Wood Business

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Tenure made better

April 1, 2015 - Forest tenure agreements aim to strike a balance between industry and stewardship. In 2012, the Canadian forest products industry shipped products valued at $58 billion and supported an estimated 235,000 direct jobs. The value of all forest-based recreational activities is also significant. It is essential that we ensure Canadian forests are managed in the best and most efficient means while taking into consideration all forest values. The Sustainable Forest Management
paradigm is our present model to achieve this (for more details on the paradigms go to www.woodbusiness.ca).

Forest tenure agreements are of fundamental importance in the management of Canada’s publicly-owned forests. Canadian provincial governments have developed two basic tenure agreement models: area-based and volume-based
(See Fig 1)


Forest tenure agreements have two central purposes: to establish the conditions under which timber is made available to industry, and to ensure and deliver specified forest management performance.

They can be long-term (20 to 25 years) or short-term (one to five years) depending on the circumstances. Only secure long-term timber supply agreements provide any reasonable basis for forest management planning and industrial investment.

Tenure types
Typically, tenure agreements are signed between a province and a forest products company. The agreements provide the tenure holder with rights to harvest timber from publicly-owned forestland together with a set of specified forest management responsibilities. Provincial governments have comprehensive regulations to ensure the maintenance of environmental values, public access and recreation.

Area-based tenures: The provincial government allocates a specified area of forest to a private sector manager, usually a single forest products company. In some cases, several medium-sized companies may rely on one area for their wood supply. The private sector manager (tenure holder) is responsible for preparation of a long-term forest management plan, subject to review and approval by government, as well as all forest operations and post-harvest regeneration. Provided the tenure agreement is secure for a period of 25 years or more, the licensee is able to develop a sense of stewardship for the forest.

Volume-based tenures: The provincial government establishes a forest area under management by the provincial department responsible for forests or by a government agency. This area of forest will usually supply timber to several forest products companies. The public sector manager is responsible for preparation of the long-term forest management plan and allocates areas for annual forest operations to the companies. Post-harvest regeneration may be the responsibility of the public sector manager or the company that carried out the harvest operation. Companies operating under a volume agreement are less likely to develop a sense of stewardship. They have no clear stake in the future productivity of the forest.

An efficient tenure system should be structured to achieve three objectives essential to ensure good forest management and a competitive industry:  

Logical and clear allocation of responsibility for all aspects of forest management and operations. (It is important to place the responsibility where it can be carried out in the most efficient way.)

Clear lines of accountability for performance of forest management responsibilities.

Incentives to increase forest growth and productivity as well as the quality of trees to be used by industry. (These incentives have been lacking due to the current structure of tenure agreements.)

Historically, many of the large forest products companies have been able to look back on 50 years of management of a specific area of forest. Unfortunately, there has been no ability to look ahead with confidence into the future for 50 years of access to the wood supply. This has reduced the incentive for industry to invest in silvicultural treatments to improve the quality and value of the timber.

Further, many companies have disappeared during the past decade due to changing markets, especially for pulp and paper. Although some of the their forest tenures may be taken over by other forest products companies, the continuity of management is broken, as is any sense of a stake in future productivity.  

The conditions of forest tenure agreements are almost always framed in provincial forest management legislation. This results in periodic change at intervals of about two decades to keep in step with perceived public values, and perhaps more specifically, to conform to the political and economic philosophy of the government of the day. These periodic changes in tenure often result in uncertainty about the future allocation of timber supplies and the allocation of responsibility for woodlands management and operations.

This raises a further question about the ability of the existing tenure systems to provide for the management of public forests. We must recognize that there will be changes in both timber and non-timber values and uses and the markets for both – often related to changes in technology.

A further consideration is that forest-based communities throughout Canada, including First Nations, have had little active participation in forest management decision-making although they are often economically dependent on forest management operations and timber processing. Public participation in the development of forest management plans is important, but does not recognize the essential responsibilities that reside with the forest managers.

Despite these realities, we must develop and implement a form of tenure that will achieve the three objectives mentioned above in order to ensure good forest management and a competitive industry.

What is lacking?
The present models of area- and volume-based tenures have not yet developed to the point where they address both the dynamic nature of the marketplace and the participation of forest-dependent communities in management decision-making at the forest level. They do not provide any incentive for the tenure holder to explore new markets or invest in the long-term improvement of timber values or non-timber values, such as habitat improvement or recreational use. The present tenure system is essentially inflexible.

Nevertheless, there is some evidence that a different approach is already underway. An early example of what can be accomplished when a provincial government delegates the full management of a forest region is illustrated by the success of the Algonquin Forestry Authority (AFA) established in Ontario in 1974. Although responsible directly to the Minister of Natural Resources and Forestry, the directors of the AFA represent the local communities. A key result of the silvicultural program (particularly in the maple forests) has been a marked improvement in tree quality, which would not have occurred if the tenure had been left to individual forest company licensees.

The forest managed by the AFA is audited and certified to the CSA SFM Standard. This model of stewardship can provide both responsibility and accountability to a board of directors that represents local communities, forest products companies and forest interests such as recreation and hunting and fishing. In Ontario, such forest management corporations already exist with varying representation on their boards of directors.

In 2011, provincial legislation broadened this approach with the establishment of a local forest management corporation (LFMC) – the Nawiinginokiima Forest Management Corporation (NFMC), which will be responsible for forest management on the Big Pic Forest covering 1.9 million hectares with an annual allowable cut of 2.2 million cubic metres. The NFMC Board of Directors includes representatives from three First Nations bands: Pic River, Pic Mobert and Hornepayne, and the communities of Marathon, Manitouwadge, Hornepayne and White River.

Similar innovations centred on First Nations communities are being tried in B.C. The recent Supreme Court decision concerning title to lands of the Tsilhqot’in Nation in B.C. is another sign that provinces must consider new approaches to the management of public forestlands.

Placing forest management in the hands of community-based organizations, combined with an influential role for industry in all forest management decisions, offers an opportunity to combine long-term timber management and timber supply obligations, an incentive to increase forest productivity and the means to respond to market demands. Forest-dependent communities have a long-term socio-economic interest in forest productivity as do the forest products companies that depend on the forest for their wood supply.

Locally funded
To make this opportunity truly effective, some or all of the stumpage revenue should be retained by the organization to offset the costs of management and silvicultural operations and to ease the burden of companies providing employment in the community.

Stumpage revenues are merely pocket change in large urbanized provinces such as Quebec, Ontario, Alberta and British Columbia. Redirecting them to a community forest management corporation for investment in silviculture, inventory and other forest resource enterprises would be a solid investment. The economic stimulus to the forest-based communities involved will more than compensate for any reduction in Crown stumpage charges received by the province and encourage the sale of timber and development of other forest values in a competitive marketplace.

The process of forest management and sale of timber from public forestlands has evolved in response to economic and social conditions, the marketplace and technology. The move to community-based management is part of this process. This is particularly relevant in view of the rapid pace of urbanization and lack of political representation of distant forest-dependent communities.

There is reason to be flexible in allocating forest management tenures. We have seen ample evidence that governments have difficulty holding themselves accountable. Governments have no difficulty holding the private sector accountable for poor performance – all that is required is political will.

Beyond the local desire to protect the long-term health of the community and existing government regulations, certification to one of the forest management programs offers additional assurance of exemplary performance.

Ken Armson R.P.F. (ret.) was a professor of forestry for 26 years at the University of Toronto and retired as Ontario’s Provincial Forester after 11 years with the Ontario Ministry of Natural Resources.

Tony Rotherham has a BScF from the University of New Brunswick, and is RPF registered in Ontario and B.C. Tony spent 21 years with the Woodlands section of the Canadian Pulp and Paper Association (now FPAC) and has worked with Canadian private forest land owners since retiring from FPAC in 2001. He has worked in Quebec, Ontario, B.C.,
Kenya and Iran.

A sustainable tenure
A successful tenure system will provide:

  • a secure long-term timber supply to industry;
  • incentives to improve forest productivity and tree quality;
  • long-term stability in tenure and policy to allow management targets to be
  • set and met;
  • availability of funds to ensure fulfillment of management and silvicultural obligations through market cycles;
  • an influential role for industry in all forest management decisions;
  • an influential voice for forest-dependent communities that have a long-term interest in the management of the forest;
  • private sector management rigour and discipline; and
  • government oversight to ensure long-term policy goals are met.

Tenure agreements should be signed under contract law, not under provincial forest management legislation. Forest management should not be subject to political cycles and ideology.

Comments and good ideas can be sent to: trotherham@sympatico.ca.

The complete version of this article is available online at www.woodbusiness.ca.



April 1, 2015  By Tony Rotherham and Ken Armson

Incentives to improve forest productivity and tree quality are key to any tenure system. April 1

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