The competitiveness of the forestry sector threatened by the new forest regime

MONTREAL, Oct. 27, 2016 /CNW Telbec/ - On October 31, at the Forum Innovation Bois, the Quebec government will announce recommendations, probably accompanied by new programs, for encouraging innovation and investment in the forestry sector. Yet it is the government itself that is in large part responsible for the lack of investment in this industry and should review its practices before announcing new measures, argues a Research Paper published today by the MEI.

In particular, the tendency toward centralization, which has characterized forest regime reforms for too long, should be reversed in order to give companies on the ground more latitude.

Indeed, the entry into force of the new forest regime in 2013 shook the forestry sector. The Department of Forests, Wildlife and Parks took over almost all responsibility, including the development of forest management plans. The addition of new administrative structures has also complicated the planning of the activities of logging companies that now merely follow the Department's directives.

"The Department's lack of transparency and of economic considerations in developing these plans leads to additional expenditures and delays that increase companies' operating costs," points out Alexandre Moreau, Public Policy Analyst at the MEI and author of the publication. "Basically, the profitability of mills now depends in large part on the work of government officials."

The short-term vision underlying this new regime is also incompatible with the idea of encouraging innovation and investment in the sector. "Previously, timber volumes were allocated for a period of 25 years, compared to 5 years or less under the new regime, at the discretion of the Minister. This makes supply hard to predict and exacerbates the risk associated with investments and with the hiring of labour," explains Alexandre Moreau.

"To allow the industry to innovate and to remain competitive at the international level, it is essential for the Quebec forest regime to guarantee companies a stable and predictable timber supply. Reforms that go in this direction would support 60,000 forestry sector jobs, and the 264 municipalities that are heavily dependent on this sector and are struggling to recover from the economic crisis," says Jasmin Guénette, Vice President of the MEI.

This publication also provides a historical overview highlighting certain positive aspects of former forest regimes. It furthermore debunks some myths that have been used to justify more government involvement in the management of public forests.

The Research Paper entitled Quebec's Forest Regimes: Lessons for a Return to Prosperity was prepared by Alexandre Moreau, Public Policy Analyst at the MEI, with the collaboration of Jasmin Guénette, Vice President of the MEI. This publication is available on our website.

The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

SOURCE Montreal Economic Institute

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