Urban Renaissance Institute

Lawrence Solomon
National Post
March 30, 2002

Only a Toronto-based, left-leaning, corporate-hating

. . . globalization-conspiracy theorist like Lawrence Solomon could come up with the strange and twisted logic used to justify forest land privatization in parts of Canada which he clearly has never visited (Natural Value, March 26).

He blames the depopulation of Saskatchewan and B.C. communities on government’s willingness to hand over resources to rapacious multinationals. He states that the destruction of the natural beauty of the land during extraction of resources creates a landscape so devoid of esthetics that it eventually drives people away. The only way to prevent future exploitation and destruction, according to Mr. Solomon, is to sell the land to private citizens who will become “true stewards of the land.”

He does not seem to realize that a large part of the Saskatchewan he is referring to is already privately owned by farmers. Farmers have experienced a century-long improvement in agricultural productivity. leading to a huge decrease in the demand for farm labour. As a result, those who used to live in Saskatchewan people have moved to urban centres for employment. The forest industry in Canada has experienced and continues to experience a similar pattern.

He presented the communities of Tofino and Whistler as examples of towns which are thriving due to green industries. He compared these towns to Port Alberni, which is apparently suffering from its past dependence on resource exploitation and a refusal to embrace eco-tourism.

Tofino is located next to a large National Park, which was created through the expropriation of private land, with park access via a publicly built highway. It is clear that private investment did not play a significant role in the development of the present eco-tourism industry in Tofino. Whistler, on the other hand, a source of much private investment, is just another kind of semi-permanent clear-cut which will remain on the landscape for as long as that community exists.

Mr. Solomon played fast and loose with the demographics to indicate that communities like Tofino and Whistler have enjoyed significant growth rates due to their non-exploitive, environment-friendly tourist industries. Tofino has a population of 1,403 and could experience a significant population increase should another boatload of Chinese migrants suddenly show up in its harbour. Port Alberni would require half-a-dozen superferries-worth of migrants to create the same kind of relative impact. On a more personal note, I spent a half-hour wandering around Tofino one day looking for a loaf of bread. I much preferred my weekend stay on a blueberry farm (a resource extraction industry) nestled in the lovely second growth forest just outside Port Alberni. I suspect the 18,403 permanent residents of Port Alberni also have similar reasons for choosing to live in that community.

Timothy Conlin, Victoria.

I will hazard a guess

. . . that Mr. Solomon has never lived for any length of time in a non-urban setting. There are many reasons why cities like Port Alberni go into decline: progressive mechanization of the forest industry, U.S. protectionist, lumber policies or increased costs of harvesting timber from Crown lands. I’m not condoning industrial activities per se, but I am suggesting that you are dangerously oversimplifying complex issues.

As regards your idyllic picture of Tofino as example of the future of rural Canada, I shudder to think of the prospect. I worked in forestry there for some time and have the following observations. The tidal wave of so-called ecotourism is resulting in degradation of sensitive coastal ecosystems, the harassment of vulnerable species under the guise of recreation for rich visitors, sky-rocketing property values that drive local people away because they can’t afford to live there anymore, an ‘urban’ infrastructure geared more toward tourists than residents and the overdevelopment of a landscape whose pristine and natural qualities are ironically what drew visitors there in the first place.

Also consider that forests developed are permanently altered, whereas a forest harvested remains a forest nonetheless. Your depiction of the rapacious use of forest resources from Crown lands is out of touch with the general direction that forest policy for public lands has taken over the last 20 years.

As regards privatization: ask any forester or environmentalist about the state of forest management on private lands and they will undoubtedly and appropriately use adjectives like rapacious, unsustainable, unregulated. Drive north of Toronto two hours to Parry Sound or Muskoka, into the Great Lakes-St. Lawrence hardwood forests and see the continuing commercial abuse of forests on private property. It’s appalling.

Have a look at the private forests in the Southeastern United States and note the striking similarity between common agricultural crops and the cottonwood plantations on the Mississippi delta. Note also the user fees for forest access and the lack of consideration for wildlife habitat management with the exception of wild turkey and deer … both lucrative game species.

Last but not least, the notion of privatization would be unimaginably offensive to the aboriginal peoples of this country who feel (and have substantial legal claim in many cases) that the so-called ‘public’ lands you refer to are not ours for the selling.

Riki Burkhardt, Master of Forest Conservation
Registered Professional Forester, Thunder Bay, Ont.

Read Larry’s article, “Natural Value,” published by the National Post on March 26, 2002.

Lawrence Solomon
National Post
March 26, 2002

Don’t believe all the census hype claiming that Canadians are indiscriminately abandoning rural areas for the cities. Canadians love living in the countryside when the countryside stays true to rural ideals. But place Canadians in countryside that has been converted into an industrial site – whether it be a large-scale forestry, mining, or agricultural operation – and many will flee for more hospitable parts of the country.

Take Port Alberni, B.C., a logging town on Vancouver Island that lost 5.5% of its population in the last five years. In spectacular Clayoquot Sound, Port Alberni could have based its economy on the beauty of its surroundings, capitalizing on the sea and old-growth forests to attract year-round residents and tourists alike. Instead, it gave short shrift to tourism and – pushed by federal and provincial governments hell-bent on creating short-term jobs – razed its surroundings. The strategy had locals patting themselves on the back for years. Now that the valuable, near-in trees have been turned into pulp and two-by-fours, now that the loggers need subsidies to justify logging the trees further out, and now that property values are dropping, the self-congratulations have died down. Port Alberni is in decline.

One hundred and thirty kilometres west of Port Alberni lies the prosperous town of Tofino, B.C. Also in Clayoquot Sound, Tofino’s population rose by more than 25% in the last five years as people glory in this little piece of paradise.

Tofino has become a growing tourist destination by offering the world environmental amenities that are increasingly in short supply. With its designation in 2000 as B.C.’s first United Nations Biosphere Reserve, the forests near Tofino have earned a measure of protection against rapacious Canadian governments that would decimate Tofino’s surroundings for short-term political gain.

With the U.S. government’s decision last week to slap softwood lumber duties on our exports, all Canadian forests have received a long-needed reprieve from our governments’ reckless exploitation of our old-growth forests.

President George W. Bush did Canadian citizens and the Canadian economy a favour by saving our forests from our own governments. Nowhere is this more so than in British Columbia. As fodder for mills, most of our coastal forests – 60% of which are hemlock and balsam – have no value at all.

Forest companies such as Interfor, one of B.C.’s largest exporters, sell hemlock for an average of $60 a cubic metre, and balsam for less. Meanwhile, they spend $100 a cubic metre bringing these two species to market.

“We lose $40 on every cubic metre of hemlock that we bring to the sawmill,” explains Interfor’s Steve Crombie, who adds that provincial law forces the forest companies to harvest the majority of coastal stands at a loss.

In the gnarled logic of many Canadian commentators, Canada’s forest policies represent global free trade and America’s are narrowly protectionist. In truth, our forestry laws are rooted in protectionist and paternalistic governments that value economic activity for its own sake – even when it’s money-losing. Because private owners of old-growth forests have ignored government entreaties to log, even when governments have provided them with strong incentives, governments have a history of refusing to sell our forests to the citizenry. Throughout Clayoquot Sound and other beautifully forested areas, Canadians bid up the value of forests for residential and recreational purposes – their highest value by far – whenever our governments deign to allow private ownership.

As the recent census shows, Canada’s places of beauty have been big gainers, coast to coast. In the Maritimes, only Prince Edward Island gained population. People didn’t move there for its potatoes; its sea and sand make it a playground for urbanites and a retirement destination for all.

Canada’s fastest growing area of all lies in western Alberta, the potent combination of a good economy and a great amenity called the Rocky Mountains. Calgary’s 16% growth in population is noteworthy. Also noteworthy is the 30% growth of Canmore and other Alberta places whose prime business is the enjoyment of beauty. In B.C., Whistler gained 24% over the last five years, a figure all the more impressive given its 60% increase in the previous five years, and communities on Vancouver Island – at least those not threatened by logging – similarly attract people and investment simply because they are wonderful places.

The big population losers, the census shows us, are regions artificially developed for resource exploitation, and now undeveloped in other amenities. These include Newfoundland, which has plundered the seas of fish stocks, northern logging and mining communities from Quebec to British Columbia, and Saskatchewan, which found it could not profitably plough under its once pristine prairie grasslands.

These regions, which have neither the rich amenities nor the rich resources required to attract and maintain a large population, should have remained largely wilderness. Had Canadian governments not foolishly encouraged their exploitation, often through the force of law, they would never have been intensively developed.

Thanks to globalizing trends in forestry, in agriculture and in mining, rapacious Canadian laws are increasingly being trumped by free markets. With our governments’ ability to sell out our resources now curbed, citizens are increasingly empowered over the government-industrial complex that simultaneously destroys our economy and our environment.

President Bush’s softwood tariffs further this globalizing trend, raising hopes that our governments will realize that their ability to plunder has reached its limits. They might then agree to sell their forest lands to their citizens.

If they did, our governments would have the cash they so desperately need to finance their activities, our forests would be owned by true stewards of the land, Canada’s economy would savour a big boost and Americans would have our deep gratitude.

Terence Corcoran
National Post
March 26, 2002

With six weeks to go before the United States actually imposes a 29% tariff on Canadian softwood lumber, there’s still time for the politicians to work out a compromise. Trade Minister Pierre Pettigrew obviously had that in mind yesterday when he tempered his rhetoric and urged the provinces to sit tight and wait for the negotiation process to run its course. He particularly resisted calls for retaliation. We don’t need an escalating trade war.

What we do need, however, is forest reform, whatever the tariff. Canadian forest policy is a tangled mess of incentives, distortions and regulations. One of the biggest problems overhanging the economics of forest operation is the B.C. government’s ownership of more than 90% of the province’s forests. Residents of British Columbia, along with most Canadians, cling to public ownership as a sacred core of Canadian policy. Forestry is a social program, managed by the government to create community stability and maximize employment rather than return on investment.

The case for privatization, however, grows by the day. The benefits of privatization might soon register with Gordon Campbell’s new Liberal government, which is strapped for cash and running up fresh debt. A rough estimate by one industry expert is that the province could sell a third of its forest for maybe up to US$7-billion, roughly equivalent to the deficits the government is expected to run up over the next few years.

The numbers come from Clark Binkley, former dean of forestry at the University of British Columbia and now chief investment officer at Hancock Timber Resource Group in Boston, a company that puts together forest privatization deals for institutional investors. Contacted yesterday, Mr. Binkley recalled calculations he made about a year ago. “I don’t have the numbers with me, so I’m going from memory here. But if you privatized 20 million hectares in total, which would be about a third of the commercial forest land in B.C., there would be about 3-million hectares on the coast that’s worth about $1,000 a hectare at least, or about $3-billion. The remaining 17-million hectares in the interior would be worth $300 a hectare or about $5-billion. And $300 a hectare is a very low number.”

The point is not in the precision of the numbers but in the impact of privatization on forest management and the trade dispute. An accompanying reform that removed the Canadian export ban on logs would transform B.C. forests into a healthier, and competitive resource, probably with lower timber cuts but at higher prices.

Privatized forests would also have an environmental benefit. Government ownership tends to create perverse incentives that artificially stimulate forestry at the expense of other interests. Sometimes government policy prohibits other use. Lawrence Solomon, in his article on this page, paints one picture of the impact of private ownership on forest development. He sees a dramatic increase in recreational and tourist use as entrepreneurs are free to compete for land ownership. Frankly, his outlook looks a little over-optimistic from a Green perspective. But who can say with certainty? A market for forest land use will be a much better determinant of healthy development than the current system.

A transparent, privately owned forest system, where prices and supply are determined by demand rather than policy, would certainly put an end to the endless political bickering over subsidies and stumpage. If the market sets the stumpage, there would be no subsidy to uncover before the WTO.

As we’ve argued here in the past, private ownership would add economic value in Canada. Market-driven pricing, from logging through to distribution, would improve the allocation of logs among different markets and uses. It would bring fresh capital investment to Canada’s forest sector.

The statistics on forest use in Canada and the United States are mind-numbing and, ultimately, inconclusive. But consider this isolated fact: Recent stumpage (the amount of money charged by the forest owner for each thousand board feet of lumber) in the B.C. interior is US$47. The stumpage on the same quantity of wood from a competitive private landlord in the southern United States is $145. This does not necessarily imply a subsidy. Indeed, Russ Taylor, publisher of the International Monthly Solid Wood Report in Vancouver, says the high U.S. stumpage fee is a function of “greedy [private] landlords” who are sticking it to the U.S. sawmill industry. Whatever the case, the discrepancy in stumpage rates might get resolved if Canada had a private forest management system.

In the meantime, the short-term outlook for the Canadian forest industry may not be as grim as it seems. Mr. Taylor predicts a booming market. One bell-weather lumber price is at a high of US$300. A 29% U.S. tariff would give $90 of that $300 to the U.S. government. But Canadian exporters would still get $210, a price that would allow most Canadians to break even or profit. At a tariff of 15%, Canadian companies would do even better. Over the long run, however, the trade dispute can only be resolved through private ownership and reform.