Government of Nova Scotia gov.ns.ca
gov.ns.ca Government of Nova Scotia Nova Scotia, Canada
Natural Resources and Renewables

Topics

Review and Recommendations of the Valuation, Allocation and Sale of Crown Timber Resources in Nova Scotia (AGFOR Inc. Review)

Report FOR 2000-5

The Department of Natural Resources has received a report reviewing Crown stumpage. This report makes 21 recommendations addressing stumpage rates and policies for Crown land, as well as other administrative aspects of the Department's license agreements.

The full report is available online in Adobe Acrobat Format.

SUMMARY

The Nova Scotia Department of Natural Resources had set several objectives to be met by this review. First and foremost was to assess the current methods of assigning and updating stumpage rates on Crown Lands to ensure that they met the requirements of achieving parity with the cost of wood on private lands (FMV), that they were relevant to current market conditions, and that they were practical to administer. The Province's current methods of updating their stumpage rates have consistently led to a situation where the stumpage rates are not representative of the current market conditions. AGFOR Inc. has recommended that Nova Scotia begin making the indexing and rate adjustments on a much narrower time frame. Doing so would add flexibility to the indexing system and ensure that the adjustments to stumpage rates occur much closer (in time) to the market conditions that influenced them. The province should also consider updating the baseline FMV for private wood on a regular basis. FMV will change with local market fluctuations. Changing forest management obligations on Crown Lands will mean changing costs to Licensees that also must be accounted for when setting Crown stumpage rates.

Nova Scotia should consider changing the terms of the VUA's if they wish to address the utilization and fiscal concerns associated with Crown Lands in the province. By adopting a New Brunswick- or Quebec-format allocation system, NSDNR could put much of the administrative and financial obligations (currently borne by the Province) of forest management onto industry. Reducing the Province's direct role to that of adjudicating and monitoring the forest management process is a cost effective means of attaining the full utilization and proper management of Nova Scotia's forest resources while respecting the full range of forest values held by the people of Nova Scotia. Utilization of the timber resource may also be improved if the Province were to consider a temporary re-allocation of under-utilized AAC from the long-term licenses to another beneficiary.

Implementing changes to Nova Scotia's forest resource management system will likely require significant front-end costs for both the Province and for industry. A pilot project, implemented over a definitive time frame, gradually introducing the full range of alterations would help mitigate these costs and distribute them over time. Additional benefits would be gained by allowing government and industry time to adapt to the changes and for problem areas to be identified and dealt with as they arise.

~end~