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Canada's forest industry is grappling with a variety of factors that are affecting its ability to remain competitive on world markets. These include the emergence of new producers of low-cost fibre, green consumerism, the integration of non-timber values in forest management, major international industry mergers, capital taxes and administrative costs, government regulations and a shrinking commercial forest.
Canada's share of the world market for pulp and paper has declined since 1990, due in part to growing competition from Scandinavia and countries in the Southern Hemisphere. The ability of forest companies to continue competing internationally depends on the ongoing availability of wood supply and on the industry's capacity to create the products and services in demand.
Over the last decade, available commercial forestland has diminished as more areas have been set aside for protection and settling Aboriginal land claims. Harvesting limits have been reached in some regions. There is a growing need to find ways of increasing the volume of wood produced from a given area. Some companies are exploring new ways of reducing rotation time and experimenting with fast-growing species. Governments are also looking into how to balance conservation with sustainable use.
With the exception of the prairies, high mountains and the tundra, trees are the natural dominant vegetative cover in Canada. However, marginal farmlands represent the only areas available for expanding forest cover. Reforestation on such lands may take place naturally or through planting.
Forest management practices in certain areas may become more focused on providing wood. Forests where native species of softwoods and hardwoods grow in monolithic stands could be managed intensively and primarily for timber production, with due regard for watershed and other ecological considerations. Such management will require investments in regenerating and tending, and could be encouraged through market incentives for public lands.
Canada's forest industry has remained competitive by cutting costs and enhancing productivity through advanced technology. But modernizing requires a great deal of capital investment, and the industry is finding it difficult to keep pace with the capital taxes and other administrative, monitoring and compliance costs it faces. Many of its manufacturing facilities are indeed state-of-the-art, and others have been upgraded, but there are still many requiring significant capital investment.
Capital taxes are being phased out at the federal level, and the provinces of British Columbia and Quebec recently announced capital tax reductions. Alberta has eliminated all of its capital taxes. While these are positive steps, more is needed. Current taxation and administrative and regulatory policies, such as those dealing with prescriptive fibre access, energy and transportation, hinder the sector's development. The federal government's Smart Regulation initiative to reduce regulatory duplication and inefficiency should help forestry companies reduce costs and attract the investment needed to remain competitive.
Certification is a voluntary market-based system used by industry to demonstrate that timber and non-timber forest products come from sustainably managed forests. As home improvement retailers, homebuilders, and major companies move to ensure that the products they buy come from sustainably managed forests, many forest companies are responding with environmental management systems.
Canadian companies have made great strides in certifying their operations, and the process is expected to continue. The success of certification will depend on the consumer's ability to sort out what each system means, and the degree to which these systems are recognized by governments, buyer groups and other certification systems.
Another emerging approach to assessing sustainability is the life-cycle assessment (LCA) method used by the construction industry to select environmentally acceptable products. LCA is an internationally accepted method for quantifying the total environmental effects associated with products; from extraction of resources to product manufacture and transportation, to product installation, use and maintenance, to disposal or reuse.