A ban on log exports would likely hurt B.C.'s forestry and logging industry, concludes a new study released today by the Fraser Institute, an independent Canadian public policy think-tank.
“An outright ban on log exports from B.C., as advocated by many union leaders, environmentalists and politicians, would likely cause economic damage, particularly to B.C.'s coastal regions where the majority of B.C. log exports originate," said Joel Wood, study author and senior fellow at the Fraser Institute.
Instead, the study, Log Export Policy for British Columbia, highlights a possible "export quota policy," which would allow log producers to export a fixed amount of logs, and notes the many restrictions on log exports and their impact on the industry.
The provincial government owns most of B.C.'s forests and sells timber to the private sector for processing. Therefore, as an active business partner, the government should seek the highest price for its product. But government restrictions limit exportation.
For example, before exporting a log, log producers must first offer the log to domestic buyers, then a government committee decides whether the offer is fair.
“The current log export process is wasteful, adds significant delays, and creates uncertainty for logging companies. An export quota policy, however, would streamline the process and eliminate delays and uncertainties," Wood said.
Moreover, limits on log exports increase supply in the domestic market and drive down domestic prices.
For example, in 2011, B.C.'s forestry and logging sector contributed $1.77 billion to the province's GDP. That year, coniferous logs sold domestically on the Vancouver log market for $74.28 per cubic metre while exports sold for $108.35. Only 7% of the 2011 log harvest was exported, despite foreign market demand for B.C. logs, says the Fraser Institute.
Finally, the study notes that removing restrictions on log exports as part of a trade agreement with China, for example, could provide leverage for negotiators and benefit both British Columbia and Canada.
“A complete ban on log exports, while politically beneficial for many politicians, may cause unnecessary damage to one of British Columbia's premier natural resource industries," Wood said.
“If policy-makers in British Columbia want to maximize logging's potential, they should measure the costs of delay and uncertainty imposed by the current export approval process and work to reform the process for the benefit of British Columbians," Wood said.