Clear-cutting, the softwood lumber dispute between Canada and the United States, and disputes between provincial governments and First Nations over natural resource ownership have all recently been grist"or perhaps, in the context, fibre"for the media’s mills. Yet underlying these issues, a more fundamental prob- lem has been largely ignored: how Canada’s forests are owned. Without a change in the way we allocate property rights in the forest, we are in danger of losing our forest industry and foregoing many of the non-commercial bene- fits our forests provide.

Historically, the use of licenses to allocate timber on public (or ”œCrown”) lands predates Confederation, going back to the Crown Timber Act of 1849. The basic licensing process has remained essentially unchanged for a century and a half. During the 19th century and the heyday of white and red pine logging in eastern Canada, governments often auctioned off timber rights for very short periods.

This system changed with the emergence of a large- scale pulp and paper industry in the early 1900s. Pulp and paper mills were much more costly than sawmills and long-term commitments to supplies of timber were necessary if the required financial investments were to be made. For the most part, provincial governments used timber licences as a tool to encourage such investments, which usually led to the growth of towns and revenues. The terms of the licences, which often lasted 20 years, were a result of nego- tiations between companies and governments, as were ”œstumpage charges,” that is, the amount the government charged a company for each cubic metre of wood cut. In all provinces except Alberta, ownership of the uncut tree resides with the government. Direct forest revenues, largely in the form of stumpage charges, are still a significant pro- portion of budgetary revenues in some provinces, notably British Columbia. In others, their importance has declined dramatically during the last century. For example, in Ontario annual direct timber charges have declined from over 30 per cent of the province’s budgetary revenues in the first decade of the 20th century to less than one quarter of one per cent in recent decades.

Until after World War II, exploitation of public timber under license was the norm and there had been only a few attempts at managing and regenerating forests on a sustainable basis. In the 1920s in Ontario, Abitibi Paper Company at Iroquois Falls and the Spanish River Pulp and Paper Company at Sault Ste. Marie both began major forest regeneration programs. In Quebec the Laurentide Paper Company pioneered in the establishment of plantations at Grand’Mère. These industry ini- tiatives were halted by the market collapse of 1929 and the ensuing economic depression. During the 1950s and 1960s, with federal assis- tance under the Canada Forestry Act of 1949, the provinces undertook inventories of their forests and made tentative steps toward regeneration, forest management and closer regulation of tim- ber harvesting. Licences for large companies and mills would often include requirements for for- est management planning and regeneration. Thus over a period of a century and a half the licensing process changed from a rather simple matter of auctioning rights to public timber for relatively short periods of time to a means of developing investment and infrastructure and encouraging good forest management by long- term leaseholders.

For most of this period the major licensees" the pulp and paper and sawmilling companies" were mainly if not exclusively using conifer species. Small mills often had difficulty obtaining sawlogs and frequently relied on political inter- vention and ministerial directives to get their timber. At the same time, technological changes in the form of engineered wood products such as panel boards and laminated lumber were attract- ing investors, and mills to produce these new products were built. Many of these mills required a feedstock of deciduous species. Moreover, some pulp and paper mills were turning to deciduous species either to supplement or replace conifers in their manufacturing processes. Though some licensees had permission to harvest all commer- cial species, most licenses were for conifers only. When producers applied for permission to har- vest deciduous species as well, this often led to overlapping licenses, which in turn caused dupli- cation in planning requirements. There have also been disputes between licensees over planning details such as which species"conifer or decidu- ous"is to be regenerated after harvest.

The situation has been complicated even fur- ther as provincial governments have encouraged the establishment of secondary and tertiary wood-using industries in order to increase the ”œvalue-added” component of the forest products sector. These secondary and tertiary companies, which are often much smaller than the major operators, often require wood of a specific type or quality in amounts that are simply too small to be of commercial interest to major licensees. This problem would be alleviated, or even disappear, if the organization responsible for the management of each forest were separate from the primary converting mill"whether pulp and paper or sawmill"and placed its forest products on the market in response to the demands of converting facilities, whether primary, secondary or tertiary. In other words, the forest management company would be run as an independent business and not simply be a fibre supplier tied to one mill, as is common at present.

Beyond changes in technology and in the licensing process, a third factor has increas- ingly affected forest management: Easier access to the forest has enabled members of the public to see and use it in ways and to a degree that was not possible until the past few decades. At the same time, there has been growing concern for the environment and for non-timber values and uses on areas under licence. The public generally believes that these values and uses are best pre- served by restricting any form of forestry prac- tice, but especially those that may result in the production of commercial timber, even if this comes as a by-product of management for other uses. The costs of totally withdrawing productive forest land from forest management through blanket restrictions on forestry practices are lost opportunity costs borne by the forest compa- nies, not by those who want the values or uses preserved. For the most part, this belief in preser- vation is founded on ignorance or misunder- standing of the dynamic nature of Canada’s forests. Even without human intervention, dis- turbances by fire, wind, insects and disease are the norm in the forest. Animal populations are accustomed to moving around in response to such disturbances. Good forest management practices recognize that forests at each location change over time and that as they do, their val- ues and attributes change in respect to other species of plants and animals, including humans. Even in forest lands that have been set aside as parks, forest management that focuses on non-timber values will almost inevitably result in some production of commercial timber. Sustaining many non-timber values in parks and other forms of forest reserves often requires intervention"for example, the thinning of trees to create openings for various purposes or the removal of trees that could be dangerous at campsites and enhancement of wildlife habitat. Natural disturbances by wildfire, wind, insects and disease cause more ”œdisruption” than any planned forest management practices and gener- ally have a greater negative impact on society economically. Forest management is the means by which we try to limit ”œdisruption.”

Licensees on public lands are increasingly required to seek out public participation in the planning of forestry activities. A common form of participation is the identification of areas of non-timber values that will be set aside from any form of harvesting. Concern about the mainte- nance of water quality and avoidance of soil ero- sion in managed forests has often resulted in a plethora of directives that try to cover every type of forest condition with a broad brush. There is, and will continue to be, a need for legislative and regulatory requirements dealing with the impacts of forest practices on timber and non- timber values. These will be most effective, how- ever, when they recognize the competencies and knowledge of professional foresters and institute appropriate accountability procedures to ensure that the public’s forests are being properly man- aged. What is needed is an accountability process governed by actual results, not top-down fiats based on incorrect perceptions of what is happening in the forest. To a limited extent, this is beginning to occur with sustainable forest management certification by means of third- party audits. A major reason for this certifica- tion, quite independent of the licensing system, is the growing demand in the world marketplace for wood products that come from sustainably managed forests. Two of the three certification systems currently applicable to Canadian forests and their management address the full spectrum of forest management practices in relation to economic, social and ecological impacts. These are the Canadian national standard for sustain- able forest management of the Canadian Standards Association, and the various standards of the Forest Stewardship Council. Either could be used to assess the performance of a forest management company. The environmental stan- dard ISO 14001 applied to woodlands focuses primarily on environmental management proce- dures within an organization, not on the forest itself.

Canada’s forest industry has been export-ori- ented from the time of the logging of east- ern white and red pines for Britain during the Napoleonic Wars, and it is still the sector that makes the largest single contribution to the country’s balance of trade ($37.5 billion in 2000), largely in commodity products of pulp, paper and lumber. In recent years, the industry has faced competition from new commodity fibre producers in South America, Africa and Australasia. Their fibre comes mainly from plan- tations of non-indigenous species such as euca- lyptus and pines that have growth rates several times that of northern conifers in the natural forest. In future, the viability of the Canadian forest industry as a significant competitor in the global marketplace will depend on our manag- ing large portions of our productive forests so that fibre growth rates are increased and fibre quality improved. Increases in growth rates will be dependent on management practices and sil- vicultural techniques. At present, companies must regenerate cut-over lands to the level of the natural forest that was harvested. If they are to invest in intensive forest management prac- tices that would yield significant increases in growth, they will have to be assured of their proprietary right to the timber so produced, and that requires basic changes to the tenure system. Forest companies have seen the productive areas on their licences increasingly reduced by with- drawals for non-timber uses. A proliferation of guidelines and directives constraining forest practices, together with the superimposition of other licensees and activities on the forest area, have made the planning process into a churning morass. In the long run this can only lead to the decline, if not the outright demise, of the Canadian forest industry as a worldwide com- petitor in commodity products and it may also limit the opportunities to develop secondary and tertiary value-added ones.

What is required if Canada’s public forests are to be maintained as a social and eco- nomic asset without prejudicing their environ- mental attributes?

A long-term commitment and proprietary rights to timber must be at the heart of any arrangement in this sector. The public, as repre- sented by the government, must get an appropri- ate financial return for its resource, while the for- est manager must be given an incentive to stay in operation. Both are necessary if enough invest- ment is to be attracted to the industry to increase forest growth rates significantly. Given the range in biological ages for most of the commercial species, rights should exist for at least 100 years.

Embodied in a formal agreement, these rights could be auctioned off with or without restric- tions as to the nature of the management organ- ization, e.g. whether it had majority Canadian ownership. The government, representing the public owners, presumably would want financial arrangements that dealt with the existing timber values and could be adjusted to unforeseen changes by means of periodic reviews. One mechanism would be to relate timber values to existing rates of timber growth and to provide an incentive to the management company to increase those rates over time.

At the moment, licenses cover a very broad range of both productive and unproductive for- est lands. In most if not all licensed areas, only some portion of the productive forest land will be candidates for long-term rights for timber production. We need to develop criteria and a protocol for the identification and establishment of such areas.

A second requirement of any such long-term arrangement is that the forest management com- panies be obliged to place the products of the for- est on the open marketplace. For many public forests in Canada that marketplace either already exists or could easily be developed. In some remote areas, there may now be only one or two buyers for the timber. Still, the principle of main- taining a marketplace should apply. This market- place condition effectively makes the forest the profit centre and provides opportunities for sec- ondary and tertiary manufactures to have access to a wide range of forest products. Of course, a forest management company’s decision to place products in the marketplace will obviously depend on the market’s response to this supply. The upper limit to supply would be set by the sus- tainable level of harvesting established by provincial legislation and in accordance with approved forest management plans, as is basical- ly done today.

The large areas of remaining public forest lands should be managed for the entire array of values and uses, including timber production, that are identified for them. Again, the principle of proprietary rights could be made to apply, although it is unlikely that it would be extended to other forest resources such as fish, wildlife, berries, other wild plants and recreational areas and facilities. There is, however, an alternative that is already in use. While ownership of these other resources should remain with the Crown, it is the access to them which controls their use. Owners of private forest lands can control and manage hunting, fishing and recreation on their lands as long as provincial regulations concern- ing fish and game and environmental values are observed. Thus a private forest management company under a long-term agreement with the Crown (though not necessarily a 100-year agree- ment) could manage the forest primarily for its non-timber values and derive revenues from their use by controlling access to them. The forest management company would also have to place any timber that was produced on the open mar- ketplace. A number of such companies could be partnerships of local communities, native groups, specific interest groups, logging contractors or small to medium-sized mills. A condition of per- formance for both types of forests and manage- ment companies would be that they become cer- tified to national sustainable forest management standards subject to regular third-party audits of the sort already described for timber manage- ment companies.

If the forested provinces of Canada are to ensure that their forest assets continue to benefit Canadians economically, socially and environ- mentally well into the foreseeable future, a new arrangement for the management of forest resources and the values they comprise must be made. Changing the tenure system is at the heart of the matter. Otherwise, despite having ten per cent of the world’s forests, Canada will continue to lose her position in the global mar- ketplace for timber and will forgo substantial commercial and non-commercial benefits because of poor management of her non-timber values and uses.