Are forest sector firms maximizing the economic returns from their timber? Evidence from British Columbia

Abstract

Understanding the components of the forest value chain and linkages is essential in designing a system that will maximize the economic value of Canadian fibre. A key part of the system is how firms incorporate the fibre quality and attributes of their timber supply into the decision over what kinds of products to manufacture. The linkage between timber supply and how firms decide to utilize fibre is critically important, especially in Canada, where government policy plays a key role in governing access to fibre. We explore this question by looking at whether firms try to maximize the economic return from their fibre, or instead focus on other objectives such as maximizing the production volume they can generate from their timber supply. We surveyed sawmills and woodland managers in British Columbia in the Fall of 2006 and focused on a particular characteristic-the extent to which sawmills and operations are responding to value-based signals rather than to other kinds of signals. We found that the majority of BC forest sector firms we interviewed are emphasizing volume-based measures on a daily basis, whether they are in sawmill or woodlands operations, and while economic measures become more important as the period lengthens, it is unclear as to how firms reconcile these 2 different types of measures.