This socio-economic impact report has been written
to accompany the Arrow TSA Timber Supply Analysis by the Ministry
of Forests. Together, the timber supply analysis report and this
impact assessment will be used as input for the development of
a discussion paper by the Arrow Forest District. The discussion
paper will be the focus for public discussion regarding the issues
surrounding changes to the timber harvest level.
-an assessment
of the socio-economic and environmental implications within the
Arrow TSA related to the range of forecast harvest levels specified
in the Arrow TSA Timber Supply Analysis.
Several impacts precipitated by the forecast harvest
levels for the Arrow TSA, both quantitative and qualitative, have
been evaluated in this report using a multiple accounts analysis
approach. The harvest scenarios assessed are as follows:
The base harvest forecast,
referred to as the Base Case in the Ministry of Forests' Timber
Supply Analysis Report, begins at an initial harvest level
of 619 000 m3. This level
can be maintained for six decades; however, the average age of
harvested stands would drop significantly in the first twenty
years. The forecast continues with 10 percent decreases in each
of years 70, 80, and 90. In year 100. the harvest would fall by
a further 65 percent to the long-term harvest level (LTHL) of
422 000 m3.
Case 2: A harvest forecast starting 15 percent higher than the current AAC.
Figure ES.1
The choice of harvest levels has been made by the
Ministry of Forests as a means of illustrating the sensitivity
of employment, income and government revenue, as well as the social
and environmental implications, to different harvest levels. It
does not indicate preferred options.
The results of this analysis are derived from the
best available information, however the precision of the estimates
are limited by the following factors:
Quantitative results are calculated for the forest
sector only.
Due to data limitations, impacts are presented as
if they would occur concurrently with a change in the harvest
level, which means that direct "lag effects" are not
captured in the model.
Employment coefficients used to calculate future
employment levels are development based on the assumption that
the current level of labour-intensity will hold over time, and
that a linear relationship exists between the harvest level and
the level of employment. Threshold effects, such as mill closure
due to a shortage of wood, are not accounted for in the economic
analysis.
Area Profile
The Arrow TSA forms part of the Arrow Forest District,
situated in the southwest portion of the Nelson Forest Region.
The TSA covers a land area of 754 000 hectares, and is divided
into one large, four moderately sized, and two small parcels.
Approximately 217 000 hectares, or 29 percent, of
the Arrow TSA's total land base is considered available for timber
harvesting under current management practices. The TSA accounts
for 30 percent of the 2.0 million m3
of timber required annually by processing plants in the Arrow
Forest District.
Socio-Economic Setting
In 1991 the population of the Arrow Forest District
was 42 145. The largest communities within the Arrow Forest
District are Trail, Castlegar and Rossland, while the area supports
another eight incorporated and unincorporated small communities.
The three key areas of the forest district can be
described as follows:
Population growth has been mixed in the Arrow Forest
District. Since 1981, Castlegar and Rossland have both increased
in size, while the populations of Trail, Nakusp and Slocan have
declined. Most recently, however, population throughout the forest
district has been increasing as retirees, semi-retirees and professionals
are attracted to the natural beauty of the study area. This has
fueled economic growth and diversification.
Historically, the labour force of the Arrow Forest
District has been highly dependent upon -
primary resource sectors, specifically forestry
and mining. With the loss of forest sector and mining jobs during
the past decade, there has been a shift towards lower income service
sector jobs or self employment.
The unemployment rate in the Arrow Forest District
was 13 percent in 1991.
Forestry and mining have historically been the two
prime economic sectors of the communities in the Arrow Forest
District. Tourism and outdoor recreation has been growing in importance,
although it is still a relatively small sector compared to mining
and forestry. Other key sectors include construction, agriculture
and agroforestry and wildcrafts; however, they, too, are relatively
small.
The Arrow Forest District does not contain any First
Nations' reserves or communities. However, the long standing presence
of First Nations' people has been documented and is evident from
various archaeological finds.
Issues and concerns:
Environmental Setting
The Arrow Forest District is bounded by the Selkirk
Mountain Range to the east and the Monashee Mountain Range to
the west, with the Valhalla Range at its centre. An important
feature of the study area is the east arm of the Columbia River
system, which includes the Upper and Lower Arrow Lakes.
The Upper Arrow is within the Central Columbia Mountains
Ecosection of the Columbia Mountains and Highlands Ecoregion,
which is characterized by high ridges with deep wide-trenched
and narrow valleys. The Lower Arrow is situated in the Selkirk
Foothills Ecosection of the Selkirk-Bitteroot Foothills Ecoregion.
The topography is more subdued as compared to the Upper Arrow.
The Arrow Forest District supports an abundance and wide variety of wildlife species, including both some unique and endangered species. The diversity of habitats found in the forest district account for the over 60 species of birds, both resident and migratory, that can be found in the area. All ungulate species present in B.C. can be found within the Arrow Forest District. A wide variety of fish species are also found within the Arrow Forest District.
Issues and concerns identified are as follows:
-harvest impacts on forest seral distribution (i.e.,
maximum amount in early seral stages);
-maintenance of old growth and old growth diversity;
-provisions for retention of cavity trees and coarse
woody debris;
-increased protection of caribou winter range;
-provisions for forest ecosystems networks;
-improved protection of riparian areas;
-harvest distribution impacts on special habitats
(i.e., high elevation) and wildlife species (i.e., grizzly bears,
caribou and goats);
-enhanced forest management practices;
-harvesting and road maintenance impacts on water
quality;
-the ability to manage second growth forests to provide
old growth value.
TSA Forestry Operations
The Allowable Annual Cut within the Arrow TSA is
619 000 m3. Timber is
apportioned as follows:
| Arrow TSA Timber Apportionment 1992 | ||
| Forest Licences | ||
| SBFEP | ||
| Woodlot licences | ||
| Forest Service Reserve | ||
| Total | ||
The major licensees in the TSA are Slocan Forest Products, Atco
Lumber, Riverside Forest Products, Kalesnikoff Lumber Company
Ltd., and Bell Pole Company Ltd. Approximately 79 percent of Arrow
timber is held under Forest Licence. The largest processing operations
in the Arrow Forest Distict are Atco Lumber, Kalesnikoff Lumber,
Slocan Forest Products (relying on the TSA for approximatley 55
- 60 percent of their wood supply), and Pope and Talbot, Celgar
Pulp, and Forest Fibre Ltd (relying to a much lesser degree on
Arrow TSA timber).
Based on information provided by industry representatives in the
Arrow Forest District, over 80 percent of wood from the Arrow
TSA is processed inside the TSA, and the rest outside.
Between 610 and 630 PYs of employment are generated annually by
timber from the Arrow TSA within the TSA. Approximately three
quarters of these jobs are in the harvesting and processing sectors.
Another 44-46 PYs are created outside the TSA, primarily in processing.
Overall, wood from the Arrow TSA generates approximately 655 to
675 PYs of employment annually in BC.
Economic Development Impacts
Base Harvest Case - TSA
Employment and income impacts within the TSA are
based on the location of employment as opposed to the residence
of employees. The two are not always the same, particularly in
the case of timber harvesting, transportation and silviculture
where "transient" workers are commonly employed. However
industry operators in the Arrow TSA indicate that most of their
employees reside within the Arrow TSA.
If the initial harvest level of 619 000 m3
were sustained for six decades, as in the base harvest scenario,
estimated harvest dependent forest activity would generate approximately
600 PYs of direct employment, plus an additional 430 PYs of indirect
and induced employment, for a total of approximately 1 030 PYs
in the Arrow Forest District.
Associated with this is about $30-$35 million of
after-tax employment income, of which about $20 million is direct
forest sector income.
Under the base harvest scenario, the harvest level
would begin declining in year 70, with corresponding losses of
employment and income. Over the entire forecast period, total
annual direct, indirect and induced employment would decline from
1 079 PYs to 749 PYs, representing an annual loss of 330 PYs.
Total income would decline correspondingly by $10.2 million.
The economic development implications in non-forestry
sectors arising from different Arrow TSA harvest levels would
be limited in most cases, with the exception of tourism related
to outdoor recreation and agroforestry/wildcrafts, which could
be expected to respond positively to lower harvest rates.
Base Harvest Case - Provincial
A TSA harvest of 619 000 m3
would support 630 - 640 PYs of harvest dependent employment in
the forest sector, plus an additional 950 PYs of indirect and
induced employment in other sectors for a provincial total of
1 575 to 1 600 PYs. Associated with the direct, indirect and induced
jobs is about $47 million in after-tax employment income (including
cash benefits), of which $21 million would be direct forest sector
income.
As in the case of TSA level impacts, jobs and income
related to the harvest in the Arrow TSA would remain unchanged
over the next 69 years. In years 70, 80, 90 and 100, however,
employment losses would occur. Over the entire forecast period,
years 0 to 100, a total loss of approximately 200 PYs of direct
forest sector employment in the province, and 46.8 million in
direct employment income would result.
During the entire forecast, a total of approximately
500 PYs would be lost (direct, indirect and induced employment),
and $15 million in after-tax income.
Case 1 Harvest Forecast
An initial harvest rate of 526 150 m3
(which is 15 percent less than the base harvest of 619 000 m3)
could be sustained for 16 decades before declining to the long-term
harvest level of 422 000 m3.
Thus, while there would be significantly fewer jobs in year 0
vis a vis the base harvest, they would be sustained at a constant
level for a much longer period of time (80 years).
In year 0 of the forecast period, 510 PYs of employment
and $17.0 million in income would be generated under Case 1, compared
to 600 PYs and $20.0 million in the base harvest forecast. An
initial loss of 90 PYs of direct employment and $3 million in
employment income results in Case 1 as compared to the base harvest
forecast.
The lower initial harvest level of Case 1 would generate
less annual TSA employment and employment income in the forest
sector until year 80 of the forecast period. Beginning in year
80, however, a reversal would occur, and there would be
more jobs associated with Case 1, as the base harvest continues
to decline.
This same trend would occur at the provincial level.
Case 2 Harvest Forecast
Case 2 assumes that the initial harvest level is
15 percent higher than that of the base harvest level.
This would be sustained for four decades before starting a decline
to the long-term sustainable level of 422 000 m3.
In year 0, Case 2 would generate 690 PYs of annual
direct forest sector employment, and $23.9 million in employment
income, representing an increase of 90 PYs of annual employment
and $3.1 million as compared to the base harvest forecast in year
0.
The harvest level of Case 2 would start declining
in the fourth decade, and would reach the long term level of 422
000 m3 by year 80. Consequently,
forest sector employment and income would drop off correspondingly.
Comparing Case 2 with the base harvest forecast,
the initial employment and income gain associated with a 15 percent
initial increase in harvest would be eroded starting in decade
4. By year 70, the employment and income generated by the base
harvest forecast, however, would exceed that of Case 2.
The trend at the provincial level would match that
of the TSA level results.
Government Revenue Impacts
Changes in the Arrow TSA harvest level would directly
affect government revenues through impacts on resource use and
resource-related tax revenues, as well as through changes in personal
income tax revenue. The principal resource-related impacts would
be on the forestry sector, since tourism impacts (e.g. user and
licence fees) would be relatively small, and no significant change
to the mining industry is anticipated.
Forest industry taxes at the provincial level include
stumpage and rents, as well as corporate income tax, logging,
sales, property and electricity taxes. At the federal level they
include corporate income tax, and excise and withholding taxes.
At a harvest level of 619 000 m3
per year, the forest sector would generate total tax revenues
of almost $27 million per year, of which $14.5 million would be
provincial and the remaining $12 million federal.
Of the provincial revenues related to timber from
the Arrow TSA, stumpage accounts for the largest share at $5.5
million. Other provincial forest industry taxes would contribute
almost $4 million per year, while provincial income tax would
contribute $5.2 million annually. Just under half of this would
come from direct forest sector employment.
Of the total $12 million in federal revenue from
the Arrow TSA, $11 million would come from personal income tax
and only $1 million from forest industry taxes. Again, just under
half of the federal personal income tax would be derived from
direct forest sector employment.
Between years 0 and 100 under the base harvest case,
approximately $8.4 million annually would be lost as a result
of the harvest reductions in the Arrow TSA.
Social Implications
The base harvest forecast would provide job stability
and continued employment at approximately the same level as today
over the next 69 years. This stability would be welcome from a
community standpoint given the local economy's dependence on the
forest sector (except for Trail and Rossland), present uncertainty
in the mining sector, and the already high proportion of the working
age population who are unemployed.
A long period of stable forest sector employment
would provide a much-needed base for future economic development,
and enable the community to avoid or mitigate a new wave of population
loss as well as the economic and social stress attendant with
job losses.
A fifteen percent lower initial harvest rate vis
a vis the base harvest would eliminate approximately 90 PYs of
direct forest sector employment in the forest district. This number
should be seen in the context of the already high proportion of
unemployment/social assistance and potential further job losses
in the mining sector. It would likely result in some population
loss, and ensuing social stresses.
Conversely, if the initial harvest rate was 15 percent
higher than the base harvest rate, approximately 90 additional
forest sectors jobs could be created. A 40 year period of stable
forest sector employment would support future diversification
efforts and ensure population stability within the TSA.
Negative implications of an initially higher harvest
could include impacts on agroforestry/wildcrafts and subsistence
activities, recreation, visual aesthetics and water quality.
Environmental Implications
While current management practices already include
provisions to protect critical environmental features of the TSA,
specifically deer and caribou winter range, riparian habitats,
visually sensitive areas and Class 1 and 2 watersheds, a number
of concerns have not been fully addressed. These concerns include
additional protection for old growth values, cavity trees and
coarse woody debris, ecosystems networks, riparian areas, wildlife
winter range as well as unique or limited habitats. Although these
concerns are common to all of the harvest forecasts, the rate
of harvest may accentuate or diminish these concerns, as well
as affect both age distribution of the forest and harvest distribution,
that in turn affect dependent species.
The Ministry of Environment has also expressed concern
that the base harvest forecast could negatively affect both early
and old growth stages of seral distribution, in effect narrowing
the forest age class distribution. Other concerns include the
possible liquidation of low elevation old growth, harvesting in
high elevation special habitats, and possible greater focus on
special management zones, particularly watersheds, as a result
of constraints on other areas.
The lower and higher initial harvest levels implicit
in Case 1 and 2 respectively, will either modify or exacerbate
the environmental implications related to the base harvest.