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  • Forestry doesn't pay the bills, folks


    July 3, 2020

    Over the past 10 years, it cost British Columbians $365 million per year, on average, to allow forest companies to log publicly-owned forests.

     

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    Most of BCs working forest is now a giant patchwork of logging roads, clearcuts and young, fire-vulnerable plantations. For that dubious environmental result, BC citizens are paying more to manage the destruction than they receive in direct payments from forest companies for the wood extracted.

     

    ONE OF THE GREAT ENDURING MYTHS told about BC’s forest industry is that “forestry pays the bills, folks.” Those are the exact words a Vancouver Sun reader used recently to dismiss a report by three BC forest scientists that urged the provincial government to put an immediate moratorium on further logging of large, old-growth trees. That reader’s view? No can do. Forestry pays the bills.

    The Sun reader didn’t say whose bills; perhaps forestry pays his bills. But this rationale—that the forest industry is of such great economic importance to BC that nothing should be done to disturb its operations—has been used for decades as proof that any change in direction on public forest policy would be foolhardy.

    That may have been true 40 years ago, but those days are long gone.

    Over the past 10 years, for example, the cost to the public purse of managing BC’s publicly-owned forests has exceeded all direct revenue collected from the forest industry by $3.65 billion. BC taxpayers are, on average, providing a subsidy of $365 million each year to forest companies that operate in BC.

    That figure of $3.65 billion is derived from publicly available accounts published by the Province of BC. Those accounts show that, on the revenue side, BC collected $6.41 billion in stumpage between 2009 and 2019. It also collected about $300 million through the BC Logging Tax. Together they produced revenue of $6.71 billion.

    On the expense side, figures published in annual Ministry of Forests Service Plan Reports over those 10 years show total expenditures of $10,363,595,000.

    That works out to an accumulated loss of $3,652,460,667.

    Forestry doesn’t pay the bills, folks.

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    Perhaps one of the reasons this basic fact about the forest industry—that it doesn’t pay the bills—is widely misunderstood by the BC public is that detailed accounts of forest-related revenue and expenses for a given year never appear in the same document, at least not in public. Determining these numbers would be a daunting task for any curious citizen. For example, to obtain a detailed account of stumpage revenue collected by the Province over the past 10 years, Focus needed to download and sort through 3,617,486 lines of data from the Ministry of Forests’ Harvest Billing System.

    There are, of course, other gauges of the economic benefits generated by the forest industry that ought to be considered in an examination of the claim that “forestry pays the bills, folks.”

    The forest industry—which includes forestry, logging and support industries, pulp and paper manufacturing, and wood product manufacturing—has long trumpeted its contribution to this province’s exports. The value of those exports, of course, belongs to the forest companies that produce them, and there’s nothing to prevent those companies from investing profits from those exports outside of BC. Vancouver-based Canfor, for example, recently announced majority acquisition of Vida Group, a Swedish forest products company. Canfor has also invested in Alberta, North and South Carolina, Alabama, Georgia, Mississippi and Arkansas. With the globalization of BC forest companies, we just don’t know whose bills are being paid by raw log and wood product exports.

    A more reliable indicator of the overall economic importance of the forest industry to BC is its contribution to the provincial GDP. For the eight years between 2012 and 2019, according to BC Stats, the economic contribution of the forest industry accounted for an average of 2.6 percent of provincial GDP. That includes all the road-building, felling of forests, transportation of logs to mills and log export facilities, and all the milling into wood products at lumber, panel, pulp, and paper mills. In each of those eight years, the annual growth in overall provincial GDP—none of which came from the forest industry—was larger than the entire output of the forest industry. Over those eight years, the forest industry’s contribution to GDP shrank 25 percent. By 2019 it accounted for only 2.1 percent of provincial GDP.

    Not only does the forest industry not pay the bills, its economic importance to the health of the provincial economy is getting smaller and smaller each year. This trend is evident in employment statistics, too.

    In 2000, according to BC Stats, there were 100,400 people employed in the forest industry. Those jobs accounted for 5.2 percent of BC’s labour force. By 2019, that had dropped to 46,100 jobs, or 1.8 percent of all jobs. If that rate of decline continues, the remaining jobs will be gone by 2031.

    To keep those 46,100 jobs going, the Province has provided the forest industry exclusive access to 25 million hectares of British Columbia. At current employment levels, that works out to 5.42 square kilometres of publicly-owned working forest for each forest-industry job.

    The records Focus obtained from the forest ministry’s Harvest Billing System allowed us to determine the actual cut and compare that with the official Allowable Annual Cut.

     

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    The data shows a 22 percent drop in the actual cut in 2019 as compared with the average cut over the previous nine years. This decline occurred before the coronavirus emerged and, given the global recession that’s been triggered by the virus, the amount of forest cut in 2020, and the number of people supported by that cut, are likely to reach historic lows. A comparison of the reported volume harvested in the first six months of 2020 with the same period in 2019 showed a 21 percent drop across the province (down 27 percent in coastal BC). The troubled future many British Columbians have imagined would one day afflict BCs forest industry has now arrived.

    The sustained losses to the public purse from the current management regime for publicly-owned forests might provide ammunition for those who would privatize the land base dedicated to logging. But there are good indicators that, after decades of over-exploitation of public forests, managing BCs forests primarily for timber extraction is a money-losing proposition. TimberWest and Island Timberlands, through Mosaic, their joint business management unit, have recently claimed that the value of logs in the BC market doesnt even cover the cost of logging. TimberWest and Island Timberlands want to export more raw logs offshore in order to make money. To get what they want they have curtailed their operations until the federal and provincial governments acquiesce, putting hundreds of workers in small communities out of work. If timber extraction in BC has become such a marginally-profitable business, what would happen if the working-forest land base was privatized and there were no controls on what could be done with the wood extracted? Where is the public interest benefit in that direction?

    A change that would be more beneficial to the public interest is suggested by data Focus downloaded from the Ministry of Forests Harvest Billing System. For 2017, 2018 and 2019, we compared the value per cubic metre obtained by BC Timber Sales with that obtained from area-based tenures such as those held by TimberWest and Island Timberlands. BC Timber Sales uses a process of competitive auctions to market wood from public forests. Area-based tenures were established in the mid-20th century as a way of encouraging large forest companies to build mills in BC. Many of those mills have since closed and there is now no requirement for area-based tenure holders to operate manufacturing facilities to process wood logged from their tenures.

    For all of BC for those three years, BC Timber Sales obtained an average value of $37.33 per cubic metre. The average value collected from area-based tenures was $13.32 per cubic metre, a third of what BCTS collected. Ending area-based tenures and expanding competitive auction of publicly-owned forests seems to be a much more certain way to protect the public interest, at least as far as the economic value of logs is concerned.  

    With an ever-increasing area of BC lying bare, stripped of forest by clearcut logging and clearcut-and-plantation fires—both contributing heavily to the climate emergency and biodiversity collapse—perhaps now would be a good time to envision a less destructive, more ecologically-enlightened relationship between humans and what remains of the forests of British Columbia.

     

    David Broadland is spending the pandemic learning more about the forest he lives in and discovering the plants and creatures he shares it with. He can be contacted at focuspublish@shaw.ca.

     

     


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    We should all thank David Broadland of Focus Magazine  for his diligent research to provide these 2010 - 2019 financial performance  facts to the people of BC. This task is especially difficult since the Province stopped publishing the Forest Service Annual Reports in 2003. 

    To repeat Broadland… “Over the past 10 years, it cost British Columbians $365 million per year, on average, to allow forest companies to log publicly-owned forests.” 

    That is a $1 million loss per day. Staggering, no one in BC should be in support of that? And this number doesn’t even take into account many of the forestry related costs of flood repairs, wildfire fighting, water treatment plants wildlife restoration, tourism loss,misign salmon, all attributed to poor or unmonitored  forestry land management practices.

     

    Many retired civil servants and foresters have tried repeatedly to get the NDP to resume publication of this important report.  How can we run a business if we don’t know our status?

     

    BC needs to stop doing what is not working and continuously improve what is, we also need to stop the  fake news and forestry propaganda, govt , industry and communities all KNOW  it is not working, it is  negligence to continue to do the wrong thing at the costs of floods, dirty water, caribou, old growth , tourism jobs, climatge change and biodiversity….

    And still the Council of Forest Industry is demanding a protected ‘working forest land base’ across BC exclusively for  logging purposes, well  seems to me they have had that for the past 50 years and look where it has taken us!

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    Thank you David Broadland for exposing the enduring myth that the BC forest industry "pays the bills".  It does not, and has not for decades.  Many of us that care about forestry and the forests of B.C. have repeatedly made this point but, to my recollection, no one has made the point for public consumption as well and as thoroughly as you have.  I shall keep this article as a handy reference to be quoted again and again.  

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    And poof! just like that the myth of the economic viability of the forest industry goes up in smoke!  Thanks, Dave Broadland.  It is time to view our forests not as feedstock but as living ecological entities where environmental, economic, social and cultural values can be played out.  Wildwood Ecoforest is a small demonstration forest where we harvest selectively and work within a framework similar to Kate Raworth’s Doughnut Economics.  People will pay to come and experience magnificent forests and old growth.  They won’t pay to see clear cut.  There is a better way to steward our forests.  Let’s get on with it.

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    The province must be allowing the financial losses for a reason. Is it because under FIPA, The Foreign Investment protection and Promotion Agreement, ratified between Canada and China under Stephen Harper, has BC in a stranglehold?  Sell China our best trees or else China will sue the pants off of the BC.

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    Juan de Fuca Forest Watch is a facebook group of active south Island members dedicated to ending the desecration of our forests at the hands of timber barons feeding real estate moguls. We are pushing for A MORATORIUM on OLD-GROWTH LOGGING & CLEARCUTTING and we are FOR a COMPLETE OVERHAUL of our the approach to "management" of our forests.
    Please find us at JdF Forest Watch and join us to keep up on local forestry info and how you can help end the unsustainable deforestation taking place now, here on Vancouver Island, and across BC.

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    For 40 years the MoF timber harvesting bid system has also excluded smaller forest companies who leave less slash waste to be burned and create more local jobs. It seems to be rigged with deals made between the big operators in the backroom about who will bid on each timber supply area. What can we expect when the MoF timber harvesting bureaucracy is made up from industry   RPFs who bounce back and forth from industry to government to industry as they climb the forestry career ladder in their own personal interest?

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    Because the government is grossly inefficient and has put itself in a beauacratic nightmare does not mean we subsidized companies. The small buiz program is a disaster and had been since they went to sealed bids. The government tells the companies where to go and everyone said e.b.m. would save forestry well you seem to hafe proved e.b.m. is not viable and maybe they need to let some peeps with bush experience run the show. 

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    7 hours ago, Guest Taryn Skalbania said:

    That is a $1 million loss per day. Staggering, no one in BC should be in support of that? And this number doesn’t even take into account many of the forestry related costs of flood repairs, wildfire fighting, water treatment plants wildlife restoration, tourism loss,misign salmon, all attributed to poor or unmonitored  forestry land management practices.

    Ministry of Forests Annual Service Reports include the category of cost "Fire Management" and those costs have been included in my analysis. Keep in mind that a high priority in fire management is protection of commercial timber. The other sources of cost that you mention are attributable to logging operations, and any serious effort by the Province to revamp our relationship with forests should include an accounting of those costs. We might also want a better understanding of how much of the cost of the Ministry of Environment's operations is a consequence of forest industry operations.

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    Very interesting research on the actual cost of forestry to BC - about 1 Million a day in the last 10 years. Puts to rest the propaganda of the forest industry and the BC government about how forestry is essential to our economy. Forestry is in dire need of a remake - putting our forests in the hands of local forest companies, lowering the "allowable" annual cut, doing much more value added, and ending raw log exports. This would result in sustainable forestry jobs and halt mill closures, the ability to end logging old growth and original forest which would combat climate change, lower biodiversity loss, and reduce forest fire risk.

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    the 2018 profits of the four biggest forestry companies in "BC" was over 800 million dollars, (this stat is from herb hammonds excellent presentation at the forestry summit held in nelson last october, available on youtube). (Interfor: 111.7 million, Canfor: 221.8 million, Canfor Pulp: 89.5 million, West Fraser: 378 million, Total of just these 4 corporations: 801 million) We should never under-estimate the power of corruption to write bad public policy, especially when it has a long history of being embedded in the state (ie, current minister of forests is. "Touch Wood", an excellent book about forestry in bc published in 1992, writes about a scandal caused when it became impossible to hide the fact that politicians were taking bribes in return for issuing tree farm licenses. this resulted in a commission, a report, the defeat of the so-cred government, bla bla bla - but, if we look at the facts today, do you think things have changed? As an example of this type of institutionalized 'state capture', the current Forests, Lands, and Natural Resources Minister is former president of COFI (council of forest industries), one of the major groups that lobbies on behalf of the industry. The regional log sort in Vernon was shut down precisely BECAUSE it was too successful, and therefore posed a threat, at least according to the people empolyed by the MOF to set it up . If anyone in government really cared about employment, they would ban clearcutting and have all logging carried out by community forests and/or worker's cooperative and focus on value added manufacturing (800 million dollars adds up to 10,000 jobs paying $80,000 a year if the money was being spent on wages instead of sending profits to corporate shareholders, for example)

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    5 hours ago, Guest roskva said:

    As an example of this type of institutionalized 'state capture', the current Forests, Lands, and Natural Resources Minister is former president of COFI (council of forest industries), one of the major groups that lobbies on behalf of the industry.

    Minister Donaldson's personal work history, as described on Wikipedia: "With his father working in the Royal Canadian Air Force, Doug Donaldson was born in 1957 at the Canadian Forces' Zweibrücken Air Base in Germany.[1] Donaldson completed a bachelor's degree in Biology and moved to Field, British Columbia where he worked in Yoho National Park for 8 years before leading private guided tours of the area.[2] After completing a Masters in Journalism he had numerous articles published in the Calgary Heraldand The Vancouver Sun but moved to Smithers where he wrote for a local newspaper, The Interior News. He took a job in Prince George with the CBC Morning Show but moved back to the Bulkley Valley area, living in Telkwaas a technologist in the forestry industry before moving to Houston working as a manager at Northwest Community College (later renamed "Coast Mountain College").[3] Finally, Donaldson settled in the village of Hazeltonwhere he became the communications officer for the Gitxsan Treaty Office.[4] In 1992, he starting teaching journalism at the Gitxsan Wet'suwet'en Education Society located in the same village.[5] In 1994, he co-founded the non-profit group Storytellers Foundation which focuses on civic literacy and economic development on the community-level.[3]"

    There's no mention of Donaldson ever having been "president of COFI".

     

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    I second the comment above about having this as at hand as a reference for those heated exchanges with the old boys in our industry.  I have been ranting on about how Forestry in BC is treated as a make-work social project for years, and now I have the numbers to back me up.  Excellent article.

    P.S. I'd love to see how many people the public service employs in Forestry and related activities--the bureaucrat-to-GDP ratio should be explored as well. I suspect it's part of the reason that government keeps resuscitating a lifeless industry.

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    David Broadland has demonstrated the data does exist in BC Government files to inform the citizen owners of our vast public forests on crown land ( 94 percent of BC). Since the 2003 termination of the Ministry of Forests Annual Reports by former Premier Gordon Campbell  Thanks to Focus for downloading and sorting  through 3,617,486 lines of data from the Ministry of Forests’ Harvest Billing System. Why does staff not annually do this so BC citizens can be well informed? It is time for the NDP/Greens to restart publication of the Ministry Annual Reports for forestry. That would not be difficult for Premier John Horgan and Minister Doug Donaldson to do now. 

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    Thank you David for excellent research and analysis. Somehow, conversations, rhetoric and blaming must change to "FOCUS" on the coordination between regionally sustainable resources and maximum competitive global value.  Profits based on unsustainable volumes and easy low cost commodity marketing should not be justified and somewhere - somehow we should be reminded of the role that Justice and First Nations should play in all of this as well as socio-economic benefits to society as a whole. 

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     "If that rate of decline continues, the remaining jobs will be gone by 2031." If this is true, and the author seems quite confident in his interpretation of the numbers, then it seems that in a few years we will not have to be subsidizing the logging industry 360million dollars a year because there will be no more logging. Result:  No more losses.

    Of course the people who sell the trucks, the machines and those who service the logging industry as well as all the spin offs such as the mill jobs, etc etc will have to shut down, but the environment will be saved and who can argue with that idea.

    I can't help but feel that there is something much deeper going on than what is covered in this article.  Could the world possibly be much more complicated? I'm only asking the question.

     

     

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    While David's insights ring so true it dosen't change the fact that in Canada as well as in the USA we no longer operate under a democracy but Oligarchy's whose sole job is too make more money for the wealthy and businesses even at the expense of lying about what is going on. The lying and non-truth telling is so prevalent at every single detail all of David's data here will just be trivialzed down to inaccuracies. Ironically we have a chief forester in BC who is licensed and the head of ethics for all resource government employees. In addition, after the NDP's Professional Reliance Review paper was released 2 years ago, it concluded that 55,000 practising professionals were not being held accountable by their licensing bodies, hence the need to create an arm in the Attorney Generals office to do this exact thing. Where was our illustrious chief?  Completely silent. The Forest Industrial Complex indeed runs deep within BC

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    On 2020-07-03 at 3:42 PM, David Broadland said:

    Ministry of Forests Annual Service Reports include the category of cost "Fire Management" and those costs have been included in my analysis. Keep in mind that a high priority in fire management is protection of commercial timber. The other sources of cost that you mention are attributable to logging operations, and any serious effort by the Province to revamp our relationship with forests should include an accounting of those costs. We might also want a better understanding of how much of the cost of the Ministry of Environment's operations is a consequence of forest industry operations.

    Beyond fire control costs, the Ministry cost can't be equated solely to logging. That Ministry deals with a whole host of issues related to public land. In fact, you didn't even get the current name of the ministry correct. Interesting point, but go back to the drawing board as your economics are weak. 

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    On 2020-07-07 at 5:47 PM, Guest sue said:

    Please tell me why the logged areas are not replanted? This is a travesty ! 

    They are, Sue. By law they have to be.

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    1 hour ago, Guest TalkingTrees said:

    Beyond fire control costs, the Ministry cost can't be equated solely to logging. That Ministry deals with a whole host of issues related to public land. In fact, you didn't even get the current name of the ministry correct. Interesting point, but go back to the drawing board as your economics are weak. 

    Thank you for your comments.

    Regarding my use of "Ministry of Forests," see the logo in the upper right corner of the Ministry of Forests Harvest Billing System front page: https://a100.gov.bc.ca/pub/hbs/opq/ftas/invoiceSummary.do?actionType=P400&radSelectedReport=billing

    The full name of the ministry changed at least two times in the time period of my analysis. Rather than twist readers' brains with the acronym for whatever the Ministry of Forests is named today, I, like the Ministry of Forests, used "Ministry of Forests."

    It is true that a small part of the super ministry's costs are unrelated to forest management. Most of those operations also have revenues, and those revenues, from the "whole host of issues related to public land," such as non-forestry Crown land leases and rentals, and water licences, are not included in my account of the Ministry of Forests' revenues. It would greatly assist public accountability of the Ministry of Forests' (or FLNRORD if you like) operations if non-forestry-related costs were broken out in its Annual Service Report.

    Keep in mind, too, that some serious costs directly related to forest management are not included in the Ministry of Forests annual service reports. One example are the costs associated with damage from flooding and degradation of water quality resulting from clearcut logging in community watersheds. Another example is the future cost associated with restocking Not Satisfactorily Restocked lands. Another cost is the loss of carbon sequestration. And so on. None of these costs are included in the Ministry of Forests annual service reports.

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    1 hour ago, David Broadland said:

    Thank you for your comments.

    Regarding my use of "Ministry of Forests," see the logo in the upper right corner of the Ministry of Forests Harvest Billing System front page: https://a100.gov.bc.ca/pub/hbs/opq/ftas/invoiceSummary.do?actionType=P400&radSelectedReport=billing

    The full name of the ministry changed at least two times in the time period of my analysis. Rather than twist readers' brains with the acronym for whatever the Ministry of Forests is named today, I, like the Ministry of Forests, used "Ministry of Forests."

    It is true that a small part of the super ministry's costs are unrelated to forest management. Most of those operations also have revenues, and those revenues, from the "whole host of issues related to public land," such as non-forestry Crown land leases and rentals, and water licences, are not included in my account of the Ministry of Forests' revenues. It would greatly assist public accountability of the Ministry of Forests' (or FLNRORD if you like) operations if non-forestry-related costs were broken out in its Annual Service Report.

    Keep in mind, too, that some serious costs directly related to forest management are not included in the Ministry of Forests annual service reports. One example are the costs associated with damage from flooding and degradation of water quality resulting from clearcut logging in community watersheds. Another example is the future cost associated with restocking Not Satisfactorily Restocked lands. Another cost is the loss of carbon sequestration. And so on. None of these costs are included in the Ministry of Forests annual service reports.

    Thanks for the quick reply. I think overall the article makes some very interesting points and I hope it generates some buzz. The employment stats say a lot.

    The point I was making is that comparing costs and benefits needs a fairly rigorous methodology with respect to public services. Otherwise, we can jump to some faulty conclusions. You are almost arguing for a cost-recovery model. Would we make the same argument regarding education or health care? If what you are saying is that the management of BC's public land base (much of which is forested,) should be profitable, it is a thin line to privitization. I believe that the ministry also deals with wildlife conservation, a variety of natural disaster preparedness measures, research, etc. It's true....this isn't 1974, and we are not a one industry Province anymore.

     

    But, there's still more than a few mill towns if you get outside the metropolis on either side of the Straits. In a lot of parts of the world, rural towns get shutdown to become playgrounds for the urban wealthy. Is that where BC is headed? Perhaps they should just build more golf courses. That's sure to be profitable. 

    With respect to BCTS, I'm not sure that's what we want. If you look at their record on on Old Growth and community engagement, they seem to still think it is 1974. Anyways, we would have to seperate out their costs to make a fair comparison of bang for buck. Moreover, on the benefits side, what about income tax generation, economic multipliers, revreation sites, the importance of exports to a regional economy, and public access to the backcountry?

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    Hi David,
    I just read your article and while I have not checked all of the information, there is one point that stands out to me that should be clarified.

    The average value difference between BCTS auctions (37.33 $/m3) and area based tenures (13.32 $/m3) that you have posted is an apples and oranges comparison.  When BCTS puts up an auction they cover the cost of field and office work, road development up to the cutblocks, and reforestation.  In other words the successful bidder does not pay for these things.  However, under area based tenures the licensee has these obligations as the tenure holder and must incur the cost for these activities (unlike a bidder for a BCTS sale who does not).  Therefore, a cost allowance is deducted from stumpage for area based tenures, which is why there is the difference.

    Hope that helps.

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