Monday, June 10, 2013

Free enterprise and public forests

Most of British Columbia's forests are in public ownership. Political perspectives of our time would lead one to think that public ownership of forests and free enterprise are rather incompatible. Public ownership of forests was actually promoted as a boon to free enterprise. It was one of the main selling points for the formation of the National Forests in USA. Public ownership was seen as a way to ensure good forest management to sustain timber supplies. Since the timber supplies would not be owned by lumber barons and forest corporations, supplies of timber could be sold in an open market to any buyer. This arrangement was supposed to encourage a diverse range of wood manufacturing. Gifford Pinchot, a sturdy forester, managed to sell this idea for public forests in the wild west of USA.

Gifford Pinchot sold public forests to USA and also sold the innovative idea to a BC Royal Commission on forests in 1909. Pinchot's largest contiguous public forest comprises most of British Columbia. BC was on the periphery of European expansion in North America, and has shared the milieu of free enterprise in a land of abundant resources. Since WWII, BC provincial government administrations have been mainly free enterprise coalitions. It ran under the banner of Social Credit for decades and now runs under the banner of Liberal. The Liberal title is perhaps quite confusing especially to any American readers because it is considerably right of the center of the political spectrum.

"Free enterprise" in BC frames the idea of the hard working individual using ingenuity to generate economic activity from the potential of abundant natural resources. This picture might be true for the farm homesteader on the western Canadian prairie but the endeavor of extracting resources in a mountainous Province such as BC usually required considerable capital. BC's free enterprise since the late 1800's has been about relationships with robber barons or resource corporations. Canada connected the country together by giving land grants to railway companies. "Free enterprise" in BC has in many cases meant holding your nose in a lenient deal with big capital in the hope that everyone will go along because there will be trickle down dollars.

When I mention that BC public forests have been in a state of gradual enclosure into the private interest since WWII, I often hear the response: "That will never happen in BC". Unfortunately it has already happened to a large area of the best forest land in BC. A huge chunk of eastern Vancouver Island was given to a coal baron who built a railway from Victoria to Nanaimo. The Canadian Government paid for the railway construction. There was strong opposition at the time but the deal went through because the majority thought that they would gain.

Enterprise in BC's public forests has been about taking timber from the forest to run saw mills and pulp mills. The forest has not been run as a business enterprise. Forest corporations were given timber harvesting rights in public forests if they would construct a mill. The timber allocations were subject to administrative pricing and the timber stumpage revenue went into general government revenue to be spent on roads, schools hospitals etc. Sufficient funds were not returned for forest stewardship. The "free enterprise" involved a lenient relationship with a few forest corporations that turned BC's forest sector into a government supported oligopoly. The arrangements have really amounted to costly enterprise. Forest companies were allowed to feast on the most profitable timber. The forest sector was working on easy street for several decades and in a poor position to handle the inevitable years of harvest of less profitable timber that would follow. Millions of hectares of less valuable lodge pole pine were left for later. This aging pine became susceptible with advancing age to mountain pine beetle attack and the beetles fed on a $100 billion worth. The lack of an open market restricted the diversity of wood products manufacture. The cost of harvesting some timber on the BC coast is so high that the only market is log exports to countries that can manufacture sufficient value out of the logs. Administered prices rather than market prices for public timber made BC wood products vulnerable to accusations of subsidy and export tariffs or taxes.

Perhaps the most important flaw in the shared arrangements for forest management between the BC Government and forest corporations is lack of incentive to spend the necessary funds for long term stewardship. Forest companies have to ensure regeneration after harvest, but there is no incentive to do any more than the minimum. Roads and other infrastructure are often left to erode or decay. Government tends to spend its stumpage income from the forest elsewhere for political purposes. BC's forests are being degraded to support a corporate welfare scheme. BC scheme of forest management incorporates the worst elements of the private sector and the government sector into a single package: central government boondoggling and private sector greed.

Is there a way to incorporate the best aspects of the private sector and the public sector to manage public forests?  If a local forest landscape was operated as a forest business or enterprise, forest managers would be able to ensure that forest stewardship and infrastructure are maintained from income to ensure the long term sustainability of the business. There would be incentive to develop non timber income streams from non timber forest resources and nature based enterprises. These in turn provide incentive to maintain the quality of the forest environment. Generating additional non timber economic activity for the local economy is a major element in international sustainable forest management standards. It is an item that is largely ignored in the wood products marketing based sustainable forest management certification standards. More than half of the average forest landscape in BC is not suitable for timber production.

 The local forest landscape can be operated as  a local forest trust under documents requiring sustainable forest management to international standards. The shareholders are the local public and the wider BC public. A local elected board and professional resource managers would manage the local forest trust as a business. Local forest trusts would be accountable to the wider BC public through a BC Forest Trust Assembly. The Forest Trust Assembly would audit local forest trusts, provide collective services and act as a court of appeal.  The whole system would be supported by forest income and the forests would not be a drain on the taxpayer. It would be run on a private sector model with the shareholder public participating on boards through election. This arrangement gives private sector performance, direct participatory democracy without the problems of central government bureaucracy. It would put competition, incentive and innovation back into BC's forest sector and replace a failing non competitive system.

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