Wood that they could: thinning their holdings, timber companies clear the way for Wall Street to find a slow-growth stock.

• Author: Martin, Edward
• Position: Feature

Along Water Street in the town of Washington, some houses date to the late 1700s. South of town, a low bridge carries U.S. 17 across the Pamlico River toward Chocowinity Bay. Next to the bay is Cypress Landing, a 1,200-acre development by Weyerhaeuser Real Estate, a subsidiary of the big timber company. Life here reflects the region's stately past. Golfers putt where pines and hardwood trees once stood, and $500,000 houses sit on $400,000 lots. There are Sunday jazz concerts.

East of Washington, between the Colonial town of Bath and Belhaven, another former forest once owned by Weyerhaeuser is now called Bailey Point. Here, and to the south in Carteret County where Adams Creek laps at the marsh grass of Merrimon Bay, Timberline Land Co. bought the forest and last year carved out 270 lots at prices ranging up to $200,000. "Both developments sold out in four hours," says Cliff Brown, president of the Greenville, S.C.-based company.

A quiet revolution is under way. Ownership of North Carolina forestland is shifting and with that, some believe, the future of much of the economy and environment of the state. Trees cover more than 17 million acres, about 58% of its surface. Historians trace its Tar Heel nickname to when Bath and other towns produced pine tar to waterproof wooden ships. With $20 billion in sales in 2002, the forest-products industry--everything from logging to paper mills--was second only to textiles in North Carolina manufacturing. Trees are its raw material.

Only three states have more commercial timber acreage, and changes in supply and price ripple through the economy. Some researchers say North Carolina is poised to lose more of its forest over the next several decades than any other state.

Change isn't new. The Colonial pine-tar industry gave way to cut-and-run

timber barons. But then, in the early 1900s, came companies such as International Paper, Weyerhaeuser, Union Camp and Georgia-Pacific. They not only pulped, papered and shaped felled trees but they replanted what they cut. Through self-interest or conscience--or both--they became known for forest stewardship.

Forestry experts say the latest transition is driven by myriad economic forces, including tax laws that are prompting a sell-off of commercial timberland and soaring values that make land more valuable for development than for growing timber. Beaufort County tax assessor Bobby Parker says the Bailey Point land, assessed at $513,000 as forest, is worth $8.2 million as a subdivision. Urbanization chews up tens of thousands of acres...