A distinguished panel of scientists working for the National Research Council recently concluded that the Forest Service's research program -- paid for by U.S. taxpayers -- is too much oriented toward tree farming and not enough toward understanding how forest ecosystems function and the role they might play in regulating climate {Federal Page, July 31}. To get back on the right track, the National Research Council recommends that federal spending on forest research rise from its annual rate of $152 million to $327 million over the next five years.

Important as the proposed research is to us all, concerns about the federal budget deficit will make it difficult to persuade Congress to give the Forest Service an additional $175 million a year. Perhaps this problem can be solved by reforming the Forest Service's wasteful timber sale practices.

Each year 40 to 50 percent of Forest Service timber placed on the market is sold at prices that do not recover the government's costs of growing and selling the trees. In 1989 such below-cost timber sales cost federal taxpayers at least $365 million. This strange outcome is a result of perverse incentives. Forest Service managers are rewarded for gross timber receipts, acres logged and local jobs ''created,'' not for habitat protected or for saving taxpayer dollars.

A phase-out of taxpayer subsidized timber sales is a winner on three counts. It would provide a source of funds for high-priority forest research. It would also help protect the environment and promote investments in private-sector forestry. PETER M. EMERSON Fairfax