The forestry sector has a market crisis, and many people who care about forests don’t understand the extent of it.
I spent last week at the Markets Matter Convening, hosted by the U.S. Endowment for Forestry and Communities, surrounded by loggers, mill operators, investors, and researchers. Healthy forests don’t happen on their own. They require active management like thinning, harvesting, and stewardship. And that management only pencils out if there are markets for what comes out of the forest.
I care about forests because of the benefits they provide to biodiversity, clean water, and wildfire resilience. What I understood better after this week is that those outcomes depend on economics. You cannot have thriving forests without a market for forest material.
You cannot have thriving forests without a market for forest material.
First, what crisis?
The U.S. produces about 270 million dry tons of wood fiber a year, but markets are only absorbing 214 million. Figures presented at the convening put the annual gap at 56 million bone dry tons (4 million truckloads!) of pulpwood, logging slash, and mill residuals that are physically available but economically stranded. The wood and processing infrastructure exists. The constraint is markets.
This is not just a downturn. It is a collapse of demand. U.S. pulp production has fallen nearly 20 percent since 2021, with roundwood pulpwood consumption dropping 16 percent in 2023 alone, according to USDA data. Five more pulp mill closures were announced in the South in 2025. The forest sector has a narrow set of anchor markets that absorb large volumes, and when those markets weaken, the whole system weakens with them. Landowners lose revenue, loggers lose jobs, mills lose supply, workforces leave, rural communities hollow out.
The outcome: forests become overgrown, fire-prone, and less resilient.
The market problem is accelerating the forest health crisis. Fixing markets won’t solve everything, but we cannot ignore them and expect forests to recover.
Three Market Opportunities Worth Watching
There is no shortage of ideas for what to do with stranded wood fiber. What stood out was not just that these opportunities exist, but the innovation behind how people are thinking about scaling them.
Biochar
Biochar is a porous, carbon-rich charcoal made from wood that is primarily used as a soil amendment to improve water retention in agricultural fields. As a standalone product, biochar doesn’t command a high enough price on its own to make the economics work.
What makes biochar commercially viable is the ability to stack revenue streams. A biochar producer isn’t just selling a product. That same facility can earn carbon credits because biochar locks carbon into the soil for potentially hundreds of years. If the facility sits within a watershed where improved soil filtration reduces runoff, water quality credits may also be available. Stack the product sale, the carbon credits, and the water quality offsets together, and suddenly the economics work in a way they never would from the product sale alone.
The question then becomes who buys it. Scale matters here. Potential buyers span industries: golf courses reducing irrigation costs, steel manufacturers testing it as a substitute for petroleum coke, water treatment plants enhancing biodigester performance, and communities remediating PFAS contamination in their groundwater.
I have a sticky note on my laptop that says “biochar = clean water.” I did not know before last week that biochar can filter PFAS from groundwater and improve the performance of water treatment plants. I live in an area with brown water, and I left asking whether biochar could be part of the answer for communities like mine. Turning it into reliable markets will require policy, committed buyers, and supply chains that don’t yet exist.
Fiber packaging
Consumer demand is real and growing. Younger buyers are willing to pay a premium for fiber-based packaging over plastic, and the technology for barrier coatings that make fiber packaging resistant to oil, water vapor, and oxygen already exists.
The gap is not technical, it is supply chain alignment. The forests generating millions of tons of stranded material and the manufacturers who need affordable feedstock are not yet connected. Closing that gap is a logistics and policy challenge, not an innovation one. It would require a large, reliable buy to create institutional demand at the scale the market needs to justify investment.
Biopower
Burning wood to generate energy is not a new idea. What is new is how utilities are making the economics work. Elvy Barton from the Salt River Project deserves every bit of recognition she gets in this space. This was the third time I have heard her speak, and I find myself wanting to hang out with her genius more every time.
The Salt River Project is a public power and water utility serving over two million customers in the Phoenix area. Eight million acres of watershed feed their water supply every day, which means healthy forests are not a nice-to-have, they are infrastructure. When SRP ran the numbers, the case was clear: post-wildfire restoration costs far more than active forest management. Paying to prevent the problem is the obvious choice. So they structured a biomass power purchase agreement that treats the energy as a watershed protection tool, then went to the cities and water districts that benefit from the same watershed and asked them to cost-share.
Post-wildfire restoration would cost SRP alone about $81 million. Active forest management cost a fraction of that.
A biochar initiative followed the same logic. SRP issued multiyear guaranteed offtake contracts to biochar producers, then stacked water quality credits and carbon credits on top of the material sale. Individually, none of those revenue streams makes the economics work, but together they do.
The principle is transferable even if the model isn’t: utilities, insurers, and water providers are already paying for the consequences of unhealthy forests. The question is whether those costs can be redirected upstream, toward the management that prevents the problem and creates a market for the wood that comes out.
(USDA Forest Service photo by Preston Keres)
Two Challenges That Cut Across Everything
Scale is not optional. Selling biochar to home gardeners or replacing plastic in consumer goods moves small volumes. We are talking about 56 million dry tons. The solutions that matter are institutional and require large buyers, long contracts, and policy-driven procurement. Processing facilities also have to be near the source. Freight costs for 4 million truckloads of material can kill the economics before a market even gets started.
Early adopters are the unlock. Every market that has made real progress found an anchor buyer first. A long-term purchase agreement is what lets a mill justify capital investment and lets a logger sign a multi-year supply contract. It is what turns a concept into a supply chain. The goal of the Markets Matter Convening is markets that are feasible, scalable, and durable. Durable means they can withstand economic cycles, policy shifts, and supply disruptions. That only happens when demand is diversified and committed buyers are in place early.
Why We Need to be Paying Attention
When a mill closes it is often the largest employer in a rural county, the anchor of a local tax base, the reason a landowner has any incentive to manage their land at all.
I’m from Northern California, and I have many loved ones back home in high wildfire risk areas. California once had more than 100 sawmills, today just 31 remain active. The biomass plants that depended on their residuals have undergone a similar collapse, from 66 at their peak to about 30 today. As the mills and plants closed, active forest management slowed and the forests grew denser. The fires that followed weren’t inevitable, they were predictable.
This is a supply chain failure with consequences that show up in smoke columns. Rebuilding that demand is how we reverse it. It does not require a policy degree or a forest management background. If I was back home and I could spend a little more for a paper product that came from local forests and helped reduce wildfire risk, that is all I would buy.
In the coming months an action plan from the convening will be released, and the U.S. Endowment for Forestry and Communities has committed $10 million over three years to help attract the investment this sector needs. That plan will only work if the people who can move capital, shape procurement, and influence policy show up for it. This is not a forestry niche. It belongs to all of us.
