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    Forestry doesn't pay the bills, folks


    David Broadland

    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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    1 hour ago, Guest TalkingTrees said:

    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.

    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?

    Thank you for your reply.

    No, I am not arguing that government management of BC forests should be profitable. I am suggesting that claims that forestry "pays the bills" in this province are no longer valid. I am arguing, along with a lot of other voices in BC, that it is time to consider managing the forest in the Timber Harvesting Land Base for a broader spectrum of values than, in effect, just timber. In this era of governments declaring a climate emergency and acknowledging an ongoing collapse in biodiversity, it's long past time to acknowledge that the forest industry is doing harm, harm that can no longer be justified in terms of the dollars the industry generates in our economy.

    As for including other benefits in a cost-benefit analysis of the ministry's operations, I think we need to start with the assumption that employment in small communities is one of the values that government would protect as it adjusted the allowable cut downwards. The logging industry wouldn't disappear, it would be downsized, and employment shifted to other needs that would likely be forest-dependent, just not forest-destruction dependent.

    No matter what people are working at, they pay income and sales taxes, and claims can be made that any economic sector, including education and healthcare, have "economic multipliers." There's already a vast surplus of access to the backcountry; a reduction in the cut would not change that. 

     

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    58 minutes ago, Guest Point to Clarify said:

    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.

    Yes, this is helpful. I am trying to determine how much of the difference can be accounted for by the additional costs that area-based tenures have. If you have professional experience on this question and can provide relevant information, please contact me at focuspublish@shaw.ca.

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    Guest John Janmaat

    Posted

    The government isn't populated by fools.  I am pretty sure that they have been aware of this for some time.  While for the province as a whole, forestry is a money loser, it is central to the economy of many rural parts of the province.  So, in a system where rural votes are important votes, this is one more example of the more urban engines of the provincial economy subsidizing the rural areas.  Is this a good thing to do?  What do we want our rural areas to look like?  Is there value in subsidizing a 'rural' culture - a culture that ironically believes that they are the independent, back to the land types that don't need government?  What do we want to manage our rural landscapes for?

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    19 hours ago, Guest Deryk Houston said:

     

    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.

     

     

    It's called "rape and pillage". Can't get much simpler than that. And all governments are in collusion, at least since the decision was made to de-industrialize this country...... 

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    Guest John Janmaat

    Posted

    In response to "Guest Point to Clarify", I am pretty sure that with BCTS auctions, the successful bidder is responsible fro silviculture.  They are responsible for the block until the stand is 'free to grow', which refers to a certain number of stems per hectare that have attained at least a specific height (4m I think).  The government is responsible for FSRs, but these are public roads.  Same goes for TFLs.  Again, I think that the successful bidder is responsible for roads needed to access the timber, and for either removing or decommissioning these roads if they do not become part of the provincial FSR network.  I could be wrong, but this is my sense of how it works.

     

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    Guest Point to Clarify

    Posted

    Hello John Janmaat,

    The successful bidder for a BCTS auction is not responsible for silviculture, that responsibility rests with BCTS.  I recommend reviewing a timber sale advertisement or timber sale particulars document that outlines the responsibilities of the licence holder - these are available online.  As for road construction, a market logger is responsible for some in-block road construction, but typically not for the roads leading up to the cut block, again that cost rests with BCTS (or already being looked after by the major licensees).  Before awarding a sale, BCTS will ensure those roads are already pre-developed.

    This is very different for major licensees who do have tenure obligations as a condition of tenure and must incur the costs of forest management, road development, road management, silviculture, etc..  An allowance is deducted from stumpage to cover the cost of these obligations, hence the difference.

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    This report is an opinion piece disguising as hard study.  This report offers no citations, nor is it peer reviewed, and the author has not presented the required credentials to support any command of opinion on the subject. 

    The report has extracted disparate information, makes no mention of AAC, silviculture/regrowth rate, road building benefits, market pricing/fluctuations , labour union obligations, spin off industries, corporate taxes collected, employee taxes collected, the MOE/AR2, or the actual cost of the administrative department of the Ministry of Forest itself, including the BC Forest Service.  This report also lumps all geographical areas into one and does not take private timber into account, all of which serve to further skew outcome.  

    This is a "fluff piece" written to support a pre-conceived conclusion. 

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    Guest Mama Bear

    Posted

    On 2020-07-08 at 9:45 PM, Guest TalkingTrees said:

    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?

    The BC Liberal government has been cutting costs to education since 2002 until they lost the election in 2017, even after they were voted out they were still making cuts. A whole generation of youth lost out on adequate supports in school which continues past their high school graduation to the lack of affordable housing, employment, and mental health supports that can never be recovered. 

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    Guest Richard Best

    Posted

    I appreciate the work Mr Broadland has put in to come up with data of the sort he has presented. For me he did an admirable job of presenting some of the basic information that is so badly needed in discussions about land use.

     

    In regard to the criticisms by GDN, I would like to point out that this article was not intended to be a PhD thesis, and it is ridiculous to criticize it because it does not have "the required credentials". Required by who? The Corporate Welfare Clearcut Society of BC? The foreign hedge fund hyenas that own our timber? If you have any data to refute that provided here please present it. If you have any numbers to present for the other costs you mention please do so.  If not please stop blowing hot air, and polluting the internet with gibberish.

     

    Notice that many of the "extra costs" listed by GDN are a direct result of clearcutring, in particular the farce that passes for silviculture on Van Isle. In regard to the "benefits provided by road access", I would like to point out that thousands of kilometers of logging road were pad for by the provincial government in the previous century under the infamous section of the Forest Act of BC (somebody help me out here, Section 88?) in order to promote clearcutting. I was told in the 1990s that in some cases the road building subsidies actually exceeded the stumpage paid to the government on some cutblocks, so once again the taxpayers of BC paid welfare to keep the loggers busy clearcutting. These roads caused horrific damage to fish streams, among other things, and were part of the backlash that resulted in the fall of the Sleazy Credit/Liberal regime. The incoming NDP regime then created the Forest Renewal BC program. The taxpayers of BC funded hundreds of millions (billions?) of dollars worth of FRBC "road deactivation" to take out the same roads they had paid for in the first place. So in regard to Van Isle, the argument about the benefits of road access provided by logging is pure hogwash. No new roads are being built for public access here, and the few places that the public is allowed to drive into are getting less and less every year. Spur roads are constructed for one reason only - to clearcut the forest within reach of them. The public is not allowed on these roads. And as soon as the trees are logged off the road is blocked off and forgotten until the trees grow big enough again to saw a 2x4 out of again.

     

    And while we are on the subject of costs not mentioned by Mr Broadland, allow me to add a few more myself. Not because it was a bad report, but because it was not part of the topic he chose to discuss:

    Not mentioned in Mr Broadland's data are the BILLIONS of dollars in revenue to commercial and recreational fisheries lost due to clearcutting, BILLIONS of dollars in lost tourism revenue, and so many other commercial opportunities that are not available to the public because the landbase is committed to corporate welfare parasites. Also not mentioned are the BILLIONS of dollars in lost revenues to the forest industry of the future, as our forests are converted from the finest timber that ever grew on this planet into row crops growing out of leeched out, degraded soil, and cut down as soon as the multinational corporate owners can make a quick buck out of them.

     

    It was clear in 2000 that we were on a race to the bottom of the barrel in BC in regard to forest policy. Now we have reached it. Raw log exports need to be shut down NOW. The desperate and pathetic clearcutting junkies who export raw logs for cash are far worse than the crackheads I see wandering the streets of Nanaimo. At least the social cost of paying for drug addicts ends when they die. The cost of subsidizing clearcut welfare junkies will continue to be paid by future generations for centuries to come.

    Richard Best

    Nanaimo

     

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    Guest David your a joke

    Posted

    I’d love to discuss your out to lunch views on the forest industry and feeding the public your bull shit 

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    I wish the article included more detailed information on the government expenses . I would like to quote from the article but would need to back up my claims with descriptions of the actual expenses. 

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    4 hours ago, Guest Greg said:

    I wish the article included more detailed information on the government expenses . I would like to quote from the article but would need to back up my claims with descriptions of the actual expenses. 

    We looked at 10 years of expenses from the ministry's Annual Service Plan Report for each fiscal reporting period: 2009-2010 through to 2018-2019. You can find 8 of those here. If you want the other two, email me at focuspublish@shaw.ca.

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    Guest TalkingTrees

    Posted

    On 2020-07-09 at 4:50 PM, Guest John Janmaat said:

    In response to "Guest Point to Clarify", I am pretty sure that with BCTS auctions, the successful bidder is responsible fro silviculture.  They are responsible for the block until the stand is 'free to grow', which refers to a certain number of stems per hectare that have attained at least a specific height (4m I think).  The government is responsible for FSRs, but these are public roads.  Same goes for TFLs.  Again, I think that the successful bidder is responsible for roads needed to access the timber, and for either removing or decommissioning these roads if they do not become part of the provincial FSR network.  I could be wrong, but this is my sense of how it works.

     

    BCTS does all silviculture,  not the licensees. Roads that aren't FSRs are the responsibility of the licensee.

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    Guest TalkingTrees

    Posted

    On 2020-07-08 at 11:47 PM, David Broadland said:

    Thank you for your reply.

    No, I am not arguing that government management of BC forests should be profitable. I am suggesting that claims that forestry "pays the bills" in this province are no longer valid. I am arguing, along with a lot of other voices in BC, that it is time to consider managing the forest in the Timber Harvesting Land Base for a broader spectrum of values than, in effect, just timber. In this era of governments declaring a climate emergency and acknowledging an ongoing collapse in biodiversity, it's long past time to acknowledge that the forest industry is doing harm, harm that can no longer be justified in terms of the dollars the industry generates in our economy.

    As for including other benefits in a cost-benefit analysis of the ministry's operations, I think we need to start with the assumption that employment in small communities is one of the values that government would protect as it adjusted the allowable cut downwards. The logging industry wouldn't disappear, it would be downsized, and employment shifted to other needs that would likely be forest-dependent, just not forest-destruction dependent.

    No matter what people are working at, they pay income and sales taxes, and claims can be made that any economic sector, including education and healthcare, have "economic multipliers." There's already a vast surplus of access to the backcountry; a reduction in the cut would not change that. 

     

    Thanks for clarifying, those are some really good points. Having spent my entire career in the industry I would mostly agree that we need to put public interest, and moreover Indigenous interests at the forefront.  Put another way, forestry in BC has basically been a job creation scheme for quite a while now. 

    The tricky is not just if you reduce the cut,  but by how much and how do you handle the political fallout. To figure this out, ministry costs would go up as stumoage revenues invariably fell and rural communities came kicking and screaming to Victoria. I'm not sure the ministry is up to the task, having never really recovered from the layoffs at the inception of professional reliance. Another change in government probably wouldn't help. 

     

     

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    Guest Visit the Horgan Clearcuts

    Posted

    On 2020-07-08 at 6:30 PM, Guest TalkingTrees said:

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

    Forests aren't replanted. That wouldn't make financial sense for Timberwest and Teal Jones. Mono-culture tree farms are planted where forests were removed. They're not similar.

    As a sidenote, where is the moral conscious of people these days? Who cuts down an 1100 year old tree and sleeps just fine?

    Your grandchildren will be ashamed.

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