Sunday, April 4, 2010

Value subtracted forestry

International agreements on sustainable forest management encourage a value added forest economy. This means that you try to diversify your forest economy beyond just making commodity lumber and paper pulp. Secondary wood manufacture to produce interior finishing materials, furniture etc adds value. Non timber forest products such as floral greenery, mushrooms and berries, fish and game can help to diversify local economies. Nature based economic activities can be an important addition in forests that are managed to preserve their natural environment and recreational appeal.

Instead of encouraging a value added forest economy, BC legal and institutional framework encourages a value subtracted forest economy. Our public forests were intended to provide an open free market supply of timber to encourage a diversity of entrepreneurs and wood manufacturers. Instead the BC Government allocated most of BC's timber to a few commodity producing forest corporations under a non market system of administered prices. Development of secondary wood industries was impeded because they could not get a supply of wood. Non-market non competitive arrangements removed some of the impetus for innovation within the forest sector.

The main competitive advantage of the BC forest industry did not reside in the competitive merit of the wood utilization industry but in BC's forests. The trees and wood in BC's forests and especially on the coast was simply bigger and better that most coniferous forests of the rest of the world.

BC's Government and forest industry oligopoly honed and exercised its competitive advantage in world markets for many decades by harvesting the best of the best out of the forest. The best timber was value stripped out of the forest to maintain the competitive advantage. On the coast the best timber is gone and along with it the competitive advantage. In the interior of BC, Lodgepole pine tended to be avoided in favor of spruce and other species that gave greater competitive advantage. Forest fires tend to be more frequent in Lodgepole pine forests. The combined effect of fighting fires and failing to harvest enough Lodgepole Pine resulted in a build up of a huge area of very old pine. Old pine is susceptible to mountain pine beetle attack. A mountain pine beetle outbreak, much larger than a usual natural outbreak, has our little beetle friends eating up a $100 Billion worth of wood.

The forest sector is in our public forests for timber and usually grumbles about the economic downside of taking care of other forest values. It wants to give credit for its most successful mountain pine beetle habitat enhancement project to climate change and global warming. It is time the forest sector took some of the credit. The Government contributed your funds in firefighting over several decades to save the pine and forest industry let it grow old just for the beetles. It is quite an achievement to create a mountain pine beetle habitat the size of Denmark, Holland and Switzerland put together. Subtract $100 Billion for feeding beetles.

It is simply not possible to move to a new diverse value added forest economy in BC under legal and institutional arrangements for a non market forest commodity oligopoly. These non market arrangements are the main reason for export taxes and tariffs on BC's wood exports. Log exports are further witness to our lack of diversity in wood manufacture. Others can add the value while we are unable.

Our non competitive value subtracting forest sector is failing. To revitalize the forest sector, we need a complete reform of the legal and institutional framework for forest management in BC. Unfortunately the BC Government is part of the existing non market based oligopoly and is likely to heed the advice of its partners to prop up the existing arrangements. They will prop up the existing arrangements by doing what they have always done. They will take it out of the forest.

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