a) Planning and administration ($4.52/m3)
Code-related operational planning requirements and administration accounted for a total of $4.52/m3 (22%) in logging costs for the 1992 to 1996 period. Regionally, cost increases attributable to operational planning requirements and administration account for a greater proportion of the cost increase on the Coast (27%) than in the Interior (17% in the Southern Interior and 16% in the Northern Interior).
i) IPR:Increased planning requirements ($2.57/m3)
The increased planning requirements of the Code are a major cost driver in all regions of the province, although the total cost increase attributable to this driver is greatest on the Coast by a substantial margin. Some of the reasons behind the greater impact on Coastal logging costs include:
- The nature of Coastal terrain, which is generally steeper and more difficult to operate on than much of the Interior, resulting in increased planning requirements.
- Coastal areas frequently contain a greater number of streams requiring assessment and a higher proportion of potentially unstable terrain requiring geotechnical assessment.
- The Coast requires a greater proportion of cable harvesting systems in order to harvest the timber profile. Planning for these systems is generally more complex and time consuming than for the ground-based systems which predominate in the Interior.
- Some assessments (e.g., gully assessments) are only required in the Coastal area of the province.
- Timber harvesting has a longer history on the Coast, and the impact of past practices may increase the potential for resource use conflicts while reducing planning flexibility.
- Many Coastal operating areas are relatively close to population centres and consequently have a greater number of resource conflicts to deal with.
Southern Interior cost increases attributable to increased planning requirements are less than half those experienced on the Coast, although still higher than those for the Northern Interior. While not as difficult an operating area as the Coast, the Southern Interior has more varied terrain than the North and shares many of the Coastal planning issues related to proximity to population centres (e.g., visual quality constraints, harvesting in community watersheds, etc.).
Cost categories which have been significantly impacted by the increased planning requirements of the Code include:
- Tree to truck:costs increases related primarily to the impact of delays, shutdowns and changes in forest practices associated with operational plan amendment requirements on active cutblocks. This issue was far more prevalent on the Coast, although it is also a Northern Interior issue to some degree.
- Forest regeneration:cost increases were primarily due to operational plan amendment requirements to address changes in silvicultural practices and standards. This was only an issue on the Coast.
- Road expenses:increases in road costs were the result of more staff time spent attending on-site inspections with government agency staff in advance of road approval. Note: the increased planning requirements for roads are addressed under the road and landing requirements cost driver as these are included as sections of the road regulation.
- Forest management and engineering:these cost increases, which account for the largest proportion of cost increases attributable to this driver, were related to an increase in the number of forestry and engineering staff and planning contractors necessary to address the additional planning requirements, the increased number and complexity of operational plans required, requirements for detailed surveys in advance of operational plan preparation (stream classification, watershed assessments, geotechnical assessments, archaeological impact assessments, gully assessments, etc.), crew transportation costs to complete assessment work in remote areas and other associated costs.
- Other overhead:costs increases in this category came as a result of increased vehicle costs to support additional forestry and engineering staff and an increase in administrative staff necessary to manage the increased documentation handling requirements of the Code.
ii) ADM:Administrative delays in the approval process ($0.83/m3)
Administrative delays in the approval process for operational plans (e.g., silviculture prescriptions, forest development plans, etc.), cutting permits, road permits and special use permits were a major cost driver in all areas of the province (approximately 4% of non-stumpage cost increases), although the impact on the Coast was significantly greater than that in the Interior. However, the full significance of these delays lies in their contribution to the sharp reduction in standing timber inventories (i.e., timber in approved cutting permits) observed over the last few years. As the time required to prepare and receive approval for operational plans and cutting permit submissions has increased, several companies have had to draw down their standing timber inventories in order to meet cut control requirements and preserve their AAC allocations. As a result, there is a delayed cost component to administrative delays that will not be incurred until companies complete the additional work necessary to rebuild their standing timber inventories.
The shortage of approved cutting permits has also prevented companies from reacting in a strategic manner to changes in both the market for products and the market for purchased wood.
Some of the reasons for the greater impact of this cost driver on the Coast include:
- The smaller maximum Coastal cutblock size (40 hectares), which tends to exacerbate efficiency problems when delays in approvals result in more than one logging phase operating in an area (e.g., road crews, fallers and yarding crews working in close proximity).
- The greater difficulty and longer time required to build Coastal roads, which forced some operators to opt for more expensive helicopter logging methods in order to meet cut control requirements for the year. Participants also noted that, in some areas, reliance on helicopter logging of what would otherwise be conventional wood (if road access were available) may effectively reduce the operable timber supply as helicopter operations typically target higher value stands, resulting in less volume and lower quality timber remaining to support the cost of future road construction in the area.
Cost categories which have been significantly impacted by administrative delays in the approval process include:
- Tree to truck:cost increases came as a result of unscheduled shutdowns due to late approvals, "lurch logging" from one block to the next, inefficient operations and a shift towards helicopter logging where insufficient road approvals had been obtained to permit the achievement of cut control requirements using conventional logging methods. Approval delays and the shortage of approved permits sometimes resulted in too many active phases in a cutblock (e.g., road construction, falling and yarding all active in the same block at the same time) as companies attempted to harvest their quota and keep crews working.
- Road expenses:administrative delays in road approvals resulted in the inefficient use of road building equipment and work disruptions where more than one logging phase were forced to work in the same area. In addition, administrative delays sometimes forced operators to reschedule road construction projects outside of optimal seasonal operating windows, which in some instances added to road construction costs (e.g., where wetter soils were encountered, additional drainage control and/or endhauling of material were sometimes required due to road construction under less than optimal conditions).
- Forest management and engineering:delays in approvals for cutting permits, operational plans and assessments resulted in extra staff work to revise logging plans in order to keep logging and road crews operating. In addition, where delays were experienced, more staff time was required to review and negotiate operational plan content with government agency staff.
iii) C&E:The penalty systems component of the Code ($0.83/m3)
The penalty systems component of the Code (the threat of fines, jail sentences, administrative penalties, etc.) was a major cost driver in all areas of the province, as the industry reportedly often exceeded Code requirements as a way to manage the risks associated with non-compliance. The impact of this driver on Coastal logging costs was significantly greater than that in the Interior because of the greater diversity of resource values and the difficulty of operating on Coastal terrain, both of which increase the risk that forest practices may result in non-compliance with Code requirements.
Cost categories which have been significantly impacted by the penalty systems component of the Code include:
- Tree to truck:cost increases related to the development of standard operating procedures to address harvesting practices, additional supervision of logging crews by production personnel, the over-achievement of some Code requirements (e.g., cleaning debris from streams that may not require it, dedicating a hoe to ditch cleaning to ensure that ditches are cleaned concurrent with logging) and an overly cautious approach to shutdown on wet, sensitive sites by some operators.
- Forest regeneration:increases in forest regeneration costs were generally related to an increase in the proportion of areas planted, higher planting densities and the use of larger planting stock as a means to manage the risk posed by Code penalties for not meeting regeneration delay requirements.
- Road expenses:cost increases related to the development of standard operating procedures to address road practices, additional supervision of road crews by production personnel and the over-achievement of some Code requirements (e.g., installing more culverts than required by the road profile, carrying out more endhauling than prescribed).
- Forest management and engineering:forest management and engineering cost increases relate to increased logging and road construction supervision by forestry and engineering staff and increased diligence in laying out roads and cutblocks and preparing operational plans (e.g., more time spent running deflection lines, greater emphasis on walking cutblocks to accurately map streams and standard units, etc.).
- Other overhead:cost increases in this category were more prevalent in the Southern Interior and were the result of Code fines charged to overhead accounts and the time spent by administrative staff in preparing for and attending appeals.
