest, contiguous blocks of private forest should be included in the effort.

"We're committed to sustainable forests and sustainable rural communities in our area," Joselyn said. "And it became clear to us that we can't have either if we don't have private forest land that remains undeveloped."

The coalition hopes to obtain several million more dollars from other private donations and the federal Forest Legacy Program. During the next three years, the coalition is aiming for $26 million to secure conservation easements on forest land.

"We're going to have at least another million people in the state over the next 25 years, and a lot of those people are going to want to spend their time off in the forests," the DNR's Moore said. "If we want to have land for everyone to hunt on and camp and for tourism, and have land that's viable for forest wildlife and the timber industry, we have a short window of opportunity here for maybe five to 10 years to act. If we don't, there are going to be a lot of unhappy people 25 years down the line."

John Myers lives in Duluth, where he reports about the environment and natural resources for the Duluth News Tribune newspaper.