The NDP government’s recent announcement that it intends to defer logging in 2.6 million hectares of “old growth” forest has sent shock waves through the industry. It is also causing perturbations across the wider B.C. business community. Ending logging in such a large area of the province will have severe consequences for the industry, its employees, the thousands of local suppliers that sell to it, and the many communities that depend on it.
The decision is based on recommendations developed by a five-person panel – four of whom have close ties to the Sierra Club, an environmental group with a long track record of advocating for policies that would sterilize vast swathes of B.C.’s land base. Already, 37 per cent of the province is classified as “protected” in some fashion, according to the government’s own figures. For many in the environmental movement, this quantum of protected land is woefully insufficient – even though it exceeds the geographic territories of most European countries. Also worth noting is that of 11.4 million hectares of remaining “old growth” forest, more than three quarters today is protected or outside of the harvesting land base.
Remarkably, the government has failed to produce a robust economic or community impact analysis of how its proposed deferral program will reshape the province’s biggest export industry – one that, in aggregate, is on track to generate in the vicinity of $16 billion in export earnings in 2021, equal to one-third of all B.C. goods sold to the rest of the world.
Private sector analysts estimate that the logging moratorium will lead to between 14 and 20 sawmills closing. In addition, the viability of two B.C. pulp mills is also in question, as fiber supplies dwindle due to scaled-back timber harvesting. Thousands more jobs will be lost in the logging segment of the industry. It’s surprising that a government with strong roots in the trade union movement would usher in a far-reaching policy change that’s guaranteed to destroy so many high-paying jobs in a heavily unionized part of our economy.
An important aspect of the sweeping logging deferrals is that the negative effects will not be limited to coastal regions of the province, even though that is where public battles over old growth have been most intense. In fact, the B.C. interior is expected to suffer the largest decline in the allowable annual cut – resulting in numerous lumber mills being put out of business.
The government’s latest policy move will add to the high and rising uncertainty that exists for all land-based industries about trends in the B.C. business climate for both existing operations and new investment. Companies in all resource-based sectors that require access to Crown land – which accounts for 95 per cent of the province’s land base – face cumbersome regulatory and permitting processes along with significant legal complexities and risks arising from Aboriginal right and title claims and the recent adoption into law of UNDRIP. In the case of forestry, this has contributed to B.C. becoming the highest-cost lumber producer in North America, despite a still-abundant fiber basket, a cluster of well-managed companies, and world-class sustainability practices.
The planned logging deferrals will make a difficult operating environment for the industry worse and foster further capital outflows as company executives and their boards take stock of how B.C. stacks up from a competitive and ROI perspective. If the Horgan government wants to shrink B.C.’s number one export sector and sharply reduce the number of people it employs, accelerating the departure of investment dollars in the forest industry should help to deliver that outcome.
Politicians often talk about adding “value” to B.C. logs, lumber, pulp and other forestry products. But chasing the largest companies in the sector and their investment dollars out of the province is a strange way to pursue that goal. In truth, the financial resources, business acumen and market understanding necessary for any credible “value added” strategy reside within the industry itself, not among public servants, legislators, or civil society groups.
In short, we believe the NDP government needs to pause and rethink its planned harvesting deferrals and, indeed, its broader approach to natural resource policy and development. Our elected representatives would be wise to remember that bedraggled protesters and vocal environmental activists don’t pay the bills in British Columbia. Workers, companies and investors do.
As published in Business in Vancouver.