Goals, Key Outcome Indicators and Core Business Areas — Continued

Goal 2: Sustainable Forest Benefits

In British Columbia, more than 90 per cent of the land base that is suitable for timber production is publicly owned. Approximately 22% of employed British Columbians have jobs associated with the forest sector. Of the province’s 63 regional economic areas, 41 per cent rely on forestry as their principal source of income. Forestry is projected to generate $1.1 billion in direct revenue to the provincial government during 2002/03, and remains a major contributor to British Columbia’s current and future economic health.

As stewards of the forest resources on the behalf of government, the Forest Service has a major role in ensuring that the citizens of British Columbia benefit from commercial use of their forests. Sustainable forest benefits rely on a strong forest economy and a competitive forest sector.

International buyers are seeking assurances that the forest products they purchase come from well-managed forests. Certification is viewed by buyers and others as an important indicator of whether forests are well managed. The demand for certified forest products is expected to increase. The Forest Service is committed to working with industry and others to support increased certification of British Columbia forest products.

The Ministry recognizes the unique interests of First Nations in sustainable forest benefits; for their economic benefit and so they can have access to the forest for future generations.

Additional benefits from our forests and range resources are generated from the ranching industry, the use of forests for tourism and recreation, including guide-outfitting, and the botanical forest products industry.

Goal 2: Sustainable Forest Benefits
Key Outcome	Indicator	2002/03 Projection	2003/04 Projection	2004/05 Projection	2005/06 Projection
Revenue to the crown	Crown forest gross revenue ($ billions)	1.185 B	1.072 B	1.170 B	1.191 B
	Crown net revenue generated from BC Timber Sales ($ billions)	0.104 B	0.142 B	0.168 B	0.171 B
Strong Forest Economy	British Columbia’s share of the U.S. softwood lumber market	17%	17%	17%	17%
	British Columbia’s share of Japan softwood lumber imports	46%	45%	45%	45%
	Increase in wood product sales to Taiwan, China and Korea	N/A	20% increase	20% increase	20% increase
Competitive forest Sector	Ratio of BC forest industry capital investment to depreciation and amortization	0.65 (2001)	<1.0	<1.0	>1.0
Globally competitive forest Sector	Percentage increase in forest land certified by major forest certification processes (FSC, CSA and SFI, excludes ISO)	9.9 million ha certified	≥10% increase	≥10% increase	≥10% increase

There are four Core Businesses that support this goal:

Core Business: Pricing and Selling Timber

The Forest Service has a major role in ensuring that the citizens of British Columbia benefit from commercial use of their forests. This relies on a strong forest economy and a competitive forest sector, which in turn is dependent on a fair pricing system, effective allocation and administration of timber harvesting rights, and a safe and cost effective road infrastructure to access timber.

Core business activities to achieve this goal include timber tenure administration, timber pricing, market access activities, maintaining a forest road infrastructure and First Nations consultation.

Tenures managed by the Ministry of Forests: 34 Tree Farm Licences 815 Woodlot Licences 11 Community Forest Pilot Agreements 151 replaceable and 81 non-replaceable Forest Licences 100 replaceable and 1,620 active non-replaceable Timber Sale Licences 723 Timber Licenses 10 Pulpwood Agreement

Changes from 2002/03

The BC Timber Sales Program was included in this core business in 2002/03 but has been moved to its own core business for 2003/04.

Planned Changes

The ministry is planning to implement a market-based timber pricing system for the province. A market-based pricing system is expected to increase the competitiveness of the forest industry and provide greater incentives for capital re-investment. It may also lead to greater variability in provincial revenues and consolidation in the logging and milling sectors.

In addition, the ministry is implementing significant business changes to increase efficiency. The Harvest Billing System project, to facilitate a more efficient and effective “e-business” relationship with forest companies, will be completed in 2003/04. This system will allow timber scale data to be fed directly to the ministry over the Internet and invoices to be sent back electronically. In addition, in 2003/04, the forest industry and ministry will be able to exchange timber pricing data using the Internet. These changes will fundamentally reform both how timber is priced in the province and how the forest industry and the ministry transact business, using modern e-business approaches.

The ministry has embarked on a forest policy reformation process that will largely be implemented through the timber tenure system. The goal is to have a policy framework that will ensure that the parties holding timber tenures are able to make sound business decisions and expand the role of market forces in the forest sector. Other goals that will be factored into this policy regime is to maintain British Columbia’s strict environmental standards and increase First Nations involvement in the forest sector.

The Small Scale Salvage Program was established in 1998 to create short-term, seasonal employment opportunities through the harvest of previously unrecovered timber and logging residue. Changing government priorities, in conjunction with New Era commitments and the ministry’s workforce adjustment have necessitated a number of significant changes to the program for 2003/04. Program objectives will now be focused on:

• reducing unsalvaged losses;
• contributing to forest health management;
• contributing to Crown revenues; and,
• transitioning existing small scale salvagers to a more market-based environment.

The field services division of the ministry will be responsible for delivery of the program. The small scale salvage program is expected to generate sales volumes in excess of 210,000 m3 and revenues of at least $2.5 million in stumpage through the sale of competitive and non-competitively awarded timber sales licenses and the piloting of a number of new salvage-based non-replaceable forest licenses.

In 2003 the ministry will pilot the use of salvage non-replaceable forest licenses (SNRFL) to promote small scale salvage operations. It will also introduce, through the defined forest area management initiative, increased responsibilities for licensees to manage and minimize forest health losses. Depending upon initial success of SNRFLs, the program may be expanded in following years.

The ministry is responsible for establishing all forest road and bridge construction and maintenance standards. Those standards apply to approximately 120,000 kilometres of forest roads built and maintained by the forest industry under road permit and 44,000 kilometres of Forest Service Roads. With respect to Forest Service Roads, although the ministry is responsible for all 44,000 kilometres of Forest Service roads including 4,900 bridges and other major structures, 33,000 kilometres and the majority of bridges are maintained by the forest industry on the ministry’s behalf. The remainder are maintained by the ministry to either the wilderness or public use standard.

Over the next two years, where possible, MoF plans to transfer responsibility for forest service roads with industrial use to the forest industry. In addition, it plans to discontinue maintaining forest service roads to the public use standard (those that access communities and reserves) and transfer the responsibility to maintain those public use roads to either the Ministry of Transportation through a road rationalization process or to road user groups.

The remainder, approximately 10,000 kilometres, will be maintained to the new wilderness standard. Because the wilderness standard is designed to protect environmental values, any roads and bridges considered unsafe to vehicular traffic will be temporarily or permanently closed.

In the area of First Nations, recent court decisions related to First Nation’s issues (Taku, Haida) have further defined the range and scope of the government’s consultative obligations. In cases where aboriginal interests are likely to be infringed as a result of a forestry decision, this obligation may include “accommodation” of aboriginal interests that may include the provision of economic opportunities. These court decisions have also extended the Ministry’s consultation obligation for administrative decisions such as tenure replacements and AAC determinations. For example the ministry must offer to replace 135 forest licences and a number of other tenures in 2003, with more to follow in 2004 and 2005, and each of these replacements require First Nations consultation. The ministry will also be supporting the Treaty Negotiations Office on priority treaty tables, other First Nation’s negotiations, and related policy issues.

The ministry plans to maintain its role in providing industry and market intelligence to help guide forest policy changes but expects that a resolution to the softwood lumber dispute will allow considerable savings in delivery of this function.

Core Business: BC Timber Sales

The Forest Service has a core responsibility to provide British Columbians with benefits from the commercial use of public forests. To achieve the goals of increased effectiveness and being more commercial, the ministry has refocused the mandate of the Small Business Forest Enterprise Program (SBFEP) and moved operations into a new organization called BC Timber Sales, which will be managed independently from the field services division. The small scale salvage program originally initiated in the SBFEP will be managed for 2003/04 under the field services division.

Business functions include planning and development of standing timber for sale by auction to independent forest companies, creating and maintaining a road and bridge infrastructure to provide access to tenure opportunities and meeting all requirements of the Forest and Range Practices Act, including silviculture obligations.

Ministry strategies associated with this core business area are designed to generate significant ongoing revenues for the province.

Changes from 2002/03:

In 2002/03, BCTS was part of the Pricing and Selling Timber core business.

Planned Changes for 2003/04

To make BCTS more effective and put it on a commercial footing, the program will:

• Implement a three-year business plan that puts the program on a net revenue basis; and
• Change the financial accounting treatment for sales inventories and the silviculture liability to more appropriately reflect the multi-year nature of a timber sale and more accurately capture labour costs.

Core Business: Compliance and Enforcement

Activities focused at enforcing revenue policies and forest crimes such as theft, have a direct impact on provincial revenues and the fair return to the public from commercial use of forest resources. Under Goal 2, this core business includes:

• enforcing the revenue policies that govern removal and transportation of timber, marking, scaling, marine log salvage, etc.;
• combating “forest crimes” (theft, arson, mischief) which are a significant drain on provincial revenue and a significant risk to other environmental, social and economic values;

Planned Changes

While the ministry’s primary focus will continue to be monitoring of forest and range practices under the new Forest and Range Practices Act as described under Goal 1, the ministry will increase the emphasis placed on revenue issues and forest crimes. This will include planned changes to the Forest Act to increase the ministry’s ability to enforce in key areas such as revenue.

Core Business: Forest Investment

Under the goal of Sustainable Forest Benefits, the Forest Investment Account promotes investment in product development and international marketing initiatives. Forintek Canada Corp. administers both initiatives at the provincial level.

Changes from 2002/03

The Forest Investment Account is a new Core Business Area for 2003/04. In 2002/03, the Forest Investment Account was identified separately and not included in any of the Ministry of Forests Core Businesses.