Over the past 10 years, it cost British Columbians $365 million per year, on average, to allow forest companies to log publicly-owned forests.
July 3, 2020
Most of BC’s “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.
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.
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 BC’s 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 BC’s 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 doesn’t 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 Forest’s 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 firstname.lastname@example.org.