Montreal, November 27, 2019 – Quebec’s forestry sector has been quietly losing steam for several years, yet its difficulties have gone largely unnoticed by the media. Indeed, according to a publication launched today by the MEI, a poorly designed forest regime and the softwood lumber dispute have undermined this sector that employs nearly 60,000 Quebecers.
“Quebec has little control over trade disputes, but it is entirely responsible for its forestry policy. The regime put in place in 2013 has completely disrupted the forestry sector,” says Luc Vallée, Chief Economist at the MEI and author of the publication. “The government took over practically all responsibility for forest management. It is this centralization that made the planning of forestry companies’ activities more complex, and contributed to an increase in their supply costs.”
Admittedly, the forestry sector benefited from a record upturn in timber prices in 2017 and the start of 2018, and long-term global demand for forest products will remain strong. So why are Quebec companies slow to take advantage of these favourable circumstances?
“Under the current forest regime, companies do not have an incentive to invest. The result? Competitiveness has deteriorated,” explains Mr. Vallée. “Given the current context, if the regime is not reformed, the danger is that the government will end up subsidizing the industry in order to save jobs in the short term, without addressing the root cause of the problem.”
In order to make the forestry sector more competitive, Quebec should give companies greater latitude in forest management, as is done elsewhere. “In the past, in Quebec, it was actually the government that overestimated the forest’s capacity. And today, it is again the government’s fault that we harvest only two-thirds of what the forest can offer, which makes no sense either economically or environmentally,” adds Luc Vallée.
More efficient forest management will not only benefit forestry companies, employees, and communities. According to the Chief Forester, an optimal management of the forest will also help fight climate change and protect biodiversity.
“Forests that are denser and better managed will provide a better return all while capturing more carbon and expanding protected areas. There is a significant economic gain to be had and an opportunity to reduce greenhouse gases at very low cost. The government should have the humility to take a step back if it wants this to happen,” concludes the author.
The publication entitled “How to Make Quebec’s Forestry Sector More Competitive” was prepared by Luc Vallée, Chief Economist and Chief Operating Officer at the MEI. This publication is available on our website.
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The MEI is an independent public policy think tank with offices in Montreal, Calgary, and Paris. Through its publications, media appearances, and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.
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