MacMillan Bloedel Parks Settlement Agreement Decision
British Columbia has a very unusual mix of Crown and private land. Approximately 95% of the province is Crown owned. Forest policy as a result is almost exclusively determined by the legislative scheme established by the Province. This is a higher percentage of publicly owned land than in other provinces and much higher than in other competing forestry jurisdictions.
Presenters at the public hearings and in written submissions strongly supported the largely public model of resource development in British Columbia. The Crown lands are described as a legacy for all British Columbians held in trust by the current government for future generations. It was argued that only if lands are kept in public hands can there be adequate democratic control over how those lands are used, or for non-timber values to be respected on forest lands.
There was very little support for changing the mix of tenure towards greater private ownership. MB itself did not advocate privatization of land. However, some speakers emphasized the benefits to be obtained from private ownership, including greater incentives to invest in developing the land, higher levels of economic activity and attraction of capital into the Province. MB's own position is that security of tenure rather than private ownership is what is required for expanded forest activities on its current land base.
It was interesting to note that members of the public did not distinguish between the Schedule A lands and other types of land which had been placed on the table as possible currency options. Because Schedule A land is highly regulated by the Crown, in all important respects it is equivalent to Crown land. While within the Tree Farm License, MB’s land cannot be alienated to third parties, cannot be used for non-forestry purposes and can only be logged according to the prescriptions of the Forest Practices Code. Accordingly, the Schedule A land is a form of quasi Crown land rather than simply a regulated type of private land. The arguments made against privatization of Crown land were applied equally to deregulation of Schedule A land.
Concerns about privatization were stimulated by actions that took place outside of the public consultation process. Many speakers noted the comment made by Deputy Premier Dan Miller that B.C.’s "soviet style" forestry needs extensive reform. The implications of the Weyerhauser share purchase raised concerns about foreign ownership of not just MB but of a significant parcel of Crown land as well. The combination of these events raised concern that the current Settlement Agreement was in fact a precedent or template for further settlements and that the Province was on the verge of commencing wide scale privatization of land.
Those opposed to the sale of private land pointed to the difficulty of maximizing economic benefit from such a sale. If Crown land continues to be held in public ownership, there is in theory an infinite stream of income that can be obtained from stumpage over successive rotations of trees. If the land is alienated only a small fraction of that income can be realized through the sale price.
Critics also pointed to the recent removal of Schedule A lands from the Tree Farm License held by Timberwest. When evaluating the benefit to the company of removing Schedule A land from under the provisions of the Forest Practices Code, the appraisal found the benefit to be limited to a reduction in costs of approximately $4.00 per cubic meter of harvested timber. This is only a fraction of industry estimates of a cost imposed by the Forest Practices Code of closer to $20.00 per cubic metre. The example of Timberwest was used to argue that the Province would not obtain an adequate economic return should Schedule A lands be removed as contemplated by the Settlement Agreement.
Speakers also expressed concern that there were inadequate records of the quality and quantity of standing timber on Crown land which would result in an underestimate of the value. There was also concern expressed that if in fact the Province was planning to raise funds through the sale of public lands, that the land should be made available to anyone who wished to make an offer. The recommended mechanism was some form of auction of Crown land with the proceeds being used to pay funds required under the Settlement Agreement. This would ensure that a maximum market value for the land was obtained.
A repeated concern raised by many members of the public was the potential for land transferred to MB to be lost from the active forest base. All of the lands under consideration are currently within the Forest Land Reserve and would continue to be governed by that legislation even if transfers take place. However, once land is removed from a Tree Farm License or alienated from the Crown, it becomes significantly easier to remove land from the Forest Land Reserve and convert it to other uses.
A great deal of the land under consideration is near rapidly growing population centers. The VIP lands, for example, are near the growing communities of Nanaimo, Duncan, Ladysmith and the Cowichan Valley. All of these communities have expanded dramatically over the past 10 years and there is no reason to believe that population growth pressures will abate in the immediate future. Most of the land which is not currently within urban areas near these communities is owned in fee simple by either Timberwest or MB. If Crown lands are added to the private land base, this will mean that expansion of communities can only take place through conversion of forest lands into residential, commercial and industrial areas. Converting Crown land to private land creates an opportunity for land to be removed from the working forest base and sold to third parties for development purposes.
Another area of concern is Schedule A lands surrounding the Municipality of Ucluelet. An application for exclusion of approximately 800 acres of Schedule A land within the District of Ucluelet's boundaries was made to the Forest Land Commission in 1998. The application was turned down but is supported both by MB and by the District of Ucluelet. The area in question includes approximately five kilometers of waterfront along the west coast of Vancouver Island. Given the very high value of waterfront property, it is likely that there would be continued pressure to remove these lands from the Forest Land Reserve, particularly given the support of the local municipality. If these lands were removed from the Forest Land Reserve, MB would gain the dramatic increase in value from owning a large parcel of developable property, subject only to a recapture of property taxes by the Province.
In the Powell River area, a significant amount of the Schedule A and Schedule B lands proposed for transfer are waterfront properties on the Lois Lake chain. One presenter estimated that 35 kilometers of lakefront property have been proposed for transfer to MB in fee simple. Powell River is a burgeoning recreation and residential community and the lakes in its area are already under significant pressure from boat houses moored around the edges of the lakes. Should the land be transferred to MB, the long-term development pressure to create waterfront residential properties would be enormous.
The possibility of land being removed from the active forest base has several implications for the proposed land transfer. First of all, MB could realize significant windfall profits in the event that land was removed from the Forest Land Reserve and then converted to development use. Estimates of the market value of large parcels of Crown land within the Forest Land Reserve ranged from $3,500.00 to $5,000.00 per hectare. If small parcels were removed from the Forest Land Reserve and converted to development use, the likely value per hectare would increase at least ten fold, value which would be lost to the Crown.
Conversion of land to fee simple ownership by MB also creates potential municipal growth management problems for many communities. The Ministry of Municipal Affairs canvassed municipalities that are potentially affected by the proposed land transfers and a summary of their comments are included as Schedule B to this report. Many regional districts and municipalities would find it necessary to rethink growth strategies and current zoning in order to protect themselves against changes in use of lands that are currently Crown regulated or owned.
The involvement of Weyerhauser has also raised concerns in the public mind. Because Weyerhauser has a significant land development branch, it is feared that the potential new owner may take steps to maximize the economic value of their land base by converting forest lands to other uses. This could place development pressures on Island and Sunshine Coast municipalities while shrinking the active forest land base. Persons involved in the forest industry have also expressed concern that this could result in job losses as forest land fell under asphalt.