2002/03 Annual Service Plan Report Ministry of Forests

Performance Reporting

Introduction

This section reports on the ministry's accomplishments, by core business, in the context of its goals, objectives and strategies. It provides an overview of the three ministry goals and the core businesses associated with each goal. The information on the ministry's objectives, strategies and performance measures are structured around the five core businesses.

Objectives are concise results-oriented statements of what service results the ministry intends to achieve in the short term. The strategies outline the actions taken to achieve the objectives. The performance measures are used to indicate the degree of success the ministry has in achieving its objectives and strategies. The accountability for the performance measures and targets resides fully with the Ministry of Forests.

Additionally, key outcome indicators are provided for each goal to monitor high-level progress in achieving the ministry's mandate. Because they measure societal, land base or stakeholder results, or changes in results or behaviour, the accountability for the key outcome indicators cannot be solely attributed to the Ministry of Forests.

Performance at a Glance

The ministry established 29 performance measures and targets for 2002/03 to evaluate ministry performance in its core businesses. Eighty-six per cent of these targets (25) were substantially achieved, achieved or over-achieved in 2002/03. Fourteen per cent (4) were partially achieved or not achieved in 2002/03. Explanations of performance target achievements are provided in the following section.

Core Businesses, Objectives, Strategies, and Results

Goal 1: Sustainable Forest Resources

As stewards of British Columbia's forest and range resources, the Forest Service has the responsibility to ensure that the use of the forests to generate economic benefits is balanced with the long-term health of the forest and range resources. We will ensure that the use of appropriate forest and range management practices maintain and improve the long-term sustainability and health of the province's forest and range resources.

The following key outcome indicators provide high level measures for our goal of sustainable forest resources.

A key aspect of forest practices legislation, which contributes to sustainable forest resources, requires that areas harvested after October 1, 1987 must be reforested promptly. The current status of not satisfactorily restocked Crown land is presented in Table 1. Table 1 represents a balance sheet of all areas harvested in the province and their reforestation status. This table includes areas harvested prior to 1987 (termed backlog, equivalent to 173,000 ha at the end of 2002/03), and those currently between harvest and reforestation (a total of 393,000 ha at the end of 2002/03). Backlog areas may eventually be reforested and returned to productivity or reclassified to non-productive areas. Areas currently between harvest and reforestation were within their legislated allowable limits for regeneration delay (as indicated by the per cent compliance with legislation reported by the Compliance and Enforcement performance measures). The ratio of forestland reforested to area of forestland harvested is expected to remain relatively steady around 1.0.

Macro-level indicators of soil, water and bio-diversity were developed during 2002/03 to represent key elements of healthy ecosystems. They are:

• Percentage of annual harvest area with soil loss due to establishment of permanent access roads. The benchmark is < or = 5%.
• Percentage of community watersheds with active logging for which watershed assessments have been completed. The benchmark is 100%.
• Ecosystem diversity is represented by the area of forests > 140 years of age within the province in millions of hectares. The benchmark is 26 million hectares.

These indicators, along with other indicators to be developed, (to be published in a State of the Forest Report beginning in 2004/05), will be used to show the state and health of BC's forestland base.

Table 1: Changes in the Not Satisfactorily Restocked (NSR)¹ Crown Land in 2002/2003

Core Business 1 — Protection of Forest and Range Assets

To help ensure the forest will continue to contribute to a strong forest economy, the ministry prevents and suppresses wildfire to protect natural resource inventories and investments in the forestland base. Our forest fire response is primarily focused on protecting lives and government forest assets, particularly timber. Without fire protection, some 500,000 hectares of productive forest would be lost annually costing the province billions of dollars in potential direct revenue.

This core business also includes the detection and management of insect pest outbreaks on areas under the responsibility of the province. Of key significance in 2002/03 were bark beetle infestations. Other defoliators, endemic pests and outbreaks of local significance are also managed.

The key objective and associated strategy for this core business are:

1.1 Ensure that forest and range resources are protected, managed and improved on a sustainable basis.

• Implement a cost-shared fire protection model in co-operation with forest companies, other industrial users, private land-owners and others.

In 2002/03, forest fire response and containment targets were achieved, protecting lives and BC's productive forests. Development and consultation for the new Wildland Fire Act was undertaken in 2002/03. The Act is expected to be introduced in the fall of 2003.

Surveys to detect insect infestations were completed as planned. Gypsy moth populations did not require treatment in 2002/03. Bark beetle infestations, on the other hand, intensified with an increased rate of spread, challenging the ministry, forest industry companies and other agencies to control the damage to productive forests. Additional ministry funding was provided during 2002/03 to increase the percentage of high priority bark beetle infestation sites treated by the Forest Service.

Core Business 2 — Setting Performance Standards for Forest and Range Practices

This core business is fundamental to ensuring sound environmental stewardship of forest and range resources to ensure that they are used in a sustainable way. This in turn supports global recognition of environmental stewardship for BC and BC companies by ensuring that an appropriate regulatory framework is in place. This can also provide a foundation for forest certification of company operations.

Stewardship includes the regulation of forest and range practices, timber supply planning and determination, range planning and management, control of invasive alien plant species, recreation resource management, applied research, and forest gene resource management. The ministry continues its deregulation initiative that will reduce forestry regulation by one-third by 2004/05 without compromising environmental standards.

Provincial investments in forest productivity, which are largely managed by forest companies, also assist in this goal while supporting the long-term value of the Crown's forest asset base. In addition, the Forest Investment Account promotes investments in sustainable forest management and improving the public forest asset base. A summary of Forest Investment Account programs and expenditures for 2002/03 is provided in Appendix 3.

The key objective and associated strategies for this core business are:

2.1 Ensure that forest and range resources are protected, managed and improved on a sustainable basis.

• Manage volume-based licenses within a defined forest area management model.
• Work co-operatively with forest companies and other stakeholders to implement timber supply and range analysis within a defined forest area management model.
• Increase the accountability of forest licensees in Timber Supply Areas, including timber supply analysis and control and monitoring of forest pests and diseases.
• Transfer the ministry's role in delivering discretionary forest health and silviculture activities to forest licensees.

2.2 Ensure performance standards from managing timber, forage, biodiversity, water, soil, forest habitat, and scenic resources are established and enforced.

• Implement a results-based Forest Practices Code by April 1, 2003 that encourages exemplary forest management of all forest resources by licensees.
• Target applied research activities to support scientifically-based standards of forest practices on Crown lands.
• Transfer the maintenance of Forest Service recreation sites and trails to other agencies and organizations.

The Forest and Range Practices Act was passed by the legislature in November 2002, after stakeholder and public consultations based on publication of a white paper in April 2002.

Effectiveness evaluations of forest practices legislation, which supported development of the new Act, were done in the areas of wildlife trees, coarse woody debris and deregulation of silvicultural operations.

Allowable Annual Cut (AAC) determinations were made for 11 TSAs and 6 TFLs. Of those that were required during 2002/03 (to be determined within their 5 year deadline), 80% were achieved as planned. Delays in determining AACs for several TFLs were attributed to extended consultations with relevant First Nations.

Legislation required to introduce defined forest area management (DFAM) was prepared but not introduced in 2002/03. The forest health component of DFAM is included in the Forest and Range Practices Amendment Act and the Timber Supply component is included in the Forest Statutes Amendment Act (No. 2), both of which were introduced in May 2003 for passage in the fall. This has caused the implementation of defined forest area management for TSAs to be delayed and the performance measure not achieved. The 11% benchmark for 2001/02 represents areas managed under Innovative Forest Practices Agreements (IFPAs) that have been in place for several years.

A research client satisfaction survey was completed in 2002/03, the results of which are published at: http://www.for.gov.bc.ca/hre/index.htm. The survey asked internal MOF clients and client sponsors to assess the progress and effectiveness of research within project groups linked by similar objectives. The overall rating was 70% satisfaction.

As outlined in the Ministry of Forests 2002/03 – 2004/05 Service Plan, 1240 recreation sites and 650 trails managed by the ministry are intended to be largely divested between 2002/03 to 2004/05. However, during 2002/03, the ministry decided to continue to manage 735 recreation sites and 212 trails, and that the remaining sites and trails could be managed on a user-maintained basis and that partnership agreements with recreation groups, community organizations, First Nations, Forest Companies and individuals to manage sites and trails could be developed over a longer period. As a result, in 2002/03 ministry funding was redirected into recreation maintenance and the performance targets were adjusted internally. Although the published recreation targets were not achieved in 2002/03, this was a result of the change in strategic direction and allocation of additional ministry resources to recreation maintenance. This change in direction and associated performance measures has been incorporated into the Ministry of Forests 2003/04 – 2005/06 Service Plan.

Volume gain projected from reforestation activities funded by the Ministry exceeded the target. This represented planting 1365 ha and brushing 1059 ha. An additional 262,000 m3 of volume per year is projected to be available for harvest in 65 years from activities funded by the Forest Stand Management Fund.

Ministry tree improvement activities during 2002/03 are estimated to have added a volume gain of greater than 1,671,000 m3 of timber per year expected to be available at approximately 65 years.

As part of rationalizing infrastructure, the Campbell River and Cobble Hill Seed Orchards were closed in 2002/03. No offers from the private sector were received on the six seed orchards offered for lease. The ministry continues to operate these six seed orchards under its commitment to the tree improvement program.

The Skimikin Nursery in Salmon Arm was offered to the private sector, resulting in its sale on October 18, 2002, for $1.4 M to Skimikin Nursery Ltd. This is a company made up of Skimikin Nursery workers and the Outland Group, the largest silvicultural contracting company in Canada. The Government decided not to proceed with the offer of Surrey Nursery to the private sector during 2002/03.

Core Business 3a — Compliance and Enforcement

This core business includes all activities related to upholding BC's laws related to protecting the province's forest and range resources under MOF's jurisdiction. In 2002/03, these activities included enforcing environmental standards under the Forest Practices Code of British Columbia Act for forest and range management carried out both by the government and by forest and range tenure holders. This core function also included enforcing regulations to minimize fire, pests, and unauthorized activities that threaten the province's forest and range resources; and enforcing rules governing the use of Forest Service recreation sites and trails.

The key objective and associated strategy for this core business are:

3a.1 Ensure performance standards for managing timber, forage, bio-diversity, water, soil, forest habitat, and scenic resources are established and enforced.

• Implement a new compliance and enforcement regime for the results-based Code.

Per cent compliance was affected slightly by a lower compliance rate of oil and gas industry licensees.

Of approximately 3,000 sites that were identified as a high priority for inspections based on an assessment of risk, 95% were inspected.

The slightly lower rate of compliance may reflect a change in ministry compliance procedures to focus fewer staff and inspections on the highest risk sites. This may have increased the proportion of inspections showing non-compliance.

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 generated $1.3 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.

The following key outcome indicators provide high level measures for our goal of sustainable forest benefits.

Crown forest revenue for the year was $1.296 billion, (see Table 2). Actual revenue was higher than the original blue book estimate of $1.122 billion. Harvest volumes were also higher for the year than originally expected. The slowing U.S. economy and the continuation of the softwood lumber tariffs on U.S. bound lumber were key issues again this year.

Table 2: 2002/03 Revenues (unaudited) by category and forest region

The British Columbia share of U.S. softwood lumber market increased slightly (from 17 to 17.6%), reflecting record U.S. consumption and the effects of the anti-dumping duty on B.C. lumber production. In an effort to lower their dumping duties, some B.C. producers have added an additional shift in order to lower per unit production costs.

Our position among Japan's softwood lumber imports lost 2% (from 45 to 43%), reflecting the long running recession in Japan as well as a continued shift away from green Hemlock products in favour of kiln dried lumber from Europe and locally produced lumber made from inexpensive Russian logs.

Certification continued at a substantive rate, reflecting that some companies are seeking certification through more than one process. Of the additional 10 million hectares certified by major forest certification processes during 2002/03, the largest component was 6.5 million hectares certified under the Sustainable Forest Initiative (SFI) by a number of BC companies.

Core Business 3b — Compliance and Enforcement

This core function includes all activities focused at enforcing revenue policies and forest crimes such as theft, which have a direct impact on provincial revenues and the fair return to the public from commercial use of forest resources. In 2002/03, these activities included enforcing the revenue policies that govern removal and transportation of timber, marking, scaling, marine log salvage, log export; and, 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.

The key objective and associated strategy for this core business are:

3b.1 Ensure that the public receives fair value for the use of its forest and range resources now and in the future.

• Implement a new compliance and enforcement regime that addresses the new pricing system, revenue safeguards, and changes to the tenure system.

Targets for compliance and enforcement activities related to revenues and timber pricing were fully achieved. During 2002/03 it was decided that the determination of the per cent of revenue loss is too imprecise a measure on which to base a review of performance, so alternative measures are being considered for future years. Similarly, consideration is being given to broadening the basis for measuring the percentage of successfully concluded major forest theft and fraud investigations, since the above noted measure included only a few investigations initiated at headquarters.

Work on the new compliance and enforcement regime to address the new pricing system, revenue safeguards, and changes to the tenure system, is awaiting the finalization of associated legislation.

Core Business 4 — Pricing and Selling Timber and Range Use

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.

The activities under this core business include timber tenure administration, timber pricing, market access activities, maintaining a forest road infrastructure and First Nations consultation.

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 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.

The Forest Investment Account promotes investment in product development and international marketing initiatives. A summary of programs and expenditures for 2002/03 is provided in Appendix 3.

The key objective and associated strategy for this core business are:

4.1 Enhance opportunities to generate wealth from forest and range resources.

• Make the Small Business Forest Enterprise Program more effective and put it on a commercial footing.
• The maintenance of Forest Service roads and bridges, except for those accessing remote communities, to be transferred to other agencies, converted to a new wilderness road designation, permanently deactivated, closed or maintained on a user-pay basis.

4.2 Maintain and expand international markets for British Columbia forest products.

• Pursue free access for British Columbia forest products to markets in the United States.
• Develop and implement new international marketing initiatives.

4.3 Ensure that the public receives fair value for the use of its forest and range resources now and in the future.

• Implement a market-based pricing system to generate appropriate revenues to the Crown.

4.4 Strengthen and support the competitiveness of the forest sector.

• Reform government market intervention regulations.

For much of the year, key ministry staff were devoted to the Canada/U.S. Softwood Lumber dispute. This involved significant consultation with industry to refine market pricing models and supporting softwood lumber trade negotiations throughout the year.

Progress was made on implementing a market pricing system on the Coast. In November 2002 a new Coastal Market Pricing model was released after the ministry and coastal licensees explored and refined this new model for potential application to all coastal timber.

The Market Pricing System was not implemented for all B.C. timber as significant discussion occurred both domestically and internationally, and as such, no implementation decisions were undertaken by government.

Throughout the year, business area staff also continued to refine stumpage calculations and processes to assist in dealing with the significant bark beetle epidemic in the North Central Interior.

In November 2002 development of the Electronic Commerce Appraisal System (ECAS) began. This project will allow the transfer of appraisal data electronically and will make the business area more efficient, using an Internet based approach with the forest industry.

Work on the Harvest Billing System continued throughout the year and an industry pilot was completed as planned during March 2003. In addition to having invoices and harvest data available on the Internet, the ministry has been receiving scale data electronically through the Internet since March 2003. Project completion and full implementation will occur in the fall 2003. This will enable the ministry to invoice the industry electronically.

The significant over-achievement of the performance target for net revenue generated from the Timber Sales Program can be attributed in part to the accelerated timber harvest associated with the bark beetle prevention program and high mill production resulting from the U.S./Canada softwood lumber trade issues.

The targets of 95% of Timber Supply Area AAC under a form of tenure and 90% of animal unit months of forage allocated were both achieved. This meant that timber was available as planned to forest companies and timber producers, and that forage was available as planned to ranchers and hay producers.

In 2002/03 the ministry fully maintained 1,166 kilometres. Therefore the ministry achieved its goal of reducing the kilometres of roads being fully maintained by the ministry to less than 5,000 kilometres. To achieve this goal the ministry transferred maintenance responsibility on Forest Service Roads to industry, realigned the ministry Forest Service Road maintenance policy to only provide guaranteed access (brushing and surface maintenance) to communities and school bus routes (1,166 kilometres) and converted the remaining road inventory, some of which access seasonal and permanent dwellings, to a new wilderness road standard. The wilderness road standard directs maintenance funding to environmental protection projects; it does not provide funding to restore or maintain access. In a few instances, in accordance with the new maintenance policy, some Forest Service Roads were permanently deactivated, or closed for safety reasons.

The ministry's long term objective is to transfer responsibility for maintaining the majority of Forest Service Roads accessing communities and all Forest Service Roads that rural residents believe require higher maintenance levels than that offered through the wilderness standard to other agencies and groups. As such ministry staff and others continue their work rationalizing the provincial forest road network in order to achieve that objective.

Two bridges were replaced on Forest Service roads. In the Prince George Forest Region, one bridge was washed out and replaced under the Provincial Emergency Program, while another high-priority bridge was washed out and replaced in the Nelson Forest Region. Not withstanding the rain events in Prince George Region, road maintenance requirements in 2002/03 were kept to a minimum by unseasonably dry weather.

Goal 3: Effective Sustainable Forest Manager

As the Forest Service moves towards its 100th anniversary, we are on track to revitalize ourselves as the stewards of the province's forest and range resources. While undertaking the many challenges and opportunities involved in this endeavour, we will bear in mind that our core purpose is to ensure that sustainable forest resources deliver sustainable forest benefits for the citizens of British Columbia. The effectiveness of our organization is dependent upon highly trained and knowledgeable staff who will continue to be responsive and performance-focused.

The following key outcome indicator provides a high level measure for our goal of being an effective sustainable forest manager.

On behalf of the ministry, in the fall of 2002 BC Stats surveyed a random sample of British Columbians about their attitudes towards forestry and the BC Forest Service. Results indicate that 60% of British Columbians trust the Forest Service to manage and protect our public forests for the long-term and 73% think the Forest Service is an effective organization.

Core Business 5 — Corporate Services

The ministry intends to become a more effective organization by improving its governance and service delivery processes. The corporate services core business therefore includes both of these aspects.

Key clients for the strategic policy and governance aspect are the Executive, Minister and Cabinet. Activities are structured within key frameworks for policy and legislation development, performance management, internal audit and evaluation, and litigation support. Executive, regional and district management, and staff in the Corporate Policy and Governance Division play a key role in delivery of these functions.

Support service activities include finance and administration, human resources, central infrastructure management, Freedom-of-Information, records management, continuous improvement and best practices initiatives, as well as application of information technology. These services are delivered at all levels of the organization — branch, region and district. While focused at supporting internal management and employees, they also serve industry and the general public.

The key objective and associated strategies for this core business are:

5.1 Achieve a successful transformation of the organization so that the Forest Service has the right people with the right skills to fulfill its mandate.

• Implement a successful workforce adjustment process to support the new Forest Service mandate.
• Implement succession planning, training and leadership programs, and diversity initiatives to attract and retain highly qualified staff.

5.2 Regularly assess the performance of the organization and incorporate a culture of positive change to ensure achievement of our mandate.

• Enhance the effectiveness of our corporate planning by fully integrating performance management with the internal business planning and budget processes.
• Increase the effectiveness and efficiency of core and administrative functions by redesigning business areas and implementing best-practices principles across the organization.

5.3 Ensure that the public has confidence that their forest and range resources are being well managed.

• Implement a communications strategy to advise the public on forest policy shifts.
• Involve the public through the Minister's Forest Practices Advisory Committee.

This core business had 6 performance measure targets for 2002/03. Under the first, which was to achieve 95% of published performance measure targets, 86% were substantially achieved or achieved. The remainder were not fully achieved primarily due to associated legislation not being enacted during 2002/03, or due to a change in strategic direction during 2002/03. The ministry achieved 100% of its expenditure targets in 2002/03.

Of its 10 key legislation milestones associated with major forest policy changes to be completed in 2002/03, the ministry fully or substantially achieved all 10 milestones. These included milestones associated with the deregulation and legislation changes to the Forest Act, the Forest and Range Practices Act and the Timber Sales Program Reform.

The ministry substantially achieved its performance target for the re-design of internal business areas. These included successful completion of design work on Timber Tenures, First Nations, the Forest and Range Practice Act, and the Human Resources Strategy (Corporate Governance). However, full implementation of re-design in 2002/03 has been delayed in some business areas in anticipation of changes to be brought about by new forest policy to be introduced in 2003/04.

The ministry substantially achieved the implementation of its best practices projects in 2002/03. These projects included completing 1) the data warehouse implementation and reporting project, and 2) the Oracle I-Expense implementation. 3) The OCG post-payment review of low risk STOBs is in place and payment authority for low risk is no longer required. Treasury Board approval was received late in March, 2003 for further government-wide accounts payable streamlining which should result in the full elimination of payment authority by the end of fiscal 2003/04.

The ministry achieved its performance target of increasing the percentage of major client services provided electronically. For 2002/03, this involved the completion of 3 major projects: automated transmission of appraisal data from licensees (ECAS), automation of seed requests from the tree seed center (SPAR), and automation of billing inputs in the Harvest Billing System.