Eminent US economist concludes BC's forest industry is not subsidized by stumpage system

Stumpage fees cannot be construed by the US lumber industry as a subsidy to BC timber harvesters. That's the message of a new report authored by eminent US environmental and natural resources economist, Dr. William D. Nordhaus of Yale University. Dr. Nordhaus is also a member of the US National Academy of Sciences and a Fellow of the American Academy of Arts and Sciences. "Dr. Nordhaus' report echoes what British Columbia has always stated to be true," said John Allan, President of the BC Lumber Trade Council. "BC's lumber industry pays a fair price to harvest timber on provincial lands - and indeed more than it paid at the time of the last lumber dispute, when an independent international tribunal ultimately concluded that no subsidy existed," Allan said. "British Columbia generates over $500 million more in revenues than it pays out in costs," he added.

The key finding Dr. Nordhaus' study concluded: - Stumpage does not confer a subsidy on softwood timber. That would only occur if the province was paying companies to harvest timber that was otherwise unprofitable to harvest. The Government of BC is receiving "adequate remuneration" from producers and its charges for stumpage are "consistent with market principles". The study has been sent to the US Department of Commerce, which is examining the US lumber industry's trade complaint filed in the wake of the Canada-US softwood lumber agreement. The study was commissioned by the Government of British Columbia and the BC Lumber Trade Council.

The BCLTC members are responsible for 95% of BC's softwood lumber production. Executive summary of the study is at http://www.bclumbertrade.com Backgrounder: Eminent US economist concludes BC's forest industry is not subsidized by stumpage system Stumpage fees cannot be construed by the US lumber industry as a subsidy to BC timber harvesters. That's the message of a new report authored by eminent US environmental and natural resources economist, Dr. William D. Nordhaus, of Yale University. Dr. Nordhaus is also a member of the US National Academy of Sciences and a Fellow of the American Academy of Arts and Sciences. Dr. Nordhaus' report, "An Economic Analysis of Whether Long-Term Tenure Systems In Canadian Provincial Forests Provide Countervailable Subsidies to Canadian Softwood Lumber Imported Into the United States," further strengthens British Columbia's position in the Canada-US softwood lumber dispute.

The report makes two key points: 1. Provincial stumpage charges do not constitute a subsidy on softwood lumber. It is only a subsidy when dollars flow from the government to the tenureholders. When dollars flow from the tenureholders to the government, as is the case with the BC forest industry, then this is the economic equivalent of taxes and cannot constitute a subsidy. 2. Dr. Nordhaus' analysis demonstrates that the Government of BC is obtaining adequate remuneration from producers and that stumpage charges are in accordance with the competitive market norm that the trade laws seek to promote. 3. The Nordhaus analysis confirms that BC's tenure and stumpage systems provide the Province with revenues that far exceed the requirement for adequate remuneration. The BC stumpage system generates over $500 million more in revenue for the Government of British Columbia than it consumes in costs. This is in sharp contrast to the US Forest Service that has been losing money for years on its timber-harvesting program. The report, prepared at the request of the Government of British Columbia and the BC Lumber Trade Council, has been submitted to the US Department of Commerce.