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The share contract and silviculture in British Columbia

University of British Columbia

The forest industry is a very important part of the economy of British Columbia. A peculiarity of B.C. is the large percentage of forest land under government control. This situation creates difficulties when trying to attract private investment in forest management. Currently, tenure holders have no equity in future timber and only have rights to harvest timber, therefore, there are no voluntary incentives to invest and to manage the land well. The sale of Crown land to private interests on a large scale is likely not acceptable to the people of B.C. and so an alternative must be found. As the structure of the commercial forest land in B.C. undergoes the transition from old-growth to second-growth, the relationship between the Crown and tenure holder begins to resemble that of landlord and tenant farmer in agriculture. A sharecropping contract may have attributes that are desirable for managing forests. Several examples of silvicultural regimes in both the Interior and Coastal regions of B.C. are used to demonstrate how share contracts can be applied to B.C. forestry. The flexibility of ' share contracts allows the risks of forest management to be shared by both parties and they also provide the incentives to perform that the current command and control approaches do not. The calculations in the examples show positive net present values when discounted at 4% on the Coast and 3.5% in the Interior in real terms. Regimes that do not have positive NPVs with these discount rates may still be viable if non-market benefits are included and the equity shares of each party adjusted accordingly. In this way, government can internalize the benefit to the company of producing these goods. Share contracts also allow the Crown to accept logs as payment for use of the land and those logs could be used to supply provincial log markets.

Thesis/Dissertation

application/pdf

2009-02-14

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http://hdl.handle.net/2429/4561

Forestry

University of British Columbia

UBCV

DSpace