Evaluating social welfare implications of forestry policies when economic and environmental values matter in a British Columbia context

A modified Faustmann equation is used to evaluate the comparative social welfare implications of a set of forestry policies in British Columbia. A one-hectare timber stand is modeled with a timber firm as the licensee and the provincial government as the resource owner and policy-maker. Rotation time and silvicultural investment decisions are the firm’s main inputs while revenue, government expenditure, and the values of carbon sequestered and biodiversity accumulated are the components of the social welfare function. The policies include subsidized silviculture, imposed rotation times and compensation for the forest stand’s environmental outputs. The social welfare generated from each policy is compared to determine the best policy for a BC forest stand. Heterogeneity is modeled through individual stands’ infrastructure costs and unprofitable stands are assumed to accumulate environmental social welfare. Finally, a timber supply area (TSA) in BC’s southern interior is used as a case study to explore the model’s policy implications in a real-world forestry context. Social welfare was found to be highest under an environmental subsidy policy that compensates the firm for all carbon sequestered in timber biomass and a fraction of the value of biodiversity, soil carbon and wildlife habitat accumulated over the rotation. The BC government’s current policy of limited funding for incremental silvicultural activities generated less social welfare than the environmental subsidy policy. When heterogeneity was introduced, the general results held. The unprofitable stands generated very little social welfare compared to the harvested stands. In the case study, if timber quality premiums exist, social welfare is highest when stands are managed under the subsidy policy for timber quality, generating moderate levels of short-term wildlife habitat supply. Where this premium does not exist, all stands should be managed for timber supply. To meet the TSA’s stated objectives, timber supply could be managed alongside old growth if only profit and biodiversity matter or in the case where there is a downward-sloping demand for old growth forests.Science, Faculty ofResources, Environment and Sustainability (IRES), Institute forGraduat