Pricing the social contract in the British Columbian forest sector

Abstract

In this paper, we investigate the impact of various socioeconomic conditions on the value of timber tenures in the province of British Columbia. Two timber tenure models were created, one for short-term timber sale licenses and the other for longer term forest licenses. The short-term model revealed that timber sales that were awarded according to a combination of employment, revenue, and manufacturing criteria yielded $8.63/m 3 less revenue than timber sales awarded based on revenue alone. Similarly, the long-term model indicates that manufacturing and employment conditions significantly reduce the bid on forest licenses. In both instances, we suggest that such conditions distort the use of timber, labour, and capital. Therefore, we conclude that recent forest policy changes in the province that removed several of these conditions greatly improved economic efficiency. Nevertheless, distribution impacts are likely to be important because resource rents have potentially been redistributed away from rural communities to the provincial government.