Thinking like an investor: why diverse forests are a good bet for an uncertain future

Typical sub-boreal forest along Lake Superior's north shore

A big part of my job is to talk with forest landowners about their investments. So, am I a stock broker? No. A financial advisor? Nope. A real estate salesman? Wrong again. I’m a climate change specialist with the USDA Forest Service and the Northern Institute of Applied Climate Science, and my job is to help foresters and landowners prepare their woods for climate change.

Trees live for a long time – several decades to centuries, depending on the species – so managing and conserving forests requires careful long-term planning. In a lot of ways, managing a forest is like managing a retirement portfolio. Forests are assets that mature slowly over time, just like you expect your retirement investments to grow over decades. You’re obviously concerned with the economic value of your retirement portfolio, but forest landowners can think about “value” more broadly –economics, aesthetics, ecological values, and more. Landowners have flexibility to choose their management practices based on your individual goals, risk tolerance, and other factors – just like the flexibility you have as an investor. These goals and attitudes towards risk can change over time, just like your investment strategy might change depending on whether you’re 30 or 80 years old. Adding to the metaphor, changing climate conditions and unpredictable weather events will add risks for a forest, similar to the uncertainties in our chaotic and interconnected economic system.

So what can your retirement portfolio tell you about how to take care of your woods? Well, regardless of whether you’re a risk-taker early in your career or cautiously nearing retirement, it always makes sense keep a diverse investment portfolio. As the old saying goes, “don’t put all your eggs in one basket.” It’s a losing bet to have all your retirement savings pooled into slow-growing securities, and it’s also a risky bet to invest all of your savings in the next “hot stock” like Facebook (anyone remember Pets.com?). Diversifying your investments reduces the chance that any one bad year (or series of bad years) will ruin your savings, and it increases the chance that you’ll reap the benefit of a good year.

So, if diversity is crucial for long-term risk management, how you encourage diversity in your woods, and how will it benefit your forests under changing conditions? Here are a few suggestions:

Species Diversity

Forests naturally contain mixes of different tree species, and you can evaluate each species in terms of climate change risk. Northern or boreal species like quaking aspen, black spruce, and balsam fir are expected to decline in Minnesota across a range of climate scenarios, while some species like red maple, white pine, and white oak are projected to do well. As a landowner, you should look for opportunities to maintain a diverse mix of species on your property – try not to have all your forest dominated by one or two species.

If you’re going to plant some new trees on your property, you may want to focus on species that are projected to tolerate future climate conditions. If you’re more cautious, you can plant native tree species that are already common but expected to do well in the future. If you’re willing to take risks, you can try planting tree species that are currently uncommon but expected to do well – perhaps even some long-distance migrants from southern Minnesota!

Genetics

Foresters are already used to thinking about genetics in their work, because they favor high-quality genes by retaining trees that have resisted pests and stress and remove trees that have succumbed to these factors. As a landowner, you might also notice that a certain pocket of aspen has withstood a drought better than another pocket, or that certain individuals of other species just seem to be superior. You can try to favor these high-performers through management.

If you’re going to be planting trees but you don’t want to use new tree species, you may be able to introduce some genetic diversity by acquiring seedlings from locations further south in Minnesota. The idea here is that populations of trees that currently live in areas exposed to more heat and drought might have genetic adaptations that allow them to tolerate those conditions.

Structure

The structure of a forest includes the horizontal spacing among trees (including gaps in the canopy) as well as the number of layers of vegetation (dead trees, forest floor, tree seedlings, young trees, sub-canopy trees, and dominant canopy trees). Keeping a diverse forest structure provides a variety of micro-site conditions that result in different amounts of moisture, temperature, shade, and ground cover. These different micros-sites can help different tree species to find their optimum growing conditions.

Additionally, keeping several different age classes of trees on your property is another way to reduce risk, because trees are more susceptible to certain risks at different ages. For example, young trees are more susceptible to drought, while older trees might be more susceptible to insect pests. Keeping a few different age classes will reduce the chance that any one event will cause a lot of damage.

Climate change will challenge Minnesota’s forests over the next several decades, sometimes in unpredictable ways. We might not have all the answers for how to best prepare for the changes that are coming our way, but landowners and foresters will do well to encourage diversity. As a general rule of thumb, it’s a great way to reduce risk. And while you’re at it, go ahead and diversify your retirement portfolio, too!

Creative Commons image courtesy of Flickr user Eli Sagor.

Stephen Handler
Stephen is a climate change specialist with the Northern Institute of Applied Climate Science, USDA Forest Service Northern Research Station.

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