The Andrews government has been told it must choose between saving Victoria's endangered emblem the Leadbeater's possum or hundreds of timber industry jobs.
The government's forest taskforce has been told the only way to save the Leadbeater's Possum, is to stop logging in the Central Highlands.
Logging in Victoria's Central Highlands Photo: Justin McManus
The highlands are home to the vast majority of the state's 1500-3000 Leadbeater's possums.
The forests include areas designated for paper pulp and timber production and the industry estimates that more than 2100 jobs rely directly on logging in the area.
Victoria's fauna emblem, the Leadbeater's possum. Photo: Ken Irwin
A confidential report to Labor's Forest Industry Taskforce on threatened species, obtained by Fairfax Media, recommends the best way to protect the possum is to cease timber harvesting in ash forests in the highlands.
The possum population has been in rapid decline over the last decade due to the loss of critical habitat through logging, the Black Saturday fires and natural loss of older trees.
The possum relies on older trees with natural hollows to live in, but many of these have been lost due to age, fires and logging.
Premier Daniel Andrews' government is being pressured to save the future of the state's timber industry after a mill in Gippsland announced it was closing due to a reduced wood supply from the taxpayer-owned VicForests.
Labor is also being pressured by environmentalists to create the Great Forest National Park in the Central Highlands. Campaigners say 750 new jobs would be created, as part of a tourism boom.
The Victorian taxpayer also has a legislated obligation to supply Australian Paper with wood from the district until 2030.
The report's recommendation comes as environmentalists announce they have spotted koalas in logging coupes on Mount Baw Baw. Koalas are not protected in the central highlands.
My Environment Inc spokeswoman Sarah Rees said the Baw Baw area was the richest biodiversity site in the Central Highlands.
"With such a diversity of wildlife, it's appalling that we are logging these forests, and primarily for short-life paper products," Ms Rees said.
"The Andrews government has delivered nothing for these forests, despite their policy commitment in the 2014 state election. The Coalition delivered more. It is a dark day when Victorians will be buying Victorian Ash products with the blood of Koalas in the paper and wood products."
The report to the taskforce also examined the critically endangered Victorian Mountain Ash forest with warnings if logging were allowed to continue there is a "99.99 per cent" chance the ecosystem will collapse in the next 50 years, and that does not factor in another catastrophic bushfire.
"In simple terms, to minimise further decline and prevent 'ecosystem collapse' we need to stop logging and hope that there is not a large fire within the next 50 years," the report says.
A government spokesman said the issues were difficult and complex which have been left unresolved for decades and that it would continue to consult with all stakeholders.