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UBC Theses and Dissertations

Evaluation of forest land in British Columbia Robinson, E. A. F. 1969

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THE  EVALUATION IN  BRITISH  OF  FOREST  LAND  COLUMBIA  by  E.A.F. ROBINSON B.S.F., U n i v e r s i t y  of B r i t i s h Columbia, 1952  A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE  REQUIREMENTS FOR THE DEGREE OF MASTER OF FORESTRY  i n the Department of FORESTRY  We a c c e p t required  THE  this  t h e s i s as conforming  standard  UNIVERSITY OF BRITISH COLUMBIA APRIL, 1969  t o the  In p r e s e n t i n g an the  advanced  degree  Library shall  I further for  this  agree  scholarly  by  his  of  this  thesis  in p a r t i a l  fulfilment  of  at  University  of  Columbia,  the  make  that  it  permission  purposes  may be  representatives. thesis  for  freely  It  financial  available for  written" permission.  Department  of  The U n i v e r s i t y o f B r i t i s h V a n c o u v e r 8, Canada  by  the  understood  gain  Columbia  for  extensive  granted  is  British  shall  Head o f  be  requirements  reference copying  that  not  the  of  I agree and this  or  allowed  without  that  Study. thesis  my D e p a r t m e n t  copying  for  or  publication my  i  ABSTRACT  The  general  increased  demand f o r a l l types o f l a n d by v a r i o u s  u s e r s has i n t e n s i f i e d t h e problem o f e s t i m a t i n g  the v a l u e  of f o r e s t  l a n d , and o f a t t e m p t i n g t o b r i n g about i t s best use.  This t h e s i s sets f o r t h the t h e o r e t i c a l conditions f o r t h e optimum d i s t r i b u t i o n o f l a n d r e s o u r c e s ,  necessary  and analyses  some o f t h e  b a r r i e r s which e x i s t i n t h e r e a l w o r l d , both i n t h e market and i n the sphere o f p u b l i c d e c i s i o n - m a k i n g .  Current reviewed.  methods o f e v a l u a t i n g  f o r e s t l a n d i n B.C. a r e  The v a r i e d reasons f o r an a p p r a i s a l :  investment,  expropriation,  condemnation, damage a p p r a i s a l , t a x a t i o n , comparative e v a l u a t i o n and t r a n s f e r o f t e n u r e , e f f e c t i v e l y d i v i d e t h i s p o r t i o n o f t h e study, and form a b a s i s f o r comparison.  Demands f o r f o r e s t l a n d , s i n g l y and on a m u l t i p l e - u s e  basis  can o n l y be a r b i t r a t e d by a supra government body r e c r u i t e d from a d i s i n t e r e s t e d group o f p r o f e s s i o n a l r e s o u r c e t h a t t h i s department be p r o v i d e d construct  managers.  I t i s imperative  w i t h t h e knowledge n e c e s s a r y t o  economic as w e l l as t e c h n i c a l p r i o r i t y s c a l e s , so t h a t  d e c i s i o n s can be r a t i o n a l , and l e a d toward the best use of t h e r e s o u r c e .  ii  ACKNOWLEDGEMENTS  The w r i t e r acknowledges the guidance and c o n s t r u c t i v e c r i t i c i s m of her f a c u l t y advisors: and  Dr.R.Wellwood, d u r i n g  Dr.D.Haley, Dr.J.H.G.Smith  the p r e p a r a t i o n  of this t h e s i s .  S p e c i a l thanks a r e due t o Dr. and Mrs.C.D.Orchard and Mr.and Mrs.T.P.E.Wetton.  But f o r t h e i r continuous encouragement  t h i s v e n t u r e might never have been completed.  The study was f i n a n c e d (1967-68), and by a r e s e a r c h  by a t e a c h i n g  grant  assistantship  (1968), both from the F a c u l t y  of F o r e s t r y , U.B.C.  The generous a s s i s t a n c e  o f Mrs.M.Hamilton i n t y p i n g the  manuscript i s g r a t e f u l l y acknowledged.  iii  TABLE  OF  CONTENTS  ABSTRACT ACKNOWLEDGEMENTS  11  TABLE OF CONTENTS  111  LIST OF TABLES  v  INTRODUCTION  1  BARRIERS TO OPTIMUM EXPLOITATION THROUGH THE MARKET MECHANISM  CHAPTER I  A.  Efficiency  i n r e s o u r c e use  .  2  Spatial efficiency Temporal e f f i c i e n c y  CHAPTER I I  CHAPTER I I I  -  B.  F a c t o r s p r e v e n t i n g the optimum a l l o c a t i o n of the r e s o u r c e among uses.  C.  Factors preventing r e s o u r c e use.  the optimum r a t e of  5  10  DEVELOPMENT OF PUBLIC POLICIES IN THE TREATMENT OF FOREST LAND WHICH HAVE LED TO THE PRESENT DISTRIBUTION IN B.C. A.  H i s t o r i c a l development  B.  Park  C.  Present  of p o l i c y  development ownership i n B.C.  PRESENT EVALUATION  14 20 21  PRACTICES IN B.C.  A.  Forest  investment  26  B.  Comparative v a l u a t i o n  34  C.  E x p r o p r i a t i o n and comdemnation  37  iv  CHAPTER IV  CHAPTER V  CHAPTER VI  BIBLIOGRAPHY  -  -  -  D.  Damage a p p r a i s a l  41  E.  Taxation  45  F.  Transfer  o f tenure  52  MULTIPLE DEMANDS ON FOREST LAND A.  Forest  l a n d use c o n f l i c t s  54  B.  M u l t i p l e use concept  58  C.  Possible solutions  60  DISCUSSION A.  Market vs p u b l i c a l l o c a t i v e p r o c e s s  61  B.  Present p r o v i n c i a l p o l i c i e s and shortcomings  64  RECOMMENDATIONS AND CONCLUSIONS  66  71  LIST OF  TABLES  F o r e s t and non f o r e s t l a n d a r e a B r i t i s h Columbia.  Area c l a s s i f i c a t i o n  of  in  B.C.  Ownership and a d m i n i s t r a t i o n of areas i n B.C.  land  A r e a and average v a l u e per a c r e Crown-granted timber l a n d s .  of  1  INTRODUCTION  The purpose  of t h i s study i s to show how f o r e s t l a n d i s  e v a l u a t e d i n B.C, and whether the p r e s e n t system i s designed t o b r i n g about the b e s t use o f the r e s o u r c e .  The i m p e r f e c t i o n s of both the market and p u b l i c making a l l o c a t i v e systems  are explored.  decision-  I n the economic a n a l y s i s ,  the  c o n d i t i o n s n e c e s s a r y f o r the optimum a l l o c a t i o n o f l a n d r e s o u r c e s  are  p r e s e n t e d , and an attempt  prevent i t .  Barriers  which  t o optimum e x p l o i t a t i o n through the market  mechanism a r e i n v e s t i g a t e d . policy i n this  i s made t o show the many f a c t o r s  The h i s t o r i c a l  development  of public  f i e l d , as w e l l as p r e s e n t p r o v i n c i a l p o l i c i e s and  shortcomings a r e examined. C u r r e n t methods used t o e v a l u a t e f o r e s t l a n d f o r v a r i o u s purposes a r e i n s p e c t e d .  It  i s hoped t h a t such an approach, b e g i n n i n g a t a p u r e l y  economical optimum p o i n t and moving through c u r r e n t e v a l u a t i o n to a comparative assessment light  o f p u b l i c and market p r o c e s s e s , w i l l  shed some  on the means t o c o r r e c t the m i s a l l o c a t i o n s found i n both  systems. T h i s a n a l y s i s s h o u l d a l l o w the decision-maker t o advocate such p o l i c i e s as w i l l i s not c l e a r - c u t .  b r i n g about improvement even when the s i t u a t i o n  2  CHAPTER I  BARRIERS TO OPTIMUM RESOURCE EXPLOITATION THROUGH THE MARKET MECHANISM.  A.  E f f i c i e n c y i n r e s o u r c e use.  Maximum e f f i c i e n c y  i n r e s o u r c e use can be d e f i n e d i n two ways:  s p a t i a l l y , where an optimum i s found and  i n the d i s t r i b u t i o n between uses,  t e m p o r a l l y , where the b e s t d i s t r i b u t i o n between time p e r i o d s i s  obtained.  I n the former,  each s c a r c e r e s o u r c e  i n i t s b e s t use t o r e t u r n the h i g h e s t p r o f i t i n time.  t o i t s owner a t one p o i n t  With t h i s p e r f e c t d i s p e r s i o n of f a c t o r s i t would be i m p o s s i b l e  t o move a r e s o u r c e  f a c t o r from one employment t o another  d i m i n i s h i n g the n e t n a t i o n a l p r o d u c t temporal  f a c t o r w i l l be employed  (a P a r e t o optimum).  without The maximum  d i s t r i b u t i o n i s o b t a i n e d when the r e s o u r c e i s being used a t a  r a t e which maximizes i t s n e t p r e s e n t worth.  Spatial  efficiency  E a r l y B r i t i s h economists found a b a s i c o r d e r l i n e s s i n t h e i r f r e e e n t e r p r i s e economic system.  Adam Smith (1776) c a l l e d i t the  " i n v i s i b l e hand", by which each i n d i v i d u a l , w h i l e  f o l l o w i n g h i s own  s e l f i s h end, was l e d u n e r r i n g l y t o a c h i e v e the b e s t good f o r a l l under a f r e e l y c o m p e t i t i v e p r i c e system.  T h i s system f u n c t i o n e d i n an  3  economy where e v e r y t h i n g  had  production,  automatically  and  adjusted  In the l o n g run,  production  a p r i c e , - i n c l u d i n g the  to changes i n demand and  tended toward a n a t u r a l e q u i l i b r i u m  maximum s p a t i a l e f f i c i e n c y i n r e s o u r c e  use  employed i n t h e i r most p r o f i t a b l e use. both i n England and  In economic terms, a p u r e l y l a r g e numbers of buyers and  and  the i n a b i l i t y  sales.  One  s i n c e a l l f a c t o r s sought to  Trade and  competitive  sellers,  commerce i n t h a t  to i n f l u e n c e p r i c e by purchases  must a l s o assume t h a t the s o l e motive i n any  In the  short-run  c o n s t r a i n t that Marginal  Cost i s r i s i n g  (or M a r g i n a l  t h a t the l o n g - r u n e q u i l i b r i u m , w i t h no excess p r o f i t s the optimum s i z e of each o p e r a t i o n  at the  Long-run Average Cost c u r v e , i s obtained.  supply  c o s t s can  market i t i s assumed that Cost = M a r g i n a l  or  market  t h a t the p r i c e s and  u n t i l Marginal  operators  age,  market i s c h a r a c t e r i z e d  increase production  and  be  a homogeneous d i v i s i b l e p r o d u c t ,  t r a n s a c t i o n i s p r o f i t m a x i m i z a t i o n , and  will  and  market.  of buyer or s e l l e r  readily calculated.  supply.  i n N o r t h America, d i d indeed enjoy a freedom which  approached the p e r f e c t c o m p e t i t i v e  by  f a c t o r s of  be  firms  Revenue, w i t h  the  Revenue f a l l i n g ) i n the  industry,  lowest p o i n t i n  F r e e e n t r y and  so  the  exit  to  i n the i n d u s t r y i n the l o n g - r u n e q u i l i b r i u m , a p e r f e c t l y e l a s t i c  of each f a c t o r of p r o d u c t i o n ,  the output as  and  a p e r f e c t l y e l a s t i c demand f o r  f a r as each i n d i v i d u a l f i r m i s concerned, are  further  assumptions of t h i s market.  The  b a s i c tenet  knowledge and  f o r e s i g h t of a l l t r a n s a c t o r s , and  complete c e r t a i n t y . be  equal,  and  of p e r f e c t i o n i n an economic market i s the  I t follows  t h a t the  perfect  thus i t i s c o n d i t i o n e d  l e n d i n g and  borrowing r a t e s  t h a t the i n t e r n a l r a t e of r e t u r n on an investment  will,  by  will  4  a t the margin, always equal the market d i s c o u n t can be p r e s e n t to p r e v e n t the of s u p p l y and production,  demand.  and  It also follows  no  free functioning  There can  of the market  or b e n e f i t s  p r i v a t e costs  to confound the market.  and  throughout the economy. In order t h a t s u p p l y and equilibrium  equilibrium  be no economies or diseconomies i n  intangible costs  t h a t s o c i a l and  r a t e . No e x t e r n a l i t i e s  b e n e f i t s are demand may  move to  there must be a p e r f e c t m o b i l i t y of f a c t o r s . T h i s  strong  tenure over f a c t o r s but  purely  competitive  not  equal an  implies  a  n e c e s s a r i l y a complete ownership. A  market which i s p e r f e c t i s c a l l e d a p e r f e c t  competitive  market.  Under c o n d i t i o n s production, resources. the  and  of p e r f e c t c o m p e t i t i o n ,  tend to b r i n g about the  prices  determine  o p t i m a l a l l o c a t i o n of  scarce  Land of a c e r t a i n type, f o r example, would n o r m a l l y be. used i n  l i n e of work which promises the h i g h e s t  perfect competition  i n both p r o d u c t and  r e s o u r c e s would a u t o m a t i c a l l y  net  return.  I t i s only when  r e s o u r c e markets p r e v a i l s  be a l l o c a t e d to maximize the net  p r o d u c t . Thus, when every f i r m has  adjusted  employed u n t i l  Cost = Value of the M a r g i n a l  and  each f i r m ' s  Revenue, and  the M a r g i n a l F a c t o r output i s a t the  s u p p l y and  an e q u i l i b r i u m ,  the  the a c t u a l p r i c e p a i d  and  Product,  market i s at will  f a c t o r f o r each f i r m ,  this point  there w i l l remain  no  outputs w i t h o u t a m i s a l l o c a t i o n of f a c t o r s ,  a d e c r e a s e d net p r o d u c t ; and,  been reached.  factor  f o r each f a c t o r of p r o d u c t i o n  w i t h a l l a v a i l a b l e f a c t o r s employed. A t  and  of every  demand i n the p e r f e c t l y c o m p e t i t i v e  s h i f t s i n inputs  national  optimum l e v e l of M a r g i n a l Cost = M a r g i n a l  equal the V a l u e of the M a r g i n a l Product of the  possible  quantity  that  therefore,  a P a r e t o optimum w i l l have  5  Temporal  Optimum temporal  efficiency  efficiency,  or the b e s t r a t e o f use, must now  be c o n s i d e r e d i n order t o a r r i v e a t the maximum t o t a l e f f i c i e n c y i n resource e x p l o i t a t i o n .  I n t h i s case the r a t e o f p r o d u c t i o n w i l l be  o p t i m a l when the p r e s e n t worth or v a l u e  (net d i s c o u n t e d revenue) o f the  r e s o u r c e i s maximized. The c r i t e r i o n takes account  o f the t i m i n g o f  revenues and c o s t s , and weighs them a c c o r d i n g t o t h e i r occurrence  i n time,  thus, d i s c o u n t e d p e r i o d i c r e t u r n s and c o s t s a r e s c r u t i n i z e d , and the one " d i s t r i b u t i o n mix" over  time s e l e c t e d which promises the l a r g e s t  present  worth.  In terms o f economic r e n t ^ the p r e s e n t v a l u e of any useable r e s o u r c e i s always equal t o the sum of i t s d i s c o u n t e d f u t u r e r e n t s : P.W.  Where a  =  a i  =  average annual  i  =  discount rate  P.W.  =  p r e s e n t worth  economic r e n t  When the economic r e n t i s maximized, the p r e s e n t worth of a r e s o u r c e i s a t i t s maximum.  B.  F a c t o r s p r e v e n t i n g the optimum a l l o c a t i o n o f the r e s o u r c e among uses.  The  1.  optimum a l l o c a t i o n o f r e s o u r c e s among uses can be  thwarted  R o b i n s o n (1933) d e f i n e d economic r e n t t o i n c l u d e a l l payments a c c r u i n g to a f a c t o r u n i t o f p r o d u c t i o n i n excess of i t s o p p o r t u n i t y c o s t .  6  by n o n - p r i c e impediments, by i n c o r r e c t market v a l u e s , and by  direct  i n t e r f e r e n c e w i t h the p r i c e mechanism.  Land as a f a c t o r of p r o d u c t i o n has v a r i o u s i n h e r e n t The  total  supply cannot  be i n c r e a s e d , and  limitations.  so, t r a d i t i o n a l l y , i t  p r e s e n t s a p e r f e c t l y i n e l a s t i c supply curve, where market r e n t or purchase  p r i c e i s a c o s t which i s more p r i c e - d e t e r m i n e d than  determining.  However, to i n d i v i d u a l u s e r s , the supply curve w i l l  l e s s than p e r f e c t l y i n e l a s t i c , elastic  (Robinson J . 1933).  and may,  The  Long-run adjustments  i n s t a n c e s the former w i l l p e r s i s t where incomplete  Historically,  appear  i n some markets become q u i t e  i m m o b i l i t y of l a n d between uses stems  from i t s f i x e d l o c a t i o n as w e l l as i t s i n a b i l i t y short-run.  price-  may  to change uses i n the  r e s o l v e the l a t t e r , but i n some  remain. Less than p e r f e c t m o b i l i t y 2 tenure e x i s t s .  i n Canada, l a n d and  will  f o r e s t r e s o u r c e s havenj.t  gone'to the h i g h e s t b i d d e r but have been d i s p e r s e d by government u s i n g v a r i o u s non-market methods, and speculators  ( S c o t t 1958).  The  nowhere i n s i g h t , nor l i k e l y allocation  o f t e n buyers  l o n g - r u n e q u i l i b r i u m i n most cases i s  to come about.  Not  f a u l t y , but c u r r e n t governmental and  c o n t i n u e to l i m i t  have been b l i n d  f a c t o r uses, and  o n l y was  Crown l a n d may  original  i n s t i t u t i o n a l controls  o f t e n the o r i g i n a l uses i n f l u e n c e  t h e i r use p e r p e t u a l l y , d e s p i t e l a r g e economic changes. i n B.C.,  the  be purchased  outright  For example,  f o r a g r i c u l t u r e and f o r  a number of o t h e r uses, but not f o r f o r e s t r y , a l t h o u g h v a r i o u s incomplete  2.  tenures  f o r f o r e s t r y are a v a i l a b l e such as the Tree Farm  Complete tenure i m p l i e s l e g a l ownership, w h i l e any other type of r e n t a l , l e a s e , e t c . , i s termed incomplete (Barlowe 1958).  7  L i c e n c e , which i n some r e s p e c t s l i m i t s the tenant i n h i s management of  the r e s o u r c e .  Ignorance  on the p a r t of the f o r e s t owners, governmental and  i n s t i t u t i o n a l i n f l u e n c e s , and r i g i d i t i e s of custom and h a b i t may forest  l a n d from moving from low-paying  uses t o h i g h e r ones.  In a d d i t i o n ,  the market f o r f o r e s t l a n d u s u a l l y has too few t r a n s a c t o r s , and unequal  d i s p o s i t i o n of buyer and s e l l e r .  prevent  an  Lack of knowledge of l a n d  and f o r e s t v a l u e s not o n l y p r e v e n t s t h e s e r e s o u r c e f a c t o r s from r e a c h i n g t h e i r o p t i m a l use p o s i t i o n s , but a l s o i n h i b i t s the producer  from  c a l c u l a t i n g h i s c o s t s and r e t u r n s , or even d e t e r m i n i n g supply  and  demand curves i n the market.  Perhaps one t h a t of maximizing operation.  of the most important  n o n - p r i c e impediments i s  elements o t h e r than the t r a d i t i o n a l p r o f i t  i n an  Cyert and Marsh (1963) a n a l y s e d the g o a l s of the f i r m  its  e x e c u t i v e s , and  who  i n v e s t i g a t e d the time d i s c o u n t i n g of f i f t y major woodland owners  i n New  England,  l a n d was sought  found many a l t e r n a t i v e o b j e c t i v e s . . F l o r a  and  found t h a t f o r some, the o r i g i n a l investment  made to ensure  (1966),  i n forest  a continuous wood supply f o r t h e i r m i l l .  d e f e r r e d income f o r t h e i r r e t i r e m e n t or h e i r s .  wanted a e s t h e t i c v a l u e s and  Still  Others  others  recreation.  To these f a c t o r s s h o u l d be added the n a t u r a l b a r r i e r s of optimum s c a l e and  l a r g e c a p i t a l o u t l a y which are r e q u i r e d i n many  f o r e s t r y o p e r a t i o n s , and a r t i f i c i a l c o n c e n t r a t e d geographic  The  ones such as the power of  f o r e s t ownership or t e n u r e .  e x i s t e n c e of monopsony elements i n the timber market w i l l  8  r e s u l t i n i n c o r r e c t market v a l u e s . M o n o p s o n y , taken i n i t s b r o a d e s t sense  t o i n c l u d e monopsony, o l i g o p s o n y and other l e s s  m o n o p s o n i s t i c markets, i s c h a r a c t e r i z e d by one  completely  or a few  interdependent  buyers who  can c o n t r o l p r i c e , and many s e l l e r s or producers  resource.  A distinguishing  upward-sloping i t may  T o t a l Supply  of the  f e a t u r e of t h i s market group i s i t s curve  ( a l t h o u g h t o the i n d i v i d u a l  sellers  appear p e r f e c t l y e l a s t i c ) so t h a t M a r g i n a l F a c t o r Cost i s  g r e a t e r than Average F a c t o r Cost. Thus, the t y p i c a l monopsonist  restricts  the q u a n t i t y of the f a c t o r used, and h o l d s down i t s p r i c e so t h a t i t makes l e s s than i t s o p t i m a l c o n t r i b u t i o n t o the whole of s o c i e t y .  Such an o l i g o p s o n i s t i c market s t r u c t u r e was MeadU.S.A. and  a n a l y s e d by  (1966) i n h i s study of the Douglas f i r lumber i n d u s t r y i n the He  found s u p p l y and demand p r i c e i n e l a s t i c i t i e s  f a c t o r markets.  While a c o m p e t i t i v e s t r u c t u r e e x i s t e d i n the  lumber market, i m p l i c i t  and e x p l i c i t c o l l u s i o n among buyers  made the f a c t o r market an o l i g o p s o n y .  w i e l d e d a market power i n n a t i o n a l f o r e s t a s i g n i f i c a n t l y lower average  low, but was  On  of  A wide p r i c e d i s p a r i t y  found between c o m p e t i t i v e and n o n - c o m p e t i t i v e  small firms.  i n both p r o d u c t  timber s a l e s .  timber was  Large f i r m s  timber purchases, and  showed  c o s t f o r n a t i o n a l timber than d i d the  Economic c o n c e n t r a t i o n i n timber r e s o u r c e ownership  was  increasing.  the b a s i s of MeacL.'s markets we would expect to f i n d  e x c e l l e n t performance  i n lumber p r o d u c t i o n , and  timber p r o d u c t i o n or r e s o u r c e management.  something  T h i s was  less i n  not the case.  Progress i n technology and p r o d u c t i n n o v a t i o n has been poor i n the f o r e s t p r o d u c t i n d u s t r i e s compared w i t h o t h e r i n d u s t r i e s , and r e s e a r c h  9  has  lagged b a d l y .  P r i c e performance, too, was  might have been due found t h a t any  to the i n e l a s t i c supply  gains  unsatisfactory,  but  f u n c t i o n of timber.  from economic p r o g r e s s o c c u r r e d  Mead'  to the owners of  3 timber r e s o u r c e s . should  The  i n d i c a t e a r e l a t i v e l y poor performance i n timber  management, but  i t was  management would be concentration the  o l i g o p s o n i s t i c s t r u c t u r e i n the timber market  found t o be s u r p r i s i n g l y good.  improved, Mead-- f e l t ,  was  r a t h e r than timber s a l e s .  competitive  increased.  Too,  valuable  i n providing  wholesale l o g sales  coast  f o r e s t i n d u s t r y would be  guides f o r government and  Much of the b a s i c reasoning competitive  p r i c e system i s o p t i m a l  marketing u s e f u l goods and  behind the premise t h a t  by promoting h i s own  i n s t a n c e s where s o c i a l and p r i v a t e i n t e r e s t s do not a c t i o n s of p r o d u c e r s b e n e f i t others  are not  values  the  i s t h a t a producer p r o f i t s  s e r v i c e s , and  but  or they d i m i n i s h  very  industry.  he n e c e s s a r i l y promotes the i n t e r e s t s of s o c i e t y .  an e x t e r n a l economy;  the  1  A s i m i l a r study of the B.C.  But  by interests  there  are  coincide.  Some  they themselves are not the t o t a l r e t u r n s  charged f o r i t , an e x t e r n a l diseconomy.  paid,  to s o c i e t y  O f t e n market  are q u i t e c o r r e c t i n what they choose to measure, t h a t i s , the  r e l a t i v e s c a r c i t y of f a c t o r s and consumer a s s i g n them;  3.  toward  f e d e r a l government c o u l d a v o i d some of the adverse e f f e c t s of  o l i g o p s o n i s t i c market by h o l d i n g  and  However,  i f the t r e n d  of ownership of timber resources  resource  the v a l u e  the producer and  but .other b e n e f i t s and  c o s t s , and  the  intangible  S t a t i s t i c s f o r 1940-1964 showed t h a t lumber p r i c e s i n c r e a s e d but stumpage p r i c e s 1 6 - f o l d (Meade 1966).  4-fold,  and  10  s o c i a l v a l u e s must be a s s e s s e d and i n c l u d e d i n the o v e r a l l e s t i m a t e s of true value.  In the c h a l l e n g i n g f i e l d has been made i n t r y i n g  o f r e c r e a t i o n e v a l u a t i o n some p r o g r e s s  to b r i n g these v a l u e s t o the market. A r a t h e r  i n g e n i o u s method was o u t l i n e d by Pearse assumptions make the model unwieldy,  (1966), and w h i l e the r i g i d  the i d e a encourages the  measurement o f the h e r e t o f o r e i n t a n g i b l e v a l u e s a s s o c i a t e d w i t h  this  industry.  The p r i c e mechanism may not be a l l o w e d t o f u n c t i o n f r e e l y because of p r i c e f i x i n g and other c o n t r o l s by s t a t e and p r i v a t e One  groups.  common a r e a of i n t e r f e r e n c e i s i n product p r i c e supports or  s u b s i d i e s t o f a v o r e d i n d u s t r i e s such as a g r i c u l t u r e . true cost of using land resources.  These d i s t o r t the  Many other s i t u a t i o n s  reflect  i n t e r f e r e n c e : u n i o n demands f o r i n c r e a s e d l a b o u r f a c t o r p r i c e s c o r r e s p o n d i n g i n c r e a s e d p r o d u c t i o n t o warrant  without  i t ( p a r t i c u l a r l y i n the  f o r e s t i n d u s t r i e s ) , and government r e s t r i c t i o n s on the use o f l a n d . Some t a x e s , t o o , i n t e r f e r e w i t h the most e f f i c i e n t economic use o f l a n d , and here All  the f o r e s t i n d u s t r y appears  these prevent  the true.adjustment  The most r e s t r i c t i v e  t o bear an u n j u s t l o a d (Moore 1957). of supply and demand  elements.  f a c t o r i s the r e a l w o r l d , a p l a c e of  c o n s t a n t dynamic changes i n technology and use, which p r e v e n t s an e q u i l i b r i u m i n the market.  F a c t o r s p r e v e n t i n g t h e optimum r a t e of r e s o u r c e use.  While  the supremacy o f the p r e s e n t worth c r i t e r i o n i s f a i r l y  11  w e l l e s t a b l i s h e d as  the  soundest of the  t h e o r e t i c a l economic  f o r d e t e r m i n i n g the c o r r e c t r a t e of r e s o u r c e of development, i t has one  inherent  disadvantages.  or o p t i m a l i n t e n s i t y  The  assumption  can p r e d i c t the demand of the output, i t s p r i c e , the  involved i n production, every p o i n t i n the the  use,  future values  the market d i s c o u n t  f u t u r e are h e r o i c .  that  costs  r a t e , a p p l i c a b l e at  I t i s r e a d i l y seen t h a t most of  i n , f o r example, a f o r e s t investment p r o j e c t , are  a v a i l a b l e even f o r one  In e s t i m a t i n g time the d i s c o u n t  and  criteria  period.  the p r e s e n t  worth of a r e s o u r c e  r a t e i s c r u c i a l , and must be  f a c t o r through  stated a p r i o r i .  Not  only does a s l i g h t  change i n the r a t e used magnify changes i n the  present  i t o f t e n produces a change i n the  worth, but  a t t r a c t i v e n e s s of d i f f e r e n t r a t e s of f a c t o r use, mixes.  High d i s c o u n t  simplest  rates  favor e a r l y returns.  form, assumes t h a t d i s c o u n t  I t should competitive  a t the  some c o n t r o v e r s y  V i c t o r 1968)  the t i m e - d i s t r i b u t i o n The  over time.  perfect  l e n d i n g r a t e s are  identical.  e x i s t s between those who  I t has  favor  those who  been suggested  discount  (Hirshleifer  t h a t i f funds are s e l f - g e n e r a t i n g w i t h i n  development, the d i s c o u n t  r a t e should  i s borrowed to develop a r e s o u r c e , l o a n f o r the investment should the r e t u r n s  be  the  equal the r e - i n v e s t m e n t r a t e ,  t h a t r a t e which c a p i t a l c o u l d e a r n i n i t s next best  rate, provided  criterion in its  r a t e s remain constant  c o s t of borrowing c a p i t a l , and  a t the a l t e r n a t i v e l e n d i n g r a t e . 1958,  relative  remembered t h a t i t i s o n l y i n the  market t h a t borrowing and  When they d i f f e r , discounting  be  not  use.  If capital  then the r a t e of i n t e r e s t on used as the a p p r o p r i a t e  the  discount  from the output of the developed  resource  12  are used t o repay the l o a n .  A l s o j some d i f f i c u l t y a r i s e s when the  r e - i n v e s t m e n t r a t e i s the r a t e of r e t u r n on other foregone because o f some r e s t r a i n t . m a r g i n a l investment i s n ' t e v i d e n t itself  opportunities  The r a t e o f r e t u r n on the  until  the investment program  i s determined, y e t the program cannot be determined w i t h o u t  knowing the d i s c o u n t  rate.  Another problem i n u s i n g  the p r e s e n t  worth c r i t e r i o n appears  when t h e r e must be a c h o i c e made between "mixes" o f d i f f e r e n t c a p i t a l intensities.  As an a b s o l u t e  c r i t e r i o n favors  rather  than a comparative index, the  l a r g e investment over s m a l l  l i m i t e d c a p i t a l , present  worth t e l l s n o t h i n g  ones.  I n the case of  about the r e l a t i v e  e f f i c i e n c y a t which development p r o j e c t s e a r n net r e t u r n s .  T h i s c r i t e r i o n i s best a v a i l a b l e to f i l l  a p p l i e d when only one p r o j e c t i s  some g i v e n need, and where a l t e r n a t i v e s e x i s t i t  may be l e s s u s e f u l .  Other c r i t e r i a have been used e x t e n s i v e l y the economic f e a s i b i l i t y various  projects.  of resource  f o r determining  development and f o r r a n k i n g  Both the b e n e f i t - c o s t r a t i o and the i n t e r n a l r a t e  of r e t u r n c r i t e r i a have m e r i t .  B e n e f i t - c o s t r a t i o can be expressed i n  non-monetary terms and can measure p r o f i t a b i l i t y p e r u n i t of c o s t , or the r e l a t e d e f f i c i e n c y w i t h which r e s o u r c e s  a r e used.  a d a p t a b l e where investment funds a r e i n s h o r t supply  I t i s eminently r e l a t i v e to  p r o j e c t s , and does not favor monetary l a r g e s s e ; but i t s u f f e r s w i t h the p r e s e n t The  worth c r i t e r i o n  from the n e c e s s a r y a p r i o r i d i s c o u n t  rate.  beauty o f the i n t e r n a l r a t e o f r e t u r n i s t h a t i t can be used  without s p e c i f y i n g a discount  rate.  However, t h e r e  i s the i m p l i c i t  13  assumption t h a t a l l r e t u r n s  i n t h e - p r o j e c t can and w i l l be r e - i n v e s t e d •  a t the same r a t e of r e t u r n of the o r i g i n a l shown, too,  negative  The  of m u l t i p l e p o s i t i v e s o l u t i o n s may  p e r f e c t competitive  the r e a l w o r l d i s one  market and  of u n c e r t a i n t y and  risk.  With r i s k one  The  and  ability  presents  future  f o r means to  gained  i n d e c i s i o n theory,  for  planning  mathematical  s i m u l a t i o n cannot be  over emphasized,  i t must be remembered t h a t these t o o l s are only guides f o r  d e c i s i o n - m a k e r , n e i t h e r r e f i n e d nor two  no i n f o r m a t i o n about  tremendous new  a l l o c a t i n g scarce resources  programming, m o d e l - b u i l d i n g but  has  infallible.  I t i s doubtful  problems i n f o r e s t r y w i l l be e x a c t l y a l i k e , and  human judgement based on e x p e r i e n c e  and  sense, w i l l  as  always be p r e s e n t .  But  intuition,  the element and  the i f any of  perhaps common  the f i e l d becomes more complex,  and  the simple  and  the time element becomes of utmost importance, any  r e l a t i o n s h i p s become a maze of i n t e r r e l a t i o n s h i p s ,  w i l l p o i n t toward the c o r r e c t path must be Vaux (1966) n e a t l y summed up by w i l l help  But  can  uncertainty  E x c i t i n g f i e l d s have been opened i n the search uncertainty.  discussed  knowledge of outcomes from a c t i o n s .  a much g r e a t e r problem i n t h a t one  and  occur w i t h more than  a l l the c r i t e r i a  o b j e c t i v e l y a s s i g n a p r o b a b i l i t y to the event, but  deal with  and  s e c t i o n i n the cash flow sequence (Johnston jet a l . 1967).  assume complete c e r t a i n t y and  events.  been  t h a t t h i s c r i t e r i o n i s not a s i n g l e - v a l u e d f u n c t i o n ,  the p o s s i b i l i t y one  investment. I t has  considered  method which of some v a l u e .  s a y i n g "Rough data at the r i g h t moment  the decision-maker more than r e f i n e d data a v a i l a b l e only when  the time f o r d e c i s i o n i s p a s t " .  14  CHAPTER I I  DEVELOPMENT OF PUBLIC POLICIES IN THE TREATMENT OF FOREST LAND WHICH HAVE LED TO THE PRESENT DISTRIBUTION IN B.C.  Historical  development o f p o l i c y .  I t i s a s e l f - e v i d e n t f a c t t h a t both  f e d e r a l and p r o v i n c i a l  p o l i c i e s have not aimed a t a l l o c a t i n g l a n d r e s o u r c e s b i d d e r or t o the o p t i m a l use. Canada r e s t s on the c l a s s i c a l  t o the h i g h e s t  The b a s i c a g r i c u l t u r a l p o l i c y i n concepts  o f Malthus and R i c a r d o .  These  e a r l y w r i t e r s saw an i n c r e a s i n g demand f o r food brought about by p o p u l a t i o n p r e s s u r e , and where the v a l u e o f farm products r e l a t i v e t o manufactures.  Their ideas penetrated  would  rise  the l a n d  a l l o c a t i v e p o l i c i e s which encouraged wide-spread ownership i n a g r i c u l t u r a l lands i n order  to b r i n g about an e q u i t a b l e  of the supposed g r e a t e r income which would accrue than  to labor.  distribution  to land rather  C o n f l i c t i n these demand-oriented p o l i c i e s has been  i n e v i t a b l e i n the f a c e o f l a r g e s u r p l u s e s i n both Canadian and American a g r i c u l t u r e . compelled  Countries with  low d i e t a r y l e v e l s a r e  t o devote a major p o r t i o n o f t h e i r r e s o u r c e s  t o food  p r o d u c t i o n , but i n Canada, w i t h h e r abundant s u p p l i e s o f food, the need f o r any s p e c i a l  treatment  f o r a g r i c u l t u r e s u r e l y no l o n g e r  15  exists.  Other than f o r a g r i c u l t u r a l use, where l a n d has c o n s i s t e n t l y s o l d o u t r i g h t or pre-empted, there has  been  been a  strong  tendency f o r governments to r e t a i n ownership to l a n d i n a l t e r n a t i v e uses.  Those c r i t i c a l  of Grown ownership of f o r e s t l a n d i n  might remember t h a t i t e v o l v e d t o buy  p a r t l y because e a r l y s a w m i l l e r s  f o r e s t l a n d ( H a r d w i c k 1962).  In 1865  f o r c e d to i n s t i t u t e a system of g r a n t i n g  the government  p a t t e r n of Crown ownership which developed early expediencies,  and,  as S l o a n  y i e l d p o l i c i e s , but  by  t h e r e was  ( i n c l u d i n g timber). classes. F i r s t  4.  95 per cent Canada.  or  the r e s u l t of those  pointed  out,  or on l o n g - t e r m  an h i s t o r i c development (Sloan no  the sustained  industry. as used  1956).  d i s t i n c t i o n drawn between timbered  and  the e a r l i e s t d i s p o s a l s of Crown l a n d i n  them a l l the n a t u r a l r e s o u r c e s  c u l t i v a t i o n , and  leases  The  l e g a l d e f i n i t i o n of f o r e s t l a n d i n B.C.  untimbered l a n d , and  use  industry.  of h e l p i n g i n the development of a new present  c a r r i e d with  These f i r s t  on  on the immediate o b j e c t i v e s of o b t a i n i n g Crown  the government has  Originally  was  (1956) has  d e c i s i o n s ; were not based on c o n s e r v a t i o n  The  was  to those a c t u a l l y engaged i n c u t t i n g lumber, spars  timber, as a measure to encourage the s a w m i l l i n g 4  revenue, and  refused  the r i g h t s t o cut timber  Crown l a n d w i t h o u t a l i e n a t i o n of the l a n d i t s e l f . were r e s t r i c t e d  B.C.,  The  Land A c t  of 1891  appurtenant  1858  thereon  c l a s s i f i e d - ' l a n d roughly  c l a s s lands were s u i t a b l e f o r lumbering  or  those to be used f o r lumbering were to c o n t a i n  of f o r e s t l a n d i n B.C.  i s Crown, by  into  f a r the h i g h e s t  not  in  16  less to  than. 5000 f e e t per a c r e to'each 160  t r a c t s between 160  and  640  a c r e s , and  a c r e s . In 1896  l a n d c a r r y i n g 8000 fbm per a c r e f o r Coast  s a l e s were l i m i t e d '  t i m b e r l a n d was  d e f i n e d as  f o r e s t s , and 5000 fbm  per  a c r e i n the I n t e r i o r . L e g i s l a t i o n p r o h i b i t e d i t s s a l e , a l t h o u g h  the  r u l i n g ; ; was still  not s t r i c t l y  e n f o r c e d . f o r some time.  i n effect.  The  This d e f i n i t i o n i s  1  a l i e n a t i o n of Crown l a n d s , e s p e c i a l l y  f o r e s t l a n d , as  payment f o r r a i l w a y s i n B.C.  i s a b i z a r r e and  (Robinson E. 1962).  some 18% m i l l i o n a c r e s of Crown l a n d had  been g r a n t e d  By 1913  f o r r a i l w a y purposes.  a r a b l e l a n d i n the p r o v i n c e  colourful story i n i t s e l f  I t must have i n c l u d e d most of the  ( C a i l 1956).  I t went on r e c o r d t h a t when  2 m i l l i o n a c r e s of prime f o r e s t l a n d on Vancouver I s l a n d , the celebrated Esquimalt c a u t i o u s M.P.  and Nanaimo Railway  from New  lands were to be a l i e n a t e d , a  Westminster f e l t " t h a t the government s h o u l d  h e s i t a t e b e f o r e they g i v e away a l l t h i s l a n d " . S i n c e those generous days o f l a n d g r a n t s t h e r e has Columbia and Western Railway both bought back by the repurchase million  been some prudent lands and  repurchasing.  the Southern Railway  the government. A 1956  of the E. and N. Railway  The  lands were  p r o p o s a l by S l o a n aimed a t  f o r e s t lands f o r about  108  dollars.  Hardwick's  (1962) f a s c i n a t i n g t a l e of the  development of the f o r e s t i n d u s t r y of C o a s t a l B.C., geographic  historical and  resultant  d i s t r i b u t i o n , p o i n t e d out the e f f e c t s of p r o v i n c i a l  government p o l i c i e s ,  t h e i r aims, and  the e x t e n t to which they were  realized.  The  f i r s t mills  on the B.C.  c o a s t l o c a t e d on t i d e w a t e r  on  17  s h e l t e r e d bays i n the r e g i o n o f the best Douglas f i r stands. operations  saw the tremendous advantage of cheap water t r a n s p o r t a t i o n  of l o g s , and o f deep-sea p o r t marketing t h e i r products.  facilities  on B u r r a r d  Inlet for  T h i s happy combination was r e s p o n s i b l e f o r  the l a r g e growth i n the c o a s t a l f o r e s t i n d u s t r y . depleted  Early  As stands became  around Vancouver, l o g g i n g extended up the Coast, bypassed  Howe Sound because o f i t s steep  s l o p e s , and g r a d u a l l y s t a r t e d a flow  of l o g s southward t o the s a w m i l l i n g l o g s has c o n t i n u e d  during  centre  o f Vancouver.  T h i s flow o f  the development o f the i n d u s t r y ,  extending  beyond the s h e l t e r e d i n n e r water between Vancouver I s l a n d and the mainland t o the more exposed c o a s t l i n e , as advances i n log-towing this possible.  The sawmills,  except f o r A l b e r n i , were  made  concentrated  around Vancouver because t h e whole Douglas f i r r e g i o n which was a c c e s s i b l e to tidewater conversion  plants.  was e c o n o m i c a l l y  a c c e s s i b l e t o Vancouver  P u l p m i l l s , because o f t h e i r water and hydro-  e l e c t r i c requirements f o l l o w e d a p e r i p h e r a l p a t t e r n o f l o c a t i o n , and as  they used hemlock r a t h e r than Douglas f i r ,  outside  the prime Douglas f i r r e g i o n .  converging  on main c e n t r e s  allowed  i n d u s t r y which i n t e n s i f i e d w i t h  chose t o be near stands  T h i s stream of raw m a t e r i a l  a c e r t a i n s p e c i a l i z a t i o n i n the  time, so t h a t economics i n p r o c e s s i n g  were p o s s i b l e .  The  5.  beginning  of the Vancouver l o g market, an almost p e r f e c t 5  market f o r raw m a t e r i a l , was a l s o one o f the main f a c t o r s forming  this  unique.- p a t t e r n .  were  Logging o p e r a t i o n s  and m a n u f a c t u r i n g o p e r a t i o n s  T h i s market i s s t i l l s t r o n g l y favoured by some, but i t has shrunk t o a p o i n t where i t a t t r a c t s only about 20% o f the t o t a l l o g s c u t i n the Vancouver F o r e s t D i s t r i c t , and i's a b a s i s f o r trade r a t h e r than s a l e . (B.C.Forest S e r v i c e Annual R e p o r t and Average Log P r i c e s 1964).  18  almost  completely divorced.  Loggers  put t h e i r p r o d u c t s on the open  l o g market i n Vancouver through a b r o k e r , c o n f i d e n t t h a t buyers d i v e r s i f i e d needs would guarantee the manufacturers  them c o m p e t i t i v e p r i c e s .  Because  were r e a s o n a b l y a s s u r e d of a steady supply of  i n d i v i d u a l requirements  with  their  they c o u l d i n c r e a s e t h e i r p l a n t s i z e t o reap  economies o f s c a l e not p o s s i b l e i n an i s o l a t e d r e g i o n .  F o r e s t i n d u s t r i e s began to i n t e g r a t e when some doubt arose t h a t the supply of raw m a t e r i a l would c o n t i n u e i n d e f i n i t e l y . had  t o p r o t e c t t h e i r investments  supply of l o g s .  Companies  by g a i n i n g c o n t r o l of an a s s u r e d  S u s t a i n e d y i e l d l e g i s l a t i o n encouraged  this  type of  i n t e g r a t i o n , making long-term tenures of f o r e s t stands t o e s t a b l i s h e d manufacturers.  Because a c e r t a i n s i z e was  b e n e f i t s of t h i s system  of l i c e n s i n g ,  by P u b l i c Working C i r c l e s , government.  sustained y i e l d units controlled  and i s s t i l l  the  s m a l l o p e r a t o r s were p a c i f i e d Y  T h i s d i v i s i o n has produced  l o g g e r s and millmen,  almost mandatory t o reap  by  hard f e e l i n g s among s m a l l  h i g h l y c o n t r o v e r s i a l . The s u s t a i n e d  y i e l d p o l i c y , by . c u r t a i l i n g the c u t i n an a r e a , f o r c e d many o p e r a t o r s to seek timber  farther a f i e l d .  Government stumpage zones,  too, were  e s t a b l i s h e d t o promote a d i s p e r s i o n of c o n v e r s i o n p l a n t s , but p o l i c y has  largely  failed.  Only  the"grouped  this  m i l l " at Port A l b e r n i ,  r e l a t i v e l y near i t s timber s u p p l y , has e v o l v e d i n a manner v i s u a l i z e d by the government. The  g e n e r a l l o n g - r u n w o r l d demand f o r p u l p has  development o f p u l p m i l l s i n B.C.  The new  (Pulpwood H a r v e s t i n g Area) superimposed  speeded the  p u l p economy tenure  on the o r i g i n a l  has made l a r g e pulpwood s u p p l i e s a v a i l a b l e , and  sawlog  technological  system advances  19  have made these economical  t o h a r v e s t . D e s p i t e s o f t , but g r a d u a l l y  improving markets f o r pulp a t p r e s e n t , t h e r e i s a scramble the c o n t r o l o f an i n v e n t o r y of pulp timber, be made l a t e r . requires  i n B.C. f o r  f o r which payment i s t o  U n f o r t u n a t e l y , but perhaps o f n e c e s s i t y , l e g i s l a t i o n  t h a t p u l p m i l l s be b u i l t a t the same time.  and p r e c l u d e s an e c o n o m i c a l l y "timed"  It is inefficient  p a t t e r n o f development. Some  r e c e n t l y b u i l t p u l p m i l l s a r e o p e r a t i n g f a r below c a p a c i t y and g l u t t i n g the p r e s e n t over s u p p l i e d market. p r o d u c t i o n on schedule,  I f every proposed  mill  begins  the s i t u a t i o n might become more s e r i o u s .  A t p r e s e n t one o f the most c r u c i a l economic i s s u e s i n B.C. f o r e s t r y i s the o f f s p r i n g o f the s u s t a i n e d y i e l d p o l i c y , the allowable cut.  The governmental use of r o t a t i o n ages based  on m.a.i.  of wood volumes makes the c y c l e l o n g e r than i f maximum v a l u e r o t a t i o n s were used. of the p r o v i n c i a l used  In addition,  inventory.  (Smith and Haley  Ideally,  underestimation  f i n a n c i a l r o t a t i o n s should be  1964), as these can i n c r e a s e a l l o w a b l e cuts  s a f e l y w h i l e t a k i n g i n t o account inefficiency  there i s a gross  the a l t e r n a t i v e r a t e s o f r e t u r n . The  o f the whole system i s e s p e c i a l l y obvious when one notes  t h a t d e p l e t i o n due t o decay and a l l m o r t a l i t y f a c t o r s exceeds the c u t .  The  continuous  stream e n v i s a g e d by S l o a n  and h a r v e s t i n g b a l a n c e d ,  (1956) w i t h growth  leans h e a v i l y toward c o n s e r v a t i o n i s t  p r i n c i p l e s and makes no allowance  f o r changes i n markets and technology  i n a dynamic economy. I n a d d i t i o n , a p o l i c y which p r e s c r i b e s an i n e l a s t i c supply i n the f a c e o f v a r i a b l e demand can o n l y l e a d t o i n s t a b i l i t y i n the market (Haley 1966).  20  B.  Park development.  Some mention must be made of the s i z e a b l e a r e a of f o r e s t l a n d h e l d i n f e d e r a l and p r o v i n c i a l parks. About 3.1% p r o v i n c i a l a r e a i s o c c u p i e d by parks.  a c c u r a t e l y the e x t e n t of commercial  of the  It is difficult  total to-.•estimate 6  f o r e s t cover i n these p a r k s ,  t h e r e are c o n s i d e r a b l e timber v a l u e s which many ( K i e r n a n W i l l i s t o n 1964)  b e l i e v e can be h a r v e s t e d w i t h l i t t l e  e f f e c t t o the r e c r e a t i o n a l v a l u e s .  but  1964,  or no  harmful  Present l e g i s l a t i o n p r o h i b i t s  any  r e s o u r c e e x p l o i t a t i o n s i n c e r t a i n types of park. Historically primarily and  the f i r s t r e a l p r o v i s i o n f o r r e s e r v i n g l a n d  f o r park purposes  was  the " P r o v i n c i a l Parks A c t " i n  1908,  f o r many years i t s e r v e d as a means of g r a n t i n g s m a l l r e c r e a t i o n a l  a r e a s , t o g e t h e r w i t h the whole of t h e i r management t o l o c a l boards i n m u n i c i p a l i t e s and  cities  (Noble  1965).  But  park  from 1911  to  1930  l a r g e w i l d e r n e s s p r o v i n c i a l parks were c r e a t e d . These were c o n s i d e r e d r e s e r v e s f o r f u t u r e use i n t h a t there were no development.  formal p l a n s f o r t h e i r  However, d u r i n g the d e p r e s s i o n , p u b l i c funds and  idle  l a b o u r were a l l o c a t e d to develop v a r i o u s p r o v i n c i a l p a r k s , and  this  development has  c o n t i n u e d a t d i f f e r e n t r a t e s ever s i n c e . A t  b e g i n n i n g of World War was  I I the a d m i n i s t r a t i o n of the p r o v i n c i a l  g i v e n to the F o r e s t S e r v i c e , more f o r expediency  reason. The  phenomenal r i s e i n demand f o r outdoor  See  T a b l e I I I page  25/  parks  than f o r any  other  r e c r e a t i o n a l areas i n  the f o l l o w i n g twenty years c r e a t e d p r e s s u r e s f o r s u b s t a n t i a l  6.  the  21  development.  C l a s s e s of park were d e f i n e d , g i v i n g those w i t h  development p o t e n t i a l  the s t r o n g e s t p r o t e c t i o n from any  r e s o u r c e e x p l o i t a t i o n or c o m m e r c i a l i z a t i o n . remote and  Other  immediate  type of  parks, o f t e n very  i n a c c e s s i b l e , were r e s e r v e d f o r f u t u r e development, and were  a l l o w e d some secondary  r e s o u r c e use  such as l o g g i n g and mining,  the p r o v i s o t h a t such uses would not i n t e r f e r e w i t h  with  primary  recreational values.  A t p r e s e n t 226 p r o v i n c i a l parks of  c o n t a i n some 6,400,000 a c r e s ,  which 90 per cent i s c o n c e n t r a t e d i n w i l d e r n e s s parks  comparatively l i t t l e  access.  with  An a d d i t i o n a l 325,000 a c r e s are  loosely  r e s e r v e d " f o r the use, r e c r e a t i o n and enjoyment of the p u b l i c " possibly  f o r f u t u r e park development  The  f o u r n a t i o n a l parks  (Noble  and  1955).  i n B.C.,which t o t a l a l i t t l e  m i l l i o n a c r e s , w i t h perhaps a t h i r d i n f o r e s t l a n d ,  over a  are s t r e t c h e d a l o n  the R o c k i e s , and were o r i g i n a l l y c o n c e i v e d as r a i l w a y parks. They are a d m i n i s t e r e d by the N a t i o n a l Parks S e r v i c e of the f e d e r a l government, and are w e l l managed, and h i g h l y developed of  i n c e r t a i n a r e a s . A l l types  r e s o u r c e e x p l o i t a t i o n , i n c l u d i n g h u n t i n g , are p r o h i b i t e d i n these  parks.  Present ownership i n  B.C.  Of the 366,000 square m i l e s which make up the e n t i r e l a n d and f r e s h water a r e a i n B.C.  i t i s e s t i m a t e d t h a t n e a r l y 60 per cent i s  under some form of p r o d u c t i v e and  l o w - s i t e f o r e s t cover  (B.C.Forest  22  Service  1957). The  f o l l o w i n g two  complete a r e a  classification  occupy 50 per  cent  and meadow t o g e t h e r of b a r r e n will  and  of the  tables  of B.C.  (I and  I I on page23 and  Areas b e a r i n g  commercial f o r e s t s  t o t a l acreage, w h i l e a g r i c u l t u r e , urban, range  c o n s t i t u t e l e s s than !•  per  cent.  n o n - p r o d u c t i v e t r e e cover, some 36 per  The cent  l i k e l y , of n e c e s s i t y , remain i n i t s n a t u r a l s t a t e  (Kiernan  24) show' the  large of the  area total,  forever  1964).  Four main ownership c l a s s e s of f o r e s t l a n d were r e c o g n i z e d the 1957  inventory  Service.  of f o r e s t r e s o u r c e s  compiled by  the B.C.  in  Forest  These were:-  By  using  1.  P r o v i n c i a l Crown  2.  Private  3.  Crown l a n d under l i c e n c e s and  4.  Federal  ( p r o v i n c i a l Crown-granted) leases  (Canada c o n t r o l l e d )  data from the 1957  inventory  and  the 1967  Annual  Report of the B.C.Forest S e r v i c e an up-to-date t a b l e showing ownership and  administration  of f o r e s t l a n d areas has  been assembled  rounded).  For convenience, ownership c l a s s e s 1 and  combined.  See  T a b l e I I I page  possible  total.  3 above have been  25.  F o r e s t managed under some form of s u s t a i n e d over 85,000,000 p r o d u c t i v e  (figures  acres  i n B.C.,  y i e l d now  or about 60 per  cent  include of  the  TAB LE I  23  (  FOREST  AND  NON  FOREST  LAND  Total:  AREAS  2 34,11 5,331  IN  BRITISH  COLUMBIA  acres  Agricultural and Urban 0 . 7 % 1.4 m i l l i o n a c r e s  Bearing Not  Commercial  Bearing  Basis:  Entire  Commercial  land  50.3%  Forest  Forest  and fresh (Table  water  7.9%  area  total of  acreage.  total  in B r i t i s h  acreage.  Columbia.  A--1 P r o v i n c e ) . Figure  Source:  of  1  Department o f Lands and F o r e s t s , B.C., 1957 Continuous F o r e s t Inventory, o f B r i t i s h Columbia Table- A-1 F i g u r e 1.  24 TABLE I I .  Class  of Land and F o r e s t  Millions  of A c r e s  F o r e s t Land  Bearing  Commercial  Forest:  Productive Forest Low S i t e F o r e s t  Not B e a r i n g  Commercial  110.1 7.9  Forest:  Non-commercial F o r e s t Not-Satisfactorily-Restocked Forest  Selectively  Logged F o r e s t  12.0 6.4  0. 3  T o t a l , F o r e s t Land  136.7  Non F o r e s t Land  Agricultural  and Urban  Barren  1.4 50.1  Non P r o d u c t i v e  Tree Cover  34.6  Range and Meadow  2.4  Swamp  2.8  T o t a l , Non F o r e s t Land Water  6.1  T o t a l , Province  Source:  91.3^  234.1  Department of Lands and F o r e s t s B.C. 1957 Continuous F o r e s t I n v e n t o r y o f B r i t i s h Columbia page 14.  25  TABLE I T I  OWNERSHIP AND ADMINISTRATION OF FOREST LAND AREAS IN B.C. ( a c r e s )  P r o v i n c i a l Crown Crown - u n r e s e r v e d and g a z e t t e d f o r e s t r e s e r v e s Public sustained y i e l d units Tree Farm L i c e n c e s (Crown land) Tree Farms (not i n T.F.L's) Farm Woodlot L i c e n c e s Watersheds P r o v i n c i a l Parks  41,082,000 75,700,000 8,200,000 1,000,000 16,000 38,000 2,964,000 129,000,000  P r o v i n c i a l Crown - g r a n t e d Tree Farm L i c e n c e s ( p r i v a t e land) Watersheds Other p r i v a t e l a n d  1,400,000 25,000 5,175,000 6,600,000  Federal N a t i o n a l Parks I n d i a n Reserves Other l a n d s  375,000 560,000 165,000 1,100,000  26  CHAPTER I I I  PRESENT EVALUATION PRACTICES IN  Forest  B.C.  Investment  Under p e r f e c t c o n d i t i o n s , market e q u i l i b r i u m of supply  and  l a n d p r i c e s would be determined demand, and,  knowledge, would equal the c a p i t a l discounted  sum  because of p e r f e c t  of the expected net  a t the market borrowing or l e n d i n g r a t e  perfect competition).  T h i s i s the  by  returns,  (equal  f a m i l i a r net p r e s e n t  under  worth  criterion.  In f o r e s t r y , Faustmann (1846) p r e s e n t e d e s s e n t i a l l y t h i s concept f o r e v a l u a t i n g " l a n d e x p e c t a t i o n "bare l a n d v a l u e " ) .  Despite  value"  (or " s o i l v a l u e "  i t s economic soundness i t has  to a s u r p r i s i n g l y l i m i t e d degree f o r d e t e r m i n i n g optimum r o t a t i o n age.  Haley's  r a t e and  i n f l u e n c e d by  s t o c k i n g index. F u r t h e r ,  c o r r e l a t e d to the v a l u e any  he  growth, and  timber grades produced. increase  financial  i n establishment  the  site quality, alternative interest found t h a t i t was  growth f u n c t i o n , and  f a c t o r s which tend to change t h i s  yields, accelerated  been used  (1963) e m p i r i c a l s t u d i e s showed t h a t  f i n a n c i a l r o t a t i o n was  or  closely  therefore influenced  f u n c t i o n , such as  intermediate  the change i n the r e l a t i v e v a l u e  Pearse (1967) has  shown t h a t , i n theory,  c o s t s w i l l always i n c r e a s e  the  by  optimum  of an  27  r o t a t i o n age,  a l l other  f a c t o r s being  Other investment c r i t e r i a : r e t u r n can be used to e v a l u a t e mindful  b e n e f i t - c o s t and  investments f o r v a r i o u s  these c r i t e r i a i g n o r e  Marty  r i s k and  objectives,  uncertainty  in their  simplest  c o u l d be made w i t h o u t i g n o r i n g u n c e r t a i n t i e s . In h i s  system, a l t e r n a t i v e s are d i s r e g a r d e d  because of c l e a r l y  low-return  or u n p r o f i t a b l e r e t u r n s , u n t i l a set of a l t e r n a t i v e s i s l e f t  which s u b j e c t i v e judgement must be made.  I t d e p a r t e d from  f a b r i c a t e d neatness of other  p r e s e n t e d r e s u l t s based  c r i t e r i a and  a v a i l a b l e , not h y p o t h e t i c a l , i n f o r m a t i o n , n e a r e r r e a l i t y as  The the  of  (1964) attempted to show a method whereby f o r e s t investment  d e c i s i o n choices  values  i n t e r n a l rate  of t h e i r l i m i t a t i o n s under c e r t a i n c i r c u m s t a n c e s .  All form.  equal.  on  the on  which are p r o b a b l y as near or  those based on other more t h e o r e t i c a l c a l c u l a t i o n s .  d i s c u s s i o n i n t h i s s e c t i o n assumed p r o f i t m a x i m i z a t i o n as  only g o a l i n f o r e s t investment d e c i s i o n s . T h i s i s not always  case ( F l o r a 1966,  H e l l i w e l l , D.  1967,  Espring  1958,  the  Teeguarden arid  Von  Sperber 1967).  For  large integrated conservative  corporations  the  plant  investment promises the h i g h r e t u r n , and  the investment i n timber  resources  flow of m a t e r i a l where open  provides  the  crucial  market sources are u n c e r t a i n , return,  Pearse  sustained but  does not r e q u i r e a h i g h r a t e  (1965) observed t h a t the v a l u e  f o r e s t l a n d purchased p r i v a t e l y i n B.C. an investment f o r f u t u r e f o r e s t s , but the a l l o w a b l e  of immature or  d i d not r a t h e r was  reflect  of cutover  i t s value  as  a means f o r i n c r e a s i n g  cut on the company's whole ownership and  Crown tenure  28  under a s u s t a i n e d  For  yield policy.  the s m a l l  such a m u l t i t u d e  timber owner, f o r e s t r y investment i s governed  of f a c t o r s t h a t i t i s d i f f i c u l t  to untangle the  Perhaps foremost i n these i s i g n o r a n c e on the p a r t of the a l t e r n a t i v e investment o p p o r t u n i t i e s . very  d e s i r a b l e values  t o the  Also,  owner, and,  cover e v e r y t h i n g  skein.  owner of  f r i n g e b e n e f i t s may  provide  i n many cases a " s a t i s f i c i n g " • •  r a t h e r than a maximum net r e t u r n i s a c c e p t a b l e . p r o f i t expectations?  by  Who  can  pinpoint  They are p e c u l i a r t o the i n d i v i d u a l and  could  from a f e e l i n g of c o n v i c t i o n to the merest t o y i n g w i t h  a w i l d hope.  State p o l i c i e s , as  the  superior goal  too, do.: not  u s u a l l y assume p r o f i t  i n t h e i r endeavours, nor  they b u i l t  on  r a t i o n a l economic a n a l y s e s .  As  N o r t h American f o r e s t s , "Too  o f t e n , e s p e c i a l l y when Government i s  l a n d l o r d , p o l i c y d e c i s i o n s may analyses  Besley  are  maximization  (1967) noted i n r e f e r e n c e  be based not  c r i t e r i o n i s the i n t e r e s t r a t e to be as the p r i c e p a i d  f o r the use  the c h o i c e  used.  c a p i t a l , analogous: to r e n t of f o r e s t r y l i t e r a t u r e has  l o n g way  search  this subject  i n every f i e l d where i t i s used.  from the view of M a r t i n E u t h e r  definition,  i t as the p r o d u c t i v i t y of  been devoted to the 1968), and  investment  Another  of l a n d or wage of l a b o u r .  (Robinson, E.  evoke c o n t r o v e r s y  of an  Interest i s usually  of c a p i t a l .  h i s t o r i c a l l y more c o n t r o v e r s i a l , c o n s i d e r s  i n t e r e s t rates  expediency or  convenience".  Perhaps e q u a l l y as important as  defined  the  so much on economic  as upon p u b l i c sentiment, p o l i t i c a l  administrative  to  A v a s t volume for  appropriate  continues We  (1524) when he  to  have moved a summed up  the  29  p r e v a i l i n g Church a t t i t u d e , " . . . . t h a t whole s u b j e c t  i s such a  bottomless abyss o f a v a r i c e and wrong t h a t there i s n o t h i n g 7 t h a t can be d i s c u s s e d w i t h a c l e a r c o n s c i e n c e " .  i ni t  F l o r a (1968) was  encouraging when he noted t h a t i n t e r e s t r a t e s have been around  longer  than economists t o argue about them I n f o r e s t r y the g u i d i n g comparisons should  r a t e used by an owner i n making time  depend on a l t e r n a t i v e o p p o r t u n i t i e s a v a i l a b l e ;  f r i n g e b e n e f i t s ; r i s k and u n c e r t a i n t y  i n f o r e s t r y as compared w i t h  a l t e r n a t i v e investments, and aggravated by the l o n g - r u n n a t u r e o f the crop;  and m o d i f i e d  by any c o s t which the owner may i n c u r i n  t r a n s f e r r i n g h i s funds from timber t o something e l s e . r a t e can be an e x p l i c i t  t o o l f o r management i n making f o r e s t r y d e c i s i o n s ,  :as i n f i n a n c i a l r o t a t i o n age d e t e r m i n a t i o n , of l a n d based on a s p e c i f i e d r e q u i r e d not  The g u i d i n g  or i n p r o s p e c t i v e  purchase  i n t e r n a l rate of return.  But  a l l management d e c i s i o n s can be based on e x p l i c i t r a t e s because  of the i m p e r f e c t  knowledge o f c o s t s and •. y i e l d s .  The g r e a t  majority  of s m a l l  f o r e s t owners i n the U.S.A. make t h e i r d e c i s i o n s guided by  personal  judgement, and here an i n t e r e s t r a t e can o n l y be i m p l i e d .  I t has been suggested t h a t f o r n a t u r a l r e s o u r c e s o c i e t y as a whole may have a r a t e of time p r e f e r e n c e  development  or a s o c i a l  r a t e o f i n t e r e s t lower than the market or p r i v a t e r a t e . F e l d s t e i n ( 1 9 6 4 ) i d e n t i f i e d two types o f d i s c o u n t and  s o c i a l opportunity  time p r e f e e e n c e  c o s t ; the former r e f l e c t s s o c i e t y ' s  of consumption a t d i f f e r e n t p o i n t s  7.  rates: social  evaluation  o f time, w h i l e the l a t t e r measures  I t i s i n t e r e s t i n g t o note t h a t the s o f t e n i n g o f the Church's view on i n t e r e s t corresponded c l o s e l y t o the r i s e i n o p p o r t u n i t i e s t o i n v e s t money, even church money, i n p r o d u c t i o n e n t e r p r i s e s .  30  the v a l u e  t o s o c i e t y of the next best  funds c o u l d be put  (the o p p o r t u n i t y  rate i n a p e r f e c t l y competitive opportunity  a l t e r n a t i v e ; use  costs  market).  function.  r a t e cannot be imperfections  In the r e a l w o r l d the r e f l e c t s the  i n the market - the p r e v i o u s borrowing r a t e s , and  be g r e a t e r  d i s c u s s i o n of the  r i s k and  uncertainty.  (the m a r g i n a l output  a c t u a l l y adopted by  rather  this  capital,  production  a c o s t to  the  investor.  However, the s e t t i n g of the r a t e may I t i s sometimes f e l t  -capital  than the p r i v a t e m a r g i n a l e f f i c i e n c y of  i n c r e a s i n g t h e i r income,a.gain to s o c i e t y , but  p r i v a t e producer and  divergence  In a d d i t i o n ,  because investment.enhances the p r o d u c t i v i t y of f a c t o r s of  r e t u r n , and  social  F e l d s t e i n agreed t h a t the p e r f e c t market  the s o c i a l r a t e of r e t u r n on investment  by  social  a p p l i e d to p u b l i c p o l i c y because of s u b s t a n t i a l  of l e n d i n g and  r a t i o ) may  of funds, or market i n t e r e s t  c o s t depends on the source of funds and  time p r e f e r e n c e  to which p u b l i c _  be a p u r e l y  social policy.  t h a t i t i s the s i z e of the investment program the government t h a t determines a m a r g i n a l r a t e  i n t u r n i n d i c a t e s s o c i e t y ' s r a t e of time  of  preference,  than the i n d e p e n d e n t l y i d e n t i f i e d r a t e which f i x e s the volume  of investment country w i l l  (Johnston_et al.1967). generally  favour  anxious f o r a f a s t e r turnover  a low  Thus, a c o n s e r v a t i v e , rate, while a developing  of c a p i t a l , w i l l  tend toward a  developed country, higher  rate.  Some economists  ( M i l l i m a n 1962)  protest a special social  of i n t e r e s t , and  contend t h a t n a t u r a l r e s o u r c e s  planning  and  periods  considerations.  should  f o l l o w the same  r a t e s as those d i c t a t e d by p r o d u c t i v i t y  Leslie  (1967) f e l t  that a s p e c i a l  rate  social rate  of  31  discount  is valid  s o c i a l rather  i n f o r e s t r y only i n s o f a r as  than commercial. The  i n d i s p e n s i b l e to s o c i e t y and r e g i o n a l development are no 1966).  Therefore,  has  the b e n e f i t s produced  c l a s s i c a l arguments t h a t wood i s  some i n t r i n s i c v a l u e  longer  argued L e s l i e ,  entirely valid  f o r defence or  (Gould 1964,  the s o c i a l r a t e of d i s c o u n t  Pearse for f o r e t r y  must r e s t s o l e l y on non-wood s e r v i c e s which are of a c o l l e c t i v e and  not  on the g e n e r a l  rate for evaluating  f o r e s t r y case at a l l .  private  He  c o s t of c a p i t a l  to r e c o g n i z e  the  the  marginal  sector.  r a t e s and  c e r t a i n l y i n B.C.,  time, and rate).  so assume l i m i t l e s s and  B.C.  p o l i c y i s governed by  on maximizing p h y s i c a l r a t h e r 1966). In a p r o v i n c e  h e l d by tenures,  f o r e s t r y investment  c r i t e r i a are s a d l y l a c k i n g f o r Crown l a n d , because government  f o r e s t p o l i c y makers seem unable to r e c o g n i z e  (Haley  not be equal to  the Crown and  costless capital the  cost associated  than economic r e t u r n s cent  of the  yield,  i n forestry  f o r e s t land i s  i n d u s t r y under v a r i o u s  and where management i s d i c t a t e d by  with  (the zero i n t e r e s t  goal of maximum s u s t a i n e d  where 95 per  only used by  any  long-term  government, t h i s p o l i c y  becomes p r a c t i c a l l y u n i v e r s a l .  The  industrial  long-term tenants may,  g u i d i n g r a t e of r e t u r n i n r a n k i n g  i n f a c t , use  government p o l i c y .  r e m a i n i n g i n B.C.  may  The be  small p r o p o r t i o n roughly  some  i n t e n s i f i c a t i o n p r o j e c t s , although  these r a t e s remain a p r i v a t e matter to each concern, and by  the  d i v e r t e d from p o s s i b l e investment i n the  In most of Canada, and  and  nature,  a l s o suggested t h a t  government investments should  government borrowing r a t e s , but h i g h e r , opportunity  are  evaluated  constrained  of p r i v a t e f o r e s t l a n d i n terms of r e a l  estate  32  marketing p r i n c i p l e s ,  s i n c e much of i't f a l l s  into this  category.  8 Real by  estate appraisers  i n B.C. i d e n t i f y  f i v e methods governed  two p r i n c i p l e s . Market t r a n s a c t i o n s can be a n a l y s e d  d i r e c t l y by  the comparative method and by the investment method. I n the former, the a p p r a i s e r  s t u d i e s the c o n d i t i o n s and p r i c e s a s s o c i a t e d w i t h  of comparable p r o p e r t i e s , and v a l u e s  the p r o p e r t y  the s a l e  i n terms of the p r i c e  9 he f e e l s i t w i l l b r i n g on the market. income-capital  approach i s simply  investment c r i t e r i o n .  Usually  The commonly  used investment or  a form of the net p r e s e n t  the a p p r a i s e r  g r i e s t o determine the  average annual flow of economic r e n t , and uses a d i s c o u n t and p r o p e r t y  allows  for risk, i l l i q u i d i t y  higher  than government l o w - r i s k bonds (Barlowe 1958). The i n d i r e c t or n o - a n a l y s i s  worth  r a t e which  management demands - a r a t e  of market t r a n s a c t i o n s approach  i n c l u d e s the c o s t method, the p r o f i t method and the r e s i d u a l method. The c o s t method sums , the c o s t s a s s o c i a t e d w i t h and  the s i t e v a l u e .  A replacement c o s t v a r i a n t i s simply  p r o v i d i n g an a c c e p t a b l e  s u b s t i t u t e property.  technique used f o r e s t i m a t i n g fully fix  developed.  developing  the p r o p e r t y the c o s t o f  The p r o f i t method i s a  the r e n t a l v a l u e  of p r o p e r t y  already  T h i s c a l c u l a t i o n i s u s u a l l y made by an operator  the maximum r e n t he can a f f o r d t o pay f o r the p r o p e r t y  The r e s i d u a l method i s used f o r e v a l u a t i n g p r o p e r t y w i t h  to  he needs.  l a t e n t values  \ 8.  Notes from R e a l E s t a t e A p p r a i s a l diploma course g i v e n by the F a c u l t y of Commerce, and.-Business A d m i n i s t r a t i o n ,  9.  U.B.C. 1967-1968.  A t any moment of time, the market v a l u e of an i n t e r e s t i n l a n d i s the p r i c e i t might r e a s o n a b l y be expected t o r e a l i z e when s o l d by a w i l l i n g s e l l e r to a w i l l i n g buyer a f t e r adequate time and exposure to the market, ( i b i d . )  33  and,  by d e f i n i t i o n ,  and b e s t use.  such p r o p e r t y i s not b e i n g used f o r i t s h i g h e s t  The v a l u e of the p r o p e r t y , then, w i l l be the v a l u e f o r  temporary use p l u s the net v a l u e a f t e r f u l l  development,  discounted  f o r the " r i p e n i n g time".  In p r a c t i c e , most a p p r a i s e r s use a combination  of s e v e r a l  methods i n t h e i r work. A l l methods are not e q u a l l y a p p l i c a b l e and  the  evaluator... must d e c i d e which method(s) b e s t s u i t ( s ) the problem a t hand.  The  relatively  p r a c t i c e s , and These timber experience.  few  timber b r o k e r s  i n B.C.  follow real estate  l e a n toward d i r e c t a n a l y s i s of market t r a n s a c t i o n s .  l a n d a p p r a i s e r s get a " f e e l "  f o r timber p r i c e s w i t h  F o r e s t e d l a n d i n the Vancouver F o r e s t D i s t r i c t has  f a i r l y wide range of v a l u e s . Immature timber 10 v a l u e d a t $25  to $100  per a c r e a t age  50.  on a medium s i t e i s  To t h i s can be added a  f o r l o c a t i o n , a c c e s s , and p o s s i b l e a l t e r n a t i v e use. As approaches merchantable age r a t e s , p l u s a sum Lower Mainland  cases  disadvantage  timbered  i t i s r o u g h l y v a l u e d a t going  land  stumpage  and Vancouver I s l a n d are not i n t e r e s t e d i n immature  of farmers who  timber v a l u e s ; i n f a c t , t h e r e are  see any  timber  to t h e i r o p e r a t i o n . Others  amenity to the s i t e they wish to develop  cover as a  distinct  v a l u e some t r e e cover as  an  as a r e s o r t , but scrub i s  e q u a l l y as a c c e p t a b l e f o r t h e i r purpose.  10.  sum  f o r l o c a t i o n and a l t e r n a t i v e use. Most buyers i n the  forested property for p o t e n t i a l still  a  Based on B.C.F.S. volume-age r e l a t i o n s h i p s f o r s p e c i e s .  34  Challies  (1966) attempted a p a r t i a l a n a l y s i s of the Vancouver  market f o r f o r e s t l a n d and of v a l u e s task was  He  t r i e d t o draw up  from a d v e r t i s e m e n t s of f o r e s t e d p r o p e r t i e s fouled.' by  roads, fences and  stock  some schedule  i n B.C.  the i n c l u s i o n , i n many i n s t a n c e s ,  however, to g l e a n a few Distance  timber.  of b u i l d i n g s ,  i n t o t a l p r i c e of the p r o p e r t y .  He was  p r o p e r t i e s were g e n e r a l l y h i g h e r  p r i c e d than o t h e r s .  Lower Mainland There was  tendency f o r l a r g e holdings;: to be p r i c e d f o r l e s s per a c r e t h a t p o t e n t i a l use  d i v e r g e n c e ; where s m a l l acreages would go sites,  l a r g e r t r a c t s would be  The  the e v a l u a t i o n problem, and  i n t e n s i f i c a t i o n on  smaller  used f o r ranches.  has  taken an a c t i v e i n t e r e s t i n  i n i t i a t e d a s e r i e s of p r a c t i c a l  the economics of r e f o r e s t a t i o n and the south c o a s t  Osborn 1968,  than  accounted f o r t h i s  of B.C.  V i c t o r 1968,  studies  management  as w e l l as more t h e o r e t i c a l  i n v e s t i g a t i o n s of investment c r i t e r i a comparisons B e l i k 1967,  a  to hobby farms or r e c r e a t i o n  F o r e s t r y F a c u l t y a t U.B.C. has  d e s i g n e d to e x p l o r e  able,  i n s i g h t s from h i s a n a l y s i s of the market.  from Vancouver a f f e c t e d p r i c e s a p p r e c i a b l y .  holdings,i. C h a l l i e s f e l t  This  Paille  (Smith et al.1961,  1968).  Comparative v a l u a t i o n .  Comparative v a l u a t i o n i n an o p e r a t i o n , which l a n d and is  other  resources  o f t e n the most d i f f i c u l t  can be put,  of the v a r i o u s  uses to  or to the i n t e n s i t y of  use,  type to c a l c u l a t e ; y e t i t i s becoming  i n c r e a s i n g l y necessary f o r the decision-maker to choose between a l t e r n a t i v e investment p r o j e c t s when any  f a c t o r s are l i m i t e d . C r i t e r i a  35  used f o r investment can be a p p l i e d t o ra'nking v a r i o u s cost, net present together  absolute is  worth and i n t e r n a l r a t e of r e t u r n can a l l be employed,  with Puerr' s(i960)  net p r e s e n t  break-even method and m a r g i n a l method. The  worth c r i t e r i o n i s i n f e r i o r  values,  and thus f a v o r s  f o r ranking  worth w i l l  c r i t e r i a which c o u l d be used f o r r a n k i n g  ones. I t  investment and l i f e  c o i n c i d e w i t h the other  Teeguardeh (1967) i n v e s t i g a t e d v a r i o u s  opportunities  i n t h a t i t compares  l a r g e investments over s m a l l  only w i t h i n the c o n s t r a i n t s o f equal i n i t i a l  t h a t net p r e s e n t  schemes. B e n e f i t - '  term  two c r i t e r i a .  economic investment  r e f o r e s t a t i o n investment  on" the Rosebur.g" D i s t r i c t ; p r o j e c t s - o f -the -Bureau-of Larid  Management i n the U.S.A. f e d e r a l government.  Contrained  by a dictum  i s s u e d by the Oregon-Washington D i r e c t o r o f the bureau " . . . . t o use each a v a i l a b l e d o l l a r where i t w i l l regeneration net p r e s e n t  per  g i v e the maximum r e s u l t s on the  o f non-stocked f o r e s t l a n d " ,  the c r i t e r i a  of b e n e f i t - c o s t ,  worth, i n t e r n a l r a t e o f r e t u r n and d i s c o u n t e d 11  d o l l a r i n v e s t e d were a n a l y s e d .  wood y i e l d  I t s e l e c t e d the b e n e f i t - c o s t  c r i t e r i o n as the most s u i t a b l e because investment funds were i n s h o r t supply  r e l a t i v e t o investment p r o j e c t s , and p r o j e c t s were m u t u a l l y  exclusive  (area c o n s t r a i n e d ) .  The d i s c o u n t  r a t e o f 3 per cent was  chosen by a r e i t e r a t e d p r o c e s s so t h a t the b e n e f i t - c o s t r a t i o from 1 t o l a r g e r values  f o r a l l top-ranking  the budget.  T h i s p r e s e n t e d a problem i n i t s e l f ,  should  the r a n k i n g  vary,  s c a l e proved o p t i m a l ,  because i f the budget  must be r e c a l c u l a t e d . The b e n e f i t c o s t  priority  t o o , i n t h a t i t was i n s e n s i t i v e t o s p e c u l a t i v e  elements t i e d up i n e s t i m a t e s ,  11.  p r o j e c t s c o u l d be undertaken w i t h i n  such as changing wood p r i c e s . With changes  The r a t e o f r e t u r n c r i t e r i o n was later' omitted because the a l t e r n a t i v e s were m u t u a l l y e x c l u s i v e .  36  i n i n t e r e s t r a t e to 5 p e r c e n t , t h e r e were o n l y some minor priorities  i n the lower end of the s c a l e because  the i n t e r e s t  shifting in  t h i n n i n g s depended on  rate.  A f u r t h e r study (Teeguarden and Von Sperber .1967) :6f the same p r o j e c t t e s t e d the a t t r i b u t e s of c a p i t a l b u d g e t i n g u s i n g a b e n e f i t - c o s t r a n k i n g , and a l i n e a r programming s o l u t i o n . They found t h a t i f c a p i t a l is  the only l i m i t i n g  factor  (and the b e n e f i t - c o s t a n a l y s t has  this  knowledge i n advance), both c r i t e r i a g i v e the same answer; but i f another resource i s l i m i t i n g , i n addition,. resource w i l l  .;.«•  then the l i n e a r program r e s u l t s are b e t t e r ,  and  ... ';. i t does not r e q u i r e p r i o r knowledge of which  e v e n t u a l l y be  limiting.  Marty and Newman (1967) d e s c r i b e d a p r o j e c t designed t o a s s e s s the e f f e c t s o f v a r i o u s management i n t e n s i f i c a t i o n s , and to determine the r e l a t i v e e f f i c i e n c y of each by t i m b e r l a n d c l a s s . Comparisons made u s i n g an i n t e r e s t r a t e a t which increased; toward  the added c o s t s o f i n t e n s i f i c a t i o n  the added stumpage v a l u e s generated.  Duerr • (1960) i l l u s t r a t e d a problem i n comparative of unmarketed v a l u e s i n h i s textbook. (social  were  appraisal  He used a "common v a l u e approach"  o p p o r t u n i t y c o s t ) determined by p u b l i c p o l i c i e s and  decision-  making w i t h amendments over time, which e f f e c t i v e l y i m p l i e s a narrow range of s o c i a l v a l u e s .  Comparative  v a l u a t i o n , i n i t s w i d e s t sense, i s simply a.  method f o r a l l o c a t i n g r e s o u r c e s to t h e i r h i g h e s t and b e s t use.  37  " C.  E x p r o p r i a t i o n and  condemnation.  E x p r o p r i a t i o n i s the term used i n Canada to d e s c r i b e compulsory t a k i n g of p r o p e r t y l i m i t a t i o n imposed on the  f o r p u b l i c use.  the  There appears to be  supremacy of the Canadian P a r l i a m e n t  no  to 12  expropriate;  and  e x p r o p r i a t i o n w i t h o u t compensation i s p e r f e c t l y l e g a l  although r a r e l y e f f e c t e d . rather  than economic, and  Canada t h a t v a l u e the  The  b a s i c framework of v a l u a t i o n i s l e g a l  i t i s l a i d down as a g e n e r a l 13  i s taken to be v a l u e  time of the t a k i n g . T h i s a r i s e s out  to the owner of the l e g a l  the a c t u a l owner i s thought to be w i t h o u t t i t l e , is  the amount he would pay  r a t h e r than be e j e c t e d  A number of cases has e s t a b l i s h market v a l u e and American c o u r t s owner" s t i l l  use  prevails.  as  been e n t e r e d  the p r o p e r b a s i s  f i c t i o n whereby the v a l u e  from the  him  property.  Canadian " v a l u e  to  the  However, even i n t h i s c o u n t r y market v a l u e  to the owner, to which must be  to a r r i v e a t v a l u e  is  since i t automatically  to the owner.  These other  which defy p r e c i s e measurement, remain l a r g e l y a matter of  added values,  opinion.  Through a s e r i e s of l e g a l cases d e a l i n g w i t h t h i s e v a l u a t i o n the  to  f o r compensation. E n g l i s h  t h i s c r i t e r i o n , but  e s t a b l i s h e s the minimum v a l u e s values"  as i t e x i s t e d a t  i n Canada to t r y to  an important p a r t of the e v a l u a t i o n p r o c e s s ,  "other  and  principle in  problem  f o l l o w i n g emerges:  12.  MacDonald, 3".. i n N e l s o n v P. G.E. Report 597 at 603.  Rlwy. (1918) 1 Western Weefcly  13.  Cedar Rapids Mfr.and Power Co. v L a c o s t e (1914) Appeal Case ( G r . B r i t . ) 569, an appeal to the P r i v y C o u n c i l from Quebec.  38  1.  No p e r s o n a l  or s e n t i m e n t a l attachment of the owner toward  h i s p r o p e r t y which are not commonly accepted w i l l  2.  A l l restrictions account,  and  on the use  be  of the p r o p e r t y must be  a l s o the r e a s o n a b l e  possibility  that  recognized.  taken  into  these  r e s t r i c t i o n s w i l l be removed.  3.  P o t e n t i a l v a l u e and-disadvantages must be but here o n l y the p r e s e n t v a l u e disadvantages  i s allowed.  But  taken i n t o  of these advantages  account, and  t h e r e i s a c e i l i n g to f u t u r e  r e t u r n s as c i t e d i n a r u l i n g of an appeal 14 Reclamation Act:  of the Fakse Creek  " I t i s e v i d e n t t h a t w h i l e a l l o p p o r t u n i t y of employment f o r c e r t a i n purposes i n r e g a r d t o the p o s i t i o n of l a n d to be a c q u i r e d i s to be taken i n t o account, there comes a p o i n t where the o p p o r t u n i t y becomes so remote as to be n e g l i g i b l e " .  4.  S p e c i a l a d a p t a b i l i t y d e s c r i b e s some use reasonably  be expected  to which the l a n d might  to be put i n the f u t u r e , i f the l a n d i s  not a l r e a d y i n i t s h i g h e s t and b e s t use.  The  evaluation i n this  case i s f i x e d at some p o i n t between the p r e s e n t use v a l u e t h a t of i t s b e s t use, never r e a l i z e t h i s  5.  remembering t h a t the l a n d might, i n f a c t ,  potential.  I n a case where the only p o s s i b l e purchaser the "added v a l u e s " are s t i l l use  14.  and  i s the e x p r o p r i a t o r ,  p o s s i b l e , although  f o r the l a n d i s t h a t to which i t i s put by  the only p o s s i b l e the e x p r o p r i a t o r .  Exchequer Court 23, Dominion Law Reports (2nd) 94, Supreme Court of Canada (1963) Supreme Court R u l i n g Report 455.  39  6. . The  owner i s e n t i t l e d t o a v a l u a t i o n of h i s p r o p e r t y i n one  use only ( h i g h e s t and b e s t ) and not f o r both p r e s e n t and potential  7.  Market  use.  v a l u e i s what a w i l l i n g p u r c h a s e r would pay a w i l l i n g  vendor  f o r p r o p e r t y as a whole. T h i s r u l i n g was based on a 15 case where a timber l o t had been e x p r o p r i a t e d .  When p a r t of the l a n d i s taken (severance) the e v a l u a t i o n i s similar.  The  compensation  payable i s the d i f f e r e n c e between the v a l u e to  the owner of a l l the l a n d b e f o r e e x p r o p r i a t i o n and the v a l u e to him of the r e m a i n i n g l a n d a f t e r e x p r o p r i a t i o n .  In the case where no l a n d i s  taken, but the l a n d i s r e n d e r e d l e s s v a l u a b l e ( i n j u r i o u s l y a f f e c t e d ) by r e a s o n of the u n d e r t a k i n g which an a d j a c e n t e x p r o p r i a t i o n has the r i g h t injury  to c l a i m compensation  taken,  i s c o n t i n g e n t on the damage b e i n g an  t o the l a n d i t s e l f and not t o b u s i n e s s , that i t be o c c a s i o n e d , by  c o n s t r u c t i o n of some p u b l i c work and not on i t s use, and  that i t be  as would be a c t i o n a b l e under common law but f o r the s t a t u t o r y The b a s i s f o r compensation actually  such 16 power.  than the case where l a n d i s 17 taken, i n t h a t v a l u e i s taken t o mean market v a l u e .  In  i s narrower  the e x p r o p r i a t i o n of lands by the B.C.Hydro and:;.Rower A u t h o r i t y f o r  f l o o d i n g or f o r r i g h t - o f - w a y , the v a l u e to the owner approach  Court Report 429 a t  i s used.  15.  K i n g v Woodlock 15 Exchequer  434.  16.  A u t o g r a p h i c R e g i s t e r Systems L t d . v C.N.R. (1933) Exchequer Report 152 a t 155-6.  17.  Re 1335 Howe S t . L t d . v C i t y o f Vancouver (1955) 14 Western Weekly Report 337 a t 340-341 (Supreme C o u r t ) .  Court  40  Timbered l a n d i s v a l u e d on one f o r e s t o p e r a t i o n s , and T h i s has  caused  perfectly  on another  some i l l  purposes.  timber  schedule  f o r a l l other owners.  legal.  Vancouver F o r e s t D i s t r i c t  f o r e s t and  f o r e s t l a n d v a l u e s i n the  for p o s s i b l e a c q u i s i t i o n for right-of-way  H i s method f o l l o w e d the l e g a l Vvalue compensation was  profits.  lower  f o r owners a c t i v e l y engaged i n  f e e l i n g among owners, but the p r o c e s s i s  Kenwood (1967) a n a l y s e d  although  schedule  He  to the owner" approach,  not p a i d on the whole of the  anticipated  i d e n t i f i e d t h r e e s e p a r a t e v a l u e s : mature timber,  and bare  land.  Mature timber was  e v a l u a t e d a t the  immature  anticipated  Conversion Return  c a l c u l a t e d from the d i f f e r e n c e between c u r r e n t average  S e l l i n g P r i c e and  local  estimated type and and  operating costs.  Immature timber v a l u e s were  from an i n t e r n a l r a t e of r e t u r n curve drawn f o r each site.  The  i n h e r e n t reinvestment  assumption of t h i s  timber  criterion  other l i m i t a t i o n s make i t l e s s than optimal i n most cases. However,  the r o t a t i o n age precludes  of 100 'years assumed by Kenwood i n h i s c a l c u l a t i o n s  the complete a d o p t i o n of the net p r e s e n t worth  (and the c a l c u l a t i o n of " a " ) . capital  I t i s important  or o p p o r t u n i t y f o r f o r e s t investment  criterion  too to know whether  i s the l i m i t i n g  factor.  Bare l a n d v a l u e s were a s s e s s e d by d i r e c t a n a l y s i s of comparable market t r a n s a c t i o n s . Kenwood suggested  t h a t the Faustmann method (but employing  the i n t e r n a l r a t e of r e t u r n f o r the d i s c o u n t r a t e ) might be used i n combination  w i t h a market a n a l y s i s . Both methods i n t r o d u c e problems;  the t r u e Faustmann by the c o r r e c t a p r i o r i r a t e , and  statement  of the  interest  the l a t t e r by e x t e n s i v e i m p e r f e c t i o n s i n the market. I n  a d d i t i o n , o n e c o u l d q u e s t i o n h i s non-economic, but perhaps more  41  realistic,  It  treatment of annual f i x e d c o s t s  can be argued t h a t  than o p t i m a l f o r a s s e s s i n g  bare l a n d and  study the v a l u e of these two  per  cent to the  figures seriously.  l i m i t e d or i m p e r f e c t the  conditions  are  a relatively  t h e o r e t i c a l e r r o r would  small  not  A market a n a l y s i s , no matter may  less  immature elements. However, i n  factors contributed  t o t a l a p p r a i s a l , so any  final  re-establishment  the methods used i n t h i s a n a l y s i s  the  a f f e c t the  and  be,  can be  justified,  how  too,  as  an a c c e p t a b l e l e g a l a p p r a i s a l .  Damage A p p r a i s a l .  Appraisal disease,  of damage to f o r e s t s and  inundation,  expropriation  values.  ownership, the p r o p e r t y ; and  f r a g m e n t a t i o n and While the  from f i r e ,  insects  other f a c t o r s i s t i e d c l o s e l y  l a t t e r means complete t r a n s f e r  former assumes r e t e n t i o n i n some i n s t a n c e s  f o r e s t land  of t i t l e t o a l e s s  c l o s e l y approximates the  to  of  valuable  aforesaid  " i n j u r i o u s a f f e c t i o n " cases.  Flora  (1968) reviewed the a l t e r n a t i v e f o r e s t damage a p p r a i s a l  measures, t h e i r advantages and timber a p p r a i s a l , he  The  case of  standing  argued t h a t market v a l u e of a stand i n no  c o m p l e t e l y compensates the continual  d i s a d v a n t a g e s . I n the  owner, s i n c e p r o f i t s from l o g g i n g  l o s s to a l l o w a b l e cut i n a managed f o r e s t are  v a l u e added method o f a p p r a i s a l , where the e f f e c t of  not  and  (and  changes i n G.N.P.), does not  the  counted.  large-scale  r e s o u r c e damage i s supposedly r e f l e c t e d i n v a l u e added through processing  way  further  always g i v e a r e l i a b l e  0  42  e s t i m a t e , because of p r i c e changes, i n e l a s t i c demands, s u b s t i t u t e e f f e c t s and suggested  the m o b i l i t y of l a b o u r and  u s i n g the sum  capital  to other f i e l d s .  o f consumers' and p r o d u c e r s '  Flora  s u r p l u s as a  measure of s o c i e t y ' s b e n e f i t from a r e s o u r c e , and which enables a p p r a i s e l o s s e s as they occur. T h i s has sprice q u a n t i t y method. He was  one  to  f a r more meaning than the u s u a l  strongly c r i t i c a l  (and j u s t i f i a b l y )  the z e r o r a t e of time p r e f e r e n c e o f t e n advocated  by government  of  agencies.  For damage a p p r a i s a l , damage postponed i s u s u a l l y b e t t e r than damage if  time i s c o n s i d e r e d , and  i t a l l o w s w a i t i n g c o s t s and  treatment  now,  costs  to be a s s e s s e d w i t h i n an economic frame.  I n 1954  a sub-committee of the Western F o r e s t r y and  C o n s e r v a t i o n A s s o c i a t i o n ( A l l e n _et _al. 1954)  o u t l i n e d a procedure  for  a p p r a i s i n g damage i n pre-merchantable stands. They r e c o g n i z e d the need f o r guides  i n this  of l i t i g a t i o n s i n v o l v e d , and imperfections. calculating and  type of a p p r a i s a l because of the i n c r e a s i n g number  f o r f o r e s t damage, the n o n - s t a n d a r d i z e d  commodity  the l a c k of a r e l i a b l e market because of i t s s i z e  and  The method which they recommended c o n s i s t e d of  the age  a t which the stand would reach f i n a n c i a l  maturity,  then i n c a l c u l a t i n g the v a l u e of the stand when d e s t r o y e d .  T h e i r c a l c u l a t i o n of optimum r o t a t i o n was their " s o i l value"  (S) was  not  theoretically  correct.  Firstly,  a given value.  justified  t h i s by s t a t i n g t h a t a f o r e s t owner should have some  knowledge of the approximate v a l u e of h i s s o i l s . t h a t the s o i l v a l u e  The b a s i c e r r o r i s  (net p r e s e n t worth of bare land) or i t s annual  e q u i v a l e n t , the economic r e n t , " a " , cannot be determined r o t a t i o n age,  and  They  before  i s an i n t e g r a l p a r t of the whole c a l c u l a t i o n .  the The  43  optimum rotation i s determined by solving simultaneous equations with two unknowns, "a" and " t " (Gaffney 1962). the exact c a l c u l a t i o n of s o i l value may  Haley (1967) has  shown that  sometimes be highly s i g n i f i c a n t .  In c a l c u l a t i n g optimum rotation Allen._et al. maximized the i n t e r n a l rate of return, which i s not the same as maximizing the net return to the fixed factor, land. used, and  the rotation chosen which maximizes the annual earning power,  a very early age increase  I f the c r i t e r i o n of i n t e r n a l rate of return i s  i s indicated, an age where there i s the most rapid  i n timber value, and  the stand i s most productive. This i s  surely not the appropriate age,  (See Figure I ) .  x FIG.I.  x'  Tjbtnt'dn 4j?e  A comparison of proposed methods for determining the optimum f i n a n c i a l rotation.  44  The r o t a t i o n chosen to maximize the p r e s e n t net worth w i l l c o i n c i d e w i t h t h a t of the i n t e r n a l r a t e of r e t u r n c r i t e r i o n o n l y where the d i s c o u n t r a t e i s equal t o the i n t e r n a l r a t e of r e t u r n , a t X prime i n Figure I.  The v a l u e of the immature stand when d e s t r o y e d was from an i n t e r n a l r a t e of r e t u r n curve based (investment)  a t z e r o and  c a l l e d "independent v a l u e of annual  on c o s t of e s t a b l i s h m e n t  stumpage ( r e t u r n s ) a t r o t a t i o n age.  variables":  expenses  s o i l value  (E ~ e_), • op  e r r o r occurs i n the ambiguity  ( S ) , and  and  then i n the annual  Secondly,  some c o n f u s i o n The  original  soil  ( i n German l i t e r a t u r e c a l l e d "Bodenerwartungswerte")  the net p r e s e n t worth of bare l a n d . The  the s o i l r e n t , or economic r e n t .  Soil  annual  equivalent, "a", i s  v a l u e , S, appears  incorrectly  equations. The B.C.Forest  S e r v i c e (1964) has  drawn up a schedule  v a l u e s t o guide i n the a p p r a i s a l of damage caused Mature timber  i s v a l u e d a t average  merchantable,  otherwise as "Non-commercial Cover"  A t a b l e f o r immature timber  by f o r e s t  of  fires.  c u r r e n t stumpage p r i c e s i f a t 25c per a c r e .  (1964) g i v e s a s e r i e s of v a l u e s per a c r e  to v a r i o u s s p e c i e s (and c o m b i n a t i o n s ) , by zone, based The  first  beyond the f i r s t h a r v e s t ,  seems t o have a r i s e n i n the meaning of s o i l v a l u e .  their  capitalized  expenses, E, t a k i n g the c o r r e c t form f o r  f u t u r e r o t a t i o n c a l c u l a t i o n to i n f i n i t y .  in  so-  of the complete e q u a t i o n l a c k i n g more than  r o t a t i o n , so t h a t no v a l u e s are expected  is  the  The  were c a r r i e d as c o n s t a n t s . The  one  expectation value  estimated  on stand  age.  immature v a l u e s of each type are a f u n c t i o n of the mature stumpage  45  p r i c e , and appear to be the d i s c o u n t e d 18 age, $25  v a l u e a t 2 per cent  f o r each  a l t h o u g h many o f the lower age groups a r e g i v e n a f l a t per a c r e .  Sparsely  stocked  immature stands a r e g i v e n h a l f v a l u e .  T h i s d i r e c t i v e makes an a p p r a i s a l simple, enough f o r d i f f e r e n t a p p r a i s e r s perhaps, q u e s t i o n on a 2 p e r cent  rate of  cheap, and d e f i n i t e  t o get s i m i l a r answers. One c o u l d ,  the e v a l u a t i o n method used f o r immature stands based  discount  rate.  I t would be an i n t e r e s t i n g e x e r c i s e t o  c a r r y p l a n t i n g , p r o t e c t i o n and other  c o s t s of a stand  forward a t the  i n t e r e s t r a t e a t which funds c o u l d be borrowed (by government bond 19 issue)  t o compare w i t h  these stand v a l u e s .  I n c o u r t cases i t i s  customary t o l e a n h e a v i l y toward the " c o s t v a l u e " method, s i n c e  past  c o s t s a r e u s u a l l y e a s i e r t o o b t a i n and t o v e r i f y . However, t h e t h e o r e t i c a l l y •-. c o r r e c t c r i t e r i o n t o use i s the " f u t u r e revenue foregone", it  i s an economic p r i n c i p l e t h a t h i s t o r i c c o s t s should  present  since  not i n f l u e n c e  value..  Taxation.  There a r e many who b e l i e v e t h a t l a n d , as d i s t i n c t products of labor, i s a free g i f t should  t o mankind, and that i t s annual  be devoted t o p u b l i c purposes  F o u n d a t i o n 1955).  from the value  ( v a r i o u s w r i t e r s i n Schalkenbach  Henry George, i n h i s " S i n g l e Tax Theory", wrote i n  18.  One p a r t only o f the c a l c u l a t i o n i n v o l v e d i n the " f u t u r e revenue foregone" method o f a p p r a i s a l .  19.  "Cost  v a l u e " method o f a p p r a i s a l .  46  1886  t h a t the v a l u e which the growth and improvement o f a community  a t t a c h e s t o l a n d should be taken f o r the use o f the community. He envisaged  an i n c r e a s e o f the s i n g l e t a x on l a n d v a l u e s u n t i l  took a l l o f the annual with  f e e simple  t h i s tax  r e n t a l v a l u e o f l a n d f o r p u b l i c purposes, but  ownership l e f t i n p r i v a t e hands. H i s c o n v i n c i n g works  were w i d e l y read through s m a l l scale,were  the w o r l d ,  and many " c o l o n i e s " , a l b i e t  e s t a b l i s h e d a l o n g these i d e a l l i n e s  on a  i n the U.S.A.,  e n c l a v e s which a b l y demonstrated a n a t i o n a l s o l u t i o n t o the l a n d problem, and the advantages which f o l l o w from p u b l i c a p p r o p r i a t i o n o f the economic r e n t o f l a n d .  Land taxes i n g e n e r a l s e r v e many purposes i n r e g u l a t i n g the economy, but the foremost  i s as a means of r a i s i n g p u b l i c funds t o  c a r r y on. the r e s p o n s i b i l i t i e s  o f the s t a t e . That  the methods used should  be e q u i t a b l e i s c l e a r l y assumed, y e t one f i n d s many i n s t a n c e s i n the taxing of f o r e s t lands, i n p a r t i c u l a r , and  o f government b i a s ; of ignorance  d i s c r i m i n a t i o n ; o f heavy t a x burdens f o r some owners and l i g h t e r  ones f o r o t h e r s .  Pearse  (1967) i n v e s t i g a t e d the e f f e c t s  f o r e s t e d l a n d upon the optimum f o r e s t r o t a t i o n .  o f v a r i o u s taxes on An annual  property  tax as a p e r cent of v a l u e would s h o r t e n the f o r e s t r o t a t i o n ,  because  as the f o r e s t grew more v a l u a b l e so the t a x would i n c r e a s e , and the owner would be persuaded t o skew. : h i s use d i s t r i b u t i o n toward the present.  The economic r e n t would thus decrease. An _ad  valorem  severance  t a x on a f i x e d per cent o f the v a l u e h a r v e s t e d would reduce  the economic r e n t , but not d i s t u r b the r o t a t i o n age. Perhaps the soundest  t a x i s one l e v i e d on the economic r e n t , or annual  s i t e value.  47  One  c o u l d s a f e l y t a x up t o the f u l l economic r e n t w i t h o u t  optimum r o t a t i o n age and without  altering  the .  d i s t o r t i n g production incentives.  F o r e s t s a r e taxed by many d i f f e r e n t methods i n other c o u n t r i e s . F i n l a n d ' s unique system ( S a a r i , 1959), which taxes c a p a c i t y o f the s o i l , forest site ideal  the p r o d u c t i v e  t h a t i s , t h e o r e t i c a l income determined  types d e v i s e d by the c e l e b r a t e d A.J.Cajander,  from a p r a c t i c a l p o i n t of view. I t i s simple  p a r t l y by  approaches the  to administer,  avoids  tax e v a s i o n s , overcomes the uneven p u b l i c revenue problems o f other systems, and, above a l l , seems t o s a t i s f y owners can c o n c e n t r a t e sell  t h e i r sales i n favourable business  l a r g e q u a n t i t i e s without  same time, p r a c t i c e sound  The B.C.  the f o r e s t owners. I n a d d i t i o n ,  the f e a r o f p r o g r e s s i v e taxes, and, a t the  forestry.  e l a b o r a t e and v a r i e d f o r e s t l a n d tenure and t a x system i n  makes any s e r i o u s t a x d i s c u s s i o n a t r e a t i s e i n i t s e l f .  made an e x h a u s t i v e  study i n t h i s  field,  Besley  Moore (1958)  i n which he i n c l u d e d a l l the  Canadian p r o v i n c e s , and was thus a b l e t o make i l l u m i n a t i n g  for  c y c l e s and  comparisons.  (1951) c o n f i n e d h i s a n a l y s i s t o B.C., and o f f e r e d sound p r o p o s a l s  t a x reform.  Robinson, E. (1958) i n v e s t i g a t e d the types o f  management p o s s i b l e under these d i f f e r e n t  tenures and taxes i n B.C.  S i n c e 1958 a s e r i e s of tenures has been i n t r o d u c e d w i t h a view to  superimposing  to  c u t pulpwood. (the. " s m a l l w o o d " t i m b e r 'defined by the c l o s e . u t i l i z a t i o n  standards)  a p u l p economy on the o r i g i n a l  on a broad a r e a o f Crown t i m b e r l a n d , and perhaps c o v e r i n g  s e v e r a l P u b l i c S u s t a i n e d Y i e l d U n i t s , i s granted for  sawlog one. The r i g h t  21 years under the Pulp H a r v e s t i n g A r e a  t o a p u l p m i l l owner  tenure.  Pulp Timber S a l e s  were d e v i s e d f o r those p u l p m i l l s which, c o u l d demonstrate a need f o r  48  raw  m a t e r i a l , and would put a l l t h e i r h o l d i n g s  standards.  They are not awarded by  open b i d d i n g .  s a l e s cover stands i n the P u b l i c S u s t a i n e d exceed a 30 per cent  under c l o s e u t i l i z a t i o n -  sawlog content,  and  r e g u l a r quotas of the working c i r c l e  Y i e l d U n i t s which do  so do not  timber  the  been the i n t r o d u c t i o n of  L i c e n c e , which i s a new  timber s a l e i n P u b l i c S u s t a i n e d  i n f r i n g e on  not  loggers.  Perhaps the most s i g n i f i c a n t change has the Timber S a l e H a r v e s t i n g  In the main, these  Y i e l d U n i t s , and  f l e x i b l e form of  a means of  the  sharing  r e s p o n s i b i l i t y . I t i s a l s o a n ^ e f f i c i e r i t : "method 'of amalgamating "quota's i n the working c i r c l e . . . . . .  . J . . .  .•'.••.  Other forms of tenure i n B.C., s i n c e Moore's 1958 and  the e f f e c t  a n a l y s i s , but  appreciably  f o r e s t l a n d tax r a t e s have  increased,  of the d i s c r i m i n a t o r y p r o v i n c i a l l o g g i n g p r o f i t s  l a r g e l y been a m e l i o r a t e d  by  tax 20 tax exemptions at the f e d e r a l l e v e l .  The w e a l t h of p e n e t r a t i n g cannot be d i s m i s s e d was  have not changed  a n a l y s i s by Moore and h i s  w i t h o u t some comment. The  encouraged i n r e l a t i o n to other  associates  purpose of t h e i r  to d i s c o v e r whether investment i n f o r e s t s was  discouraged  weight of tax they bore. They a l s o t r i e d to determine whether  timber were p r o f i t maximizing, and interest.  or the the  the p r i c e l e v e l s s e t f o r i t s  t h e r e f o r e i n the p u b l i c ' s  They found t h a t government r e g u l a t i o n s and  the optimum a l l o c a t i o n of r e s o u r c e s  20.  study  investment as a consequence of  Crown's r e g u l a t i o n of i t s f o r e s t s and  has  best  s t a t u t e s impeded  i n forestry. B.C.provincial  property  The C a r t e r Commission on Taxes, 1963-67, found the p r e s e n t method i n e q u i t a b l e because the B.C. p r o v i n c i a l government r e c e i v e d the l a r g e r share of the revenue; and recomme'nded a r e t u r n to the pre-1962 s h a r i n g b a s i s . The f o r e s t i n d u s t r i e s are opposed s i n c e the t o t a l tax would be larger.  49  taxes on p r i v a t e l y h e l d f o r e s t l a n d , tihey found, were v e r y heavy, would l e a d to e a r l y c o n f i s c a t i o n ,  or an uneconomic r o t a t i o n . The  and tax  r a t e s f o r t i m b e r l a n d were h i g h e r than f o r other r u r a l p r o p e r t y , and burden of c a r r y i n g these charges  the  f o r long periods often precluded  f o r e s t r y uses or r e t a i n i n g ownership to c u t o v e r l a n d s . The  owner c o u l d ,  of course, have e l e c t e d to p l a c e h i s f o r e s t l a n d under Tree Farm  tenure  where the weight of tax dropped to about 20 per cent of the net income, but was but  h i g h e r on v e r y young stands. T h i s gave immediate tax  there was  relief,  a c e r t a i n r e l u c t a n c e to s u r r e n d e r p r i v a t e f o r e s t  a p o l i c y of government r e g u l a t i o n .  Moore a l s o f e l t  l a n d to  t h a t the p r o p e r t y  tax c o u l d never be e q u i t a b l y adapted t o such d i s s i m i l a r e n t i t i e s bare l a n d , mature timber s t a n d s , and  sustained y i e l d  one  f o r e s t s were on a f u l l y  accept  the f i c t i o n t h a t a l l B.C.  as  farms, nor c o u l d operating  sustained y i e l d basis.  Moore proposed t a x i n g methods f o r both immature and f o r e s t l a n d which have much m e r i t . An a r b i t r a r y tax weight w i t h government budgetary  requirements  and  mature (in line  i n d u s t r i a l conditions.)  c o u l d be e s t a b l i s h e d such t h a t a g i v e n per cent of the p o t e n t i a l v a l u e , e.g. formulas,  50 per cent, would be d e l i v e r e d as tax.  the v a l u e of the government share  Using discounting  (50 per cent of stumpage  at r o t a t i o n age) would be p r o - r a t e d i n t o annual would accumulate a t compound i n t e r e s t  timber  i n s t a l l m e n t s which  f o r the optimal r o t a t i o n to a  sum  equal t o 50 per cent of crop v a l u e . T h i s method would p r o v i d e s t a b l e revenue and be easy  to a d m i n i s t e r .  The  o p e r a t o r , too, c o u l d improve h i s  p r o p e r t y by i n t e n s i f y i n g management w i t h o u t h i s F i n n i s h c o u n t e r p a r t , and arbitrary,  tax i n c r e a s e s , much l i k e  though the method might be somewhat  i t would be e q u i t a b l e f o r a l l i n d u s t r y .  50  With r e g a r d to the " c a p i t a l  g a i n s " i s s u e i n Canada t h e r e appears  to be j u s t cause f o r reform. A t p r e s e n t , i f l a n d and  timber  are  sold  en b l o c , revenue from the s a l e i s termed a c a p i t a l g a i n , and not On  taxable.  the other hand, i f timber a l o n e i s s o l d , then the revenue i s  c o n s i d e r e d a b u s i n e s s p r o f i t , and  The  taxed a c c o r d i n g l y .  t i m b e r l a n d a p p r a i s e r s of the B.C.  p r o v i n c i a l government 21  a s s e s s the v a l u e s of p r i v a t e immature t i m b e r l a n d a n a l y s i s of l i k e p r o p e r t i e s . The schedule  department has  from the market assembled an  annual  from s c r u t i n i z i n g a l l market t r a n s a c t i o n s of immature  O r i g i n a l l y t h i s schedule was  p u b l i s h e d , but i t r e c e i v e d so much  m i s i n t e r p r e t a t i o n , and each average f i g u r e had p r a c t i c e has  timber.  to be defended, t h a t the  been d i s c o n t i n u e d . A l l the f i g u r e s used a r e a r r i v e d a t  by e a s i l y a c c e s s i b l e s a l e s data from newspapers and F o r e s t S e r v i c e open files.  The  a p p r a i s a l i n q u e s t i o n i s p l a c e d above or below these  average  figures. The  Lands Department a t one  v a l u e per a c r e of a l l B.C. The  averaged  time a l s o p u b l i s h e d an annual  p r i v a t e timber  lands  average  (see T a b l e IV, page 51).  v a l u e s i n themselves have l i t t l e meaning, but the y e a r l y  changes are s i g n i f i c a n t not o n l y i n the v a l u e but i n the s i z e of the Grown-granted timber  21.  Land and Act.  lands.  timber are c o n s i d e r e d i n s e p a r a b l e under the B.C.  Taxation  51  TABLE IV  •  AREA AND AVERAGE VALUE PER ACRE OF CROWN-GRANTED TIMBER LANDS.  YEAR  1911 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51  AREA (acres)  824,818 874,715 922,948 960,464 913,245 922,206 916,726 896,188 883,491 867,921 845,111 887,980 883,344 654,668 654,016 688,372 690,438 671,131 644,011 629,156 602,086 552,007 567,731 557,481 535,918 515,924 743,109 754,348 719,112 549,250 543,633 527,995 543,044 571,308 591,082 601,148 596,900 571,439 597,790 631,967 682,746  AVG. VALUE PER ACRE (dollars)  8.72 8.60 9.02 9.66 9.55 9.73 9.61 9.60 9.48 11.62 10.33 11.99 11.62 15.22 40.61 39.77 39.01 38.62 38.41 44.74 43.77 43.73 41.18 37.25 37.13 36.61 23.32 23.05 22.73 27.70 26.99 26.34 25.15 25.28 26.32 26.64 25.01 no v a l u e  Source: Department of Lands, B.C. Annual R e p o r t s . T a b l e 19.  ii u 1!  52  t  - F.  Transfer  of Tenure  When l a n d "changes hand" or t r a n s f e r s from one t h e r e may  be  little  i n the same way  and  e f f e c t on the economy i f the new on the same s c a l e as  impact of the change may  be  the  owner to another,  owner uses the  former one  f a r - r e a c h i n g when the new  d i d . However, the  objectives  uses d i f f e r markedly from the o l d . Most r e s i d e n t i a l l y developed are  cushioned l e g a l l y by  zoning  diseconomies on the a r e a ,  but  laws a g a i n s t  the  despite still  toward the  being  i t can be but  as  use  i n other  consider  be i n i t i a t e d 1 on t h a t p a r t i c u l a r l a n d . The  a l l the e f f e c t s of the  r e c l a s s i f y i n g productive pressure  cases,  settlement  a  productive  e v a l u a t i o n must  As Hughes (1968) p o i n t e d  f o r e s t l a n d i n the Prine.e  of a g r i c u l t u r e and  on the management p l a n s  change.  idea,  shown t h a t l a n d i s  thoroughgoing : economic a n a l y s i s might show t h a t other more uses should  apparent  i s a marked  o r i g i n a l use - p e r p e t u a l  used i n the best p o s s i b l e way,  lands  1  s p i l l o v e r e f f e c t s are not  economic changes. In many i n s t a n c e s  and  uses w h i c h : . i n f l i c t  or so r e s t r a i n e d i n the h i n t e r l a n d . C e r t a i n l y there government p o l i c y b i a s  land  out,  George area under  the  produces a s e r i o u s s i d e - e f f e c t  of the P u b l i c S u s t a i n e d  Y i e l d U n i t s . The  c o s t of s e r v i c i n g s c a t t e r e d independent farms a l s o should  not  added  be  overlooked.  Flora  (1967) e x p l o r e d  the v e r y  great*-effeet of f o r e s t l a n d  w i t h d r a w a l s f o r p u b l i c (non-timber) purposes. He all  c o s t s and  benefits  mitigation principle. the i n d u s t r i a l  from f o r e s t l a n d u s i n g m u l t i p l i e r s and The  the  v a r i o u s m u l t i p l i e r s : the employment m u l t i p l i e r ,  income m u l t i p l i e r and  w h i l e showing the  attempted t o measure  the r e g i o n a l income m u l t i p l i e r  tremendous r e v e r b e r a t i o n s  of p r i m a r y f o r e s t a c t i v i t y ,  53  fail  to r e f l e c t p r i c e and  intangible costs. the v a l u e  The  l o s t , but  and  to r e p l a c e i n k i n d  the monumental task  of  stock.  of the most s e r i o u s problems f a c i n g ARDA ( A g r i c u l t u r a l  R e h a b i l i t a t i o n and Development A c t the  some s o c i a l  mitigation principle tries  i t completely ignores  assembling the t r a d i n g  One  technical- changes, and  t o t a l e f f e c t and  land w i l l y i e l d  i n Canada) i s the d e t e r m i n a t i o n  c o s t of changing l a n d use  the g r e a t e s t  so t h a t each p a r c e l  b e n e f i t to Canadians.  of of  54  CHAPTER IV.  MULTIPLE DEMANDS IN FOREST LAND  Forest  l a n d use c o n f l i c t s .  As most uses o f l a n d tend  t o expand, c o n f l i c t s n a t u r a l l y  a r i s e because o f the s c a r c i t y o f the f a c t o r , and p o p u l a t i o n intensifies  the c o m p e t i t i o n .  wide range o f wood p r o d u c t s .  Forest  growth  l a n d can be used f o r growing a  I t can be a sanctuary  or h u n t i n g  ground  f o r w i l d l i f e , a watershed t o s t o r e water or t o p r e v e n t e r o s i o n and f l o o d s . I t can a l s o be a r e c r e a t i o n a l a r e a which, i n i t s e l f , i n c l u d e a group o f w i d e l y  may  v a r y i n g and o f t e n c o n f l i c t i n g use's. Not  o n l y must these uses be accommodated i n some way on a f i x e d of f o r e s t l a n d , but the encroachments of n o n - f o r e s t  quantity  l a n d uses such  as urban, a g r i c u l t u r a l and i n d u s t r i a l , must be met.  I f our o b j e c t i v e i s t o use each a c r e will yield  of l a n d i n a way t h a t  the maximum b e n e f i t t o s o c i e t y , then we a r e o b l i g e d t o  f o l l o w the economic p r i n c i p l e s o u t l i n e d i n the f i r s t attempt t o a m e l i o r a t e  the r e a l i m p e r f e c t i o n s  a p p l i c a t i o n . This i s a d i f f i c u l t has  pointed  chapter, and  involved i n their  but not a h o p e l e s s task. Pearse  out t h a t o f t e n an u n d e r s t a n d i n g o f the c o r r e c t use o f  a v a i l a b l e data w i l l h e l p i n the d e t e r m i n a t i o n  of optimal  l a n d use  (1968)  55  p a t t e r n s , and, i n the case of m u l t i p l e - u s e , of the a p p r o p r i a t e d i r e c t i o n of adjustment.  Bandy  (1967) spoke t o the Canadian I n s t i t u t e of F o r e s t r y  r e c e n t l y of the c o n f l i c t s a r i s i n g between  separate B.C.  government  a g e n c i e s : F o r e s t r y and.WIldlTfe; G r a z i n g a n d W i l d l i f e ; F o r e s t r y , F i s h e r i e s and Water, where t h e i r u n i l a t e r a l development Often, the o r i g i n a l  overlapped.  terms of r e f e r e n c e of a f a v o r e d agency a r e extended  not as a r e s u l t of any e c o l o g i c a l , s o c i o l o g i c a l or economic but by r a t h e r a r b i t r a r y means. He saw the problems  Hughes (1968) noted and the p r e s s u r e s uneasiness  study,  intensifying.  t h i s i n c r e a s i n g demand f o r l a n d i n B.C.  on the f o r e s t e d a c r e s f o r other uses.  He f e l t some  a t the c o n s i d e r a b l e l o s s of f o r e s t l a n d by e x p r o p r i a t i o n  f o r i n d u s t r i a l roads,  t r a n s m i s s i o n l i n e s , p i p e l i n e s , hydro  r e s e r v o i r s , s e t t l e m e n t and r e c r e a t i o n a l r e s e r v e s , and hoped t h a t the development of economic land-use  p o l i c i e s would stem t h i s  flow.  Hughes drew a t t e n t i o n to the p a r t i c u l a r v u l n e r a b i l i t y of f o r e s t l a n d to the p r e s s u r e of a g r i c u l t u r e and s e t t l e m e n t . F o r e s t e d areas which have a h i g h economic use as f o r e s t l a n d a r e b e i n g r e - c l a s s i f i e d by the l a n d examiner, and i n many i n s t a n c e s t h i s l o s s has had s e r i o u s e f f e c t s on the p r o d u c t i v e c a p a c i t y and management o f P u b l i c S u s t a i n e d Y i e l d Units.  T e c h n i c a l and economic data a r e u r g e n t l y needed a t t h i s p o i n t i n order to develop  s c a l e s and p r i o r i t i e s  i n land-use  f o r m i d a b l e program a l o n g these l i n e s i s now ARDA.  underway  policies. A i n Canada  The Canadian A g r i c u l t u r a l R e h a b i l i t a t i o n and Development  called  56  Act  22 was passed i n 1961, a sha'ring agreement between f e d e r a l and  p r o v i n c i a l governments. I t began w i t h  s c a t t e r e d and i s o l a t e d programs  aimed a t a g r i c u l t u r a l problems, but has s i n c e s h i f t e d r u r a l poverty, initiation  and expanded i t s sphere o f r e f e r e n c e  of resource  establishing criteria with regrouping  should  t o i n c l u d e the  and r e s e a r c h aimed a t  f o r a c t i o n under t h e l e g i s l a t i o n .  I t i s involved  farms i n t o economic u n i t s and i n t e n s i f y i n g s o i l and  water c o n s e r v a t i o n It  and manpower surveys,  to issues of  p r o j e c t s , designed p r i m a r i l y t o a s s i s t a g r i c u l t u r e .  be remembered t h a t the c o n t r o l o f l a n d use i s l a r g e l y i n  the hands o f p r o v i n c i a l r a t h e r than f e d e r a l government. l a n d use becomes a n a t u r a l p r e r e q u i s i t e t o a l l these  Under the Canada Land Inventory, c a p a b i l i t y i s being  assessed,  s c i e n t i s t s i n each r e s o u r c e  A study o f  goals.  now p a r t o f ARDA, l a n d  and shhedules have been drawn up by  d e f i n i n g classes of p r o d u c t i v i t y .  For  example, f o r e s t l a n d i n c l u d e s seven c l a s s e s , which produce i n excess o f lfl)0 c u b i c f e e t p e r a c r e p e r year i n C l a s s I , down t o f o r e s t s i n Class VII with  l e s s than 10 c u b i c f e e t p e r a c r e p e r year growth, and so  poor as t o be o f no immediate commercial v a l u e .  Similarly, agricultural  l a n d has been d i v i d e d i n t o c l a s s e s which range from h i g h  agricultural  p r o d u c t i v i t y t o s o i l s which have no c a p a c i t y f o r a r a b l e c u l t u r e or permanent p a s t u r e .  The r e p o r t s o f the i n i t i a l surveys and schedules  have much m e r i t , b u t an a l a r m i n g the i n f o r m a t i o n  The  (£2.  s i t u a t i o n appears t o be d e v e l o p i n g as  gathered i s a p p l i e d to various  regions.  S p e c i a l S a l e A r e a i n the P r i n c e George r e g i o n i n  T h i s was changed t o the A g r i c u l t u r a l and R u r a l Development A c t i n 1965.  57  23 B.C., an ARDA p r o j e c t begun i n 1964, i s a case i n q u e s t i o n . and  agricultural  into  soil  surveys,  Both f o r e s t r y  s e p a r a t e l y a l l o c a t e d the t o t a l  acreage  t h e i r near r e s p e c t i v e c l a s s e s . I n the recommendations of the r e p o r t ,  i n c r e d i b l e comparisons were made between f o r e s t r y and a g r i c u l t u r a l c l a s s e s , as i f a c l a s s number showed some e q u a l i t y . S i n c e no economic v a l u e s were imposed on these p h y s i c a l c a p a b i l i t y c l a s s e s , i t would seem dangerous t o a r r i v e a t these c o n c l u s i o n s . note was a f i n a l  suggestion  Perhaps the one encouraging  t h a t economic s t u d i e s be i n i t i a t e d , but t h i s  seemed r a t h e r b e l a t e d a f t e r many important i s s u e s had a l l but been decided.  Bulmer (1966), a c o o p e r a t o r Government, c h a l l e n g e d  the N a t i o n a l  i n ARDA p r o j e c t s i n the Nova S c o t i a Committee on F o r e s t Land t o  produce a p l a n o u t l i n i n g j u s t how t h i s a g r i c u l t u r e and other  resources  were t o be used i n determining  o r d e r l y development of f o r e s t ,  was t o be c a r r i e d out; and what methods the f i n a n c i a l investment t o be expended  on each c a p a b i l i t y c l a s s , a f t e r g a t h e r i n g  the v a s t amount o f i n f o r m a t i o n  across  forthcoming.  Canada.  No c l e a r answer has been  The ARDA o b j e c t i v e o f r a i s i n g the l e v e l of income o f r u r a l communities does n o t appear t o have been a c h i e v e d  t o any s i g n i f i c a n t  degree, e i t h e r . A s p e c i a l study, p r e p a r e d f o r the Economic C o u n c i l o f Canada, examined how e f f e c t i v e l y ARDA and other contributed,  or appear l i k e l y  of r u r a l incomes (Buckley concluded e m p h a t i c a l l y  23.  f e d e r a l programs have  t o c o n t r i b u t e i n the f u t u r e , t o the growth  and T i k a n y i 1967).  These economists  t h a t ARDA agreements i n e f f e c t u n t i l  1970 do  A r e p o r t on the l a n d c a p a b i l i t y f o r a g r i c u l t u r e and f o r e s t r y f o r t h i s a r e a was completed i n 1966, but not p u b l i s h e d . Mimeo.  58  not f i l l appears  the most important gaps i n p o l i c i e s t o be a r e a s o n a b l e tendency  evade the q u e s t i o n of what might  f o r r u r a l Canada. There  i n ARDA a s s i s t a n c e p o l i c i e s  t r u l y c o n s t i t u t e an e f f e c t i v e  to solution  f o r m a r g i n a l farm u n i t s . They found t h a t many l a n d and water r e s o u r c e investments, which c o n s t i t u t e satisfy either  the bulk of ARDA programs, would not  the minimum c r i t e r i o n of economic e f f i c i e n c y , or the  o b j e c t i v e of a more e q u i t a b l e income d i s t r i b u t i o n i n f a v o r of the poor. Of the p r o j e c t s a n a l y s e d t h e r e were many i n which a d o l l a r was t h a t a r u r a l m a r g i n a l farmer c o u l d earn about lamented  50c.  Buckley and  the f a c t t h a t ARDA funds were not c h a n n e l l e d i n t o  manpower m o b i l i t y programs aimed a t removing m a r g i n a l l a n d s ; nor was c o s t of the readjustment  Tihanyi  comprehensive  t h e r e any commitment to share the s o c i a l to m i g r a t i o n i n the c o n t r a c t e d  i n f i n i t e s i m a l l y , and p r o s p e c t s not a t  so  underemployed l a b o u r from  R a t h e r , p r o j e c t s were i n i t i a t e d which r a i s e d r u r a l  M u l t i p l e Use  spent  services  communities.  incomes  all.  Concept.  The m u l t i p l e - u s e p h i l o s o p h y has been w i d e l y a c c l a i m e d as the panacea f o r a l l l a n d use c o n f l i c t s .  Simply s t a t e d , l a n d r e s o u r c e s  s h o u l d be used on a m u l t i p l e b a s i s i f two or more simultaneous uses of a r e s o u r c e w i l l y i e l d a g r e a t e r b e n e f i t than one use a l o n e . Economic theory i s e x p l i c i t i n the m u l t i p l e - p r o d u c t model. Maximum net b e n e f i t s a r e p o s s i b l e when r e s o u r c e s a r e a l l o c a t e d among the m u l t i p l e uses i n such a way  that  the m a r g i n a l r e t u r n s per u n i t of i n p u t from a l l uses  a r e equal ( Z i v n u s k a 1961).  Or, expressed another way,  the primary  use  59  should g i v e way  to other uses to the e x t e n t t h a t the net b e n e f i t  these other uses exceeds the s a c r i f i c e i n the primary use  I t i s here  the c o n t r o v e r s y b e g i n s .  from  (Pearse 1968).  Many r e s o u r c e managers  e r r o n e o u s l y b e l i e v e t h a t the m u l t i p l e - u s e concept means i n t r o d u c i n g secondary  uses o n l y i n so f a r as they do not d e t r a c t from or d i m i n i s h  the v a l u e of the primary are bound by l o y a l t i e s  use.  Even those w i t h a more r e a l i s t i c  to t h e i r s p e c i f i c r e s o u r c e use, and  changes which might reduce  approach  resist  the a r e a under t h e i r j u r i s d i c t i o n . Moreover,  d i s t r i b u t i n g uses on one a r e a by s y s t e m a t i c a l l y e v a l u a t i n g them a c c o r d i n g to economic and  s o c i o l o g i c a l p r i n c i p l e s i s b e s e t by s e r i o u s problems of  d a t a m e a s u r e m e n t , i n s t i t u t i o n a l - r i g i d i t i e s , t r a d i t i o n s and impediments.  Zivnuska  (1961) noted  the v e r y low s t o c k of knowledge of  the p h y s i c a l r e l a t i o n s h i p s , v a l u e s and uses made of f o r e s t l a n d . i n t a n g i b l e s and  Difficulties  s o c i a l products  c o s t s , i n v o l v e d i n the a r i s e i n the case of  However, even though these can't  q u a n t i f i e d i n p r e c i s e monetary terms, they must be (Pearse  generally f a i l  (Gregory  1955), and  1968).  joint  on i s o - c o s t  f u n c t i o n s expressed.  to i n c l u d e " s p i l l o v e r " e f f e c t s and  s o c i a l and  v a l u e s . These problems are b e i n g approached i n many new 1966b).  However, i t seems e v i d e n t t h a t d e c i s i o n - m a k i n g  ways  or r u l e , but must r e l y on the knowledge and  and They  intangible (Pearse  involved with  m u l t i p l e - u s e can never be expressed w h o l l y by p r e c i s e economic  maker, and how  be  considered  Economic m u l t i p l e - u s e models have been b u i l t i s o - r e v e n u e curves  competing  such as r e c r e a t i o n and a e s t h e t i c v a l u e s ,  which a r e not n o r m a l l y marketable.  s u b j e c t i v e l y i n decision-making  sociological  formula  judgement of the p o l i c y  w e l l he i s a b l e to assess a l l c o s t s and b e n e f i t s  60  (Zivnuska  1961).  In B.G. resources.  some p r o g r e s s has  been made i n the i n t e g r a t i o n of  C l a u s e s designed to p r o t e c t salmon spawning grounds have  become an i n t e g r a l p a r t of government timber l i c e n c e s , l e a s e s other and  f o r e s t tenures.  Forest Service  C o o p e r a t i o n between Land S e r v i c e , Parks Branch  i s e v i d e n c e d by  decision-making i n s i t u .  The  f o r the i n t e g r a t i o n of other Public Sustained  and  j o i n t f i e l d examination  Forest Service also includes  resource  use  and provision  development i n a l l c u r r e n t  Y i e l d U n i t working p l a n s  (Hughes 1968).  Possible solutions.  H i s t o r i c a l l y , a l l major resource, i n t e r e s t s i n B.C. i n c o n f l i c t w i t h one (1961) saw  another a t d i f f e r e n t times ( B l a c k  controversy  as  1968).Zivnuska  the v e r y medium f o r m u l t i p l e - u s e  i n the p u b l i c s e c t o r , where i t would serve  to b r i n g out  v a r i e d i n t e r e s t s a f f e c t e d by  to be made. But  c l a s h of f o r c e s may  not  serve  supra-body, a c o o r d i n a t i n g a r b i t r a t e as  the d e c i s i o n s  and  reference  (Bandy 1967,  a  the  continual  the i n t e r e s t s of s o c i e t y . R a t h e r , some  government department, might be  s e t up  to  land  use  attempt to r e s o l v e c o n f l i c t s w i t h i n a l a r g e r frame of  economic p r i o r i t y  Pearse 1 9 6 8 ) . a  Not  s c a l e s be e s t a b l i s h e d but  o n l y must the t e c h n i c a l a w e l l balanced  d i s i n t e r e s t e d group of p r o f e s s i o n a l s ; must be crucial  decisions  forcefully  o b j e c t i v e l y as p o s s i b l e the demands of v a r i o u s  agencies,  have been  decisions.  and  and  r e c r u i t e d to make these  61  CHAPTER V  DISCUSSION.  Market v s . p u b l i c a l l o c a t i v e p r o c e s s .  Many economists m a i n t a i n t h a t the tremendous f o r c e s s u p p l i e d by the c o m p e t i t i v e e n t e r p r i s e toward e f f i c i e n t  market o r g a n i z e  operation.  motivating  and guide f r e e  B r o a d l y , both the Canadian  f e d e r a l and p r o v i n c i a l governments encourage f r e e e n t e r p r i s e . They r e a l i z e t h a t a c e n t r a l l y - c o n t r o l l e d economic system, such as i n the U.S.S.R., cannot make the myriad d e c i s i o n s n e c e s s a r y f o r the e f f i c i e n t f u n c t i o n i n g o f such a complex.  That our economy never reaches the  optimum p o i n t i s not as important as the f a c t directed  t h a t way. Some o f the i m p e r f e c t i o n s  t h a t the main f o r c e i s o f the c o m p e t i t i v e  market and the impediments t o i t s f r e e o p e r a t i o n have a l r e a d y discussed,  but d e s p i t e  these,  features.  I t p e r m i t s unanimity w i t h o u t e n f o r c i n g  been  the market mechanism has many redeeming conformity  (Friedman 1965), and may b r i n g about a more e q u i t a b l e r e d i s t r i b u t i o n of income, p r o v i d e d (Leftwiche  1966).  that s o c i e t y f e e l s that t h i s  An added advantage o f the market system i s that i t  a c t s as an i m p a r t i a l a r b i t e r between p r e s e n t resources  i n ai manner . f a r s u p e r i o r  The  trend i s d e s i r a b l e  case a g a i n s t  and f u t u r e f o r most  t o any y e t d e v i s e d .  a f r e e l y competitive  market r e s t s s o l e l y on  62  the degree to which f a c t o r s p r e v e n t i t s i d e a l i t s e l f , per  se.  not  on  Others f e e l t h a t p u b l i c d e c i s i o n - m a k i n g i s f a r  superior  to that of the market mechanism.  "one  - one  man  f u n c t i o n i n g , and  vote"  rather  than "one  Socialists believe  that  d o l l a r - one-vote" b r i n g s  about  a more d e s i r a b l e d i s t r i b u t i o n of income, a l b e i t w i t h l e s s e f f i c i e n c y . S o c i e t y as a whole may those of the market.  p r e f e r the weights of the p o l i t i c a l p r o c e s s I n some i n s t a n c e s  the market cannot express  c o l l e c t i v e demand f o r investment to b e n e f i t the "common p o o l "  or " f u g i t i v e " r e s o u r c e s  w i l d l i f e , and  some go so f a r as  such as  f u t u r e . In the  o i l fields,  to i n c l u d e s t a t e timber  optimal  allocation.  r a t e of use,  ownership p r e s e n t , anything these  and  This presents  no user i s going to be  for future periods.  resources, desired  with l i t t l e  concerned about  or  the  no  saving  Government i n t e r v e n t i o n i s c r u c i a l  in  cases.  In l a n d r e s o u r c e s , they are not l a n d i s to be must be  absolute,  and  even though p r i v a t e r i g h t s are s o c i e t y has  considered  resource,  but  a strong vested  which do not  t h i s may  of s o c i e t y , which may  not be  Social  how  goals  always r e c e i v e weight on the market. bidder  gains  c o n t r o l of the  land  compatible w i t h the l o n g - r u n i n t e r e s t s  f a v o r b a l a n c e d growth, r e g i o n a l development,  economic s t a b i l i t y and  general  However, many of the  f o r e s t ownership may  exclusive  interest in  used, p a r t i c u l a r l y as i t becomes s c a r c e r .  Under a f r e e market the h i g h e s t  use.  case of  a problem of gauging  f o r these r e s o u r c e s ,  the  fisheries,  the l a i s s e z f a i r e mechanism cannot hope to b r i n g about the optimum r e s o u r c e  to  employment above e f f i c i e n c y i n  s p e c i f i c arguments o f t e n c i t e d  resource  f o r Crown  not have t r u e economic r a t i o n a l e . In the case of  63  economic s t a b i l i t y of v a r i o u s communities, s o c i e t y must d e c i d e whether it  i s indeed worth t h e c o s t of t y i n g a r e g i o n t o a s t a t i c  base.  resource  The c o s t o f p l a n t c o n s t r u c t i o n , t o o , can be argued down.  stock i s only depreciated  f o r twenty y e a r s g e n e r a l l y , so what  c o u l d be g i v e n f o r p r o l o n g i n g  t h e f o r e s t i n d u s t r y investment  Crown revenues would not s u f f e r i f f o r e s t  Capital  reason period?  l a n d were a l i e n a t e d , and  d e s p i t e governmental d e s i r e t o h o l d t h e i r f o r e s t c a p i t a l , i t should be justified  on some p r e s c r i b e d i n t e r e s t  large holding cost. and  In the f i e l d  r e t u r n s a r e present  r a t e o t h e r than z e r o , t o assess t h e  of multiple-use  i n which s o c i a l  costs  i t appears e v i d e n t t h a t government ownership i s  s u p e r i o r t o p r i v a t e i n some cases.  The  e v a l u a t i o n o f l a n d r e s o u r c e use p r o v i d e s many examples of  government-directed growth t h a t f a i l e d . marginal  a g r i c u l t u r a l l a n d stand  The abandoned farms on  as constant  reminders o f these  failures.  Perhaps worse i s a c e r t a i n p e r s i s t e n c e i n government t o m a i n t a i n unproductive  these  endeavours by s u b s i d i e s .  One c o u l d q u e s t i o n d e m o c r a t i c r e p r e s e n t a t i o n i n g e n e r a l . it  i n f a c t t r u l y r e p r e s e n t a t i v e o f t h e w i l l of t h e people?  groups have a v o i c e a t a l l ? rolling",  Is  Do minor  One c o u l d c i t e i n s t a n c e s of f l a g r a n t " l o g  and " t r a d e - o f f s " between r e p r e s e n t a t i v e s which d i s t o r t t h e  whole system.  Certainly i t i s d i f f i c u l t p o l i c y with regard  t o see how present  governmental  t o f a c t o r uses, f r a u g h t w i t h p s y c h o l o g i c a l and  h i s t o r i c a l b i a s , and downright ignorance lobbying i n the l e g i s l a t u r e ;  and apathy;  i n f l u e n c e d by  c o n d i t i o n e d t o income d i s t r i b u t i o n and  employment problems and t o economic growth;  forced to maintain  power  64  over r e s o u r c e s , can ever hope t o ' b r i n g about a maximum net p r o d u c t from r e s o u r c e use.  P e r f e c t i o n appears t o be no more a c h i e v e d i n the p u b l i c sphere than i n the open market. the  We  s h o u l d n e i t h e r impute an i n f a l l i b i l i t y  p u b l i c d e c i s i o n makers nor r e g a r d the d e m o c r a t i c i n s t i t u t i o n s  u t t e r l y d e v o i d of r a t i o n a l i t y . of  a r e p r e s e n t a t i v e group of p e o p l e who  fail,  B.  They a r e the combined wisdom and  as folly  sometimes  i n t h e i r endeavours.  P r e s e n t p r o v i n c i a l government  In i t was  o f t e n succeed, but  to  p o l i c i e s and shortcomings.  t r a c i n g the h i s t o r i c a l  development  seen .thatygovernment t a c t i o n s -suited-, the  r e t r o s p e c t i t i s easy t o uncover f a u l t s . s u s t a i n e d y i e l d p o l i c y , no matter how be applauded f o r the tremendous  of f o r e s t tenure "In B.:C immediate problems.  In  The i n t r o d u c t i o n of the  unsound e c o n o m i c a l l y i t i s , must  impetus i t gave to sound  forestry  p r a c t i c e s and t o i n c r e a s e d u t i l i z a t i o n of both p r i m a r y and secondary f o r e s t p r o d u c t s . I t succeeded i n c o n v e r t i n g a l a r g e army o f f o r e s t h a r v e s t e r s i n t o knowledgeable " f o r e s t e r s " w i t h i n a decade or two. many i t seemed i n c r e d i b l e t h a t c o n d i t i o n s  To  t h a t brought about the  24 infamous Sommers Case among government  24.  c o u l d have e x i s t e d .  Fragmented d e c i s i o n - m a k i n g  departments o f t e n r e s u l t e d i n a s u r p r i s i n g degree of  A case i n which the M i n i s t e r of Lands and F o r e s t s f o r the B.C.government was found g u i l t y of a c c e p t i n g b r i b e s f o r the r i g h t s to prime f o r e s t l a n d s ( F o r e s t Management L i c e n c e t e n u r e ) .  65  d i c t a t o r i a l power, i n c l u d i n g the power t o g i v e away r i g h t s t o r e s o u r c e s .  I t may  be r e a l i s t i c  at t h i s p o i n t to view the whole  a l l o c a t i v e process  a g a i n s t the p r e s e n t  practical politics  out of which a c t u a l p o l i c i e s are f a s h i o n e d .  system of government  B.C.  resource  p o l i t i c a l environment, the  has been l a b e l l e d The P o l i t i c s of E x p l o i t a t i o n  because of i t s great p r e o c c u p a t i o n  w i t h economic development  u t i l i z a t i o n of our endowment of n a t u r a l r e s o u r c e s present  B.C.'s  S o c i a l C r e d i t form of government  and the  (Black 1968).  appears t o s u i t  The  the m a j o r i t y  of v o t e r s , p e o p l e h e a v i l y immigrant, and l i v i n g i n i s o l a t e d  communities;  i n t h a t i t i s i n v o l v e d i n m a t e r i a l i s m and not t r a d i t i o n a l i s m , and has the a c t i o n t y p i c a l of f r o n t i e r c u l t u r e . government  The immediate o b j e c t i v e of  must be always t o r e t a i n power ( B l a c k 1968);  supposed demands of B.C.  and t h e  v o t e r s a r e i n t e r p r e t e d i n p o l i c i e s which l e a n  toward t a n g i b l e , s h o r t - r u n and s p e c t a c u l a r developments.  It i s  b e l i e v e d e s s e n t i a l f o r power, t o o , t h a t a l l n a t u r a l r e s o u r c e s r e t a i n e d under p r o v i n c i a l ownership. makers w i l l be guided e f f i c i e n c y i n resource  I t i s highly u n l i k e l y that  economic  gains;  exploitation.  There i s an u n f o r t u n a t e  Any changes f o r t h c o m i n g  The present  must produce  especially  or improve B.C.'s p o s i t i o n i n the world government  may  market  cannot a l l o w p r o f e s s i o n a l  and the means o f r e s e r v e e x p l o i t a t i o n (Black  governments  so  startling  r e s o u r c e managers t o i n f l u e n c e p o l i c y i n the c r i t i c a l areas  Future  tendency  i n a province  or be b e n e f i c i a l t o the m a j o r i t y of v o t e r s ,  the s m a l l e n t r e p r e n e u r s ; ( B l a c k 1968).  policy  i n t h e i r d e c i s i o n s by c r i t e r i a of economic  t o f e e l t h a t some economic waste i s not important r e s o u r c e wealthy.  be  of t i m i n g  1968).  e l e c t to r e l i n q u i s h l e g a l t i t l e to  66  forest  lands when i t becomes e v i d e n t  managed e f f i c i e n t l y  by the t e n a n t s ,  t h a t Crown f o r e s t s are and  being  t h a t p u b l i c revenues can  c o l l e c t e d from the f o r e s t i n d u s t r y without  ownership of the  be  timber.  T h i s would promote a c o m p e t i t i v e market i n f o r e s t l a n d , and p l a c e i t e q u a l l y i n the l a n d market f o r any supply  and  if  any  In t h i s way  the p l a y of  demand i n the open market would tend to a l l o c a t e l a n d to  i t s h i g h e s t use. (or  o t h e r use.  The  amount of l a n d b e i n g used f o r timber  growing  o t h e r f o r e s t p r o d u c t ) c o u l d w e l l d i m i n i s h i n such a market,  o t h e r l a n d uses proved more p r o f i t a b l e .  A note of warning was Canada (1964).  Progress  sounded by the Economic Council of  does produce c a s u a l t i e s , and  growth some i n d u s t r i e s w i l l s u f f e r . always a s t r o n g t e m p t a t i o n d e c l i n i n g and  inefficient  The  Council f e l t  i n economic that there i s  f o r governments t o s u b s i d i z e industries.  these  Rather, t h e i r duty should l i e  i n f a c i l i t a t i n g the smooth adjustment from d e c l i n i n g to expanding activities, to  and  i n c r e a s i n g the m o b i l i t y and  r e a l i z e t h e i r highest  return.  a d a p t a b i l i t y of  resources  67  CHAPTER VI  RECOMMENDATIONS AND  The  CONCLUSIONS  r o l e o f t h e p r o v i n c i a l government i n t h e  of l a n d use i s v i t a l .  I f we a c c e p t ,  f o r t h e moment, t h e p r e s e n t  system of Crown tenures o f B.C. f o r e s t l a n d , t h e r e immediate i m p e r f e c t i o n s  determination basic  are s e v e r a l  which c o u l d be improved, and which l i e c l e a r l y  at hand.  Our  knowledge o f f o r e s t s o i l  c a p a b i l i t i e s i s f a r from complete.  Knowing what i s t e c h n i c a l l y and e c o n o m i c a l l y forest  p o s s i b l e from each a c r e of  l a n d i s a p r e r e q u i s i t e f o r any i n t e n s i v e p l a n n i n g .  must be geared t o r e f l e c t adaptable t o r e v i s i o n .  These s t u d i e s  changing t e c h n o l o g y and markets, and so be  An admirable s e r i e s o f such p r o j e c t s has been  i n i t i a t e d by Dr. J.H.G. Smith and h i s a s s o c i a t e s a t U.B.C.  Knowledge o f t h e k i n d s forest  land  o f market e x i s t i n g i n B.C. both i n  (or timber) and i n f o r e s t p r o d u c t s ,  i s sketchy, too.  on t h e l i n e s f o l l o w e d by Mead (1966) i n h i s P a c i f i c northwest  Studies  analysis  i n U.S.A. would l e a d t o a f u l l e r u n d e r s t a n d i n g o f the market, and the means o f overcoming c e r t a i n problems would be c l e a r e r .  I t i s t o be hoped (and t h e r e  a r e rumours t o t h i s e f f e c t ) t h a t  the p r o v i n c i a l government w i l l s h o r t l y s p e c i f y a g u i d i n g  rate of return  i n f o r e s t r y p r o j e c t s , and thus f o r m a l l y accept the f a c t t h a t t i m i n g o f  68  f u t u r e r e t u r n s i s j u s t as important  as t h e i r magnitude.  When s u s t a i n e d y i e l d p o l i c y was 1952  i t was  f i r s t presented  h a i l e d by f o r e s t e r s as the "Great  much to recommend a t t h a t time.  i n B.C.  in  Step Forward", and i t had  Coming as i t d i d when timber  shortages  seemed imminent, i t appeared t o o f f e r the i d e a l s o l u t i o n to supply problems, and  guaranteed  Economically,  sustained y i e l d  ( S a a r i 1948,  Pearse  the p r o f e s s i o n a golden r a i s o n d'  1966  etre.  as a p o l i c y l e a v e s much t o be d e s i r e d  , Smith 1968).  I t t i e s the economy t o a s t a t i c  9.  l e v e l of p r o d u c t i o n i n i t s e f f o r t to conserve. of the r i g i d  The unhappy consequences  a l l o w a b l e c u t , r o t a t i o n ages based on the m.a.i. of wood  volumes, and a gross u n d e r e s t i m a t i o n have a l r e a d y been noted.  of the p r o v i n c i a l f o r e s t  inventory  Reforms i n these a r e a s , which have been w e l l  s t u d i e d and documented, are s u r e l y the next  l o g i c a l step i n our  development. Not  o n l y must t h e r e be a s h i f t  from a p r e o c c u p a t i o n w i t h  the  t e c h n i c a l to economic a s p e c t s of the r e s o u r c e i n u t i l i z a t i o n and i n management, but some e f f o r t must be d i r e c t e d to c o o r d i n a t e l a n d  and  r e s o u r c e p l a n n i n g f o r economic e f f i c i e n c y .  Impartial resource  a d m i n i s t r a t o r s must be found who  a c l e a r i n g house f o r the  can s e t up  v a r i o u s demands f o r l a n d s , and make d e c i s i o n s t h a t w i l l weigh adequately  the a l t e r n a t i v e s p o s s i b l e i n r e s o u r c e p r o j e c t s .  Although  the f e d e r a l government i s not a c t u a l l y i n v o l v e d i n  the a l l o c a t i o n of f o r e s t l a n d i n B.C., on the p r o v i n c i a l economic environment.  i t has  a very s t r o n g i n f l u e n c e  Canadian government p o l i c y  appears t o encourage c o m p e t i t i o n i n b u s i n e s s , or at l e a s t a h e a l t h y rivalry  (Brewis  et a l . 1965).  One  of i t s d u t i e s should be to seek  out the i m p e r f e c t i o n s i n the market and  t r y to lessen t h e i r  effect  69  w h i l e remaining w i t h i n t h e main c o n s t r a i n t s of a r e a s o n a b l e , but not necessarily f u l l ,  employment l e v e l , and economic development at a  p r e s c r i b e d , but r e a l i s t i c ,  rate.  Some o f t h e i m p e r f e c t i o n s which I  have mentioned i n t h e t e x t can be r e c t i f i e d understood.  Here government decision-makers  as they a r e more c l e a r l y must e x e r c i s e S c o t t ' s  (1958) " r e s o u r c e f u l n e s s and r e s p o n s i b i l i t y " and n o t be i n f l u e n c e d by e x t e r n a l p r e s s u r e s o r expediency.  Another o b j e c t i v e s h o u l d be t h e  removal of b a r r i e r s between compartments of t h e c a p i t a l market.  Thus,  the fewer b a r r i e r s t o t h e movement o f funds from one market t o t h e o t h e r , t h e g r e a t e r i s t h e a b i l i t y o f borrowers t o compare terms i n each market, and so t o d e c i d e on t h e m e r i t and r a n k i n g of v a r i o u s projects  (Brewis e t a l . 1965).  A f i n a l word i s needed. r e s o u r c e e x p l o i t a t i o n was based that forest  on p r o f i t m a x i m i z a t i o n .  Many may argue  l a n d has v a l u e f a r beyond the immediate d o l l a r v a l u e o f  forest products. fitted  The optimum e f f i c i e n c y l e v e l i n  I have p o i n t e d out t h a t i n t a n g i b l e v a l u e s s h o u l d be  i n t o any a p p r a i s a l , and most can be e v a l u a t e d  However, t h e r e a r e some f a c t o r s which cannot be v e r y s i g n i f i c a n t t o some p e o p l e .  reasonably.  be p r i c e d , and these may  The businessman w i t h h i s  suburban v e g e t a b l e p l o t undoubtedly  r e a l i z e s t h e diseconomy o f every  c a r r o t he grows, and t h e housewife,  t o o , senses  f o r h e r home made bread.  the ultimate p r i c e  There may be l a r g e groups of people who  p s y c h o l o g i c a l l y s u s t a i n a complete a l i e n a t i o n from these k i n d o f homely p u r s u i t s i n o r d e r t o move toward t h e u l t i m a t e e f f i c i e n c y i n an i n d u s t r i a l economy.  Others, caught  between these two extremes, may  s t r i k e out on a new tangent, embracing e n t i r e l y new v a l u e s which would render many t h i n g s o b s o l e t e , and c o n c e i v a b l y a l t e r the p r e s e n t  course  70  of economic development. B.C.  We  have o n l y t o r e c a l l the s h o r t h i s t o r y of  from a f u r - b e a r i n g p r e s e r v e  of the Hudson's Bay  f r a n t i c g o l d - m i n i n g economy, to the p r e s e n t  Company, to a  d i s p e r s i o n i n which f o r e s t s  account f o r the most v a l u a b l e i n d u s t r i e s , to see the p o s s i b l e changes i n emphasis.  What f u t u r e demands w i l l a l t e r t h i s p a t t e r n ?  (1968), d i r e c t o r of p l a n n i n g  Graham  f o r Vancouver, foresaw a p o p u l a t i o n  4 m i l l i o n i n the lower F r a s e r V a l l e y by the l a n d s u r f a c e devoted to r e c r e a t i o n .  2020, and  of  at l e a s t o n e - t h i r d  Perhaps B.C.  w i l l become a  v a s t r e c r e a t i o n a l area i n the f u t u r e to s e r v e the needs of many m i l l i o n s of p e o p l e from a l l p a r t s of the w o r l d .  In another t h e s i s such v a r i e d p o s s i b i l i t i e s c o u l d explored  i n the l i g h t  Even G a l b r a i t h ' s  of widespread u n r e s t  (1967) v i s i o n of the New  p e o p l e would r e a d i l y s u r r e n d e r a greater production  i n well-fed  be  countries.  I n d u s t r i a l S t a t e , i n which  i n d i v i d u a l freedom t o p a r t i c i p a t e i n  of goods and  s e r v i c e s might be s h a t t e r e d by  revolution i n values.  "Omnia mutantur, nos  25.  et mutamur i n  illis"  25  A l l t h i n g s are changing, and.we are changing w i t h 1  them.  this  of  BIBLIOGRAPHY  Anderson, M.L.  1960.  Some p o i n t s a f f e c t i n g the f i n a n c i n g of a f f o r e s t a t i o n schemes. 5th World F o r e s t r y Congress P r o c e e d i n g s . V o l . 2 : 1174-1177.  ARDA  1966.  Report on l a n d c a p a b i l i t y f o r a g r i c u l t u r e and f o r e s t r y . S p e c i a l s a l e a r e a , B.C. (Prince George a r e a ) . Compiled by D.S.Lacate. U n p u b l i s h e d mimeo. 12 pp.  1966.  A s s o c i a t i o n of B.C.Foresters  1967.  1968.  F e d e r a l - p r o v i n c i a l r u r a l agreement A p r i l 1965 to March 31, 1970. Queen's P r i n t e r , Ottawa. 29 pp. Draft  1,  of f o r e s t p o l i c y statement. Mimeo 4  pp.  R o l e of the p r o f e s s i o n a l f o r e s t e r i n f o r m u l a t i n g l a n d and r e s o u r c e use p o l i c i e s i n B.C. 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