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Cassiar
Timber Supply Area
Socio-Economic Analysis

NOVEMBER 1994

Executive Summary

The Cassiar Timber Supply Area (TSA) covers a large, sparsely populated, relatively undeveloped and inaccessible region of the province. It is well endowed with natural resources of provincial and international significance, including large wilderness parks, a diversity of wildlife, particularly big game species, proven mineral wealth, and forest resources.

Historically, mining has been the leading economic activity. Guide-outfitting and trapping are also important sources of regional income. Industrial forest activity has been intermittent. Harvested volumes have generally been below the allowable annual cut (AAC) of 140 000 cubic metres per year. Registrants in the Small Business Forest Enterprise Program harvest small volumes for local needs. Larger volumes, also issued annually on a competitive basis, are allocated from the Forest Service Reserve. The latter volumes are typically removed from the TSA for further processing.

The Timber Supply Analysis has determined the long-term harvest level to be in the order of 870 000 cubic metres per year. In deriving this value, broad assumptions were adopted in place of detailed land and forest information, which is not available for this TSA. The estimate of the long-term harvest level should be considered indicative of the potential harvest, and subject to revision as the information base improves.

The socio-economic analysis of increased harvest levels also suffers from a lack of information. In part, this is because the forest industry is not well established in the TSA and the potential increase in harvest volumes implies a very large increase in economic activity relative to the TSA's existing economy. For this reason, two hypothetical harvest levels were selected to illustrate the nature and magnitude of the social, economic and environmental implications. The two harvest levels were 240 000 cubic metres per year (an increase of 100 000 cubic metres per year), and 640 000 cubic metres per year (an increase of 500 000 cubic metres per year). These harvest levels are for discussion purposes and do not suggest a preferred AAC level, nor will they be the only options considered in the final AAC determination. The discussion that follows summarizes the economic impacts that could be associated with these harvest levels, as well as the community, First Nations and environmental implications.

Economic Impacts

The economic implications of TSA harvesting activities at the current level, and at the two hypothesized levels, are summarized in Table ES-1. A harvest level of 240 000 cubic metres per year could probably be realized by the existing community and economic structure of the TSA. A minimum five-year phase-in, however, would be required in order to conduct the proper planning functions. It is assumed that a large proportion of the incremental harvest would be conducted by out-of-TSA contractors, and be would be processed outside the TSA. Direct forest sector employment within the TSA is projected to increase from about nine person-years (PY) of employment currently, to about 42 PY. This would stimulate 14 PY of indirect and induced employment. Total TSA employment (excluding Forest Service employment) would increase from 12 PY currently to 56 PY. While the employment figures are not large, they are significant in the small TSA economy. Implicit in the analysis is a modest increase in TSA wood processing.

Much of the economic activity generated by the increase in harvest levels (given the continuation of current policy) is assumed to occur outside the TSA, as most of the harvesting phase activities would be undertaken by contractors from neighbouring TSAs. As well, most of the processing would occur outside the Cassiar TSA, likely at mills along the Highway 16 corridor from Houston to Terrace. Direct employment in the province at this harvest level is estimated at 185 PY (includes TSA employment). Total provincial employment is estimated to be 462 PY.

Table ES-1.

Annual Economic Impacts 1

The 240 000 cubic metres per year harvest level would generate government revenue through various federal and provincial taxes. The annual total value of government revenue is estimated at $9.2 million annually.

Increasing the harvest level to 640 000 cubic metres per year would have a more than proportional economic impact on the TSA. This is because the TSA economy would grow and diversify relative to what exists today, before this level of harvest could be attained. In particular, at this harvest level, cut blocks would be distributed throughout the TSA. The cost of continuing to transport logs to "southern mills" from more distant areas of the TSA may, in cases, not be financially justifiable. This suggests that a processing plant sited in the TSA might be necessary before this level of harvest could be attained. The TSA does not presently have the industrial infrastructure (i.e. transportation, energy, suppliers) and skilled labour resources to support a substantial processing facility. This infrastructure would be necessary before a mill could be established in or near the TSA.

In projecting the economic impacts summarized in Table ES-1, it was assumed that a larger proportion of the TSA population would be employed in the forest sector, and that roughly 50 percent of the processing employment would be in the TSA. It was also assumed that a more diversified TSA economy would result in a larger share of the indirect and induced effects being realized locally. For the purposes of estimating the induced effects, the local income multiplier corresponding to the Smithers/Houston economy was used. Given these assumptions, the TSA's share of total employment is 37 percent at this higher harvest level as compared to 13 percent at the 240 000 cubic metres per year harvest level, and seven percent at the current harvest level. It follows that the TSA would also realize a greater share of the income generated. Government revenue, given similar assumptions under the two harvest levels, is projected to increase in proportion to the increased harvest.

The analysis demonstrates the nature of the economic effects that may arise at the different harvest levels. One should not attach too much importance to the specific harvest levels that have been selected to illustrate the implications. It may not be a question of what "harvest threshold" would bring forth a diversity of economic growth. Rather, it is a process of economic growth that must proceed to a point where the TSA is capable of capturing a greater share of the economic opportunities offered by an expanded harvest level. Clearly, if the economy and infrastructure of the TSA were sufficiently developed today, it could capture a much larger share of the economic effects than is projected here, even at the lower harvest level.

Community Impacts

The TSA communities are all relatively small and isolated at the present time. As long as the wood continues to be processed outside the TSA, increased harvest levels would have a limited effect in terms of employment and income (as illustrated at the 240 000 cubic metres per year harvest level). Given a further substantial increase in the harvest level, (640 000 cubic metres per year) it is assumed that the TSA would have experienced economic growth and diversification. The expanded forest industry would be part of the economic growth that might be experienced in the area. However, it is difficult to predict at this time which particular communities might be most directly affected by the expansion of the forest sector. Growth within the TSA communities would likely be a lengthy process.

First Nations

First Nations will pursue an active role in forest resource management and use of resources within their traditional lands. Higher harvest levels may lead to more opportunities for First Nations involvement in the forest industry. Specific impacts on First Nations communities would depend on their desired role, and geographic proximity to forestry activity. First Nations will have to weigh the economic benefits associated with involvement in the forest industry against any adverse impacts on their traditional way of life.

Environment

A lack of inventory information necessitates that environmental impacts be treated in an overview manner. The TSA contains vast areas of pristine wilderness. Areas that become accessible through the building of roads for logging purposes could be significantly impacted. Fish and wildlife populations may suffer due to related changes in predator/prey relationships, or increased human use. This would be compounded by the generally lower productivity and recovery rates as compared to more southern areas. Environmental resources are also important from a use perspective. Tourism, recreation, and guiding are significant economic activities in the TSA. All depend on wilderness settings and could be adversely impacted given increased harvest levels.


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