|2002/03 Annual Service
Ministry of Forests
Ministry Role and Services
The Forest Service is the main agency responsible for the stewardship
of 47 million hectares of provincial forestland. In addition, the
ministry provides fire protection services for 84 million hectares.
Managing these provincial forests presents a unique and complex
set of challenges. More than 90% of British Columbia's forestlands
are publicly owned, which means that the provincial government,
on behalf of the public, plays a much more prominent role in the
forest sector than its counterparts in other forestry jurisdictions.
The ministry pursues its goals for sustainable forest resources
and benefits in a consultative manner with the public, industry,
and other Crown agencies, while recognizing the unique interests
of aboriginal people. In this way, the ministry works to earn the
public's trust as our staff make the day-to-day decisions which
ensure that all British Columbians can look forward to healthy forests
and a strong forest economy now and in the future.
The key legislation, for which the Ministry of Forests is responsible,
is summarized in Appendix 1.
As a result of the Core Services Review and government direction
on reductions to ministry resources, in 2002/03 the ministry reduced
from 6 regional offices and 40 district offices to 3 regional offices,
29 forest district offices and 4 satellite offices. It created 12
new BC Timber Sales offices at district locations and continued
the existing 6 fire centres. This reorganization will maintain
the field presence required for the ministry to carry out its stewardship
mandate. A current Organization Chart is provided in Appendix
Ministry Vision, Mission and Values
Healthy Productive Forests
Since its establishment in 1912 as the Forests Branch, the BC Ministry
of Forests (also known as the Forest Service) has continued to protect
the public's interest and provide leadership in the protection,
management and use of the province's forest and rangelands. Its
2002/03 vision of "Healthy Productive Forests" reflects the ministry's
mandate to ensure that the health and productivity of the province's
forest and range resources are maintained now and in the future.
Protect and manage our public forests for the sustained benefit
of all British Columbians
As stewards of British Columbia's forest and range lands, the Forest
Service undertakes the key responsibilities of: protecting and managing
the province's forest and range resources; providing the basis for
a globally competitive forest industry with high environmental standards;
and, maximizing net revenues to the Crown. These responsibilities
were reflected in the 2002/03 mission statement to "Protect and
manage our public forests for the sustained benefit of all British
The Forest Service protects the public's interest in its forest
and range lands through a commitment to the values of respect, service
excellence, accountability, openness and adaptiveness, and a can-do
attitude. We are guided by the ethics of sustainable use, stewardship
and public service.
Strategic Shifts and Alignment with the Government Strategic Plan
The Core Services Review of the ministry, completed in the fall
of 2001, directed the ministry to move to results-based regulation,
establish defined forest area management, and pursue alternative
arrangements for direct delivery with the forest industry and other
stakeholders. This direction resulted in significant changes to
the ministry's vision, mission and goals as reflected in its Service
Plan 2002/03 – 2004/05. The ministry also implemented
key strategies during 2002/03 to meet this direction.
These strategic shifts within the ministry align directly with
the long-term goal of a sustainable environment and associated key
strategies and actions as outlined in the Government Strategic
Plan 2002/03 – 2004/05 and the government's New Era
commitments for sustainable forestry.
The ministry operates under a legislative framework comprised of
the Ministry of Forests Act, the Forest Act, the Range
Act and the Forest Practices Code of British Columbia Act.
To implement the major forest policy changes associated with the
ministry's strategic shifts, significant amendments to the ministry's
legislative framework were implemented in 2002/03.
Update on New Era Commitments
In 2001, the provincial government established 11 commitments for
their New Era of Sustainable Forestry, which fall within
the ministry's mandate. The table below summarizes the ministry
actions to date in achieving these commitments. Further information
on the ministry actions during 2002/03 is found in the "Performance
|New Era Commitment
|1. Establish a working forest land base,
to provide greater stability for working families and to enhance
long-term forestry management and planning.
||The land-use planning responsibilities and
resources of the ministry were transferred to the Ministry of
Sustainable Resource Management in 2001/02.
|2. Streamline the Forest Practices Code
to establish a workable, results-based code, with tough penalties
||The new Forest and Range Practices Act
was passed in 2002/03. This Act puts greater reliance on professional
and company accountability.
||Core Business 2
|3. Apply 1 per cent of all direct forest
revenues, not including "super stumpage," to global marketing
of B.C.'s forest practices and products.
||In 2002/03, the Forest Investment Account
provided $12 million in funding for forest product development
and international marketing initiatives.
|4. Create a market-based stumpage system
that reflects global market realities and local harvesting costs.
||A market-based timber pricing system was
under development. Consultation with industry and refinements
||Core Business 4
|5. Either fix or scrap Forest Renewal BC,
starting by removing the political appointees on the board.
||The Forest Renewal BC corporation was scrapped
on March 31, 2002. The new Forest Investment Account was established
on April 1, 2002.
|6. Invest in research to promote forest
||The ministry and the Forest Investment Account
provided significant funding in 2002/03 for focused research
in forest stewardship.
||Core Business 2 and Appendix 3
|7. Cut the forestry regulatory burden by
one-third within three years, without compromising environmental
||In 2002/03 the ministry achieved an overall
3.2% reduction in forestry regulation. High environmental standards
are being maintained.
||Core Business 2
|8. Work to expedite interim measures agreements
with First Nations, to provide greater certainty during treaty
||The Forest Service continues to provide
support for the Treaty Negotiations Office on priority treaty
tables, other First Nations negotiations, and related policy
||Core Business 4
|9. Increase the allowable annual cut over
time through scientific forest management, proper planning,
and incentives to promote enhanced silviculture.
||The ministry and the Forest Investment Account
provided significant funding in 2002/03 for tree improvement,
planning, research and silviculture activities.
||Core Business 2 and Appendix 3
|10. Eliminate "waterbedding."
||Implementation of the announced market-based
timber pricing system will eliminate waterbedding.
||Core Business 4
|11. Scrap the "HCL" silviculture hiring-hall
policy that discriminates against silviculture workers.
||The Forest Renewal BC corporation was wrapped
up on March 31, 2002. The hiring policies in place under Forest
Renewal BC were terminated.
Updated Environmental Scan
For both the Ministry of Forests and the forest sector generally,
2002/03 proved to be a challenging year with revitalization, policy
change and forest health dominant themes.
Forest health was a major concern during 2002/03. The unprecedented
epidemic of mountain pine beetle is causing significant damage to
the Interior forest resource. In 2002, the beetle infestation expanded
to include an area of about 9 million hectares, stretching from
Smithers to Cranbrook. The beetle epidemic is essentially impossible
to control by man-made means.
Implementation of new government forest policy direction to meet
the core service review objectives was a major focus for the Ministry
In December 2002, streamlining amendments to the Forest Practices
Code of British Columbia Act and regulations came into effect.
These amendments will reduce the number of transactions between
government and licensees over a two-year transition period until
the new Forest and Range Practices Act is fully implemented
in December 2005. By streamlining the existing code now, resource
management practitioners will work toward a results-based forest
and range practices regime.
Government's commitment to the introduction of a new market-based
pricing system, putting the Small Business Forest Enterprise Program
on a more commercial footing, and deregulation, resulted in the
announcement of the Forest Revitalization Plan in March 2003. The
plan consists of a comprehensive set of legislative and policy reforms
that will create opportunities and build a more diverse forest sector,
remove barriers to regional job creation and open up new partnerships
with First Nations.
Implementation of the Forest Revitalization Plan requires some
reallocation of existing harvesting rights. To that end, on March
31, 2003, government initiated reallocation of 20 per cent,
or 8.3 million m3, of harvesting rights from major licensees. One-time
funding of $200 million has been set aside by government for compensation
purposes. Transition assistance, in the form of a $75-million trust
fund, will also be available.
About half of the reallocation volume will be used to open up opportunities
for First Nations, woodlots, and community forests. The other
half will be used to increase the amount of timber sold through
competitive auction. The auction results will form the foundation
of the new market based pricing system. Implementation of both the
reallocation and market based pricing will be a focus for the forthcoming
Another feature of the forest revitalization plan is the creation
of the BC Timber Sales organization. This organization has replaced
the former Small Business Forest Enterprise Program. The new organization
is commercially focused. Its core purpose is to market Crown timber
to establish market prices and capture the value of the asset for
Other policy changes aimed at revitalizing the forest sector include
changes to cut control regulations, the elimination of timber processing
and appurtenancy requirements, and the elimination of mill closure
penalties. In addition, the regulatory burden associated with tenure
transfers and subdivisions has been reduced. The changes remove
requirements that have caused forest companies to maintain uneconomic
operations and harvest public timber at a loss. Once the changes
are in place, wood will be better able to flow to its highest and
Despite forest health problems and despite the broad array of policy
changes and the significant workload they imply, the Ministry of
Forests proceeded with Core Service Review restructuring during
2002/03. Ministry funding will shrink 35 per cent from 2001/02 to
2004/05. During 2002/03, as a first step towards the Core Service
Review results, Ministry staffing levels declined by 14.8 per cent
and the Ministry's operating expenses were reduced by 15.5 per
As expected, the softwood lumber dispute and U.S. market access
continued to be a major issue over the course of the 2002/03 year.
Some highlights included the following:
- The Canadian government launched two NAFTA challenges of the
U.S. softwood countervail/anti-dumping duty determination in April
of 2002. An additional challenge followed in May. Through NAFTA
Canada is challenging the final countervailing duty, the final
dumping duty and the final threat of injury determination.
- On May 22, 2002 the U.S. Department of Commerce published the
final orders in the countervailing duty and antidumping cases.
This meant that the final 27.22 per cent U.S. tariff (combined
rate) was in effect as of that date and Canadian lumber exporters
had to pay cash deposits on their U.S. softwood exports.
- On July 26, 2002 the World Trade Organization provided a preliminary
ruling on one of Canada's softwood challenges. The WTO found that
the U.S. made errors in its preliminary determination of subsidy.
- During 2002, Canada also initiated WTO challenges with respect
to the final countervailing duty, the final dumping duty and the
final threat of injury determination. These panels are expected
to report in 2003/04 however, appeals of panel findings could
well extend into 2004/05.
- On January 6, 2003, the U.S. Department of Commerce released
its "Proposed Analytical Framework, Softwood Lumber from Canada".
The framework outlines policies intended to serve as the basis
for a long-term, durable solution to the ongoing dispute between
the United States and Canada over trade in softwood lumber. Discussions
pertaining to proposal continue.
The world economic situation also continued to be a challenge in
2002/03. The International Monetary Fund estimates the global economy
grew at a rate of 3% during 2002.1 However, Japanese
economic growth remains slow and competition from the European and
Russian forest sectors is increasing. The strengthening Canadian
dollar will also be a challenge for forest product exports in the
Prices, Costs and Performance
BC's forest industry is dominated by the production of lumber,
pulp and paper. These commodities are then sold into the global
Despite the softwood lumber tariff, BC harvest levels, as measured
by timber scale billed, increased by a modest 2% in 2002, rising
from a provincial total of 72.0 million cubic metres (m3) in 2001
to 73.4 million m3 in 2002. Increased harvest levels were likely
due to higher Canadian and US housing starts.
Reliance on exports of forest products means that global prices
are strong indicators of market demand and important determinants
of the health of the sector. In 2002/03 prices for forest products
were generally weak with lumber, pulp and paper all posting declines.
In 2002, total variable costs, or costs that vary directly with
output, remained relatively steady compared with 2001. Costs rose
slightly on the Coast and declined slightly in the Interior. For
the Coast, increasingly difficult terrain, environmental pressures
and changing markets will likely continue to create cost challenges.
Overall, total sector employment declined by 4.0 per cent or more
than 3,000 positions, primarily in solid wood products employment.
In 2002, forest product exports accounted for 48.0 per cent of
total provincial exports and had an estimated value of $14.4 billion.
The primary market for BC forest products is the United States.
The U.S. accounted for over $9 billion of forest sector exports
while Japan, the second largest market, imported products worth
more than $2 billion. Exports to European countries totalled slightly
more than $1 billion.
Overall, provincial forest product exports were down in 2002 falling
from $14.5 billion in 2001 to $14.4 billion in 2002. The decline
in lumber exports was tempered to some extent by an increase in
other forest product exports.
Supply and Sustainability
Four supply-related issues will continue to affect the long-term
prospects for the provincial forest sector. These issues are:
- world supply of timber;
- First Nations land claims; and
- forest stewardship and forest health.
World Timber Supply
The Food and Agriculture Organization's "State of the World's Forests
2003" report predicts that land conversion and silviculture practices
will, in the long run, be key determinants of the level of timber
supply. However, the report also notes that enhanced tree growth,
mainly as a consequence of increased global temperatures and longer
growing seasons have been observed in many regions of the world.
For example, the annual increment of Norway spruce in Austria increased
by about 17 per cent, during the period 1961 to 1995.
An increasing number of provincial forest companies are becoming
certified. In 2002/03 ten additional B.C. companies were certified
increasing by more than 8 million hectares the total area of certified
First Nations Land Claims
Clarity around First Nations land claims will improve both the
long-term stability of the provincial timber supply and the investment
attractiveness of provincial forest enterprises. In the meantime,
the Ministry is taking action to increase First Nation participation
in the forest sector and accommodate First Nation interests.
In May 2002, the government introduced legislation enabling the
Minister of Forests to directly award forest tenures to First Nations
in order to create participation opportunities. Since then seven
agreements have been signed, providing First Nations with rights
to 1.1 million m3 of timber over a number of years. As part
of the forestry revitalization plan, more volume will be made available
to First Nations. Over time, the allowable annual cut available
to First Nations is targeted to rise to 8 per cent of the core allowable
Forest Stewardship and Forest Health
The introduction and implementation of the results-based code of
the Forest and Range Practices Act is aimed at improving
provincial forest stewardship. Through its results-based approach
the new code focuses on the end result of responsible forest management
rather than the means by which it is achieved. By being more adaptable,
the new code rewards innovation and will be backed by tougher enforcement,
including higher fines and regular monitoring.
The ongoing improvement of forest stewardship is also the objective
of the legislation introduced in 2002/03 to establish the College
of Applied Biology, the first of its kind in Canada. The act is
designed to improve forest management by registering biologists
and holding them accountable for their work. Under the Forest
and Range Practices Act and the redefined Forester's Act,
resource management professionals will have increased responsibility
for protecting the environment.
The work of the Forest Investment Account (FIA) began in 2002/03.
FIA was created to promote sustainable forest management in British
Columbia. It is founded upon a Vote of the Legislature, authorizing
the Minister of Forests to provide funding for certain forest management
activities. FIA expenditures totalled $144 million in 2002/03 including
$38.5 million of Forestry Innovation Investment expenditures.
In the area of forest health, the Mountain Pine Beetle infestation
will continue to be a pressing problem for the province for the
foreseeable future. In 2002/03 the Chief Forester increased the
allowable annual cut by 2.9 million cubic metres to address the
mountain pine beetle problem. Estimates of the beetle's rate of
spread indicate that every infested tree removed at the front of
the infestation will save up to 16 trees from being attacked the
As ever, the B.C. forest sector and the Ministry of Forests will
continue to face challenges in 2003/04. Implementation of the broad
array of legislative changes introduced in 2002/03, resolution of
the softwood lumber dispute, and dealing with the mountain pine
beetle epidemic are only a few of the issues that will have to be
dealt with. Ultimately, to be successful in the ever-changing global
economy, the forest sector will have to be outwardly focused, competitive
and environmentally responsible while the Ministry will have to
ensure that appropriate legislation, policy and business processes
are in place to support these outcomes.
Linkage of Ministry Goals to Performance Reporting
The Forest Service established three long-term goals in 2002/03
to provide overall strategic direction to the ministry in achievement
of its mission and vision:
1. Sustainable Forest Resources — the use of the forests
to generate economic benefits is balanced with the long-term health
of the forest and range resources.
2. Sustainable Forest Benefits — the citizens of British
Columbia benefit from commercial use of their forests.
3. Effective Sustainable Forest Manager — the Forest
Service is comprised of highly trained and knowledgeable staff focused
on ensuring that sustainable forest resources deliver sustainable
forest benefits for the people of British Columbia.
The framework below has been developed to assist the ministry in
achieving these three goals. Five core businesses were established
(called core functions in the 2002/03 – 2004/05 Service
Plan) which incorporate all the activities carried out by the Forest
Service. Each of the core businesses is linked to at least one of
the three goals; the Compliance and Enforcement core business supports
two of the three goals. Under each core business are structured
the associated objectives and strategies of the ministry. To indicate
how successful the ministry is in achieving these objectives and
strategies during 2002/03, key outcome indicators and corporate
performance measures were assigned. Summaries of the objectives
and strategies, and ministry performance by core business are provided
in this report.
As part of the government's restructuring of ministries and the
Core Services Review, the 2002/03 – 04/05 Service Plan indicated
that the ministry would no longer be undertaking several functions
that were contained in its 2001/02 – 2003/04 Performance Plan.
During 2003/04, the ministry pursued the transfer of these functions
to other government agencies, forest sector companies and other
organizations. Summaries of strategies and performance measures
and targets associated with these transition functions are provided
in this report.