Reprinted from the JOURNAL OF FORESTRY Vol. 81, No. 12, December 1983 Managing Red Alder in the Douglas-Fir Region: Some Possibilities Robert F. Tarrant, Bernard T. Bormann, DeanS. DeBell, and William A. Atkinson ABSTRACT - We compare the present net 1\'orth (PNW) of
each of six theoretical systems for managing red alder (Alnus
rubra) ll'ith PNW of fertilized and unfertili:::ed Douglas-ji"r
(Pseudotsuga menziesii) systems in continuous mana&ement.
Under the comlitions specified for this analysis, the most
$623 per acre) is Douglas-fir
profitable system ( PNW
commercially thinned and fertilized twice in a 45-year rota­
$578 per
tion. In the next most profitable system (PNW
acre), red alder is grown to sawlo& size in 28 years and
followed by Douglas1i'r, thinned twice but not fertilized, in a
45-year rotation. The remaining six systems range doll'nward
from PNW
$527 (unfertilized Douglas-fir) to PNW
=
=
=
=
-$251 (red alder in continuous 13-vear
rotation). The condi­
·
tions under which malwf?ed red alder systems are equally
profitable with Douglas-fir include increases in either real
interest rate, alder stumpage price, or the cost of nitrogen
fertilizer, or a decrease in the time required to gro\1' red alder
to minimum sawlog size.
D
ouglas-fir has been the mainstay of the forest indus­
try in the coastal Pacific Northwest for more than a
century. Old-growth logs have provided a superior raw
material, especially for sawmills and plywood plants.
Recent studies suggest, however, that the availability
of softwood sawtimber in the Douglas-fir subregion of
the Pacific Northwest will decline over the next several
decades (Adams and Haynes 1980). Consequently, both
softwood and hardwood species previously considered
less serviceable than Douglas-fir are being reexamined
as possible sources of lumber, veneer stock, and chips
for pulp or particle board (Resch 1980).
Red alder is the major hardwood tree in the Douglas­
fir region. Here, about 3 million acres now support an
estimated 6.8 billion cubic feet of unmanaged red alder.
This resource provides raw material for a relatively
small industry which provides furniture and cabinet
stock, cargo pallets, veneer core stock, and chips. The
Northwest Hardwood Association reports that in mem­
ber mills the manufacture of red alder lumber increased
substantially from 1975-1978, and has remained stable
thereafter despite the distressed economy (personal
communication with David A. Sweitzer, secretary­
manager, Northwest Hardwood Association , November
1982). However, red alder is still far less important
economically than Douglas-fir.
In general, markets are not well established, nor has
there been significant product development. Further,
December 19 3/JOURNAL OF fORESTRY/7 7
unmanaged alder stands (fig. 1) frequently contain
crooked boles, resulting in unusable wood. The volume
of merchantable timber per stand is lower, and logging
costs are higher, than for conifers. As a consequence,
managing for alder is often assumed to be less profitable
than for Douglas-fir or western hemlock (Tsuga heter­
ophylla).
W hy, then, should foresters consider managing red
alder? We believe that an increasing amount of informa­
tion from research, a predicted decline in softwood
timber availability and quality, and both short- and
long-term economic and biological considerations indi­
cate a need for new approaches to producing wood and
fiber in some Pacific Northwest forests.
In this article, we compare several proposed man­
agement systems. First, we briefly review and document
pertinent attributes of red alder. Next, we describe the
assumptions we made for purposes of analysis. We then
examine how changes in yield, stumpage price, and
interest rates might affect the profitability of red alder
systems compared to Douglas-fir. Finally, we summa­
rize our conclusions about the profitability of thes six
theoretical systems for managing red alder either alone
or in combination with Douglas-fir vs. the profitability
of Douglas-fir alone.
Attributes of Red Alder
Characteristics of red alder which suggest its potential
value in intensively managed forests include rapid juve­
nile growth, a capability to improve soil fertility and
structure, a presumed capacity for rapid genetic im­
provement, and suitability for a wide range of products.
Rapid early growth of unmanaged red alder is well
documented. Seedlings may grow 3 feet or more in their
first year; they may reach 30 feet by age 5 years and
more than 70 feet by age 20. On well-stocked sites of
high quality, mean annual increments may approach 150
ft3 per acre for 20- to 40-year rotations.
Furthermore, projections based on early performance
of research plantings, results of thinning trials, and
gains obtained by spacing other species suggest that
growth rates and usable yields of managed stands will
be much higher (DeBell et al. 1978). For example, trees
in a 12-year-old red alder plantation on the Oregon coast
average 5. 4 inches in diameter whereas trees in un­
managed natural stands do not normally reach this size
until age 20. Similarly, 26-year-old trees in a red alder
stand in western Washington, spaced at age 7 to 16 feet
by 16 feet, now average 11.2 inches in diameter. Normal
yield tables indicate that trees in natural stands do not
attain this size until age 36.
Over most of the Douglas-fir region, readily available
nitrogen is not sufficient for optimum tree growth. Urea
has been applied over more than I million acres to
alleviate this nitrogen deficiency, which undoubtedly
will become more serious if Douglas-fir is cropped
continuously. An alternative remedy is through biologi­
cal nitrogen fixation. In symbiosis with root-nodule
bacteria, red alder "fixes" atmospheric nitrogen on most
sites in amounts from 30 to more than 300 pounds per
acre annually. This added nitrogen can increase the
growth of Douglas-fir (Tarrant 1961, Miller and Murray
1978). Further. rapidly decomposing leaves, branches,
and dead alder roots release plant nutrients and provide
organic matter to improve soil structure and porosity.
In addition. red alder may be the Northwest tree most
788/JOURNAL OF FORESTRY/December 1983
Figure I: Unmanaged red alder stands stems and low volumes of merchantable
(USDA Forest Service photo.) acre. ideally suited for rapid genetic gain per unit of time and
effort (Stettler 1978). Biological traits which support
such optimism include early sexual maturity, annual seed
crops, and rapid juvenile growth. Improvement of growth
rate, capacity to fix nitrogen. bole form, and crown
shape will all be significant aspects of programs for
genetic improvement of red alder.
The wood is used in a variety of ways (Resch 1980).
Primary products include lumber, veneer. pulp chips,
fuel, and bark. The lumber is easily converted into
furniture, cabinets, case goods, pallets, novelties, and
other minor products. Chips can be pulped by several
processes: kraft. acid sulfite, Permochem, and kraft
green liquor.
Obviously, these biological characteristics suggest that
red alder might be valuable in intensively managed
forests. The final test. however, must be economic:
under management might it compete with Douglas-fir to
provide an equally useful raw material? If so, under
what circumstances?
Procedures and Methods of Analysis
Management systems
Eight management systems are considered in this
analysis. Two are for continuous culture of Douglas-fir,
three for continuous culture of red alder, and three for
alternately cropping red alder and Douglas-fir. These
systems are modifications of those proposed by DeBell
et a!. (1978) and Atkinson et a!. (1979).
Fir 45 is a standard industrial prescription for
Douglas-fir: plant 400 seedlings per acre, thin commer-
cially at ages 29 and 35 years, and harvest by clear­
cutting at age 45 years. Fir 45 +N is Fir 45 plus 200
pounds per acre of nitrogen as synthetic fertilizer ap­
plied each time the stand is commercially thinned.
These two options are baselines to which other options
may be compared.
In Alder 13, red alder seedlings would be planted at
9- by 9-foot spacing (540 per acre), and the stand would
be clearcut for pulpwood at age 13 years. Alder 20
would begin with seedlings spaced at 12 by 12 feet (300
per acre) and would be clearcut for fuel or pulpwood at
age 20 years. In Alder 28, seedlings would be planted at
15- by 15-foot spacings without later thinning. Sawlogs
would be harvested at age 28 years.
Systems Alder 13:Fir 45, Alder 20 :Fir 45, and Alder
28:Fir 45 each combine Fir 45 with the specified red
alder system as alternate cropping systems.
Economic assessment
Profitabilities of the eight management systems are
compared in a present net worth analysis (discounted
returns minus discounted costs) with a perpetual time
horizon. All costs and returns are based on best esti­
mates of yields, costs, and stumpage prices for managed
stands. Expenditures and returns are discounted at
7-percent real annual interest, a rate commonly used in
the forest industry. Stumpage prices are assumed to
increase I percent annually over the first full rotation.
Internal rates of return are also calculated for each
management system. This is the rate at which an in­
vestment grows toward the eventual return, and may be
used as an alternative to present net worth when ranking
economic effectivenes . All analyses are made on a
pre-tax basis. Sensitivity analysis is used to evaluate the
influence of several factors on present net worth of the
two continuous Douglas-fir systems and the two most
profitable systems containing alder. We also determined
the effect a higher cost of nitrogen fertilizer would have
on the profitability of fertilized Douglas-fir compared to
other systems.
Yields
Yields are based on site indices of 165 feet (I 00-year
basis) for Douglas-fir and 100 feet (50-year basis) for
red alder (table 1). Region-wide fertilizer trials have
indicated that about two-thirds of such sites respond to
nitrogen fertilizer (Miller and Fight 1979). Moreover,
we believe sites of this quality are capable of growing
red alder to desirable sizes within the time frames
proposed.
Douglas-fir yields are generated from a managed
stand simulator (DFIT) (Bruce et a!. 1977). The DFIT
model is also applied to Fir 45 +N, and estimates ,a
yield increase of 6.3 percent above unfertilized Douglas­
fir (Fir 45).
For the three management systems that include both
red alder and Douglas-fir, we assume that Douglas-fir
yields following the 13-year, 20-year, and 28-year alder
rotations average 5, 10, and 12.5 percent greater,
respectively, than that of continuous, unfertilized
Douglas-fir. In the sensitivity analysis, the increase in
yield of Douglas-fir following the 28-year alder rotation
varies from 5 to 20 percent. We believe the upper limit
of this range is reasonable; it represents a productivity
increase of about one site class (165 feet to 195 feet). In
a mixed planting of Douglas-fir and red alder on land of
much lower quality, height growth and site index of
Table 1. Average tree size and anticipated stand yield.
Management system
(species and rotation
length in years)
Years
29b
35c
45
Fir 45 Fir 45 +N 29b
35c
45
Ft.
68
85
106
Ft.3
Ft.3
10.1
13.6
1,319
15.1
45.0
6,526
68
10.1
13.6
1,319
110
15.7
49.9
7,058
86
ln.
11.2
11.3
19.9
20.5
1,000
Alder 13 13
47
6.0
Alder 20 20
63
9.0
11.5
Alder 28
28
77
12.0
25.2
4,910
Alder 13:Fir 45d
13
47
6.0
4.2
2,246
29b
35c
45
Alder 20:Fir 45d 20
29b
63
10.2
14.2
11.3
15.4
20.9
48.5
9.0
11.5
73
10.3
45
113
15.8
11.5
22.0
28
77
12.0
25.2
35c
Alder 28:Fir 45d 70
87
110
4.2"
899
29b
35c
45
90
74
91
115
10.4
11.5
16.0
2,246"
3,435
1,407
1,005
6,813
3,435
14.9
1,497
52.1
7,103
15.2
22.5
53.6
1,112
4,910
1,539
1,163
7,245
All volumes are expressed as CV4 (cubic volume to a 4-inch top)
with the exception of Alder 13, for which volume is expressed as
CVTS (cubic volume total stem).
b First commercial thinning (d.b.h. and volumes refer to cut trees
only).
c
Second commercial thinning (d.b.h. and volumes refer to cut
trees only).
d Increases in growth rate of Douglas-fir following alder rotation of
13, 20, and 28 years are assumed to be 5, 10, and 12.5 percent,
respectively.
a
Table 2. Cost assumptions per acre for economic analy­
sis (1981 dollars). (Data on file at Forest Research
Laboratory, Oregon State University, Corvallis, Oregon
97331.)
Item Initial site preparation for all systems
Site preparation for Douglas-fir following alder
(system Alder 13:Fir 45)
Site preparation for Douglas-fir following alder
(systems Alder 20:Fir 45 or Alder 28:Fir 45)
Douglas-fir planting costs (400 trees per acre)
Red alder planting costs (540 trees per acre)
Red alder planting costs (300 trees per acre)
Red alder planting costs (194 trees per acre)
Fertilization cost (200 lbs. nitrogen per acre)
Annual costs of management
Cost
Dollars
120
60
80
96
108
60
39
55
3
Douglas-fir trees were improved by the equivalent of
one site class over an adjacent pure Douglas-fir planta­
tion (Miller and Murray 1978).
Estimated yields for alder crops in Alder 13 and Alder
13:-Fir 45 are those of DeBell et al. (1978); yield
estimates for alder in other systems, developed by the
same methods, are compatible with growth data from
precommercially thinned natural stands and young
plantations.
Costs and stumpage prices
Cost assumptions are based on a survey of 1981 costs
for forest management in the Pacific Northwest (table
2). In most analyses, the cost of nitrogen fertilizer is
assumed to increase at the same rate as inflation. But
because there is some concern that it may rise at a
higher rate, fertilizer cost was varied in one analysis.
December 1983/ JOURNAL OF FORESTRY 1789
Douglas-fir stumpage prices used in this analysis are
an approximate average of information gathered from a
wide variety of public and industrial sources (jig. 2A).
Alder stumpage prices are more difficult to estimate
because current prices reflect a limited market, poor tree
form in unmanaged stands, increased logging costs due
to difficult terrain and low volume of usable wood in
wild stands, as well as current timber sale and bidding
practices. Moreover, alder stumpage prices have in­
creased over the past several years partly as a result of
expanding markets.
The potential net return on stumpage from managed
alder in an expanded market is assumed to increase over
current stumpage prices (jig. 28) as follows: timber in
stands averaging 6 inches in d. b. h. is assumed to be at
$10 per cunit, whereas unmanaged alder of this size has
negligible or negative value. Stumpage price for man­
aged alder averaging 9 inches in d. b.h. is assumed to be
about $20 per cunit; in unmanaged stands, timber of this
size has negative value except near metropolitan centers,
where prices of $20--$25 per cunit have been obtained for
firewood. Stumpage prices in alder stands managed for
sawlogs are assumed to be $60 per cunit, about 25
percent higher than current prices for unmanaged alder
and about 20 percent lower than the prices paid for
Douglas-fir trees of a similar size which were removed
in commercial thinnings. These assumed prices for
managed alder also vary in the sensitivity analysis at 60,
80, and 100 percent of the price of Douglas-fir logs of
similar volume.
Profitability of the Systems
Under the conditions assumed in this forecast, the
present net worth of each of the eight theoretical man­
agement systems ranges downward from $623 per acre
(Fir 45 + N) to a negative return of - $251 per acre
(Alder 13) (table 3). Profitability ranking is Fir 45 +N >
Alder 28:Fir 45 >Fir 45 >Alder 28 >Alder 20:Fir 45
>Alder 13:Fir 45 >Alder 20 >Alder 13.
All four systems aimed at producing sawlogs have
substantially greater present net worth than the four
which produce pulpwood or fuelwood. These latter
systems are not profit-competitive with those designed
to grow sawlogs.
Present net worth with a fixed interest rate is consid­
ered an appropriate criterion of investment performance
for industrial forest owners (Gansner and Larsen 1969).
Internal rate of return is a method of assessing eco­
nomic effectiveness when a minimum acceptable rate of
return is sought.
An analysis of the internal rate alters the profitability
ranking of the present net worth analysis. Here, Alder
28:Fir 45 produced the highest percentage rate of
investment growth, followed by Alder 28, Fir 45 +N,
then Fir 45 (table 3).
We performed sensitivity analysis upon the two most
profitable systems that include red alder, Alder 28:Fir
45 and Alder 28 (table 4). Comparisons were made
with all variables held constant at best-estimate levels.
THE AUTHORs--Robert F. Tarrant is professor, Department of
Forest Science. Oregon State University, Corvallis 97331. Ber­
nard T. Bormann is research plant physiologist. USDA Forest
Service, Juneau. Alaska. Dean S. DeBell is research project
leader. USDA Forest Service. Olympia, Washington. W illiam A.
Atkinson is tbrestry research manager, Crown Zellerbach Corpora­
tion, Wilsonville, Oregon.
790/JOURNAL OF FORESTRY/December 1983
!:::
::J
u
....
.(f).
200
z
A
w
u
a:
a. w
(!)
<t
a. :::E
::J
Ien
0::
u..
en
<t
_J
(!)
::J
0
0
AVERAGE TREE VOLUME
!:::
z
::J
. u
....
.(f).
60
w
u
a:
a. w
(!)
40
8
I
20
:::E
::J
1n
0::
w
0
_J
<t
0
-20
Jl l l
I
.
4.2 11.5
25.2
AVERAGE TREE VOLUME
A L DER 13 ALDER 20
ALDER 28
SYSTEM
Figure 2A. Stumpage price of Douglas-fir. 2B. Current stump­
age price of red alder. Tree volumes are in cubic feet.
Table 3. Mean annual Increment (MAl), present net worth
(PNW), and internal rate of return (IRR), for eight man­
agement systems including Douglas-fir, red alder, or
both. Values are per acre.
Management system Continuous rotations
Fir 45
Fir 45 +N
Alder 13
Alder 20
Alder 28
Alternating rotations
Alder 13:Fir 45
Alder 20:Fir 45
Alder 2B:Fir 45
MAl
PNW
IRA
Ft. a
Dolla rs
Percent
194
527
173
-251
208
172
623
10.0 10.3 <0
175
81
464
8.4
11.6
198
202
218
8.4
9.8
204
333
578
11.7
Varying the interest rate alters the profitability rank­
ing of the systems. Low interest rates generally favor
those with Douglas-fir only, while high rates favor
alternate cropping and continuous alder production.
Profitability of the alder systems increases sharply,
relative to Douglas-fir, when alder stumpage price is
increased ifigs. 3A, B; 4A. B), and when alder rotation
length is decreased (figs. 3C, D; 4C, D).
The cost of N fertilizer would also affect profitability,
especially if the price of natural gas should rise. Large
increases in fertilizer cost could reduce the profitability
of Fir 45 +N (fig. 5). Thus, when all other variables are
held at best-estimate levels and N fertilizer prices are
raised at an annual rate of 5. 8 percent above inflation,
Table 4. Break-even values for two alder sawlog sys­
tems vs. two Douglas-fir sawlog systems.
700
FIR 45 + N
w
a:
u
<{
'
-<!>:X:
Ia:
0
Consideration
- - - - - - - - - Percent - - - - - - - - Real interest rate
Minimum acceptable
rate of return
Fertilizer price
increase above inflation
Alder stumpage price
as percent of price
assumed for same-sized
Douglas-fir
7.8
6.1
8.5
7.6
10.4
10.0
10.4
10.0
5.8
8.6
88.0
73.0
Iw
z
Iz
w
Vl
w
a:
a..
FIR 45 500
ALDER 28
400
1
ALDER 20: FIR 45
87.0
99.0
ANNUAL INCREASE IN N FERTILIZER COST
ABOVE INFLATION (%)
- - - - - - - - - - Years - - - - - - - - - Alder sawlog rotation
length
5
1
27.0
2000
1-2-4000 A:
0 ./
0
29.0
c
----
c
0
':/
60 75
-800 45
ALDER STUMPAGE PRICE (
27.0
25.0
D
$ /CUNIT)
:
------- 5
=======9
7
26---28 30--- 5
ALDER ROTATION LENGTH
(YEARS I
Figure 3, A-D. Sensitivitv analvsis-A!der 28 minus Fir 45
and Fir 45+N. at interest rates of5. 7, and 9 percent.
ALDER STUNPAG£ PRICE
ALDER ROTATION LENGTH
INCREASE IN O OUGLAS·f\R YIELO
1$/CUNITI
(YEARS)
fOC.LOW!NG ALDER tPERCENTl
Figure 4. Sensitivity analysis-Alder 28:Fir 45 minus Fir 45
and Fir 45+N, at interest rates of 5. 7, and 9 percent.
Alder 28:Fir 45 replaces Fir 45 +N as the most profitable
system. Fertilization is not profitable if N costs rise at
an annual rate of 7.1 percent above inflation.
The idea of using biological alternatives to synthetic
fertilizers in forest management is not new, nor is
concern over the high consumption of energy in fertil­
izer use. Smith and Johnson (1977) suggested that an
important objective for silvicultural research should be
learning how to transform more nitrogen into ammo­
nium ions that at;e readily available to tree roots.
Figure
worth.
5.
Effect of increased N-fertilizer cost on present net
Blankenhorn et al. (1978) concluded that the only ways
to save energy in silviculture are by reducing the amount
of fertilizer used or by using it more efficiently. Burks
(1979) said similarly that improvements to, or substi­
tutes for, chemical fertilizer offer the quickest way to
energy savings in forest management.
The increase in yield of Douglas-fir anticipated after
a rotation of alder influences relative profitability less
than does either the stumpage price or the rotation
length, especially at interest rates of 7 and 9 percent
(fig. 4). Thus, the question can be asked: is the fertiliz­
ing effect of alder a relatively minor influence on
profitability? The case might be argued from the results
of present-net-worth evaluations at interest rates of 7
percent or more. We believe, however, that these results
illustrate the inadequacy of present-net-worth analysis as
a means of dealing with long-term biological considera­
tions.
Alder management has the potential to contribute
importantly to the biological well-being of Northwest
forests. Moreover, only small changes in costs, prices,
and yields must occur to make crop rotation of red alder
and Douglas-fir an economically v iable alternative to
continuous cropping of Douglas-fir.
W hat is needed to develop this potential? First, the
practicalities of growing red alder under management
need to be tested. Would culture of alder in uniformly
spaced plantations (fig. 6, p. 792) improve tree form?
W hat about log quality in the rotations aimed at solid
wood production? W ill pruning be needed? Might estab­
lishing alder stands on gentle terrain and developing
xpertise in harvesting small stems reduce logging costs?
Research programs in the Pacific Northwest are address­
ing these questions. We consider this effort to be well
justified in view of the role that alder could play in a
mature forest economy. •
Literature Cited
ADAMS, D. M., and R. W. HAYNES. 1980. The 1980 softwood timber
assessment market model; structure, projections, and policy simulation. For.
Sci. Monogr. 22, 64 p.
ATKINSON, W. A .. B. T. BORMANN, and D. S. DEBELL. 1979. Crop rotation
of Douglas-fir and red alder: a preliminary biological and economic
assessment. Bot. Gaz. 140(suppl. ):S 102-S I 07.
BLANKENHORN, P. R., T. W. BOWERSOX, and W. K. MURPHEY. 1978.
Recoverable energy from the forests. TAPPI 61(4):57-60.
(Continued on page 792)
December 1983/JOURNAL OF FORESTRY/791
BRUCE, D., D. J. DEMARS, and D.
L. REUKEMA. 1977. Douglas-fir managed
yield simulator-DFIT user's guide. USDA For. Serv. Gen. Tech. Rep.
PNW-57. 26 p.
BURKS, J. E. Ill. 1979. Energy requirements for silviculture. P. 146-148 in
North America's Forests: Gateway to Opportunity. Proc. Soc. Am. For.
Annu. Conv. 1978.
DEBELL, D. S .. R. F. STRAND, and D. L. REUKEMA. 1978. Short-rotation
production of red alder: some options for future forest management. P.
231-244 in Utilization and Management of Red Alder. USDA For. Serv.
Gen. Tech. Rep. PNW-70.
GANSNER, D. A. . and D. N. LARSEN. 1969. Pitfalls of using internal rate of
return to rank investments in lilrestrv.
. USDA f'or. Serv. Res. Note NE-106.
5 p.
MILLER, R. E .. and R. D. FIGHT. 1979. Fertilizing Douglas-fir forests. USDA
For. Serv. Gen. Tech. Rep. PNW-83, 29 p.
MILLER. R. E., and M. D. MURRAY. 1978. The effects of red alder on growth
of Douglas-fir. P. 283-306 in Utilization and Management of Red Alder.
USDA f'or. Serv. Gen. Tech. Rep. PNW-70.
RESCH, H. 1980. Utilization of red alder in the Pacific Northwest. For. Prod.
J. 30(4):21-26.
Fixure 6. A red alder p lantation at axe 10 years. Trees hal'e
straixht boles and a\'eraxe 4 inches in diameter and 35 to 40
feet in heixht. (USDA Forest Sen·ice photo.)
SMITH, D. M .. and E. W. JoHNSON. 1977. Silviculture: highly energy­
efficient. J. For. 75:208-210.
STETTLER, R. f'. 1978. Biological aspects of red alder pertinent to potential
breeding programs. P. 209-222 in Utilization and Management of Red
Alder. USDA For. Serv. Gen. Tech. Rep. PNW-70.
TARRANT, R. F. 1961. Stand development and soil fertility in a Douglas-fir­
red alder plantation. For Sci. 7:238-246.