The provincial government manages the forestry industry and controls about 95% of the timber harvesting lands. Therefore, determining tenures and tax rates is important. Types of tenure, tree species, location, transportation and end use are all part of the basis for BC provincial taxes levied on the forestry industry.
The term “timber tenure system” refers to the collection of legislation, regulations, contractual agreements, permits and government policies that define and constrain a person’s right to harvest the province’s timber. “Timber tenure” is commonly used to describe the agreement between a company and the government that grants rights to harvest a specified volume of timber. Tenure is the way in which rights are held; tenure is not a right itself. A wide variety of timber tenures are in place, reflecting the diverse objectives for forest use that have been pursued since the early 1900s.
Forest tenure is complicated in BC due to environmental concerns (sustainable harvesting) and Aboriginal claims. In 1945, the Sloan Commission established new forms of tenure which resulted in amendments to Forest Act in 1947 and included changes to two forms of tenure.
- Tree farm licenses, which are area-based tenure that grants private forest companies long-term renewable licenses, changed from 21 years to 25 years.
- Public sustainable yield units (PSYUs) became volume based, changing the way that stumpage rates are charged.
Tree farm licenses give a company the right and responsibility for building roads, planning and reforesting in an area. They allow a large amount of private control over the land. By 2001 there were 34 tree farm licenses in BC.
In the past, Crown grants also allowed provincial forests to be controlled by private groups. Such grants gave cutting rights to private railway companies, which created an incentive to increase construction. Esquimalt and Nanaimo Railway Charter grants resulted in one-quarter of the Vancouver Island forests becoming private property. The actual amount of land in leased lands, timber leases or Crown grants make up 4% of the land total of BC. The grants accounted for most of the wood harvested until 1940s and still make up a substantial amount of today’s production. These private lands are some of the most productive in BC.
Public sustained yield units (PSYUs) are a volume-based tenure. The Ministry of Forests, Lands and Natural Resource Operations determines the volume of wood to be harvested by private companies using harvest contracts and licenses. The ministry is also responsible for building roads and for reforesting. In the 1950s and 1960s, this tenure was mostly found in the Interior as fewer larger companies were in business in that region.
The Forest Act of 1947 introduced several changes to:
- Ensure industrial access to guaranteed long-term timber supplies
- Stimulate capital investment in processing plants and therefore assure economic stability and development
- Bring forests under “sustained yield management” (Edgell as cited by McGillvray, 2011)
This act demonstrated a major shift in thinking: forests were not inexhaustible, they needed to be replanted and better managed. The two forms of tenure led to a debate over who was the better manager: the ministry with the PSYUs or the companies with the tree farm licenses.
The Forest Act was amended again in 1978. The changes included the following:
- All lands under old timber licenses (all forms of tenure except the Crown grants) would revert back to the Crown once they were harvested.
- Provincial forests were divided up into 36 management regions called timber supply areas (TSAs).
- Licenses and harvest contracts under the PSYUs were replaced with other licenses.
Forest licenses became the most common form of tenure. With a forest license, the holder has the right to harvest a stated volume per year. The forest license has the same volume-based system of the PSYUs but with 15-year renewable terms. Timber license sales also replaced PSYUs, small business forest enterprise programs, wood lot licenses and several pulpwood agreements. Tree forest licenses and farm licenses accounted for 90% of annual allowable harvest in 1993. (The “annual allowable cut” is the rate of harvest, or volume of wood, allowed for each tenure type in each timber supply area.)
The timber production increase from the 1960s (largely from the Interior) provoked new concerns about tenure privatization. Between 1981 and 1986, the recession brought on big changes to the industry and led to a decision to reduce the bureaucracy. In 1982, the Ministry of Forests proposed a policy change that would allow forest licenses and timber sale licenses of short duration (but under the government’s control) to be converted to tree farm licenses. By 1988, legislation was put in place to allow this to become possible. The public viewed this as a move to privatization because of the allowance for 25-year renewable terms, and regarded the change as a lack of management of the forest. In response, the government scrapped the policy before it was implemented.
Tenure proposals were put in place to increase the number of tree farm licenses. Round table discussions were held in the 1990s but they did not change much in the tenure system. There was a major increase in the number and size of public parks and protected areas, which meant that less land was available to be logged. By the 1990s, protected areas on the coasts doubled.
Different types of tenure have led to questions such as the following:
• What about the dominance of large corporations?
• How can higher-value-added materials be obtained?
• What about privatization?
• Should trees be viewed as fibre only?
• What else do trees provide?
The provincial government benefits from the revenues derived from the forest industry. Most of the revenue comes from taxes, both direct and indirect. The main direct tax is stumpage fees on logs, which vary according to tree species, size, quality and end use. Stumpage is the price charged by a land owner to companies or operators for the right to harvest timber on that land. It used to be calculated on a “per stump” basis (hence the name) but is now usually charged by tons, board feet or by cubic metres. Stumpage fees account for market value of wood, physical conditions of environment difficulty in obtaining the timber and volume per hectare, as well as types of tenure.
There are also costs to the province associated with the forestry industry. For example:
• Road building and engineering
• Forest fire management: research, programs to minimize risk and fighting fires
• Pest and disease management: research, programs to minimize risk and programs to fight pests and disease