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A feasibility study for the management of recreation and other selected non-timber resources on private.. Bull, Gary 1990

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A FEASIBILITY STUDY FOR THE MANAGEMENT OF RECREATION AND OTHER SELECTED NON-TIMBER RESOURCES ON PRIVATE INDUSTRIAL FOREST LANDS IN COASTAL BRITISH COLUMBIA by Gary Bull Dip. Tech., British Columbia Institute of Technology, 1984 Forest Resources Management Dip. Tech., Society of Management Accountants, 1988 B.S.F., The University of British Columbia, 1988 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF FORESTRY in THE FACULTY OF GRADUATE STUDIES FACULTY OF FORESTRY (Department of Forest Resources Management) We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA November 1990 © Gary Bull 1990 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department The University of British Columbia Vancouver, Canada DE-6 (2/88) Abstract Industrial private forest landowners in British Columbia have traditionally viewed their forest lands as a raw material supply for their wood processing facilities. However, they are now experiencing social and political changes which are restricting the way their forests are managed. These changes have enormous implications for large forestry firms, such as Canadian Pacific Forest Products. A portion of their lands, the focus of this study, has been examined to assess the impact of these restrictions on traditional land use. In addition, non-timber values have been examined for their revenue generating potential. A study area was delineated near the community of Sooke, B.C. Fishing, hunting, deer farming and camping were assessed. In order to complete the analysis, the costs in terms of foregone timber values, were calculated under a number of different assumptions. The impact of changes in bare land values on decisions with respect to the non-timber values were also examined. A number of policy changes, both by the landowner and the various levels of government involved, are required to promote forestry with a renewed emphasis on recreation. Initiating these changes is the next stage in the preparation of a recreation management plan for the area under study in this thesis. ii Table of Contents Abstract ii Table of Contents iiList of Tables v List of Figures vAcknowledgements ....... vii I. INTRODUCTION . 1 II. RECREATION PLANNING, PRICING, FEES AND MEASUREMENT ... 7 2.1 Recreation Planning 7 2.2 Recreation - Pricing and Fees 18 2.3 Conversion of Measured Units 3III. STUDY AREA - DESCRIPTION AND RATIONALE 43 3.1 Physical Setting 43.2 Determination of Study Area Boundary 44 IV. MURRAY'S FINDINGS - SUMMARY ..... 53 4.1 Methodology and Physical Setting 54.2 Major Findings 56 4.3 Limitations of Murray's Study 7 4.4 Conclusions and Recommendations 59 V. FISHING 61 5.1 Inventory - Lakes 65.2 Inventory - Rivers 2 5.3 Murray's Findings 5 5.4 Comparative Analysis5.5 Management Alternative . 66 5.6 Fish Farming, Other Jurisdictions 67 5.7 Environmental Concerns 69 5.8 Discussion 70 VI. HUNTING - BIG GAME 3 6.1 Inventory6.2 Murray's Findings 74 6.3 Values - U.S. Studies 5 6.4 Leasing 76 6.5 Comparative Analysis 80 6.6 Environmental Concerns 2 6.7 Discussion 83 iii VII. GAME FARMING 8 6 7.1 Analysis . . . . . 86 7.2 Discussion 90 VIII. CAMPGROUNDS 2 8.1 Sites - Description and Rationale 98.2 Campsite Planning 93 8.3 Financial Analysis 5 8.4 Measurement . 99 8.5 Comparative Analysis 102 8.6 Trends 104 8.7 DiscussionIX. TIMBER AND LAND VALUES . 107 9.1 Timber Analysis - Base Case 109.2 Timber Analysis - Options 9 9.3 Sensitivity Analysis 115 9.4 Land Values . .  . 119 X. CONCLUSIONS AND RECOMMENDATIONS 124 REFERENCES . 129 APPENDIX I GLOSSARY OF TERMS . . . ... . . . . • . • • . . 139 APPENDIX II BONEYARD LAKE 148 APPENDIX III MacDONALD LAKE 9 iv List of Tables 1. Summary of the Capability and Suitability Assessments Coverage in the Planning Process 15 2. Fee Schedule in the North Maine Woods ......... 29 3. Recreational Use Measurements . 34. Summary of Major Findings for CPFP Lands . 56 5. Survey Results on Lake Fishing in Murray's Study Area . 61 6. Results from Steelhead Harvest Questionnaire ...... 64 7. Daily Revenue from Freshwater Angling 68 8. Summary of Murray's Findings on Values for Deer .... 74 9. Access to Wildlife on Private.Forest Timberlands in the South 77 10. Comparative Values of Lands Leased for Hunting 80 11. Summary of Costs for Deer Farming ... ... 89 12. Conversion Factors to Translate U.S. Camping Data . . . 100 13. Cost of Campsites in the SRMA . 103 14. Comparative Cost for Camping per Activity Day ..... 103 15. Comparative Revenue for Camping Per Activity Day .... 104 16. Detailed Summary of Area, Volume, and Net Revenue by Harvest Year 108 17. Summary of Harvesting Cost by Logging Phase ...... Ill 18. Timber Harvesting Projections, Using Two Inventories . . 113 19. Sooke Recreation Management Area - Timber Analysis . . . 116 20. Land Values for Selected Blocks on CPFP Forest Lands . .120 v List of Figures 1. Location Maps of Study Area 2 2. Detailed Map of Study Area 3 3. Private Sector Recreation Planning Model ........ 8 4. Sooke Community Plan 14 5. Recreation Pricing on Private Forest Lands 20 6. Location Maps of Murray's Study Area 54 7. Details of Murray's Study Area . 55 vi Acknowledgements First, special thanks to the unsung heroes of a company like Canadian Pacific Forest Products. Keith Tudor and Dave Kynoch exemplified the cooperative spirit necessary to make my research efforts appear at times, pleasurable. The senior statesmen, Bruce Devitt and Vlad Korelus, provided wise counsel and financial support for my studies. Their recognition of the other values on forest land provided the catalyst for much of this research. Ted Murray, who prepared the groundwork for this thesis, was exceedingly helpful and co-operative throughout the entire process. Ted and his wife Kathy also provided me with shelter and food during my long stay on Vancouver Island doing research. Many thanks to my committee members from the Faculty of Forestry, Dr. David Haley (Supervisor), Dr. Peter Dooling, and Prof. Les Reed, who provided many useful comments in the draft stages of this thesis. Also to my typist, Eileen Frydenlund, who always maintained a cheerful disposition and provided encouraging words. Finally, to my extended family who have supported me in the various endeavors I undertook while completing this work. vii "Self-interest is hostile to the common good, but enlightened self-interest is not." Locke viii 1 1. INTRODUCTION Private industrial forest landowners in British Columbia are facing increasing pressure to manage their lands for more than the commercial timber values and are beginning to 'rationalize' the ownership of land. The public, who traditionally had free access to these lands, are demanding that timber harvesting practises be modified or stopped altogether to protect or enhance other values associated with the forest. No longer can timber values alone justify the ownership of land, and ways must be found to enable them to earn additional revenue from, or receive compensation for, the various non-timber resources. Canadian Pacific Forest Products Ltd.(CPFP) owns approximately 125,000 ha of forest land on southern Vancouver Island. They face a problem similar to many other industrial private landowners in B.C.; that is, how to derive a benefit from the land base while they wait for an immature forest to grow. With this in mind, this thesis examines selected non-timber values on forest land, primarily from CPFP's perspective. However, an attempt is made to identify and address the concerns of various government agencies, other private landowners and the myriad of interest groups in the area. The Sooke Recreation Management Area (SRMA), Figures 1 and 2, is identified for the purpose of segregating non-compatible recreational uses of the forest land, and to facilitate an evaluation of selected non-timber values deemed to have the greatest potential for a financial return. The selection is based on the area's proximity to Victoria, a long standing tradition of multiple-use, the possibility of controlling access, the current land use of adjacent areas, the relatively low timber values, and the previous study of the area by Murray (1988) . The objectives in this thesis are twofold. The first is to examine recreation and other selected non-timber resources which have revenue generating potential, in a socio-economic context. The second, is to assess the impact of managing these resources on the timber values within the study area. To accomplish the first objective, it was necessary to review and assess current information available for the area; to collect additional information from other jurisdictions to fill the gaps and establish precedence; and to identify the social factors which may prohibit or modify CPFP's desire to maximize net revenue. The second objective required the use of a computer model to determine the net present value of the timber under an array of assumptions. A comprehensive recreation management plan is not produced. It was deemed inappropriate, at this time, for the following reasons: l) The database for the forest lands under review is incomplete. Despite efforts to extrapolate information from other jurisdictions, more research is necessary to give planners the complete picture of the resources in question. 2) The forest company, CPFP, must make the final decision on the most appropriate plan that suits the strategic and operational objectives of the company. 3) The other interested parties, whether they be governments, adjacents landowners, or interest groups, must be involved early in the planning process. This thesis merely sets the stage for the players in the process to begin the dialogue. Section 2 presents the conceptual models necessary to give a theoretical basis for assessing these resources. The first model places the problem in a socio-economic context; the second, describes how recreation is a marketable product in natural resource economics. Finally, the theory and problems of pricing are examined in some detail. Section 3 describes the physical setting for the study area and discusses the major considerations in making this choice. Section 4 summarizes the most recent information available for the area and points to the major gaps which must be filled. Sections 5 to 8 present the net revenue generating potential for fishing, hunting, camping, and deer farming. This is achieved by examining the information available for the study area and the extrapolation of data from other jurisdictions. Section 9 examines current timber values under a host of assumptions about logging costs, discount rates, timber values, real increases in the price of wood, timber inventory projections, and annual costs. The impact of changes in bare land values over time is also discussed. Section 10 presents major conclusions and recommendations for future action. 7 II. RECREATION PLANNING, PRICING, FEES AND MEASUREMENT 2.1 Recreation Planning For effective private sector forest recreation planning Dooling suggests ten important steps, expressed diagrammatically in Figure 3 (Murray 1988). They are: 1) the identification of a particular landbase or land unit for planning purposes; 2) the collection of a complete resource inventory of that landbase; 3) the consideration of environmental attractions, problems, hazards and/or restrictions; 4) the collection of social and economic data on those who use the area (present use assessment) and those who would use the area (demand assessment); 5) an examination of public policies regarding the use of that land for each activity; 6) an assessment of private/company policy regarding the use of that land for each activity; 7) an assessment of the area to determine its capability and suitability for supporting particular activities; physically, economically, environmentally, culturally and aesthetically; 8) an estimation of the "value" of providing such opportunities or facilities to the company and to the public; 8 Figure 3 Private Sector Forest Recreation Planning Model The diagram and planning process was conceived by Dr. P. J. Dooling. 9 9) an estimation of the cost of provision, operation, maintenance, and liability of those facilities or opportunities; 10) the identification of those activities with revenue-producing potential and the determination of that potential revenue. The first step, the identification of the landbase is carefully considered in Section 3.2, boundary area rationale. It is important to remember that this boundary is established primarily for maximum benefit to CPFP, not necessarily society as a whole. Furthermore, it is the author's strongly held view that CPFP's resource planning be integrated with other landowners and agencies in the area. The second step, a complete resource inventory must be approached from a cost effectiveness standpoint. Up to 50% of the study area is classified as parkland or marginal forest land. This means that in the current economic climate these areas have no significant commercial timber values. To measure the volume of timber is cost prohibitive simply because the variations between sites make a statistically reasonable result extremely difficult. Both the head timber inventory technician and the local forestry technician for CPFP confirmed this. Benson (1985) suggests the following non-timber resources worthy of consideration: • soil • recreation • water • visual • fish • cultural • wildlife • range The wildlife inventory from the Ministry of the Environment is highly unsatisfactory for company management purposes. The deer population is simply unknown in this region. A visual assessment cannot be fully conducted until the contour lines for the area are digitized and entered into a geographic information system (GIS). Range would not be an appropriate land classification for this area as no grasslands exist. All other non-timber variables have been assessed and are in company reports or included in this thesis. The third step is the consideration of environmental attractions, problems, hazards and/or restrictions. The major environmental attractions are the Sooke River and portion of the Leech River with their volcanic rock and swimming holes; the Leechtown settlement site; the mountainous borders, with scattered rock outcrops and veteran Douglas firs; and finally, the three lakes which are capable of sustaining fish populations (see Figure 2). Environmental problems are currently more speculative than real. Mineral claims still exist in the area; the water flows in both major rivers are subject to adjustment by the GVWD affecting fish and other aquatic life forms; one adjacent landowner has proposals in place for a large real estate development; and clearcut logging with the accompanying potential of soil erosion is another perceived threat. Environmental restriction largely focuses on change in use. If activities are further promoted on these properties, vegetation could be destroyed in these many fragile ecosystems; human waste associated with human occupation could also be a very difficult problem if not carefully managed. The fourth step, the collection of social and economic data for recreation was the primary focus of Murray (1988). Since the study area for this thesis is a subset of Murray's study area, the data collected by him will be used to estimate the present use and demand assessment. The fifth step, requires the examination of public policies with respect to the management of private industrial forest land. In early times in B.C. there were no restrictive policies with respect to timber extraction on private land. However, the Taxation Tree Farm status was implemented in 1951, under the B.C. Assessment Act, to encourage private forest landowners to manage their forests on a sustained yield basis in return for certain tax concessions. New legislation in 1987 provided new arrangements which had similar intent - the improved management of forest land for commercial timber values. The recreation values of the forest are not considered under current tax legislation. Why? Legally, in British Columbia the property rights to forest land do not give the property owner the right to manage for recreation values derived from water, fish, and wildlife (Haley and Luckert 1990). Therefore, the deer and fish populations, for example, are public property and as such are managed by the provincial or federal government. However, legislation does permit property owners to charge for access rights to the non-timber resources, and this is already exercised by the landowners of such places as Sidney Island (Murray 1988). They charge for the privilege of fallow deer hunting. The more difficult problem is the public perception of traditionally held rights. Access has been without charge for recreational use since early settlement, and to suddenly levy a fee creates significant psychological barriers. However, Murray (1988) and others (Cowperthwaite 1984) have shown that this is a problem which can be overcome. This is discussed in more detail in Section 2.2 which deals with recreation pricing. New public policies are slowly emerging which indicate that the private rights to land ownership are shifting, and restrictions are being placed on those rights. For example, MacMillan Bloedel Ltd., an industrial forest products firm, has just changed its harvesting plans on Galiano Island, B.C. because of pressure from other landowners on the island. Alternatives to clearcutting are currently being examined (Parfitt 1989). The Community of Sooke has just approved a plan for its community which includes private property owned by CPFP. When the second growth forest in the area is ready for harvest this plan could well place constraints on CPFP in its harvesting practises to protect recreational values (Figure 4). Furthermore, a recent B.C. Supreme Court decision (Hamilton 1990) also gives communities the right to protect their water supply by prohibiting logging on private land. The sixth step is the assessment of CPFP's policies. They have traditionally recognized only the timber values on their property. The difficulty of access control and improved public relations, however, have consciously or unconsciously been strong motivators in allowing outdoor recreational use on the property. Currently, a way is being sought to charge user fees for access rights to the property, which in turn will provide incentives for the company to manage for these recreation values. The final company policy worth mentioning is the unstated real estate potential of the area. Adjacent property owners have already begun construction of hotel/office complexes and campgrounds, and proposed plans are in place for residential housing. Should this occur, the real estate potential for the SRMA is very high indeed. The seventh step in the planning process is the synthesizing of the data and information compiled in Steps 1-6. Table 1 below presents a summary of how this step is related to the previous 15 steps. These linkages will be examined in more detail under the specific recreation values examined. Table 1 Summary of the Capability and Suitability Assessments Coverage in the Planning Process Characteristic CapabiIi ty Sui tabiIi ty Physical 1, 2 , 3 Economic 4 4, 5, 6 Environment 3 3 Cultural 2 2 AestheticsThe eighth and ninth steps involve assessing the value and costs of providing an opportunity or facility. This implies that the "gross dollar value" of intended participation must first be measured. Both the intended use and the attached willingness-to-pay (WTP) values were measured by Murray (1988). To find the "net value," Walsh (1986) suggested three methods to measure the costs of developing and operating recreation sites. These include: (1) engineering economic estimates of the optimum combination of inputs to produce a range of output levels; (2) cross-sectional comparisons of several existing facilities with varying output levels at one point in time; and (3) time-series observations of costs for varying output levels of a single recreation site over a period of time. The engineering economic method is essentially an interview technique, whereby three to nine engineers from construction companies and equipment suppliers are interviewed. Walsh (1986) also stipulated that they be involved in recreation facilities planning near the study area. The two major problems are: the small size of the sample, which prevents the application of the usual statistical tests; and the already inaccurate cost estimates may be extended beyond the range of existing facilities. One further problem not mentioned by Walsh, is finding the engineers with the necessary skills in a particular study area. Victoria, B.C., in this case, simply does not have the personnel available with this kind of expertise. The best estimates available in British Columbia are from the provincial parks branch, but they will readily admit that each site has unique features which cause considerable variation in costs. Unfortunately, they do not have an accounting system in place to provide historical information on the costs for different site conditions. The cross-sectional method is used by public and private companies to examine the independent variables which determine costs. Using multiple regression analysis the effect on cost of recreation output, input prices, facility capacity, level of service, quality of natural resources, weather conditions, and other independent variables can be estimated. Again, the comparative statistics are simply not available for private sector forest recreation. However, despite the major difficulties, comparison is made in this thesis with the costs of 17 providing recreational amenities on U.S. National Forests in order to support the estimates generated. The time series method is popular with private recreation companies to estimate short-run cost functions. Usually, variable costs are regressed against variables affecting cost, such as wage rates, material prices, weather, fuel cost, and so on. Although normally conducted during a one-month period in which various costs are related to the number of visits per month, a thirty-month period can provide enough information for a statistical analysis. This latter method is not appropriate to this study proposal but certainly warrants serious consideration once recreation management begins. It is an effective way of comparing the cost information developed by the other two methods with the circumstance of the particular recreation facilities operator. The tenth and final step in Dooling's recreation planning model is financial analysis; i.e. to identify those activities with revenue-generating potential and determine the potential net revenue under varying circumstances. In addition, Bevin (1971) maintained that, "any realistic projection of the role of private enterprise in outdoor recreation must consider cash enterprise returns, land value appreciation, land taxation and noneconomic entrepreneurial goals." This also has been considered in Section IX of this thesis. 18 2.2 Recreation - Pricing and Fees In Canada, outdoor recreation on industrial private forest land has not been seriously exploited as a marketable product. The orientation, and perhaps legitimately so, has been toward timber management as a raw material supply. However, the American literature indicates that forest products companies, such as Champion International Ltd., are taking a closer look at the other values on their forest property as a source of income to offset operating costs (Anonymous 1989b). Additionally, since current social and economic pressures dictate the multiple use of the forest resource, CPFP and others must overcome the inertia that favours the continuance of managing land just for timber (Cordell et al. 1985). Once the multiple-use concept is accepted by forest product companies, a pricing policy must be developed to achieve a satisfactory rate of return. Price is determined not by demand only, the focus of much of Murray's (1988) research, but also by the supply and costs of recreation opportunities. This section outlines the theoretical basis for establishing a price, the major problems associated with pricing and the other factors involved. In addition, the arguments for and against recreation fees are examined, and methods of collection, with indications of current charges, are outlined. 2.2.1 Pricing - Theory and Practise Nautiyal (1988) provided a theoretical description of the pricing of recreation on private land (Figure 5). It is assumed that as entrance fees are lowered, the number of visits will increase (the landowner faces a downward sloping demand schedule for recreation). Average revenue (AR) and marginal revenue (MR) curves are, therefore, downward negatively sloping. The private forest owner, wishing to measure net revenue, will provide that quantity of recreation which equates LRMC (long run marginal cost) to MR. However, the entrance fee charged by him will be Pr (price of recreation). Bowes (1979) and Gregory (1972) indicate that the marginal cost is the relevant cost guide to how much of what shall be produced and how much shall be invested in various recreational opportunities. A general outline to determine the price of recreation as adapted from CromptOn (1984) is as follows: Stage 1 Determine the costs which the price should recover: • Variable Cost • Fixed Cost • Opportunity Cost Stage 2 Determine the going rate: • Survey similar services offered by other government agencies • Survey similar services offered by commercial suppliers Figure 5 Recreation Pricing on Private Forest Land Stage 3 - Examine the appropriateness of different opportunities based on: • Participant • Product • Place • Time • Quantity • Promotional Income/Age Needs Stage 1 - The theoretical point where the marginal cost intersects with the marginal revenue is point of maximum economic efficiency (Figure 5). Fixed costs are not deemed important assuming they are already allocated to non-recreational production factors. However, if the decision maker chooses to allocate a fixed cost such as property taxes among the revenue-generating resources and allocate on the basis of contribution to total income, then in effect the.fixed cost becomes a variable cost. Opportunity cost and its implications are worthy of a more lengthy discussion later in this Section. Stage 2 is self-explanatory and efforts were made for all non-timber values considered to establish a "going rate." In Stage 3 Crompton (1984) described the criteria for the appropriateness of the pricing policy under the categories: (1) participants, (2) product, (3) place, (4) time, (5) quantity, and (6) incentives to try. The participants category determines the price for identifiable groups such as the handicapped, senior citizens, children or families. The product category suggests a basic price be implemented with additional prices reflecting incremental costs. The place category means charging based on such factors as residency, i.e. resident/non-resident. The time category can be used to encourage off-peak use periods. The quantity category limits the amount of use; and finally, the incentive to try offers new clients lower prices or lower skill levels within the same activity also lowers prices. Serious problems for the private industrial forest owner are associated with the development of an appropriate price at each of these three stages. They are described by Crompton (1984) as: 1) It is difficult to systematically identify, classify and equitably allocate the costs associated with each service. 2) The price charged will only recover the cost anticipated if the projected number of service users is accurate. 3) Prices based on recovery of a proportion of costs are determined not by market considerations but by the cost of providing the service. Thus, it is likely that the client group will resist it. 2.2.1.1 Costs 2.2.1.1.1 Fixed and Variable Costs Fixed and variable costs for the production of recreational services, or opportunities, are not readily available where no previous markets exist. Indeed, what cost information that does exist is not readily converted into the form required for the proposed forest recreation opportunities proposed in this thesis. Thus, to develop supply curves, where the marginal cost information is not available, is difficult. The alternative is to determine the quantity and price for each recreational opportunity and then calculate the cost of producing that amount of recreation. If the rate of return looks attractive enough to warrant the investment then the suppliers, in this case CPFP, should do so. In summary, only one point on the supply curve can be developed with one set of given costs. Until forest recreation is considered a marketable product and a range of costs is known for different quantities produced, this approach cannot be improved. 2.2.1.1.2 Opportunity Costs The measurement of the opportunity costs associated with the production of recreational opportunities is the second major objective of this thesis. Thus it is necessary to discuss its implication in some detail. In this thesis, the impact of opportunity cost, i.e. the revenue foregone as a result of loss in timber production, can be ignored or included, depending upon the assumptions made. Pearse (1989) states: Opportunity cost measures the real cost to society of using a resource in a particular way. However, private producers in pursuit of profit respond mainly to the monetary cost or price they must pay for their inputs. This quotation suggests that the private producer can ignore the opportunity cost simply because he/she will not forego the opportunity which maximizes the net value of the output. On the other hand, CPFP could successfully argue that if the planning or zoning constraints imposed by adjacent landowners, for example regional parks corridors or the Sooke community plan, restrict their traditional property rights, i.e. permission to cut the forest, then compensation or subsidy should be forthcoming from those responsible for the opportunity cost imposed. In the literature, Crompton (1984) suggested the use of the term "merit services" to describe those services produced by the private sector that have public service characteristics. He stated: Although it is possible to levy user prices for merit services, it is not reasonable to expect users to cover all costs because there are spill over benefits which are received by the whole community. The users should be subsidized only to the extent that benefits to the whole community are perceived to occur. To measure the opportunity cost of planning, Reiling et al_, (1983) reported a summary of the methods in previous cost of provision studies. Among them they list: Study/ Management Agency Gibbs and Van Hees (1980)/U.S. Forest Servi ce Gibbs et aL (1979) OSDF Tyre (1975)/ U.S. Forest Service Type of Fact" I ities Studied Land Cost Capital Cost Operations & Maintenance Cost  111 Campgrounds Timber Replacement Personnel, Wash. & Oregon Opportunity Cost Amortized Vehicles Cost 20 years at 10% Contract & Tools 9 Campgrounds in Oregon 219 USFS Recreation Facilities in South Timber Replacement Personnel, Opportunity Cost Amortized Vehicles Cost 15 years at 10% Contract & Tools Timber Replacement Opportunity Cost Amortized Cost 20 years at 6% Overhead 25 Some researchers have chosen to ignore the opportunity cost of timber. Benson et al. (1985) , in measuring the cost of managing non-timber resources, chose to ignore opportunity costs in their research. Similarly, Reiling et al. (1983) did not calculate the land cost in assessing the cost of providing campgrounds. The Scandinavians in conducting research into this problem of opportunity cost found that the difference in net present value of an area of forest when shifting from timber production only to timber production with proposed recreation was $360 per ha1 at a discount rate of 3.5%. The decline in NPV was due to the extension of the rotation age beyond its optimum. Other Scandinavian researchers chose restriction on timber production for recreation use based on interviews and behavioural studies. The political decisions which followed were based on estimated opportunity cost values (Christensen 1981). To measure the impact of land zoning, Gibbs et al. (1979) examined campgrounds in Oregon to determine what volume of timber had been foregone by the presence of the facility. Three crucial land classifications exist on the Oregon State Department of Forestry land (OSDF). They are: 1) top production - all existing timber would have been harvested; opportunity cost 100%; 11981 U.S. dollars unadjusted. 2) scenic production - 75% of the revenue from timber not harvested would be considered an opportunity cost to the campground; 3) scenic conservancy - no timber revenue would have been foregone. Gibbs et al. (1979), using these classifications, developed the following formula describing the present value of the foregone timber revenue: Present Value = No. of Acres x MAI x Net Stumpage Value per M bd.ft. x % of Loss Due to Classification x Years Remaining Until Harvest  (1 + Interest Rate)Years Remainin9 Unt1'1 Harvest Present Value Conversion = No. of Hectares x MAI x Net Stumpage Value per Cubic Metre x % of Loss Due to Classification x Years Remaining Until Harvest  (1 + Interest Rate)Years Until Harvest Therefore, if 2 0 ha of CPFP's land had been previously classified as top production and they decided to build a campsite, hence a reclassification to "recreation use" for example, then the foregone timber revenue would be the net present value of commercial timber values since the percentage of loss due to classification would be 100%. Land classification has enormous implications for the measuring of opportunity cost. Land zoning and other planning restrictions affect CPFP's opportunities. If, for example, the Municipality of Sooke determines that forest recreation is a good or service that ought to be available to the residents of Sooke, then it is a merit good and they should be prepared to offer a subsidy. The timber opportunity cost and possibly the loss in land value due to zoning are the appropriate measure of the losses incurred by CPFP. In summary, the question of whether to use the opportunity cost of timber in an evaluation of the economics of recreational use remains very complex. If the property rights of CPFP allow complete flexibility in managing for the maximum value of output then no opportunity cost exists. However, adjacent property owners and the general public at large can easily restrict the forest company's flexibility; consequently, the provision of recreation is clearly a merit service. Several researchers argue the use of timber opportunity costs as an indicator of the amount of net revenue which must be retrieved for the provision of a recreational use area; others chose to ignore the cost altogether. If user fees and subsidies from local governments do not cover the cost of the loss in timber value, surely little incentive exists to extend the management practises to encompass more than timber. In addition, there is the question of the impact on land value as a result of land zoning restriction. If this is measurable then it must be included in the consideration of subsidies. Finally, if the provision of outdoor recreation improved the business opportunities in the Municipality of Sooke, this too must be added to the amount of subsidy considered in negotiations. However, other benefits, such as improved public .28 relations, are important variables in choosing the best course through these very murky waters. 2.2.1.2 Use Measurement The second problem identified by Crompton (1984) was that the prices charged will only recover the cost anticipated if the projected number of service users is accurate. In Murray's (1988) survey the service user or recreationist was asked the current use of the area for recreation, the intended use of the area if recreational services were rendered and the amount the surveyee would be willing to pay for selected recreational amenities. In this study, an attempt was made to verify the number of service users by compiling government statistics. Unfortunately, there was a great deal of disparity between the two chief sources of information on service users. 2.2.1.3 Start-up Pricing The third problem in price implementation, already alluded to, is, in part, the absence of a market on which to determine an appropriate price. The other aspect is resistance by recreationists to pay part of the cost of something traditionally viewed as being free; whereas if the recreation product had a market price based on demand they would accept it. 29 To overcome this obstacle Cowperwaite (1984) and Lecourt (1990) suggested that a low initial price which climbs towards the market price over a ten-year period is socially acceptable. Table 2 provides provides an illustration for the North Maine woods of the Northeast United States. Table 2 Fee Schedule in the North Maine Woods (in USS, not adjusted) Yearly Year Yearly Pass Resident Pass Day Use Non-res. Dai ly Fee Resident Dai ly Fee Non-res. Camping Dai ly Resident Camping Max. Non-res. Revenue 1976 5 20 1 3 15 (2 wks) 83,940 1977 5 20 1 3 .50 15 (2 wks) 114,829 1978 5 20 1 3 .50 or $10.00 .50 or 5 (2 wks) 1979 7.50 20 1 3 .50 or $12.50 1 or 21 (2 wks) 155,693 1980 7.50 20 1.50 3.50 1 or $12.50 1 or 21 (2 wks) 199,749 1981 8.00 25 1.50 3.50 3 or $15.00 4.50 or 25 (2 wks) 232,285 1982 10.00 25 2.00 3.50 3 or $15.00 4.00 or 25 (2 wks) 255,296 1983 10.00 25 2.00 3.50 3.50 or $15.00 4.50 or 25 (2 wks) 294,000 (Source: Cowperwaite 1984) Lecourt (1990) reported that for the zones of controlled exploitation (ZEC) in Quebec, the average annual fees (in nominal dollars) for hunting, fishing and road access increased as follows: 1978 $ 41 per year 1981 $ 55 1982 $ 83 1985 $100 1989 $300 (maximum) 30 These figures vary for each ZEC but generally the fees have increased by as much as 144% in a 10-year period (Lecourt 1990). Despite the uncertainty surrounding the recreation user fee system, Bossi (c. 1980) argued: "If we don't do something now, we could go another 50 years and still be waiting to implement the 'perfect' fee system." 2.2.2 Non-price Problems Other problems besides price face the private forest owner. Indeed, the initial reaction might be to withdraw from any thought of managing for non-timber values. However, Hendee (1971) stated that most corporate forest landowners will continue to provide recreation to control the inevitable public retaliation should they be identified as irresponsible stewards. The major problems in providing open access described by Hendee (1971) and Kozlowski (1989) are: increased risk of fire • increased risk of vandalism excessive taxation • condemnation (presumably for poor timber management practises) labour problems unfavourable image if corporation does not exhibit a responsible attitude • minimal economic incentive perceived landowner liability. 31 All of these are self-explanatory, but liability of the landowner is of great concern in the United States. Whether this is true in Canada remains to be investigated. In the U.S., at least 46 states have altered liability laws to reduce the landowner's responsibilities to trespassers and licensees (Cordell 1985) . Carlton (1967) argued that the responsibility, in the case of leases, for individual members must pass to the lessee. For the recreationist using CPFP lands under a fee or permit system a waiver may be a possibility (Siegel 1980). Other options include the "posting" of waiver signs (Siegel 1980) or public liability insurance (Carlton 1967). This subject needs to be carefully investigated under federal and provincial statutes to determine the best option for CPFP. 2.2.3 Recreation Fees To implement a user fee system, the tradition of free access, with all that implies, must be overcome. Harris et al. (1987) discussed three reasons free access should continue: 1) historic precedent - i.e. tradition is a major deterrent to fees; 2) merit goods - public recreation opportunities are merit good because of their benefits to society in general; 3) public subsidies - outdoor recreation is intrinsically motivated and a relatively unstructured experience. Thus fee collection is seen as degrading the leisure 32 experience that motivated the use of an area in the first place. Cockrell et al. (1985) argued that recreation fees reduce the ability of the recreationist to make choices, because once you start charging there is a likelihood of "bundling" products together to generate more revenue. Despite this the authors concede that fees seem "justifiable, expeditious and inevitable." Cordell (1985) and Clawson et al. (1966) point out that concerns about fairness to low income earners and the difficulties of implementing a fees system provide rationale against a fee program. However, this conclusion is not accepted by all recreational researchers. The equity question is related to the current policy of under-pricing. Although, for example, the USFS campground studies show only four to eight per cent (4-8%) of the total cost is recovered in recreation fees, the primary users of outdoor recreation are in the middle and upper income brackets (Reiling 1983). The report shows the median income of participants in 28 recreational activities is significantly greater than the median income of the U.S. population. This suggests that even though user fees were very low or not charged at all, it did not affect the participation rate of low income earners. Travel and equipment costs are far more significant (Reiling 1986). However, Cordell (1984) states this is activity specific. In particular, fishing and hunting fees do discriminate against lower income groups. Possibly a local government-funded program to eliminate this equity problem would be the most effective way of maintaining fairness yet allowing the private recreation owner to manage for a recreational product. Using the pricing strategy developed earlier by Crompton (1984), the discrimination that does occur could possibly be alleviated by the suggestions of Fargo (1984) for the elderly, low income or rural residents. They are: schedule free day or free hours; reduce rates for off-season or off-peak times; • have local citizens, business or service clubs sponsor or subsidize programs or sponsor participants; adjust fee structure according to income level; provide opportunities to work in exchange for fees; • publicize discount or low-cost facilities or activities; • offer discount passes to low-income visitors. 2.2.4 Revenue Collection Revenue for the provision of recreational opportunities on private land can be collected through a leasing, user fee, or permit system. The leasing method is described in more detail in the discussion on wildlife-native big game species. Cordell et al. (1985) reported leases on private land for fishing and hunting grew by 28% from 1955 to 1980. Cordell (1989) also noted that in 1977, 2.4% of hon-industrial landowners reported having a recreational lease on their land. In 1982 the percentage was 4.7%; in 1987 it was 6.6% (on Pacific Coast 11.6%). No current statistics are available for industrial forest land. The recreational leases are about $3.00 per acre ($1.40/ha Can.) or $90.00 per person per year ($103.00 Can.) in the leasing party. Most leases on large tracts (>200 ha) are with clubs or other groups of recreationists (71%). Cordell (1989) maintained that owners who lease for recreation spend substantially greater amounts of money to improve and manage their land for conservation, wildlife habitat or fisheries. Other common methods of revenue collection are by permit or user fee system or a combination of both. Even groups labelled "environmentalists," in the United States, are now supporting the call for recreation fees (Anonymous 1989a). They stipulate: 1) fees must be established by the market forces; 2) fees must be charged for all forms of recreation; 3) managers must get an equal share of the net income from all forms of recreation; 4) forest managers must be allowed to contract out fee collection. Again in the United States, Godin (1984) found hikers quite receptive to the possibility that in the future they might have to pay for some of the recreational opportunities that are currently available at no cost to them. Environmental groups (Anonymous 1989a) suggested fee monitoring be done by visible permits; a bumper sticker or ski lift-like tags. The permits can be issued on a daily basis or an annual fee (typically five times the daily fee). They suggested four different types of permits and include: 1) basic entrance fees $4 per day, $20 per year; 2) wilderness permits $10-$50 per person, $25 to $125 per family; 3) hunting and fishing permits $10-$100 per year; 4) concentrated use permits $1-$10 per day per person; examples: picnicking, swimming, boating. These prices are based upon actual charges in many areas of the United States, particularly on public forest land. For comparative purposes Lecourt (1990) reported that the zones of controlled exploitation (ZEC's), of Quebec, are now charging up to $3 00.00 per year for the privileges listed above. In addition, the general public has to pay $3.00 to $7.00 per day per vehicle for the use of roads. In addition to the charges mentioned, Baldacchino (1984) suggested a reservation fee system, whereby a limited number of recreational users may be allowed access to an area at any one time. This could prove useful once the fee program is instituted and crowd control or exclusive use is in demand. Proponents such as Binkley (1984) cited five advantages to fees as compared with other forms of limiting use. The first advantage is that a fee system will lead to efficient allocation of recreation resources. Secondly, the social returns will increase so much that the "winners" can compensate the "losers." The third advantage is that fees generate revenue. The fourth advantage is that fees on public lands will enhance the opportunities for private recreation. "A widespread, widely adopted public system may open up surprisingly wide opportunities for private enterprise in recreation." And finally, fees achieve a more equitable distribution of cost. Although these advantages are oriented towards public land, the private lands would certainly benefit from the implementation of a user fee system on all recreation lands. Binkley (1987) in a later paper indicated that while recreation fees reduce use, the indirect effects will increase recreational opportunities and therefore investment in recreation becomes more profitable. Despite these difficulties, the implementation of a price could solve a number of future problems for outdoor recreation in B.C. on private land. Reiling (1986) suggested that with the greater economic efficiency which follows, congestion problems will be reduced; the pressure to preserve more area will be lessened; and the demand for private recreation would possibly increase. 37 Other major benefits for the private industrial landowner from charging of recreational fees are: • increase profit from the forest resource (Brockman 1979); increase control over fire and vandalism (Hendee 1971); improve public relations (Brockman 1979); • improve chances to have taxes change to accommodate multiple use (Cordell et al. 1989); spread the cost of operation (e.g. fire control) (Hendee 1971); enforcement assistance (Cordell et al. 1989); tying public access to assistance programs (Cordell et al. 1989). From the public's point of view, they can expect larger amounts of money to be spent improving and managing private land for conservation, wildlife habitat and fisheries (Cordell 1989). Nelson (1984) and Crompton (1982), in their studies, found that the majority of respondents do not oppose a reasonable increase in fee or the implementation of a fee if they perceive the fee revenues will help recover cost or improve quality. 2.2.5 Concluding Remarks Clawson et al. (1966) suggested that prices serve four important roles in outdoor recreation. They assist in allocating natural resources, capital, labour and management among various uses. They play a role in helping consumers choose among alternatives on limited incomes. They can be a management tool 38 to bring about more efficient management. Finally, they are an important factor in investment decisions. Despite all these attractive benefits, the current obstacles to establishing a price are formidable when dealing with a non-market good such as the recreation values explored in this thesis. Recreation use measurement also complicates attempts to compile the necessary background material for a recreation plan. This is the subject of the next section. 2.3 Conversion of Measured Units Murray (1988) chose an activity day as his basis for recreation use measurement. In contrast, the more recent American literature in particular, generally uses the recreational visitor day (RVD) or persons-at-one-time (PAOT). These different use measurements do not facilitate the comparison of results, and a brief explanation of the definitions used and why they are used seems necessary. The activity day is "participation by any member of a household in a recreation activity on the landbase for any portion of a day. It does not equate to a calendar day of activity" (Murray 1988). So, for example, a recreationist could participate in four activities in one calendar day resulting in four activity days in a 24-hour period. 39 The recreational visitor day represents 12 visitor hours spent in any recreation activity; the hours may be aggregated continuously, intermittently or simultaneously, by one or more persons. Thus one person could be participating in an activity for 12 hours or 12 people could participate in an activity for one hour and still yield one RVD. The implication is, of course, that no direct translation is possible to assist in the comparison of results. Gibbs et al (1979) discussed recreation days and the conversion to recreational visitor days (Table 3). Table 3 Recreational Use Measurements Recreation Day1 Recreational Visitor Day Conversion Activity (hours) (hours) Factor Hunting - big game 8 12 1.50 - sma11 game 5 12 2.40 Camping 13 12 0.92 Fishing - Anadromous 6 12 2.00 - Resident 6 12 2.00 Swimming 5 12 2.40 Picnicking 2 12 6.00 Driving for Pleasure 3 12 4.00 Four Wheel Driving 6 12 2.00 Motorcycling 6 12 2.00 Recreation Day - the number of people who visit the site, regardless of their length of stay. (Source: Gibbs et al 1979) Reiling (1983) suggested that the RVD's are problematic for two reasons. First, the RVD's may not accurately reflect the relationship between the level of use and the cost of accommodating that use. , For example, the operations and 40 maintenance cost of a facility is much higher if 12 people use the facility for one hour versus one person using the same facility for 12 hours. The second problem with RVD's is that user fees are usually assessed on the basis of other use measures. For example, the USFS uses RVD's to measure the level of campground use; however, fees are assessed on the basis of an occupied site. In British Columbia, where recreation management is generally primitive as compared with our southern neighbours, the measurement of use is justifiably in activity days, user days, or party days. Murray (1990) points out that the recreational use is still relatively low in B.C. as compared with the U.S.A.; therefore, measurement in RVD's would not be justified. Calculating RVD's is generally done on-site where the recreational user can immediately recall the recreational experience he/she just participated in. In contrast, most recreational use data in British Columbia is collected by surveys wherein people cannot provide detailed annual recall. Thus, the activity day measurement is more reasonable and realistic. Reiling (1983) concluded that it is impossible to specify a "correct" measure of recreation use. Nonetheless, an attempt to measure is essential for resource allocation. Furthermore, estimating RVD's in terms of activity days provides a rough basis of comparison. Recreational researchers in the U.S.A., in 41 particular, have developed far more sophisticated techniques for quantifying the use and net value of outdoor recreation. A general formula to convert activity day to RVD's is: Total Activity Days / 12 hours  Average Number of Activities Average number of hours in each activity So, for example, if average number of activities = 4 average number of hours in each activity = 3 then RVD's = Total Activity Day 16 This applies for the aggregation of all activities. However, it is possible to examine each recreational use individually by slightly modifying the previous formula: RVD's = Total Activity Days  12 hours/Avg. No. of hours in each activity Here use Gibbs (1979) recreation day (hours) to calculate the RVD's (See Table 3). Similar problems exist in the conversion of log volume from American (M bd.ft.) to metric (m) units. Since a straight conversion is not possible, an average log was assumed to have a 2 0 inch top diameter bucked in 16 foot lengths. Therefore, one log is 280 board feet. Using the Smalian formula for log volume (i.e. avg. basal area log length x no. of logs per tree) the rough equivalent to 280 bd.ft. is 1 m3if there are five logs in one tree (Dilworth 1973). Smith (1990) and Gruenfield (1990) suggest an average conversion 220 M bd.ft. equals 1 m3. This calculation is necessary to compare losses in log volumes as a result of non-timber considerations. Of course, it is also necessary in contrasting the log costs and revenue found in the American literature. Other measurement problems abound and are discussed under the specific non-timber resource in question. 43 III. STUDY AREA - DESCRIPTION AND RATIONALE 3.1 Physical Setting The 4000 ha case study area, the Sooke Recreation Management Area (SRMA), is identified in Figures 1 and 2. It is located in the southwestern corner of Vancouver Island approximately 4 0 km west of Victoria, just north of Sooke, B.C. It is owned by Canadian Pacific Forest Products Ltd., and comprises a portion of their private forest lands in this region. Adjacent owners include Western Forest Products Ltd.; the Greater Victoria Water Board; and Albert Yeun, a private recreational developer. Additionally, the Capital Regional Parks Board has recently approved and is developing the Galloping Goose Trail as a regional park corridor. The objective is to have a park trail extend the entire width of southern Vancouver Island. The study area lies in the Coastal Western Hemlock (CWH) biogeoclimatic zone, in the drier maritime subzone with a Vancouver Island variant (CWHal). The climate is characterized by warm summers, mild winters, an annual precipitation of 2000 mm (7% snow) and 35 mm precipitation in the driest months (Klinka et al. 1984). A large proportion of the merchantable timber on the area has been harvested leaving the timber productive land stocked with immature plantations (20-40 years old). The predominant commercial species present are Douglas-fir Pseudotsuga menzesii (Mirb.) Franco (65%); western hemlock Tsuga hetrophylla (Raf.) Sarg. (10%) ; lodgepole pine Pinus contorta Douglas ex Loud. (15%); and western red cedar Thuja plicata Donn ex D. Don (5%). The anticipated economically accessible timber lies largely in valley bottoms of low to medium productivity; at least 25% to 50% of the area is in rock outcrops scattered with non-commercial tree cover. The forest company, CPFP, has, justifiably, no timber volume statistics for these scantily clad hills. The study area is presently used by a wide variety of recreationists for a number of activities. They include: hunting, fishing, swimming and camping, mountain biking, trail biking, beekeeping and firewood collecting (Murray 1988). To date, CPFP has permitted the public to use this area free of charge, except for firewood and apiary permits. 3.2 Determination of Study Area Boundary In order to realize the economic potential of the recreational resources, a specific area is identified which would make this a workable objective. The major factors are: i) an area where the timber is of a lower commercial value; ii) the proximity of the area to major population centres (namely Victoria and Sooke); iii) the increasing number of constraints on harvesting private forest land by adjacent property owners; iv) the ability to control access to the area in order to levy a user fee for recreational services; v) the existing Sooke Community Plan and its zoning of CPFP'S private industrial forest land; vi) the changing tide of public opinion. CPFP can show that a major forest company is planning for the long term giving due consideration to aesthetic and social values; vii) the immature forest is not slated for logging for another 15 years and the main haul road is not used for logging other areas; viii) the area has already been evaluated for current and intended recreational use. As already mentioned, the first factor, timber values are relatively low in the SRMA as compared with other land in CPFP's private land^holding. These values are discussed in detail in Section IX of this thesis. The second factor is the SRMA is, approximately 40 km from the City of Victoria and 10 km from the Community of Sooke. Thus it seems ideally suited for providing recreational amenities, because it is one of the closest outdoor recreation areas for these population centres. Furthermore, a high quality of the outdoor recreation experience could be offered with proper management, as evidenced by current use. The third factor is the concerns of adjacent property owners. Among them are the Regional Parks - Galloping Goose 46 Trail, Albert Yeun's private commercial recreation area, and the Greater Victoria Water Supply area. The Galloping Goose Trail has been approved as a regional park corridor. The regional park planner, Mr. Jeff Ward, has submitted a budget for 1990 and immediate anticipated use includes horseback riding, bicycling and hiking. A significant portion of the trail, an abandoned railway line, runs through CPFP property, and the final destination point, Leechtown, an abandoned mining town, is on CPFP property. Furthermore, this corridor will promote even more recreation use in the vicinity and CPFP must be able to control the recreationists on their land. It is anticipated that the recreational users in this area will be sensitive to the aesthetic values, and that timber harvesting of trees must be carefully planned and executed. Albert Yeun, a private developer, has a 65 ha private recreational area on the east side of the Sooke River, adjacent to CPFP's land and north of Sooke Potholes Provincial Park. He has made significant investments, along with loans from the federal government, in establishing an office complex, hotel, campsites, prefabricated house construction facilities and a real estate complex. If this partially completed project should proceed as planned, the aesthetics of CPFP's lands as the major focus of the viewing from his property will play a major role in developing an acceptable set of plans for tree harvesting. The Greater Victoria Water Supply Area, which flanks the SRMA both on the northern and eastern sides, allows no recreation use except deer hunting by special permit. Certain individuals within the organization want to actively discourage any recreational use on adjacent property since they fear that the water supply area will be encroached upon for recreational activities. The fourth factor, the ability to control public access, is of great concern to company officials. The company has a long history of suffering from vandalism and destruction of the logging machinery and equipment. Additionally, company employees, in carrying out their duties have felt threatened by recreational users, particularly hunters. Furthermore, access control is critical for the collection of user fees by the company or its representative. The fifth factor, an official community plan for the electoral district of Sooke was adopted on September 14, 1988 as By-law No. 1. The SRMA is classified as open space and recreation (primarily along the Sooke River) or as upland-watershed (Figure 4). It is anticipated that constraints on harvesting could be imposed by the municipality. For example, areas have already been identified within the SRMA requiring a development permit which is subject to the Capital Regional District Board. The SRMA is essentially constrained on the east, north and south by adjacent property owners and this makes it 48 easier to manage because it isn't divided up into isolated areas. The only potential problem is the Western Forest Product's property, virtually in the centre of the SRMA. Negotiations are required to ensure their cooperation in developing a recreation plan. The sixth factor, the changing tide of public opinion, is an extension of the first five considerations. This area seems ideally suited to serve as an example of a recreation forest. CPFP and other B.C. forest product firms have suffered from negative publicity in recent months. Poor planning and lack of public involvement are often cited as the major offenses (Parfitt 1989; McLintock 1990). The criticism of logging practises is intense on the private land holdings on the Gulf Islands of B.C. (e.g. Galiano and Saltspring islands). Both CPFP, a large forest products company, and other smaller loggers on southern Vancouver Island have also made local newspaper headlines because of timber harvesting practises (Gallagher 1989; Brown 1989). Integrated resource management planning to satisfy the concerns of an alarmed public simply makes good business sense. Even the current Minister of Forests for B.C. admits, "Public perception is a major force that must be dealt with" (Richmond 1990). The seventh factor is that logging is not scheduled to occur for another fifteen years and the main haul road is not currently used for logging other areas. This is important to the initial development of a recreation forest because prior to logging 49 activities in the next century public confidence can, hopefully, be gained in order to ensure the acceptability of well-thought-out logging proposals. The eighth and final factor is the recreational inventory information available from Murray's (1988) thesis and the Ministry of Environment statistics. No industrial private forest lands in B.C. have been studied in the same amount of detail for recreational opportunities. Section IV presents a summary of the major findings by Murray and the limitations in the data collected and compiled. Given these major concerns the study area boundary was chosen by examining: i) the property boundaries currently in place; ii) topography and major heights of land; iii) preponderance of management units with low timber values; iv) current water supply region for the City of Victoria and Municipality of Sooke; v) current recreational use; vi) variety of potential recreational opportunities which exist. The height of land is the natural boundary on the western side because aesthetics are an important consideration for at least two reasons. First, the Albert Yeun property and its 50 development could lead to a significant population keeping close scrutiny on future harvesting practises (2005-2050). Second, the Galloping Goose Regional Park Corridor will be an extensive recreational access route. Many places along the trail allow the recreationists landscape views of CPFP's property. Insensitive logging could lead to disastrous public and community relations. The timber values for this area are calculated using two different sets of yield projections (see Section IX). The anticipated losses from timber management can be supplemented by a recreation management plan which allows CPFP to collect revenue from its non-timber resources. The calculated timber values are relatively low compared with the alternative of selling the land (see Section IX). As mentioned, at least 25% of the area has no significant timber value. The total land area in the SRMA is 4000 ha while the inventoried productive land area is approximately 1170 ha in CPFP's management class 40-43.2 The catchment basin for the water supply for the Victoria area is partially on CPFP's forest property.(Figure 2). The GVWD is currently negotiating with CPFP permission to patrol this area and actively discourage recreational use. Additionally, a pipeline was installed from the Leech River into Sooke Lake. 2See Glossary for explanation of terms. This represents the northwestern boundary for the SRMA since water above the pipe is obviously draining into the Greater Victoria Water Supply. The Sooke Water Supply is also on CPFP property, although it is not currently under any special protection since it is used only in the winter months as a water source when little or no recreational activity is occurring. At other times during the year, the water from Sooke Lake is conveyed by pipe to the Sooke Community Water Supply intake. The current recreational use of the area has been well surveyed and documented by Murray (1988). The Sooke River runs through SRMA and it is clearly shown to be a major source of recreational activity; especially swimming, camping and hiking. The survey results indicate the clear preferences of the local recreational users and are described more fully in Section IV. Finally, this area offers an even wider range.of opportunities for non-timber management than currently exists. The fish populations in the three lakes could be enhanced, even artificially maintained at higher levels. The potential campsites identified in Section VIII could be developed. The hunting opportunities could be managed more intensively for both large game and upland birds. Finally, the management of large game species as a farming operation is considered. With appropriate marketing the recreational use of the area could be increased significantly. This thesis explores the economic feasibility of pursuing these options. The next section presents a brief summary of a survey and thesis by Murray (1988). As already mentioned, this was ah important information source in the development of this thesis. IV. MURRAY'S FINDINGS - SUMMARY Thesis - "Harvesting Crops Between the Trees" 4.1 Methodology and Physical Setting A non-market valuation of recreational activities on private forest land was undertaken by Murray (1988) to provide information for integrated forest management decision making. The Contingent Valuation Method (CVM) (Pearce 1988; Bishop et al. 1979; Dwyer 1977; Edwards 1987; Langford 1978; Cummings et al. 1986) was applied. A mailed questionnaire was sent to a random sample of households within the Capital Regional District on Vancouver Island. Based on the results of this survey, estimated willingness-to-pay (WTP) values and derived potential gross benefits were made for hunting, fishing and camping on the 18,000 ha study area, and CPFP's privately owned landbase which is approximately 10,000 ha of this study area, Figures 6 and 7, Table 4. The remaining 8,000 ha is land primarily owned by two other forest companies; i.e. Fletcher Challenge Canada Ltd. and Western Forest Products Ltd; though there are a few small parcels of privately owned non-commercial forest land, Sooke Potholes Provincial Park and Sooke Mountain Park included. I s i Figure 7 Details of Murray's Study Area 56 Table 4 Summary of Major Findings for CPFP Lands (Numbers are rounded from T. Murray's thesis findings.) Actual Intended Potential Recreational Recreational Avg. Annual Activity Activity WTP Gross Days Days $ Benefits Hiking 140,000 N/A Swimming 110,000 N/A Sightseeing 110,000 N/A Picnicking 90,000 N/A 4-Wheeling/Touring 80,000 N/A Others 160,000 N/A Hunting (big game) 20,000 25,000 9.00 225,000 Fishing 120,000 260,000 2.50 650,000 Camping, 120,000 80,000 525,000 Primi tive 40,000 3.00 Semi-primitive 30,000 . 8.00 Modified 4,000 10.00 Rural 1,500 13.00 Cabin 2,500 43.00 Total AlI Activities 950,000 365,000 $1,400,000 (Source: Murray 1988) 4.2 Major Findings In 1986, 14% of the CRD population participated in recreational use of CPFP's land within Murray's study area, Figure 7. Some 950,000 activity days are currently generated by recreation use. Three of every four area-user heads of households were male and between 25-54 years old, and 75% of CPFP land users have lived in the CRD for more than ten years. The latter figures indicate a very stable community of residents who use and are familiar with the area, with 38% coming from as far as the Saanich community and 24% from Victoria. 4.3 Limitations of Murray's Study Murray's (1988) thesis did not address several important factors in recreational management planning. They are: the possible congestion on sites for recreational use; the value of the recreational experience to non-consumptive users; the option, existence or bequest values attached to the land; the difficulties in separating data after the survey covered a much larger geographic area; the potential increase in recreational values should appropriate marketing plans attract non-residents. Congestion for activities such as fishing can be a major problem. First, it is difficult to define what congestion means because it means different things in different cultures. For example, the Dean River, B.C., is currently experiencing congestion problems with anglers whose numbers would be considered completely acceptable in most European rivers (Paish 1990). In order to keep the survey data to a manageable amount and the survey itself to a reasonable length, the value and intended non-consumptive uses were not measured. Yet the statistics show the non-consumptive users are 83% of actual use (Table 4) on CPFP property; and in Canada at large the top five recreation activities are (1) pleasure driving, (2) picnicking, (3) hiking, 58 (4) sightseeing, and (5) swimming (Meis 1979) . The latter four activities compare favourably with Murray's findings indicated in Table 4. These activities are important because, should a user fee system be adopted, the infrastructure would be in place to collect fees from the non-consumptive user as well as those consuming such recreational products as fishing, hunting and camping. The option, existence and bequest values are now being measured by economists in their attempt to value the interests of the off-site users. These values are normally applied to public land, but should CPFP enter into an easement agreement,3 for example, then these values are worthy of consideration in determining the revenue to be generated from such sharing of ownership. For a more in-depth discussion of these values, refer to Pearse 1989, Walsh 1988, Pearce 1988, Walsh et al. 1986, Greenley et al. 1982. In order to meet CPFP's need to assess the amount and anticipated recreation on its property, Murray had to separate CPFP's data from the larger study area's data. The assumption made was that if the recreationist participated in one activity on CPFP land then all activities he/she participated in were on 3Easement agreements have been in place for at least 30 years in the U.S. Several types now exist: scenic, conservancy, development easement agreements are just a few examples how private landowners can be compensated for land use restrictions (Dooling 1990). 59 CPFP land, not the larger study area. Therefore, the numbers generated must be used with extreme caution. Though beyond the scope of Murray's survey, he indicated 1.5 million visitor days of tourist traffic enter the Victoria area on an annual basis (Murray 1988). This is an important factor in CPFP's future strategic plans. The B.C. Ministry of Tourism concedes it has no measurement of the use of outdoor recreation facilities by tourists in B.C. However, the Victoria Business Report (Marcon Research 1989) suggests: The question facing this region is minimizing the dual use conflict. To integrate visitor and forestry operations, the two industries must come together and design arid plan the means to accomplish dual use . . . . For tour companies the benefit of working with forest companies and recreational operators in the area could lead to well-planned tour packages. The average tourist today is looking for a 'new experience,' one that challenges them as well as educates them. This statement alone indicates additional uses and values to CPFP lands if an integrated forest management plan captures the tourist market. 4.4 Conclusions and Recommendations The major conclusion and recommendations by Murray are: fishing should be the primary focus of any further recreational revenue research on this landbase, followed by semi-primitive camping, hunting, and primitive camping respectively. Furthermore, more work is required to estimate the potential net revenue obtainable from these activities. Such a study should address the costs of providing these activities, and including costs of planning, construction, operation, maintenance, liability insurance, taxation rates, and risks such as fire and theft, as well as opportunity costs in terms of foregone timber values of undertaking a particular project. Finally, methods of implementing a fee collection scheme should be investigated. In light of these conclusions and recommendations this thesis examines fishing, hunting, game farming and campgrounds as revenue sources. These are the subjects of the next four sections. 61 V. FISHING 5.1 Inventory - Lakes Fishing offers an alternative revenue source to CPFP on its southern Vancouver Island land holdings. In order to benefit from recreational fisheries the study area delineated has three lakes and one major river (Sooke River) within its boundaries. The lakes are Boneyard Lake, MacDonald Lake and Peden Lake. The physical description of the first two lakes is included in Appendices II and III. Recent statistics from the Ministry of the Environment (MOE) are listed in Table 5. Assuming the lakes within Murray's study area are included as potential supply sources to recreation demand, the number of angler days would be 660. Table 5 Survey Results on Lake Fishing in Murray's Study Area Angler Surface Catch Anglers Days Yearling Area Perimeter Lake est. est. est. Kept Capacity Lhsl (m) Forslund 15 10 15 0 . Boulder 815 55 175 225 TugwelI 310 50 140 190 •Boneyard 530 85 270 155 200 2.4 942 *Peden 0 0 0 0 ? ? ? •MacDonald 115 35 60 40 300 3.3 1010 660 (Source: MOE Statistics 1989) •Asterisk denotes lakes in Bull study area (SRMA). The lakes within the SRMA have been stocked with either cutthroat trout or rainbow trout. 62 5.2 Inventory - Rivers The Sooke River was the target of Murray's survey of the fisheries resource on CPFP lands. This thesis assumes that people would be willing to pay for the same recreational experience on a lakeshore. The Sooke River, below Sooke Falls, has anadromous cutthroat trout (Salino clarki) , steelhead (Salmo qairdneri) , coho salmon (Oncorhynchus kisutsh), chinook salmon (Oncorhynchus  tshawytscha), and chum salmon (Oncorhynchus keta). They are all present in the Sooke River below the Falls. Cutthroat trout is the only species with widespread distribution above Sooke River Falls. Some juvenile cohos have been planted immediately upstream from the Falls. Currently the Sooke River has a species closure on chinook and coho, and fly fishing is only allowed below Sooke River Falls (Source: B.C. Fresh Water Fishing Regulation Synopsis, 1989). Paish (1990) indicates that the lakes in the SRMA are not highly productive. Generally they are shallow, water flow is not rapid enough; and food is not in abundant supply. Therefore, even if the lakes and rivers were managed to produce as many fish as physically possible, it would not meet the demand estimates projected by Murray (1988) of 258,739 activity days at an average price of $2.49 per activity day. Pendray (1980) reported two negative factors affecting the steelhead-rearing capability of the Leech-Sooke system. They are: 1) The fluctuation in stream flow. On the Leech River the fluctuation was recorded to vary from 3520 cfs to 1.6 cfs. On the Sooke System, refuge areas for juvenile fish simply do not exist or are very rare during the high flow period (November-February). 2) Stream productivity. Sooke Lake, which is a large lake at the headwater of the Sooke River, is drained off into the Victoria Water Supply. Thus, in terms of productivity the Sooke System must be compared with other "non-lake-headed" streams (i.e. of lower productivity). Wightman (1989) reported the current low flow in the Sooke River is 20-25 cfs. It should be 75-100 cfs in the summer to bring back salmon population. He also suggests the number of fishable days is 30 days maximum. Competition between species of fish, water temperature, and mortality during out-migrations over falls do not seem to impact the fish population negatively (Pendray 1980). The Sooke River steelhead information, shown in Table 5, presents a summary of the annual catch and provides a basis for comparison of Murray's survey information (Wightman 1989). 64 Table 6 Results from Steelhead Harvest Questionnaire Total Hatchery Angler Steelhead Steelhead Stocking Catch (Smolts) Year Days Catch 1968 1488 1969 1260 1970 1478 1971 1520 209 1972 1398 226 1973 1430 134 1974 2018 349 1975 1990 350 1976 1743 246 1977 965 122 1978 749 53 1979 675 58 1980 362 82 1981 208 47 1982 62 14 1983 134 22 1984 75 21 1985 82 62 1986 45 18 1987 341 63 1988 422 614 50,000 53,000 41 38,00548 48,000 (Source: HOE Statistics 1989) The natural production capability calculated by the MOE Fisheries biologists is 3004 steelhead of wild catch. The recreational fisheries objective of the MOE is to produce 2000 hatchery steelhead annually for a total of 3000 angler days (Wightman 1989). However, Wightman (1990) reports the stocking with smolts since 1985 has not been successful and the MOE is considering discontinuing the practise in 1991. The fisheries statistics, Table 6, for the Sooke River in 1988 are distorted because Wightman (1989) states the second recapture of wild fish is up 4Volume of: anadromous waters = 160 000 m3. At 0.015 smolts per 1 m = 2400 smolts = 288 adult steelhead (300). 70% and of hatchery fish it is up 50%; and finally, a positive response bias is suspected. — you only hear from those who catch fish. 5.3 Murray's Findings Murray (1988) reported that CPFP land users intending to fish the Sooke River represent 258,739 activity days. This represents more than twice as many intended activity days as all other activities put together. The actual number reported was 121,745 activity days (for all lakes and rivers). This is the second highest use actually recorded in the survey. Murray calculated a potential gross revenue of $644,260 (258,739 x $2.49); $2.49 was the average WTP value. Murray suggested the reason why CPFP value was significantly lower was the result of the payment card ranges presented in the survey ($2-$10). It is also likely that the people who have freely used the area traditionally would not want to reveal the true value of the fishing opportunity just in case they would have to pay it. 5.4 Comparative Analysis If we interpret angler days to equate with activity days in fishing, there are serious discrepancies between the actual use indicated in Murray's survey (121,745), the intended use (258,739), and the angler days provided by the lakes and streams of 3,660 as estimated by the MOE. Furthermore, Murray's estimates of intended use seem highly questionable if the number of fishermen per day is calculated. The 258,739 activity days divided:by 30 fishable days per year renders 8,624 fishermen on approximately 2 km of stream. Given these statistics, it is fairly safe to conclude that at the current level of fisheries management in the Greater Victoria area, current supply as estimated by the MOE will never match the projected demand estimated by Murray. 5.5 Management Alternative An attractive alternative to meet the demand projections is to artificially stock the Boneyard, MacDonald and Peden lakes with trout raised on a fish farm. This would, in effect, be an aquaculture operation within a lake. For supply, there are already four trout growers in the Sooke area (Carswell 1990). By transporting grown trout to the lakes a recreational experience is provided. The fishermen are virtually guaranteed success. The cost of this recreational opportunity is determined by two variables. The first is the size of fish released into the lake. The second is the number of fishermen allowed on the lakeshore at any one time. The suggested approach is to have Boneyard Lake densely stocked. The fish would be on average 1/4 kg rainbow trout. MacDonald Lake would be moderately stocked with larger fish, 1 kg, but still with roaded access; and Peden Lake would be moderately stocked with up to 2.5 kg rainbow trout with a maximum of six people allowed on the lakeshore at any one time. This 67 range of recreational opportunity allows flexibility in meeting the demand for recreation. On-site monitoring of the revenue and costs would determine the intensity of fisheries management. 5.6 Fish Farming, Other Jurisdictions With the advent of fish farming, particularly in Norway, sports fishing in Scotland is a growing industry because wild stocks of fish are increasing. The Economist (Anonymous 1990) reports that sportsmen in Scotland have just agreed to purchase the 600 tonne quota of salmon per year from the Faroe Islands, and informal talks have begun with Greenland to purchase an 840 tonne quota. The objective is to increase freshwater angling opportunities. Meanwhile, back at home, "Flyfishing is very in, right across North America" (Simpson 1989). 5.6.1 Revenue In England and Scotland, freshwater recreational fishing is already a well-developed industry. Paish (1990) calculates the following average prices: $4.68 per kg of fish and $12.00 per day. He further reported that day-ticket angling on lakes and reservoirs accounts for 40% of the trout angling effort. He suggested that the typical physical and angler characteristics are as follows: 68 Physical Characteristics: Total number of lakes Size range Average size Total area under water Season 187 0.2 ha - 1,255 ha 76 ha 13,127 ha March to November Catch and Angler Characteristics: Estimated CPUE of retained fish 1.9 per angler day Estimated CPUE including released fish 2.4 per angler day Avg. weight or retained fish 0.862 kg The species are 60% rainbow and 40% brown trout. (Source: Paish 1990) Pearse (1988) and Lecourt (1990) stated that under Quebec's ZEC system, sports fishermen paid between $15 to $25 per day for lake fishing. For salmon fishing the charge was between $25 to $65 per day. Paish (1990) reports that in the Merritt Lakes area of British Columbia the fee for freshwater angling of large trout is $50 per day. Northcott (1989) indicated that in Osoyoos on Richter Lake the charge for catching 1-4 kg trout was set at $25.00 per day. Table 7 presents a summary of revenue projections for fresh water angling. Table 7 Daily Revenue from Freshwater Angling Using contingent valuation method. WTP per activity day: Reid Walsh Walsh CPFP B.C. USF&W et al. Olienyk 2.49 26.53 21.79 18.37 13.76 17.75 Using market value, the price charged per day: England/ Merritt Richter Scotland Quebec Lakes Lake 12.00 15.00- 50.00 25.00 . 25.00 69 5.6.2 Costs The costs of providing the trout by Western Trout Farms, Victoria, B.C. are estimated as follows: Fish Size Price 2.5 kg $12-$13 per trout 1.0 kg $2.50 per trout 0.25 kg $1.50 per trout plus delivery costs (Source: Leman 1990) Pearse (1988) wrote that fees for sportfishing should reflect the cost of improved fisheries management. In the economist's jargon, the provision of freshwater fishing opportunities warrants improved management as long as marginal revenue is greater than the marginal cost for each additional unit of output produced. Paish (1990) agrees, also emphasizing the need to provide additional services which augment the recreational fisheries experience. He suggested, for example, the provision of a chef to prepare the fish for dinner, and suitable accommodations. 5.7 Environmental Concerns Legislation is already in place to provide private fishing opportunities and the purchase of an aquaculture licence is relatively simple. The potential environmental problems which must be carefully considered in order to ameliorate MOE concerns are: 70 the maintenance of water quality; the ecology of species chosen; • the prevention of fish escapement. All of these concerns relate to the downstream impact on native fish populations (Wightman 1990). 5.8 Discussion As already mentioned, the Sooke River is not a suitable area to focus on for the provision of recreational fishing. It has a low water flow in summer and poor food productivity for fish. The river is relatively short (5 km), and only a portion (<2 km) can accommodate sport fisheries. Also, the federal fisheries management objectives are primarily concerned with salt water recreational angling. The possibilities of providing private angling has poor prospects for CPFP on this river system. Another problem is the measurement of actual use of the area for freshwater angling, as described in detail in the early part of this section. The reconciling of the angler day reported by the MOE and actual activity days by Murray (1988) seems impossible. The definition of an angler day, "any part of a day fishing by one angler" (Wightman 1990), in comparison with an activity day, seems to measure the same amount of use. The only possible explanation is that the survey measurements contain great errors indeed. This is important to consider in developing a recreational plan because the objective for fisheries management, is simply not clear. 71 Another difficulty in measuring the total demand for freshwater angling is the lack of data or information on the tourist industry in B.C. With effective marketing, non-residents to the area could increase the demand for recreation, presumably by a shift to the right of the demand curve. Since Murray (1988) indicated the use of his study area was largely local residents, this could have enormous implications for the management option chosen. Thus, CPFP's investment plans would be ill-conceived if the revenue and cost estimates just presented were the sole basis for their decision. Despite the obvious inaccuracies in the use measurement, and revenue and cost projections the trends for fresh water angling opportunities are very positive. In the Victoria area, demand for fishing is very high. So much so that plans have just been announced to build a $10 million hatchery on the Cowichan River to supply various lakes on Vancouver Island. It is expected to be in production by 1992 or 1993. Where does this leave CPFP and their interest in obtaining revenue from non-timber resources? The best route to follow, in the opinion of the author, is to develop a unique freshwater angling experience for a variety of markets in Boneyard, MacDonald and Peden Lake. Test markets with careful assessment of marginal costs and revenues are necessary. The physical location is there; the only short term investment is the purchase 0 of readily available fish, of various sizes, to meet consumer demand. For CPFP the risk is minimal since staff and fish can both be purchased as demand requires. 73 VI. HUNTING - BIG GAME Native Species The black-tail deer (Odocileus hemionus columbianus) is the primary focus of the discussion which follows. The major reasons are the value of the deer meat, the identified demand by Murray (1988), and the high success rate of harvest, which make the access rights a marketable product. 6.1 Inventory The Ministry of the Environment (Janz 1989) reported that over the last twelve years the average number of kills per year is 84 0 in MU 1-2 (Management Unit 1-2) by 2 000 licensed hunters. The current deer population is 8,750 ±50% and illegal hunting is estimated to be at least 50% of the annual licensed kill. Finally, Reid (1985) reported the average success rate for hunters is 54% on Vancouver Island. Given these statistics, the number of hunters is estimated to be 4000 per year and the number of deer kills is approximately 1700. Therefore the success rate is 42% (1700 deer per 4000 hunters), which is lower than the 54% reported by Reid (1985). The deer population estimates are remarkably poor with a 50% variation. However, it does confirm that an annual hunt of 1700 deer per year is certainly sustainable, even if the population is on the lower end of the population estimates. 74 The major assumptions in using these calculations is that the MU 1-2 area is approximately equivalent to Murray's (1988) study area. If the conditions are similar in other jurisdictions, such as the U.S. South, Lassister's (1985) estimates for the 10,000 ha of CPFP land studied by Murray would be: 10.000 ha 6 deer per ha = 1700 deer produced per year This verifies the projected annual harvest for deer projected . above. 6.2 Murray's Findings Murray (1988) estimated there are 20,092 actual activity days of use for big game hunting, i.e. black-tail deer on his study area. The intended activity days with management is 25,481 with a WTP of $10.15 per activity day. This compares favourably with the market value of $11.47 per activity day on the Greater Victoria Water District property (see Table 8). Table 8 Summary of Murray's Findings on Values for Deer Adjusted Total Gross Projected Values Values Actual Intended Values Revenue per ha per Hunter Use Use (1989 S) (1989 $) (1989 $) (1989 $ Activity Days CPFP Land (Murray) 20,092 25,481 Values 10.15 258,632 25.86 2.50 Activity Days (study area, Murray) 20,092 31,220 Values 11.16 348,415 19.36 Murray's (1988) survey did not indicate the intensity of management or the property rights allocated. Although the value of $25.86/ha/year for the lease is calculated, the value of $19.3 6/ha/year seems more reasonable. In the attempt to separate the CPFP values from the study area value, an error seems probable. Examining the values reported by Murray on non-CPFP property (i.e. 8000 ha), it seems only 26% of the revenue is derived from 44% of the land base. No reasonable explanation exists. Furthermore, examining fish values, 47% of the revenue is derived from 44% of the land base. This ratio of value to area seems realistic. Thus, $19.36 per ha is the most reasonable leasing charge should CPFP take this course of action and accept Murray's survey results as accurate. 6.3 Values - U.S. Studies Listed below are selected U.S. studies reporting values for deer hunting1 using the Contingent Valuation Method (CVM): Author Date of Data Per Activity Day' 1982 1989 US $ Can $ Miller (1980) Colorado 16.00 29.92 Hansen (1977) 33.03 96.45 USFWS (1980) 3 27.32 51.09 1 The adjustment assumes values have increased with inflation. t Represents additional cost to get to hunt site. 'Nationwide survey. (Source: Sorg and Loomis et al. 1984) These measure total value, not just the prices of access to hunt. Each study asked different questions with different non-market-valuation techniques. Thus, comparison is difficult and it certainly does not assist in determining revenue potential. Only if the value of time, equipment and site, for example, can be determined can the netted-out value of successful hunting be determined. Thus, much of the published research for public lands in U.S. is of limited use in assessing the best course of action for such industrial land owners as CPFP. Most American studies, with respect to hunting values on private forest land, focus on the well-established leasing arrangement for the collection of recreation revenue. Thus, the description of leases and their implications is the focus of the next two sections in the discussion on deer. 6.4 Leasing Large forest products corporations, such as Champion International, have stated that, "The trend is towards privatization of recreation values," and Champion is committed to increasing this on its land holdings in the south and north of the United States (Anonymous 1989b). Table 9 presents a summary of how access to wildlife is managed in the U.S. South on private forest timberlands. 77 Table 9 Access to Wildlife on Private Forest Timberlands in the South Access Arrangement Total Acres in 1983 State Wildlife Management Areas 3,274,174 No permission or permit required 2,754,673 Permission or permit required 4,696,939 Free (2,499,776) Charge (2,197,163) Access Right Leased 6,569,760 Open only to owners, employees or guests 1,233,509 Closed to all parties 1.358.803 19,358,858 (Source: Lassister 1987) Recent studies have shown that there may be significant economies of scale in offering recreational leases, both in marketing and administering the leases, and because large contiguous areas may be relatively more attractive to lessees. Since 1974, in the State of Maine, the North Main Woods Association has controlled access for hunting, fishing and camping by selling permits. This association is comprised of 18 private landowners (mainly corporations and land management companies). Initially fees were set low on this 2.5MM acres of forest land, but rose to $294,000 revenue by 1983. This is still not enough to fully compensate owners for the cost of providing access (the Association's deficit is about $10,000); but owners feel group management offers them help in controlling liability and vandalism as well as public relations benefits (Healy et al. 1989) . 6.4.1 Advantages Lassister (1987) cited these advantages to selling access rights on land with large wildlife population. They are: annual income from this source assumes greater relative value when interest rates are high, due to timber production's heavy cash flow characteristics; enhanced property control; reduced property damage; less interference with field operations; reduced liability; fewer trespass enforcement headaches; where local and distant groups vie for access, owners may enhance their local reputation by leasing to local groups. Other advantages recognized in more recent research are: beginning the gradual acclimation of the general public to access fees until the forest owner can charge the market value of the provision of recreational opportunities; spill-over benefits to other recreational users in the vicinity of the area under wildlife leasing; this is particularly in the form of wildlife viewing; an incentive to use the wildlife classification system (British Columbia 1983), thus improving the deer management in the region. 79 6.4.2 Characteristics Leased access rights in Lassister's (1985) study were generally short term, with a median length of one year; made predominantly to groups or clubs (non-profit); and access rights generally limited to wildlife alone. Access rights is not granted to non-residents, with preference to local residents in immediate vicinity. This improved local public relations and avoided vandalism and arson. The lessees are not allowed to sublease access rights; they have to provide evidence of liability insurance and/or sign "hold harmless" agreements; and finally, they must agree to restrictions on wildlife food plots when these are allowed. 6.4.3 Markets and Prices Lassister (1985) suggested the important factors to determine the "market" for access to wildlife are: congestion, current levels of wildlife population, the proximity of lands on which wildlife are located to population centres, and the substitutability of other forest lands. He further suggested that to determine prices, two approaches are taken. The first, hunting rights leases are advertised, bids taken, and the lease is awarded to the highest bidder. The second, a few individuals act as brokers to bring buyers and suppliers of access together. 80 6.4.4 Forest Management Practises The forest management practises considered beneficial to wildlife are prescribed burning, stand thinning, streamside management zone, seeded woods roads, and dispersion of age classes in even-age management. However, significant alteration in forest management practises only occurs if the lease value exceeds $12.50 per ha (Lassister 1985). 6.5 Comparative Analysis Table 10 Comparative Values of Lands Leased for Hunting Location or Company Champion International (private) " " (state) Area Avg. S/ha 15.19 3.04 Range $/ha Value Market Market U.S. South CPFP (Murray's) CPFP+ (Murray's study area) 10,000 18,000 5.19 1.04-33.20 Market 25.86 CVM 19.36Champion International, a forest products company, is now planning to lease 75% of its private land holdings to the states of New Hampshire and Vermont for a charge of $3.04/ha; and 25% of its private hunting leases for a charge of $15.19/ha. In the U.S. South, the range from $1.04/ha to $33.20/ha is not explained by Lassister (1985). However, Wheetman (1990) indicates that additional rights are granted (e.g. to build hunting club facilities) on the higher-priced leases. The lease to state government renders significantly less income and fewer rights (see Table 10). Looking in more detail, another U.S. forest company, Westvaco, has been implementing wildlife and recreation fees for some time. They have 170,000 ha leased to 300 clubs and 53,000 ha in cooperative game management agreements with state agencies. They have some 14,000 permits issued for hunting and fishing, special sites designated as preserves of non-game wildlife species and native plants and, finally, some 15 major areas designated for unique biological, historical or geological characteristics (Kinard 1979). Two other U.S. forest products companies recently reported their lands under wildlife leases. International Paper Co. in the State of Maine now has 51,000 acres (20,647 ha) under lease for fish, hunting and recreation access (Healy et al. 1989). Champion International Corporation currently has hunting leases on 2,000,000 acres (809,716 ha) of its timberlands nationwide (Anonymous 1989b). Kinard (1979) describes characteristics of the standard hunting lease agreement. They: specify the annual fee; restrict privileges granted to hunting and/or fishing; require protection of property and timber from any damage and the prevention of forest fires; • require conformity with state and federal law and regulations; • indemnify Westvaco from any claim or loss; • restrict construction of campsites without special permission; • provide the right for Westvaco to cancel the lease with refund of unexpired portion of the lease fee; • require the lessee to pay any tax or licence fees which may be assessed against the premises due to the lease use; • require the signing of the lease agreement by all club members; grant permission to post leased lands if such notices read "posted no hunting." 6.6 Environmental Concerns Since the management of black-tail deer on private forest lands has not yet been done in B.C. the environmental concerns remain speculative. However, should CPFP pursue an aggressive management policy to increase the deer population there are, in the opinion of the author, areas of concern, particularly to government wildlife managers. They are: (1) the genetic manipulation to produce superior wildlife stock; (2) vegetation management to increase populations in concentrated areas; (3) supplemental feeding to attract deer from other regions of Southern Vancouver Island; and finally, (4) the impact on other resources, particularly those under government jurisdiction such as fish, water and minerals. 83 6.7 Discussion Problems abound when it comes to the management of native big game animals. First, the control of public access to CPFP and other companies' private land is simply cost prohibitive. Currently, adjacent landowners, such as the GVWD, are having limited success in controlling access (Dixon 1989). Second, deer have a home range which transcends property boundaries. Thus the management of deer populations would have to include adjacent landowners. Third, CPFP risks increased damage to both equipment and plantations. Equipment damage is well documented in company records and increased human activity could mean a higher probability of this type of damage. Fourth, plantations can suffer from heavy deer browsing; thus increasing the deer population simply means more damage to the young forest. Fifth, the government records show a general downward trend in hunting, as Murray reported (1988), with antihunting groups and the "Bambi" syndrome having popular appeal. Sixth, the incompatibility of hunting with other forms of recreational use is recognized by most resource managers. The hunting would therefore have to be on the logged-over lands adjacent to the SRMA on the Sooke River and/or during restricted time. Seventh and finally, the non-profit fish and game clubs in the Sooke area are not familiar with the wildlife lease arrangement used extensively on other industrial private forest land in North America. 84 Current government policy also poses problems to industrial private forest owners like CPFP. For example, the MOE has decided not to permit non-native big game species on private land in a non-fenced area (Walker 1990). The rationale is that states in the U.S.A., like Texas and Florida, have concluded it was an error to allow the mixing of native and non-native big game animals. The native species can no longer be found because of interbreeding. British Columbia already has one of the best mix of game species found anywhere in the world. The wildlife branch feels to allow interbreeding would damage this resource (Walker 1990). However, species such as fallow deer do not breed with black-tail deer, and thus the policy changes should allow private landowners to use the land for this non-native species. Otherwise there is an opportunity cost incurred by CPFP. As far back as 1930, the American Game Conference had this recommendation for wildlife management. Recognize landowners as the custodians of public wildlife on all other land, protect them from the irresponsible shooter and compensate them for putting their iand into a productive condition .... In short, make wildlife management a partnership enterprise whereby landowners and the public each contribute appropriate services and each derives appropriate support. (Colyer et al. 1989) Forest companies in the United States have charged for hunting rights on private land for some time. Recent tax reform (Tax Reform Act 1986) meant the loss of preferential capital gains treatment for timber income. Not only has this changed land ownership patterns in the U.S., it has forced landowners 85 into reconsidering alternative source of income in order to make their land holdings return a reasonable rate on their investments. This same process is now occurring in British Columbia with wildlife management. In summary, the estimated value of deer on the study area by Murray (1988) seems a realistic indication of projected revenue for CPFP. The leasing of the access to non-profit clubs under short-term arrangements seem to be the most popular form of management in North America. The revenue captured is highly dependent upon the property rights negotiated. However, hunting is often a non-compatible recreation activity. The hunters will have to be restricted in time or space to allow other recreation opportunities to be provided concurrently. 86 VII. GAME FARMING Game farming started in British Columbia in 1982 with the bison. Currently the only species allowed are bison, fallow deer and reindeer. The MOE is vehemently opposed to other species. For example, the elk have been found to have an effect on the wild stock of elk by spreading disease. This is not an acceptable risk the MOE wants to take in B.C. (Walker 1990). Some wildlife' ecologists are opposed to the development of game farming because it increases pressure on the native game population. This has been documented to be true since poachers now have a market for the animals killed illegally, unless a rigid registration program is in place (Karpan 1989). Currently, game farming requires well-fenced private land that is 5 ha or larger; as opposed to game ranching, which allows free-ranging animals to mix with wild species. In 1987, the farming of fallow deer as a non-native species started in British Columbia. Currently there are some 29 game farming permits issued in B.C. 7.1 Analysis If restrictive policies regarding the management of non-native species changes, then CPFP could start to manage fallow deer as a commercial crop on their own private forest lands in a game ranching style. Failing this, it is already legally possible to farm fallow deer within a fenced area of 5 ha or 87 more. The potential costs and benefits for a small herd of such a venture are as follows. Assume: herd buck:doe ratio doe replacement buck replacement pregnancy rate, does offspring doe yearling buck yearling full-grown deer dressed weight, buck - 4 bucks, 120 does - 1:33 (Strachan 1990) - 7% (Strachan 1990) - 33% (Strachan 1990) - 90% (Paish 1990) - 50% bucks, 50% does (Paish 1990) - sold after one year - sold after one year - 55 kg (Karpan 1989) - 30 kg (Strachan 1990) Actual yearly harvest is therefore expected to be (this assumes keeping the herd at the same population level): Maximum buck yearlings per year Minus replacement .33(4) Minus unsuccessful pregnancies .1(60) Anticipated number of bucks per year 60 - 2 - 6 52 Maximum doe yearlings per year 60 Minus replacement .07(120) - 9 Minus unsuccessful pregnancies .1(60) - 6 Anticipated number of does per year 45 88 7.1.1 Revenue Assume yearling doe value $1200 (Strachan 1990) Venison value ; $14.30/kg (Strachan 1990) Velvet1 $120.00/kg (Ireland undated) Given: yearling bucks are 52 per year, dressed weight 30 kg The annual revenue from bucks is: 52 bucks x 30 kg x $14.30/kg = $22,308/yr. Given: yearling does are 45 per year The annual revenue from does is: 45 does at $1200 = $54.000/yr Total Revenue = $76,308/yr. 1Velvet ($120/kg) - not a significant amount produced. (Paish 1990). 7.1.2 Costs The major costs are the mature animals, fencing, labour, feeding, and interest: Animals • breeding doe • sire buck • breeding doe Canadian Fallow Deer Farm • breeding doe Douglas Lake Ranch Investment per breeding doe $1000-$1200 per animal $1200+ " » (Karpan 1989) $1400-51500 " " $1800 (Paish 1990) (Paish 1990) $1700 » " (Strachan, 1990) Population levels: 30 per ha if rye grass/clover mixture - 20 tonnes per ha 45 per ha if supplemental feeding - maize 89 Table 11 presents the major costs in setting up a deer farm operation. Table 11 Summary of Costs for Deer Farming The Capitalization of Investment Cost in Fallow Deer (i.e. $180,000 = $1500 x 120 does) Capital Costs ($ per year) Interest Initial Investment Write-off Amortization Period Rate 5 Years 10 Years 15 Years 8 45,082 26,825 21,029 10 47,484 29,294 23,665 12 49,934 31,857 26,428 . 15 53,696 35,865 30,783 20 60,188 42,934 38,498 Other Costs ($ per year): Labour (I person) Feed (supplements) Set-up Fence $7195/10 yrs. 3 0% Permi ts Other Facilities $1800/10 yrs 3 0% Slaughtering/Animal Care Sub-total Costs ($ per year per herd) $10,000 7,200 720 100 180 3.800 $22,000 The choice of the annual returns from deer farming depends on the interest rate and the amortization period chosen to write off initial investment. To illustrate, if the interest rate is projected to be 15% and the amortization period is 10 years the annual interest expense on the initial investment of $180,000 is $35,865.00. This added to the annual cost of $22,000 gives $57,865 for total cost. If the annual revenue is $76,308 then net revenue is $18,443 per year before tax. In other words the rate of return on investment is 10%. 90 This illustration ignores the impact of taxation. Currently, the Venture Capital Tax Credit is allowed to be applied against such an investment. This and other tax concessions is beyond the scope of this thesis but preliminary investigation suggests the rate of return on investment is more likely to be nominally between 20% and 25%. Currently, better cost and revenue estimates are being developed by the provincial Ministry of Agriculture. However they already have published information on typical yearly flow as presented below. Months JFHAMJJASO _N_ _D_ % Income per year 40 43 17 X Expense per year 6 2 13 1 15 15 55 3 (Source: Strachan 1990) 7.2 Discussion Although the raising of fallow deer is possible in the SRMA, current government policies do not allow the hunting of these animals or allow them to roam freely. Thus CPFP might consider this as a revenue source on other private holdings, such as Phillips Farm, where land is already in an agriculture land reserve and grassland areas currently exist (approx. 175 ha, of which 10 ha is grassland). 91 The advantages of deer farming to CPFP on its private property-are: the income helps offset the annual cost of holding the land; the change in land use will help convince adjacent landowners that timber harvesting merely facilitates the production of a different kind of crop; • the land holdings are close to markets, which are mainly "white table cloth restaurants.11 The advantages in producing fallow deer versus other game farm animals are: the biological problems have been largely resolved by researchers and scientists after 20 years of experience, particularly in New Zealand and Great Britain (Ireland c. 1988) ; deer meat is low in cholesterol and fat content, which is particularly important in North America * s health conscious society (Karpan, 1989); furthermore, it is light and tender; the demand for venison meat is growing, and demand currently exceeds supply, so much so that the meat producers can only meet demand by restaurants, not the supermarkets (Paish 1990). 92 VIII. CAMPGROUNDS The private campground industry is very difficult to assess despite the fact that it is relatively well developed as compared to the fish and wildlife industry as discussed in this thesis. The problems will be described in detail since they impose a severe handicap in measuring projected earning from such a venture. Trends in the United States campground industry are well documented and serve as a guide through the difficult and potentially costly decisions that must be made on this study area. Two campground locations have been chosen for study and a cost/revenue breakdown is documented. 8.1 Sites - Description and Rationale After carefully examining the suitable sites within the study area, two campground locations have been identified. Campground #1, Sooke River, has trail-only access which requires a 15-20 minute walk by the hiker. This distance is suitable for children, for backpackers, and others wishing a more primitive type of experience. No recreational vehicles will be permitted. The area has good drainage, an excellent swimming hole, high aesthetic values, and seclusion. The timber values are relatively low since it has never been converted to commercial species since logging. On rocky areas lodgepole pine is growing, and it has no current commercial value. Campground #2, Leechtown, is ideally suited for recreationists who intend to overnight while hiking the Galloping Goose Trail and return the next day to the Victoria area. Additionally, it has roaded access for recreational vehicles. Again, the timber values are anticipated to be very low, because it is located on an old townsite with soils of low productivity and undesirable tree species for commercial uses. On the positive side, the amenity values in the vicinity are very high. Several other factors have influenced the choice of location. They are: (1) the proximity of the Galloping Goose Regional Park corridor; (2) the location of the private recreational development of Albert Yeun; (3) the community plans for the Municipality of Sooke and its identification of the Sooke River as a recreational area; (4) the variety in camping experiences demanded as shown by Murray (1988), and the suitability of these two locations to meet this demand; (5) the physical suitability of the site, i.e. relatively flat ground and easy to develop; (6) the potential of the areas for expansion. 8.2 Campsite Planning Using Murray's (1988) potential demand for recreation, the number of campsites necessary are calculated. The Facilities Design Manual of the B.C. Parks Branch (1986) is used to determine the physical area necessary to meet this demand. Campsite #1 is designed using group campground specifications. This means an area of 230 m2 per campsite, with 45 campsites needed for a total area of approximately 1 ha. This meets the demand projected for primitive camping. Campsite #2 is designed using individual campsite specifications. The average area is 320 m2 per campsite, with 170 campsites needed to meet demand anticipated for semi-primitive camping. The total area is approximately 6 ha. The total of 215 campsites is arbitrarily chosen. The calculation using Murray's (1988) survey results does not, in the opinion of the author, render a value of any reality. The calculations are: Intended No. of Activity Days No. of Days Campsites Site Per Household in Season . Needed Primitive 39,883 120 332 Semi-primitive 29,442 120 245 577 Based on personal observation, this number of campsites is totally unrealistic. Furthermore, as in other areas of recreation management, the incremental approach is more realistic, and adaptation can quickly be made to demand for camping sites. Finally, it is realistic to anticipate a shift in demand once use is restricted to specific areas and alternative areas are available at a lower price. Thus the number of campsites planned for is approximately one-third of the calculated number required if Murray's data were the determining factor. 95 8.3 Financial Analysis 8.3.1 Campsite Costs A summary of the major costs in developing this site is as follows: Capital Costs Site #1 - 45 sites - Sooke River Total Amortized Cost Cost 15 years 10% Tables, Type III $ 15,750 Pad (natural) 22,50Fireplace 4,50Corrals 2,700 Water -Toilets 4,00Parking Lot (dirt) 36.450 $ 85,900 $11,295/yr Site #2 - 170 sites - Leechtown Total Amortized Cost Cost 15 yrs 10% Tables, Type III Pad (natural) Fireplace Corrals (12) Water (12) Toilets (12) parking Lot (natural) Roads ( 2 km) Gateway House $ 59,500 85,000 17,000 14,400 77,000 24,000 44.550 100,000 43.000 $464,450 $61,063/yr $72,358/yr $75,000/yr rounded = V (1 + i) Gibbs et al (1979) and Gibbs & Van Hees (1980) used a discount rate of 10% and 15-20 years for amortization. The total cost is comprised of capital cost, operations and maintenance cost. 96 The estimated operations and maintenance cost are: Operation and Maintenance Labour (3 summer personnel) Annual Maintenance Ltrucks, repair, cleanup)' Administration Cost ($28/ha x 4000 ha x 1/2 x 1/3) Add: Capital Cost (annualized) Total Cost $ 30,000 30,000 20.000 . $ 80,000 75.000 $155,000/yr 38% of total cost of campsite operations and maintenance (Contract 15%, Vehicles 14%, Tools and Materials 9%). (Schuster et al 1983) 2 1/2 is division of cost with timber values, 1/2 to non-timber values; 1/3 is dividing the cost between hunting, fishing and camping. 8.3.2 Campground Revenue Using Murray's (1988) estimate the revenue projection is: Willingness-to-Pay values Per Activity Day  Primitive $3.00 x 39,883 Semi-primitive $8.00 x 29,492 Total Revenue At Face Value 119,649 235.936 355,585 $355.600 One-Third 39,883 78.645 118,528 $118.500 Alternatively, it is more common to use $/Site in revenue calculations based on actual market prices. The closest site charges are the following: Capital Regional District Charge (Semi-primitive) $ 7.50 per site Coldstream Provincial Park/ Thetis Lake Campground $12.00 per site Murray (1988) in establishing a willingness-to-pay value, asked for a daily fee in a 24-hour period. This fee is for the campsite not just an individual person. Therefore, he correctly did not apply the expansion factor of 2.68 to the activity day to calculate the gross value of the recreational activity. For campsite planning, the expansion factor is applied since the survey respondent was responding for the party of 2.68 people he/she represented. Using these charges, the revenue per year is: No. of No. of Total Charge Days Sites Revenue . 12.00 120 215 $309,600 8.50 120 215 $219,30This represents the most optimistic and realistic revenue projection to be expected. It also assumes that unique recreational experiences will be provided to attract recreationists to this remote area: well-developed hiking trails, fishing in settings of various exclusivity, safe swimming areas, public tours of forests, and hunting reserves located far away from the main recreation area. In summary, the projected revenue and costs are as follows: Revenue Using Murray WTP values (1988) $355,600/yr Using Murray WTP values (1988) (1/3) $118,500/yr Using comparable charges in the area: Capital Regional District (semi-prim) $219,300/yr Goldstream Provincial Park $309,600/yr (215 sites, 120 camping days/yr) $119,000/yr $155,000/yr Cost Assuming low labour, administrative and maintenance costs Assuming high labour, administrative and maintenance costs This assumes full site occupancy for the entire camping season. 98 8.3.3 Cost and Revenue Analysis Thus, on the surface at least, campgrounds look like a solid investment. However, there are a number of problems to consider. They are: 1) The gravel road from the Community of Sooke to the campsite is approximately 10 km. This would have to be paved or kept in well-maintained gravelled conditions. 2) Other campsites in the Victoria vicinity are currently having difficulties keeping their campsites fully occupied. 3) The cost of maintenance and administrative overhead is difficult to measure, since the assumption is that various government employment programs may cover some of these costs. 4) The assumption that site occupancy could be 100% is very unrealistic, but no reliable occupancy rate figure is available. Other problems abound, starting with WTP figures from Murray's survey are intended use only. Not everyone does what is intended. Also, the tradition of freely using the area over a long period of time will probably inhibit people from expressing their true market value. Furthermore, the income levels of those who currently use, or intend to use, the area is low. If CPFP sought to provide a unique recreational experience, higher income groups could be expected to participate. Finally, the CVM fails to measure the other costs to the recreationist in participating in the recreational experience. For example, the cost of travel or camping equipment can be cost prohibitive, especially to the low income group. Therefore, the person surveyed could have failed to recognize the additional cost that would have to be incurred in order to enjoy the recreational experience. The weaknesses are many, but nevertheless the provision of camping sites should be considered for two reasons. First, it is an integral part of the recreation experience which CPFP could provide on its private land. Second, the community of Sooke or some non-profit organization in the area might be interested in leasing the land to set up campgrounds. They could in turn more easily solicit federal, provincial and municipal funding to cover employment, capital, operations, and maintenance costs. This would require no investment on the landowner's part and the revenue could help in offsetting the annual cost of holding the land. 8.4 Measurement This section deals primarily with the U.S. experience in the camping industry. The emphasis is on camping in the U.S. National Forest since little information is available for camping on industrial private forest land. In order to provide some basis for comparing the U.S. National Forest literature with projected cost data used in this 100 thesis, it is necessary to convert from PAOT (persons at one time) and RVD's (recreational visitor days) to Murray's measurement of activity days. The conversion from RVD's to activity days has already been discussed in Section 2.3.3. The conversion of PAOT's to RVD's is described in Table 12. Table 12 Conversion Factors to Translate U.S. Camping Data RVD Activity Day Type of Murray's Conversion Conversion Recreation Site EL Equivalent Factor Factor Family Campground 2 Primitive 0.01265 13/12 = 1.0833 Family Campground 3 Semi-primitive 0.01401 1.083^Experience level (see Glossary). 2Shuster et ah (1983). ^The conversion from RVD to activity is based on the formula (see Table 3): RVD = Total Activity Day 12 hours/Average No. of hours in each activity, i.e. 13 hours for camping (Gibbs et al 1979) The measurement problem is exacerbated by Murray's definitions of primitive and semi-primitive camping sites, a modification of the USFS ROS system (see Glossary of terms). To further compound the problem the USFS plans on the ROS system (Recreation Opportunity Spectrum), but cost and revenue data are generally not reported in those terms. In B.C. the Provincial Parks personnel do not use the ROS system, and their recreational development plans, particularly camping, are demand-driven with constraints imposed by annual budgets. This again makes comparison difficult since Murray's 101 estimates are based on anticipated use, not actual use. Furthermore B.C. provincial parks use party days, not activity days, as a standard measurement of recreational use. There are usually 3-4 people per party. Needless to say, the conversion into activity days is not possible, mainly because the information is not readily available. All this emphasizes the need to standardize the measurement unit to improve the database for recreation decision makers in both government and industry. 102 8.5 Comparative Analysis 8.5.1 Costs Using this methodology, the annualized costs presented by Schuster et al (1983) are translated as: Unadjusted 1980 US $ Type of Recreation Site Annualized Costs in PAOT Family Campground Family Campground Group Campground EL1 4%2 _7%2 10%3 2 130.33 147.53 119.40 3 128.06 142.29 130.24 40.06 45.45 36.89 1989 Can. $ EL 4% 7% 10% 2 3.00 3.40 2.75 3 2.83 3.28 3.00 0.92 1.05 0.85 Conversion to Activity Days Family Campground Family Campground Group Campground Example of conversion: $130.33 x .01265 x 13/12 x 1.2325 x -1.058 x 1.044 x 1.040 x 1.041 x 1.044 x 1.041 x 1.050 = $3.00 per activity day. Vs already mentioned, EL = Experience Level. EL2 - primitive camping; EL3 - semi-primitive camping. 2 The 4% and 7% items amortized over 10 years or 20 years, depending on the item. ^The 10% item amortized over 15 years. Other studies report the cost of developing and maintaining a campground as shown below. Study EL Year of Data Cost per RVD $ Cost per Activity Day (1989) Gibbs & Van Hees (1980) 2 1977 1.44 4.00 II II II 3 1977 1.74 4.83 Gibbs et al. . (1979) 1979 1.69 4.69 Tyre (1975) 1970 2.48 6.88 In this study the annualized cost of development compares favourably with the other studies mentioned. The total annualized costs of $155,000 per year divided by the total activity days in primitive and semi-primitive camping (39,883 + 29,492) yield a value of $2.23 per activity day. Weighting the capital cost by the number of primitive and semi-primitive campsites, the cost per activity day is: Table 13 Cost of Campsites in the SRMA Capital Cost Primitive (124 sites) - annualized 10% 15 yrs $ 39,670 Semi-primitive ( 91 sites) - 32,687 Operation & Maintenance Primitive 124/215x80,000 46,139 Semi-primitive 91/215 x 80,000 33,860 Cost per Activity Day Primitive (39,670 + 46,139)/39,883 activity days = $2.15/activity day Semi-primitive (32,687 + 33,860)/29,492 activity days = $2.26/activity day A comparative summary of cost per activity day is shown in Table 14. Table 14 Comparative Cost for Camping per Activity Day of Campsite Development and Maintenance Type of Schuster Van Hees Gibbs Tyre Bull Recreation Site (1983) (1980) (1979) (1975) (1990) Primitive Camping 2.75 4.00 4.69 6.88 2.15 Semi-primitive Camping 3.00 4.83 4.69 6.88 2.26 It is important to note that both studies by Gibbs and the Tyre study are using data twelve and ten years old respectively. Possible explanations for the higher value are that the costs have not kept up with inflation, camping standards have been lowered, or the experience levels for which the campgrounds were developed are much higher than EL2 or EL3. 104 8.5.2 Revenue Murray (1988) presented a comparison of WTP values which bears repeating, mainly because they show that while the values used in this study are low compared to American studies, they are nevertheless more realistic for British Columbia's situation. The values translated into 1989 Canadian dollars are: Table 15 Comparative Revenue for Camping Per Activity Day for Primitive and Semi-Primitive Camping 1986 $ 1989 $ U.S.A. Walsh - Primitive Camping 18.37 20.96 - Semi-primitive Camping 12.28 14.01 Camping - Western Washington 13.88 USA Average Semi-primitive Camping 16.04 18.30 B.C. CRD/GVWD Semi-primitive Camping 7.50 8.56 Goldstream Provincial Campground Semi-primitive Camping 12.00 Murray - Primitive Camping 2.49 2.96 - Semi-primitive Camping 8.53 10.13 (Sources: Murray 1988; Goldstream Provincial Campground brochure 1988; Sorg & Loomis 1984.) 8.6 Trends Generally, the revenue derived from campgrounds continues to be much less than similar facilities in the United States. This problem is compounded by the recent trends in the private campground industry on the Pacific Coast. McEwen (1989) outlines these trends. They are: 105 • Overall, the private campground industry has had a 1% decrease in the last ten years. However, in the Pacific Coast region there has been a 16% increase during this period. • The average return on investment is 3.8%. Campgrounds with less than 100 sites show a loss of 5.3%. Therefore it is not surprising that campground owners nationwide indicated 32% of their parks are for sale. • As indicated above, the economies of scale have changed significantly in the last two decades. In 1968 there was an average of 3 0 sites per campground; in 1987 there were 117 sites per campground on an average land base of 12 ha. • The campsites with no electrical, sewage or water hookup are only 28% of all campsites. Those with the hookups just mentioned have also increased swimming facilities by 289% since 1979, RV supplies by 150%, and tennis courts by 137%. Additionally there is'a significant increase in tent and RV on-site rentals. Clearly these facilities are not identified by Murray's survey as desirable. • Finally, only a few membership campgrounds have been successful. 8.7 Discussion The U.S. trends for private campgrounds indicate that while recent trends in the Pacific Coast region look positive for campground use, the returns on investment are very low, the 106 campground size is now much larger, and the demand is clearly for luxury campgrounds. This is not promising for CPFP because the return on investment is unattractive, and the intended campers identified by Murray (1988) desire primitive and semi-primitive campgrounds, not luxury campgrounds. The kernel of the problem is the low fee charged in public campgrounds. Both the provincial and federal parks use operations and maintenance cost recovery as the basis for campground management. Given that they have most of the prime locations and no profit motive, the private campground industry simply cannot compete. The one "spanner in the works" is the necessity of providing a total recreation experience, of which camping is a part. The most logical way to proceed would be the granting of leases to local governments or non-profit organizations who can operate on a cost recovery basis. 107 IX. TIMBER AND LAND VALUES The management of forest areas for recreation resources will have an impact on commercial timber values. This necessitates the examination of these values, the probable impact of recreation on both the logging cost and the anticipated revenue from the timber resources. Using a traditional discounting approach the impact on the company's net income will be examined. This is followed by an analysis of the most sensitive variables in determining the net present value. Finally, an examination of changes in land value and its impact on the decision to manage for recreation is discussed. 9.1 Timber Analysis - Base Case For the SRMA, many of the assumptions by Massey (1984) in his simple economics model are used. These include: the real rate of increase in the price of wood is 1.5% per annum; the real discount rate is 6%; one rotation of timber; and yield curves. Logging costs and log values are changed to more accurately reflect current conditions. The logging cost used is $26.00 per m3 (Avis, 1989). A summary of the area and volume using these assumptions is presented in Table 16. 108 Table 16 Detailed Summary of Area, Volume, and Present Net Revenue by Harvest Year Harvest Year Area (ha) Volume Mil Present Net Revenue at 6% 2005 2015 2020 2025 . 2030 2035 2040 2045 2050 2060 2065 2070 2080 79 69 77 73 81 136 94 103 87 60 174 68 69 24,508 36,669 53,285 51,880 52,104 74,437 99,962 63,079 28,670 31,033 105,894 42,900 25,571 369,567 391,977 476,116 385,967 321,651 380,168 421,269 218,849 81,721 59,392 165,685 54,803 21,700 1170 689,992 $3,348,865 The projected revenue is derived from Vancouver Log Market prices reported by the Ministry of Forests and Land in 1989 for Douglas fir (Fd), western hemlock (Hw) and western red cedar (Cw). It is assumed that the species composition of the final volume is 60% Fd, 5% Hw, 10% Cw. The remaining 20% of the volume is assumed to have no commercial value. The average prices reported for these species respectively are $64.62/m3, $53.26/m3 and $66.94/m3 (Pawliuk 1989). The other assumption in Table 16 is respecting the harvest year. Even though the financial rotation is determined for each forest type (see Table 16), the harvest year has been changed, where necessary, to ensure a minimum diameter of at least 35 cm at breast height. This proved necessary in the majority of forest types, making it in effect a harvest year chosen by a technical rotation age. To simplify the analysis and to realize the real constraint of moving men and equipment to this area, a 109 minimum volume of at least 25,000 m3 must be harvested in any one period. Furthermore, this constraint will also facilitate the examination of aesthetic value by such organizations as the Greater Victoria Regional Parks people, who manage adjacent property to the study area. 9.2 Timber Analysis - Options In order to improve the economic projections made for the SRMA, a number of variables are tested. They are: 1) logging cost; 2) log prices; 3) annual costs of holding forest property; 4) real rate of change in the value of wood; 5) growth and yield projections; 6) discount rate. 9.2.1 Logging Cost The logging cost is increased by 18% for consideration of non-timber values (Benson et al. 1985). They vary for every site, depending upon such factors as falling method, yarding method, distance to log dump, equipment availability, road conditions, etc. Other studies indicate the increase in logging cost to be as much as 30% for a recreation forest (Christensen 1981). / The categories of non-timber values considered by Benson et al. (1985) in their survey of 187 timber sales were: Soil • Recreation Water • Visual Fish • Cultural Wildlife • Range Soil conservation and protection of wildlife habitat were deemed to have the biggest effect on logging costs. Schuster et al. (1983) reported the major harvesting activities which have to be modified in order to provide for these non-timber activities are: Timber Sale Activity Rank Location and size of cutting units 1 Road - density and location 2 Road - seed, mulch, plant 3 Proportion of area harvested 4 Drainage - culverts, ditches, etc. 5 Road alignment at grade 6 Leave strips, streamside cover 7 Yarding/skidding direction and distance 8 Cross ditch and water-bar skid trailsCleaning trails and streams 8 Ranking is in order of importance. Table 17 presents a comparative cost summary of logging. Sauder (1988) reported the greatest potential for future harvesting is with ground skidding equipment. MacDonald (1987) indicated grapple yarding is worthy of consideration; particularly when other resource values such as aesthetics require a different approach. Ill Table 17 Summary of Harvesting Cost by Logging Phase. (1989) (1984) (1984) (1987) (1985) Activity . p Avia ($/m3) Mas&ey ($/m3) MacDonald ($/m3) Howard ($/m3) Benson" ($/m3) Falling 4.00 5.91 Yard and Load (skidder) 10.00 (skidder) 9.50-13.00 11.97 Yard (alone) (grapple) 5.68 (skidder) 5.31-5.35 Haul 11.00 11.00 5.95 6.05 Roads 1.00 1.42 1 $26.00 $25.35 .3 Costs in table are unadjusted for. inflation. Costs are based oh small opening 5-10 ha, second growth Douglas fir. Conversion: t($/mfbm) x 221 BF/m3] 1 mfbm/1000 BF x 1.17 (exchange rate 1989) 9.2.2 Log Prices Two sets of log prices are useful because of CPFP's ownership of this private property, on which log exports are not restricted. If log export prices reflect the real value of the logs, then a more accurate assessment of the impact on timber values can be derived. Therefore, Vancouver Log Market prices and the International Log Market prices provide the basis for revenue projections. 9.2.3 Annual Costs The two primary annual costs of holding forest property are property taxes and maintenance costs (roads, fire control, forestry cost, administration). The costs alternatives used were developed by CPFP forestry personnel. 112 9.2.4 Wood Values The impact of the real rate of change in the value of wood is tested at 1.5%, 0.75%, and 0%. The approximate annual change in the real value of wood over the last 100 years is 1.5% (Teeguarden 1990). Massey, in his silvicultural investment model for CPFP (1984), also used 1.5% increase. However, Haley (1990) argues that the rate of change has slowed down considerably in the last 4 0 years. This is the result of the substitutability of other materials for wood products in recent decades. Thus, 0.75% is arbitrarily chosen" to represent the future increase in wood prices. The use of a 0% real increase in price simply indicates the net present values if this variable is ignored. 9.2.5 Growth and Yield Projections Two inventory projections are used. The first is Massey's yield curves, and the second is Baskerville-Devitt's yield curves. All of these are currently used by CPFP personnel in their forest planning. Testing the economic significance of growth and yield projections is deemed important, because the Massey yield estimates are generally considered to be about 20% higher than Baskerville's and the cutting cycle is 30 years longer using Massey's projections (Tudor 1990). Although Massey's (#1) volume is 45% higher than Baskerville1s (#2) (see Table 18), the volume is calculated over an 80-year period for #1 and over a 45-year period for #2. This means in #2 there is additional volume on the next crop which is not considered in the comparison of volume. For example, all of the stands cut before 2050 in #2 projections are adding volume not considered in the comparisons with #1 projections which do not add second-growth volume to these same stands until 2080. Thus the distortions in volume as a result of considering only one rotation are exaggerated. If the mean annual increment on this productive land is 10 m3 per ha per year, the additional volume to add to #2 volume is: 10 m3\ha\yr x 1170 ha x 30 years = 351,000 m3. This would render a total of 831,313 m3 using the Baskerville yield curves, which are approximately a 20% higher yield than with Massey's yield curves. This agrees with CPFP's estimation of the difference in the two yield curves. Table 18 Timber Harvesting Projections, Using Two Inventories. Massey #1 Baskerville (#2) Projected volume (all species) 690,262 m3 480,313 m? Additional volume 351.000 ml Total volume 831,313 m Harvest years range 2000-2080 2005-2050 Average area cut per cutting cycle 77 ha 145 ha Maximum opening sizes 5-10 ha 5-10 ha Species - commercial mix (both) Fd 65%, Hw 10%, Cw 5% Management classes 40-43 40-43 60-63 Total area logged over rotation 1170 1165 114 As already mentioned, the timber harvest from the Sooke Recreation Area is sufficiently low that moving men and equipment to the area can only be justified at 5-10 year intervals. Additionally, the time of harvest is also constrained by the diameter. Company policy for milling requirements dictates that the average diameter should be 35 cm or greater; thus on sites with poor productivity the financial rotation age is extended until this technical rotation age is reached. Recent studies of second-growth harvesting indicate a smaller diameter size is merchantable (Howard 1987). Of all trees harvested, 63% were between 24 cm and 3 3 cm, and 30% were greater than 35 cm. CPFP current policy, however, is geared toward the production of high-quality saw logs, resulting in higher value-added end products. Sauder (1988) predicted the stump diameter in second-growth forest will range from 40-60 cm. 9.2.6 Discount Rate Finally, the impact of change in real discount rates of 4%, 6%, and 8% is tested. CPFP does not currently separate bare land values from commercial timber values, meaning that the rate of return is considered from the combination of both values. Since the change in land values indicates a high rate of return (see Section 9.4), the discount rate used for timber is justifiably lower, because land and timber are not separated in company decision making. 115 9.3 Sensitivity Analysis The economic evaluation of the timber resource is summarized in Table 19. Each calculation represents the net present value of the timber supply from the SRMA for a single forest rotation. The factors which are most sensitive to forest planning are: log prices real rate of change in the value of wood growth and yield projections discount rate. Selected data are presented to indicate the sensitivity of these factors in the decision-making process. Note that cost sensitivity is described in Table 19. 9.3.1 Log Prices If the assumptions about log prices changed from Vancouver Log Market Prices to International Log Prices, the selected results, in percentage change, from Table 19 are: Inventory Discount Rates 1 Projections 8% 6% 4% Massey 337 223 179 Devitt 5 158 118 Assume: • annual cost 1 - holding the land only. • increase in wood prices 0.75%. • logging cost minimum. Obviously, at the higher discount rate (8%) the inventory projection is unimportant; but the net present value calculations are nearly three times higher than the calculations at 4%. Also, the inventory projections become more important as the discount 116 Table 17 SOOKE RECREATION MANAGEMENT AREA • (all calculations are in 1989 dollars to the nearest thousand $) Period Area Volume i P 1 2 3 4 5 6 7 8 9 10 11 12 (years) (ha) (i3). 2005-2080 1170 690000 8 0.00% 698 48 -401 565 84 -534 1874 1225 775 1742 1092 643 Yield 1 0.751 1096 446 -3 964 314 -135 2600 1950 1501 2467 1818 1368 1.501 1626 977 527 1494 845 395 3566 2916 2467 . 3434 2784 2334 6 0.005 1316 454 -143 1066 204 -393 3536 2674 2076 3286 2424 1827 0.751 2171 1308 711 1921 1059 462 5092 4230 3633 4843 3980 3383 1.505 3349 2487 1890 3099 2237 1640 7238 6376 5779 6989 6126 5529 4 0.005 2724 1461 586 2208 944 695 7319 6056 5181 6803 5539 4665 0.755 4769 3506 2631 4253 2989 2115 11044 9781 '8906 10528 9264 8390 1.505 7709 6446 5571 7192 5929 .5054 16399 15135 14261 15882 14619 13744 2005-2050 1165 480000 8 0.005 746 97 -353 605 -45 -494 2005 1356 906 1864 1214 765 Yield 2 0.755 1116 466 17 974 325 -125 2678 2029 1579 2537 1887 1438 1.505 1596 947 497 1454 805 356 3553 2904 2454 3412 2762 2313 6 0.005 1899 1037 440 1758 896 299 4105 3243 2646 3964 3102 2505 0.755 2642 1780 1183 2500 1638 1041 5458 4595 3998 5316 4454 3857 1.505 3633 2770 2173 3491 2629 2031 7262 6400 5803 7121 6258 5661 4 0.005 4334 3071 2196 4193 2929 2055 8540 7277 6402 8399 7136 6261 0.755 5947 • 4684 3809 5806 4542 3668 11478 10215 9340 11337 . 10073 9199 1.505 8151 6887 6013 8009 6746 5871 15491 14228 13353 15350 14086 13212 i= discount rate 1 = VLM Log Prices, annual cost 0, Avis logging costs p= real increase in wood prices 2 = VLM Log Prices, annual cost 1, Avis logging costs V1H= Vancouver Log Market 3 = VLM Log Prices, annual cost 2, Avis logging costs INT= International Log Market 4 = VLM Log Prices, annual cost 0, Benson logging costs Yield 1= Hassey curves 5 = VLM Log Prices, annual cost 1, Benson logging costs Yield 2= Baskerville-Devitt curves 6 = VLM Log Prices, annual cost 2, Benson logging costs 7 = INT Log Prices, annual cost 0, Avis logging costs 8 = INT Log Prices, annual cost 1, Avis logging costs 9 = INT Log Prices, annual cost 2, Avis logging costs 10= KIT Log Prices, annual cost 0, Benson logging costs 11= INT Log Prices, annual cost 1, Benson logging costs 12= INT Log Prices, annual cost 2, Benson logging costs 117 rate is lowered. In all cases, the dramatic increase in net present value is attributable to the assumption about the appropriate log prices. 9.3.2 Wood Value The real rate of change in the value of wood also has an important impact. Selected results, in percentage change, from Table 19 indicate the general pattern of change: Change in Discount Rates Log Prices Real Price 8% 4% Vancouver Log Market 0 -.1.5% International Log Market 0 - 1.5% Assume: • no annual cost of land holding. » logging costs are minimum. • Massey inventory. The net present value changes by 90-193% with a change in real prices from 0 - 1.5% per annum. 9.3.3 Growth and Yield The growth and yield projections of Massey and Devitt/ Baskerville have been tested. The following selected results, in percentage change, from Table 19 represent the trend in all variables: Discount Rates Discount Rates Real Price Vancouver Log Market International Log Market 8% 6% 4% 8% 6% 4% 102 128 110 11 21 . 20 4 36 33 4 8 4 3 11 7 -<1 -<1 -6 Assume: • annual cost 1 - holding the land only. • logging cost minimum. • Vancouver Log Market for log prices. 132 193 90 124 118 The growth and yield projections are particularly sensitive if the real increase in the price of wood is 0% and the Vancouver Log Market prices are used. Examining the sensitivity if the logging cost is increased by 18%, the sensitivity is increased even more at the 0% level. Thus the obvious conclusion is, if the future prices for wood are gloomy and the logging costs are anticipated to rise at a significant rate, the choice of which yield.curves to use becomes extremely important. 9.3.4 Discount Rate The assumptions about the appropriate discount rate give a consistently high magnitude of change. The selected results, in percentage change, presented below, show marked sensitivity. log Markets  Real Increase in Vancouver International Price of Wood (8%-4%) (8%-4%) 0% 290 290 1.5% 374 36Assume: • annual costs - holding the land only. • Massey inventory. • logging costs are minimum. For example, if the discount rate changes from 8% to 4%, the change in the net present value of the forest under consideration is 290%, irrespective of whether the log market prices used are domestic or international. This change in net present value becomes even more pronounced if the real increase in the price of wood changes from 0% to 1.5%. In Section 9.2.6, difficulties with choosing the appropriate discount rate are discussed. This prompted the investigation of the next section of this thesis on the, often ignored, land valuation question. 9.4 Land Values Land values are worthy of discussion since the assumptions made are crucial to the provision of recreational opportunities; more specifically, to the rate of return from providing recreation. The SRMA is assessed with respect to the change in bare land values over time. Indications are that this is the hidden "jewel" in the ownership of land in southwestern B.C. The B.C. Assessment Authority's land value for the SRMA are estimated to be as follows: Table 2 0 gives a sample of the land values for selected blocks within the Sooke Recreation Area. The assessed values are based on the independent variables of the average growth rate of tree (MAI) and the average 5-year stumpage value for timber from the Vancouver Log Market prices. The key indicator of assessed land value then is the change in reported stumpage value over time. Site Component Land Value (S/ha) 25% Medium 50% Poor 25% Non-productive 699 348 10 (Source: B.C. Assessment Authority 1988) 120 Lane (1990) indicates that these are conservative estimates of the change in private land values, because the timber available on public land is becoming scarcer due to recent trends in land being set aside for other resource values. He further reports that this is driving up demand for private landholding for wood substantially. Table 20 Land Values for Selected Blocks on CPFP Forest Lands (Source: Assessment Authority Reports, 1988) (All values in unadjusted $) Blocks 1151 1167 1187 1195 1436 Range Area (ha) 98 57 74 183 145 (per ha) Assessed Values Years  1975 3,446 636 1,547 7,336 6,334 11-44 1978 9,300 4,900 6,900 19,600 15,850 1983 28,950 5,150 28,800 36,919 29,048 1988 34.4231 19,950 25,993 64,495 50,746 10-700 Rate of Return in % 19 30 24 18 17 Rate of Return (net of inflation) in % 16 27 21 15 14 Hhe three variables upon which assessed values are calculated are topography, distance to market, and soil quality. The topography is "average"; the access is "close"; and the soil quality is 25% non-productive, 50% poor, 25% medium. 2 Statistics Canada (May 2, 1990) reports the average inflation rate for the period 1975-1989 is 3.1%. The other major assumption is that changes in assessed values are an indicator of changes in market values for this period. Generally, assessed values are lower than market values for land, and this is certainly true for the study area. The SRMA's unique recreational features and proximity to the City of Victoria would see market values far higher than assessed values. However, a recent sale of poor site land on northern Vancouver Island (November 1988) at $479/ha indicates the assessed values were low, but not completely out of line. Information for private property sales is difficult to obtain and even more difficult to break down into the components of the sale. For example, people often include other items such as harvesting equipment in the selling price, and the only value available from Crown Lands is the total price. The real rates of return, as reported in Table 20, over a 13-year period, are in the range of 14% to 27%. This has significant influence on timber management decisions. Annual cost of property taxes, and silviculture and administrative costs, for example, could be taken as a deduction from the land values, not the timber values. The most important outcome of this change in perspective is a change in approach to silvilcultural investment decisions and the method of evaluating non-timber values. It can be argued, as long as any activity indicates a positive return of any amount CPFP should carry out that particular activity. The returns are simply an add-on to the significant rates of return from holding the forest land property. 122 To illustrate the approach, assume the 4000 ha of the SRMA is of three soil-quality types: medium (25%); poor (50%); and non-productive (25%). The assessed value is calculated as: Non-productive: $ 10/ha x 1000 ha $ 10,000 $348/ha x 2000 ha 696,00$699/ha x 1000 ha 699,000 Component Land Value $1,405,000 Timber Values St 6% Real Price Increase 1.5% Taxes & Admin, deducted Baskerville curves Vancouver Log Market Prices (from Table 19) 2,173,000 The Net Present Value of Land and Timber is $3,578,000 If the $3,578,000 is invested for 60 years (i.e. 1990-2050) at a real interest rate of 6%, the net present value of revenues generated is: vn = vo (l • i)n Vn = 3,578,000 (1.06)60 = $118,000,000 n = Number of interest-bearing periods i = Interest rate V_ = Present value o V_ = Future value n Table 20 suggests the bare land value has been increasing at a rate of 14-20% per annum. This rate of return to the bare land ignores the real estate value of the property, because the growing of forest is deemed its "highest and best use." An alternative to selling the land and timber for $3,578,000 is to hold onto the property. As long as the increase in land values increases at a rate greater than 7.66%, then this is the wiser choice. The calculations are as follows: 123 $1,405,000 (1+i)60 = $118,000,000 where i = [the 60th root of 118,000,000/1,405,000] - 1 = .076639. Therefore, as long as the average increase in land values exceeds the returns from selling now (nearly 2 percentage points in this case), and CPFP's company policy continues not to separate their land values from timber values, the growing of trees at a lower rate of return is justified. Similarly, as long as the recreation values exceed the associated costs, the decision to make recreation opportunities available is also justified. X. CONCLUSIONS AND RECOMMENDATIONS CONCLUSIONS The management of private industrial forest lands under a multiple use concept presents real challenges to both governments and industry. At the policy level, significant improvements can be made by governments to provide financial incentives for the improved management of forest land. This could be in the form of changing regulations or policies and giving tax concessions or direct subsidies to promote multiple-use. Similarly, the forest products industry needs to encourage its personnel to cooperate with other agencies in the development of a multiple-use plan. The long term benefits would be in a financial return from non-timber resources and the short term benefits would be in improved public relations. At the operational level, several conclusions can be drawn from the research findings in this thesis. They are: . • Murray's (1988) survey results from the study area north of Sooke must be used with extreme caution. The actual and intended use figures reported are not verifiable in government statistics or by CPFP company personnel. Similarly, the average willingness-to-pay values are indeed averages, and no reliable demand curves could be drawn from the data collected. • Intensive fisheries management, under existing aquaculture licences, presents attractive opportunities for private industrial forest landowners to derive revenue from their land base. However, further research is necessary to identify the demand for this kind of product, particularly from the non-resident population. Wildlife management, with emphasis on black-tail deer, offers a viable revenue source for large landowners. Preliminary research indicates the most effective arrangement is through short term leases to non-profit outdoor clubs. Deer farming, a recently introduced concept to B.C., currently offers investors a very high rate of return. This is expected to continue for at least another ten "years and is seen as an alternative use of non-productive forest land. Campgrounds do not offer attractive rates of return and future trends do not look encouraging. However, their provision is necessary since they are an important part of the total recreation experience. Timber values alone do not warrant the retention of land ownership on Southern Vancouver Island. However, the changes in land values indicate that real returns are accruing to the bare land. This has enormous implications for determining a satisfactory rate of return from investments in silviculture or recreation management. 126 RECOMMENDATIONS Private industrial landowners, such as CPFP, have the opportunities to aggressively pursue the potential for multiple-use management. The public pressures now being experienced by forest landowners can be viewed as a positive force which, properly channelled, can provide additional sources of revenue and the opportunity to improve public relations. To accomplish this, CPFP should: collect additional information on such non-timber resources as aesthetic and water values to form a more complete picture of the factors involved in the management of recreation forests; implement a pilot project to manage for the recreation products identified in this thesis and carefully monitor the marginal costs and revenue to improve the information base for future expansion. It is also necessary for private industrial landowners, such as CPFP, to work in cooperation with various government agencies to produce a recreation management plan. Specifically, they could: • cooperate with the Ministry of Tourism to determine the marketability of the outdoor recreation product; assist the Ministry of Environment - Wildlife Branch to develop a better inventory of the wildlife species 127 currently under the management of provincial wildlife biologists; • provide encouragement and initiative for the development of effective measures of recreation use. Standardizing use measurements will allow various government and business enterprises the ability to compare statistics for better planning; invite local>governments, such as the Sooke municipality, to participate in the planning process. Their interest would include such recreation activities as camping, picnicking and swimming. Outdoor groups should be consulted at this early stage in the planning process. For example, in the case study presented in this thesis, CPFP could assist groups such as the Outdoor Recreation Council in their attempt to bring forward legislation to control the use of all terrain vehicles on forest lands. Another example, local fish and game clubs need to be invited to consider the possibility of holding exclusive hunting and fishing privileges in specified areas. The final recommendation, and perhaps the most important one, is that forest companies, such as CPFP, hire foresters who have a good understanding of the broader concept of forestry, meaning the inclusion of both timber and non-timber values in their decision making. These foresters must exhibit a new kind of professionalism so that when inevitable conflicts arise they 128 can effectively negotiate with government officials, regional parks personnel, local interest group members and adjacent property owners on the forest company's behalf. The analysis completed in this study merely provides some basic information for the next stage in the planning process — cooperation and negotiation with all interested parties. As both the private sector and public agencies begin to grapple with the management of non-timber resources perhaps the advice of the Third Nationwide Outdoor Recreation Plan in the U.S.A. needs to be carefully considered. The report states: Despite its importance, recreation research currently lacks coordination, fails to systematically consider relevant research from other fields, is often duplicative, and lacks effective information retrieval and transfer mechanisms. These deficiencies limit the effectiveness of recreation planning and management at all levels of government and1 in the private sector. (Diamond et al. 1983) Hopefully these mistakes can be avoided, bringing more effective multiple-use management to all forest lands in B.C. Private forest landowners have the opportunity to take the initiative and help guide the momentum that is building for recreation forestry in the public at large, to a safe haven where plans are made and conflicts are indeed resolved. 129 REFERENCES Achert, W.S. and J. Gibaldi. 1985. The MLA Style Manuel. The Modern Language Association of America. New York, New York. Anonymous. 1989a. Reform: Testing Forest Service Reforms, Forestry Watch Magazine 2(4), supplement. 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(Feb.) 8-16p. i REFERENCES Haley, D. 1990. Personal Interview, c. May 15 Haley, D. and M.K. Luckert. 1990. Forest Tenures in Canada: A Framework for Policy Analysis. Information Report E-X-43. Economics Directorate, Forestry Canda, Ottawa. 104p. Hamilton, S. 1990. "Court Bars Watershed Logging." The Province, Vancouver, B.C., June 5. Harris, C.C. and B.L. Driver. 1987. "Recreation User Fees -Pros and Cons." J. of Forestry. 85(5): 25-29p. Healy, R.G., P. Bristow 1989. "Shared Ownership of Forestlands Experience and Prospects." In: Conserving the North Woods. Yale School of Forestry and Environmental Studies, New Haven, Connecticut. Bulletin 96. 125-145p. Hendee, J.C. and R.L. Bury. 1971. "Private Timberland Owners Invite Public, But Does Recreational Development Pay Off?" Western Conservation Journal. 28(1): 28-30p. Homer, D. 1989. Personal Interview. June 12 Howard, A.F. 1987. 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Costs for Developed Recreation Sites in the Northern Region. USDA Forest Service. Intermountain For. and Range Expt. Sta. Res. pap. No. INT-317. Ogden, UT. 6p. Schuster, E.G., C.E. Keegan III, and R.E. Benson. 1984. Provisions for Protecting and Enhancing Nontimber Resources in Northern Region Timber Sales. USDA For. Serv., Intermountain For. and Range Expt. Sta. Res. pap. No. INT-326. Ogden, UT. ' 9p. Siegel, W.C. 1980. Landowner Liability Law: Implication for Public Use of Private Forest Land. 29th Annual Forestry Symposium, Lousiana State University, Baton Rouge, 17-24p. Simpson, S. 1989. "On the Fly." Vancouver Sun. 18 July. Smith, J.H.G. 1990. personal interview. March 15. Sorg, C., J. Loomis, and U.S. Fish and Wildlife Service. 1984. Empirical Estimates of Amenity Forest Values: A Comparative Review. USDA For. Serv. Gen. Tech. Rep. RM-107. 23p. Strachan, G. 1990. "Planning for Profits." B.C. Game Growers, Ministry of Agriculture and Fisheries. Kamioops, B.C. Teeguarden, D.E. 1990. Making Strategic Choices: The Role of Economics in National Forest Planning, Western Wildlands 15(4): 12-17p. Tudor, K. 1990. Telephone Interview. May 7. Walker, J. 1990 Telephone Interview. April 4. REFERENCES Walsh, R.G. 1986. Recreation Economics Decisions: Comparing Benefits and Costs, Venture Publishing Inc., State College PA. 637p. Wheetman, G. 1990. Personal Interview. May 21. Wightman, C. 1989. Personal Interview. May 31. Wightman, C. 1990. Telephone Interview. May 18. 139 APPENDIX I GLOSSARY OF TERMS Activity Day Participation by any member of a household in a recreation activity on the land base for any portion of a day. It does not equate to a calendar day of activity (Murray 1988). Angler Day One angler fishing for any time period in one day (MOE 1990). Capability Biophysical assessment of land for recreation and the inherent attraction for recreation. Camping Classification adopted by USFS 1982 in Rim Handbook Development and Experience Level 1 Site Modification - Minimal. Rustic or rudimentary improvements to protect site rather than provide comfort to users. Synthetic materials avoided. Subtle, minimal controls; no obvious regimentation. Informal spacing extended to minimize contacts. Motorized access not provided or permitted Recreation Experiences. Primitive forest environment dominates. Rudimentary and isolated sites beyond the sight or sound of inharmonious influences. Maximum opportunity for experiencing solitude, testing skills, and compensating for the routines of daily living. User senses no 140 regimentation, feels physical achievement to reach site is important. Development and Experience Level 2 Site Modification - Little. Rustic or rudimentary improvements to protect site rather than provide comfort to users. Synthetic materials avoided. Subtle, minimal controls; little obvious regimentation. Informal spacing extended to minimize contacts. Motorized access provided or permitted, primarily over primitive roads. Recreation Experiences. Near primitive forest environment. Outside influences present but minimized. Feeling of accomplishment associated with low-standard access is important but physical exertion not necessarily required to reach site. Opportunity for solitude and chance to test outdoor skills. Development and Experience Level 3 Site Modification - Moderate. Facilities equally to protect site and comfort users. Contemporary/rustic design of improvements using native materials. Inconspicuous traffic controls usually provided for vehicles. Roads may be hard surfaced and trails formalized. Development density: about 3 family units per acre. Primary access to site over high-standard, well-traveled roads. Visitor Information Services, if available, are informal and incidental. 141 Recreation Experiences. Forest environment is essentially natural. Solitude is combined with some opportunity to socialize. Controls and regimentation for safety and well-being of user sufficiently obvious to afford a sense of security but subtle enough to leave the taste of adventure. Development and Experience Level 4 Site Modification - Heavily Modified. Some facilities strictly for comfort and convenience of users but no luxury facilities. Facilities may incorporate synthetic materials. Extensive use of artificial surfaces for roads and trails. Traffic controls for vehicles present and usually obvious. Primary access usually over paved roads. Development density: 3-5 family units per acre. Plant materials usually native. Visitor Information Services frequently available. Recreation Experiences. Forest environment is pleasing and attractive but not necessarily natural. Blends opportunities for solitude and socializing with others. Testing of outdoor skills mostly limited to the camping activity. Many user comforts available. Moderate contrast to daily living routines. Creates marked sense of security. Development and Experience Level 5 Site Modification - High Degree. Facilities, most for comfort and convenience of users, include flush toilets and may include showers, bath houses, laundry facilities, and 142 electrical hookups. Designs may be formalized and architecture contemporary. Synthetic materials commonly used. Formal walks or surfaced trails. Regimentation of users is obvious. Access usually by high-speed highways. Development density: five or more family units per acre. Plant materials may be non-native. Formal Visitor ' Information Services usually available. Mowed lawns and clipped shrubs common. (EL5 sites are provided only in special situations or close to large cities where other lands are unavailable.) Recreation Experiences. Pleasing environment attractive to the novice or highly gregarious camper. Opportunity to socialize with others very important. Satisfies urbanites1 needs for compensating experiences and relative solitude, but less intensively than in classes 1-4. (User consciously in secure situation with ample provisions for personal comfort so will not be called upon to use undeveloped skills.) (Shuster 1983) Hunter-day One hunter hunting for any time period in one day; e.g. 2 hours or 8 hours = 1 hunter day (MOE 1989). Merit Service (Good) Private services (good) that have some public service (good) characteristics (i.e. part of the benefit is received by the individual consumer and part is received by the public in general). (Crompton 1984) 143 One that is not determined by an individual preference system, but by the preference system of some "higher" authority ( 1972). Murray's adaptation of ROS spectrum a. Primitive Predominantly natural appearing, reasonably good road access, some evidence of and contact with people, potential isolation experience, picnic table, fire ring, levelled tent or camper site, pit toilet, no running water. b. Semi-primitive As in (a) above, but with good road access, greater evidence of and contact with people, built up tent or camper pad, firewood provided, garbage collection, pit or flush toilet, and cold running water to central camp area. c. Modified As in (b) above, but with substantial evidence of and contact with people, flush toilet, hot and cold running water, showers. d. Rural As in (c) above but with substantially modified environment, very high evidence of and contact with people, level grassy camper pad, electrical and sewer hookups, laundry, store. e. Cabins With beds, cooking facilities, hot and cold running water, flush toilet and showers in any of the above 144 settings. (Murray 1988) PAOT Persons at one time It represents the number of people who could simultaneously recreate at a site according to its design and facilities. It is a measure common to all U.S. Forest Service-developed recreation sites (Shuster 1983). Public Good Goods which suppliers cannot parcel up and sell to those who are willing to pay a price and exclude others, and which consumers can consume without diminishing the supply available to others. ( Pearse, 1989). Public goods are of two kinds: social goods and merit good (Gregory, 1972). Recreation Opportunity Spectrum as Defined by Classes and Setting Primitive Area is characterized by essentially unmodified natural environment of fairly large size. Interaction between users is very low and evidence of other users is minimal. The area is managed to be essentially free from evidence of man-induced restrictions and controls. Motorized use within the area is not permitted. Large mammals and wildlife species which are not too tolerant of man's presence. 145 Semi-Primitive, Non-Motorized Area is characterized by a predominately natural or natural-appearing environment of moderate-to-large size. Interaction between users is low, but there is often evidence of other users. The area is managed in such a way that minimum on-site controls and restrictions may be present, but are subtle. Motorized use is not permitted. Large mammals which are not too tolerant of man's presence. Semi-Primitive, Motorized Area is characterized by a predominately natural or natural-appearing environment of moderate-to-large size. Concentration of users is low, but there is often evidence of other users. The area is managed in such a way that minimum on-site controls and restrictions may be present, but are subtle. Motorized use is permitted. Wildlife species mid-range between those tolerant of man's presence and those not. Roaded Natural Area is characterized by predominately natural-appearing environments with moderate evidences of the sights and sounds of man. Such evidences usually harmonize with the natural environment. Interaction between users may be low to moderate, but with evidence of other users prevalent. Resource modification and utilization practices are evident, but harmonize with the natural environment. Conventional motorized use is provided for in construction standards and design of facilities. Large mammals tolerant of man's presence; those not tolerant present infrequently. Prevalence of smaller wildlife species. Rural Area is characterized by substantially modified natural environment. Resource modification and utilization practices are primarily to enhance specific recreation activities and to maintain vegetative cover and soil. Sights and sounds of man are readily evident, and the interaction between users is often moderate to high. A considerable number of facilities are designed for use by a large number of people. Facilities are often provided for special activities. Moderate densities are provided far away from developed sites. Facilities for intensified motorized use and parking are available. Wildlife species limited mostly to those tolerant of man's presence. Urban Area is characterized by a substantially urbanized environment, although the background may have natural-appearing elements. Renewable resource modification and utilization practices are to enhance specific recreation activities. Vegetative cover is often exotic and manicured. Sights and sounds of man, on-site, are predominant. Large numbers of users can be expected, both on-site and in nearby areas. Facilities for highly intensified motor use and parking are available with forms of mass transit often available to carry people throughout the site. Wildlife 147 species restricted to those highly tolerant of man's presence. RIM Recreation Information Management It is a U.S. Forest Service Recreation Management System. Recreation use is only one part of the inventory; it accounts for expenditures, conditions of inventory. RVD Recreation Visitor Day It represents 12 visitor hours spent in any recreation activity. The hours may be aggregated continuously, intermittently, or simultaneously, by one or more persons. Suitability It includes the administrative criteria, site expansion potential, climatic suitability, land tenure, mineral land uses, etc. User Day The same as an activity day if the member of the household participated in only one activity (Murray 1990). Appendix 2 : Physical profile of Boneyard Lake it* oo 149 Appendix 3 : Physical Profile of MacDonald Lake SUKVCVEO O" C. UMti OME' i<" «,"0I SMOnE OUTLINE FnOM* Ain PHOTO OC 00002 039 RESOURCE ANALYSIS BRANCH MINIST nt OF THE ENVIRONMENT STATISTICS AT TIME OF SUDVEY 1. ELEVATION Z2B.6 m 2 SunrncE AREA 32,500 iq.m. 1. VOLUME 7G,OC0<am 4 EST ANNUAL FLUCTUATION — ». MEAN OEPTH 2 S in (.'MAX. OEP'H i "> 7. PERIMETER lOiO.m a. AllEA, M. CONTOUR 9. HEIGHT OF BENCH MARK ABOVE WATER LEVEL BIOLOGICAL SYSTEMS SECTION MacDONALD LAKE DEPTHS IN METERS ntC>0N- UIM co-onptM*ic to ))f/r 0*!( ' JVl t i*. tftt OtlawN • J A 8 *"u VI500 C»LCUI*HO»'I a r riot line § r fk\* 0*>C 0 * -', "92B/I2 // II ii ll li II H II Ii \\ \\ w w w 1 

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