infestation in the interior is projected to have harmed or
destroyed 58% of the harvestable lodgepole pine in the
province. As a result, the total AAC will decline by 20%
from historical norms. This reduction in timber supply will
result in higher fibre costs, as sawmill, panel, pulp and
paper, wood pellet, and bioenergy operations compete
for a diminished supply of timber and some communities
in the interior are buffeted by consolidation and closure of
certain facilities. On the upside, however, a strong pricing
environment (and a low Canadian dollar) should help to
keep BC operations profitable and limit the job losses
associated with a smaller AAC. Note that because of the
extended growing cycle of interior trees, the AAC is not
expected to return to its historic norm until 2080.
The Forest Sector’s Economic Footprint
By any measure, the forest products cluster remains
one of the province’s dominant economic engines. In
value-added terms, the sector’s GDP in 2013 amounted
to $6.8 billion. 2 About one quarter of this comes from
logging while nearly half is from the manufacturing of
wood products (mostly lumber, but also plywood and
other panel boards and some specialty products). Pulp
and paper makes up about 15% of the sector’s total
value-added production, while another 10% comes from
support activities for forestry.3
As is evident in Figure 1, output in BC’s forest products
cluster is cyclical. After the US housing bubble burst in
2006, GDP for the BC sector tumbled from more than $8
billion to $5.2 billion in 2009. The downturn would have
been even steeper if BC wood product exports to China
had not increased sharply during this period.
Back in 1997, forestry directly accounted for about 5% of
total economic activity (real GDP) in the province. Even
though the industry grew in the mid-2000s, the sector’s
share of total economic output slipped to about 4.5%, as
other industries in the province expanded. The downturn
in the wood products industry stemming from the US
housing bust pushed forestry’s share of GDP down to 3%
in 2009. With the expansion and recovery in recent years,
that figure has climbed back to 3.5% and it may edge
higher over the rest of the decade thanks to buoyant
lumber markets.
2
•T
he BC forest products sector
remains an important source of
high-paying jobs and is one of the
province’s leading economic engines.
•T
he relative size of the forest
industry has diminished gradually
over time, but BC’s forest products
cluster is still the largest in North
America.
•F
orest products are the number one
export category for the province and
a key reason why BC’s export base is
geographically diverse.
•B
ecause of the mountain pine beetle,
the amount of timber available
to harvest is poised to contract,
which will lead to consolidation and
shrinking in the size of the wood
products industry.
•F
ar from being a sunset industry,
the forest sector is highly innovative
and utilizes advanced technology.
The BC industry has exceptionally
high environmental standards and is
sustainably managed.
•T
he industry faces rising costs
and other competitive challenges.
Because of the sizable economic
footprint and cont