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Economic Operability Assessment and Priority
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Quesnel TSA Economic Operability Analysis Final Report. Acknowledgements, Forest Ecosystem Solutions Ltd would like to acknowledge Phil Winkle Decision Tree. Forestry Consultants for his guidance and administration of this project and the input. and assistance provided by Ian Moss RPF ForesTree Dynamics Ltd in the development. and understanding of stand structure in the Quesnel TSA Additionally the Quesnel TSA. Licensee staff Canfor C C Wood Products Tolko and West Fraser provided valuable. insight into the forest conditions beetle impacts and operating parameters in the. Quesnel TSA FESL would also like to thank Gyula Gulyas with Timberline Natural Resource. Group for his work in developing the shelf life and grade tables used in this analysis. Quesnel TSA Economic Operability Analysis Final Report. TABLE OF CONTENTS,ACKNOWLEDGEMENTS 1,LIST OF TABLES 3. LIST OF FIGURES 4,LIST OF FIGURES 4,1 INTRODUCTION 1. 1 1 PROJECT BACKGROUND 1,1 2 OBJECTIVES 3,2 DATA SOURCES 4. 2 1 SPATIAL RESULTANT 5,3 DESCRIPTION OF THE STUDY AREA 5.
3 1 TIMBER HARVESTING LAND BASE 6,3 2 MODEL LAND BASE 6. 4 METHODOLOGY AND INPUT DESCRIPTION 9,4 1 DESCRIPTION OF THE MODEL USED 9. Forest Economic Assessment Model FEAM 9,4 2 OPERABILITY ASSESSMENT OVERVIEW 9. 4 3 UPDATES TO STAND VALUE MODEL 10,Stand Structure 10. The Reassignment of Stand Structure Classes To Inventory Polygons In The Quesnel. Mountain Pine Beetle Spread Infestation 16,Shelf life 17.
PFT Stand Grade Distribution and Shelf Life 21, 4 4 ALTERNATIVE PRODUCTS BIOFUEL BF AND ORIENTED STRAND BOARD OSB 22. 4 5 SELLING PRICES LOG VALUE 22,4 6 ESTIMATING OPERATING COSTS 23. 4 7 UPDATED ROAD NETWORK 23,4 8 DETERMINING ECONOMIC RETURN OPERABILITY 25. 4 9 ECONOMIC STRATIFICATION 25,5 RESULTS 27,5 1 BASECASE RESULTS 27. 5 2 COMPARISON WITH PHASE I BASECASE ERROR BOOKMARK NOT DEFINED. 5 3 2010 INCLUDING BIOFUEL AND OSB V ALUE 31,5 4 2010 COSTS MINUS 15 PERCENT 34.
5 5 2010 COSTS MINUS 25 PERCENT 37,5 6 2010 V ALUE INCREASE 40. 5 7 2015 MOUNTAIN PINE BEETLE 43,5 8 2020 MOUNTAIN PINE BEETLE 46. 5 9 2025 MOUNTAIN PINE BEETLE 49,5 10 2010 FINAL SCENARIO 52. Quesnel TSA Economic Operability Analysis Final Report. 5 11 SCENARIO COMPARISON 56,5 12 HARVEST RANKING 58. 6 CONCLUSION 59, Quesnel TSA Economic Operability Analysis Final Report.
LIST OF TABLES,Table 1 Sources of data used in this project 4. Table 2 Updated to spatial dataset for Phase II 5, Table 3 Final data list used in analysis database 5. Table 4 Quesnel TSA Land base Classification 7, Table 5 Quesnel TSA Timber harvesting land base definition 8. Table 8 Pine Grade Distribution and Shelf Life Small Logs 18. Table 9 Pine Grade Distribution and Shelf Life Medium Logs 18. Table 10 Pine Grade Distribution and Shelf Life Large Logs 19. Table 11 Grade Distribution without URL Large Logs 19. Table 12 Grade Distribution without URL Medium Logs 20. Table 13 Grade Distribution without URL Small Logs 20. Table 14 10 Pine Grade Distribution and Shelf PFT Stands 21. Table 15 Grade Distribution without URL PFT Stands 21. Table 16 Log selling prices m3 22,Table 17 MOFR Publish Average Cost Estimates 23. Table 18 Average Hauling Distance by LU Code 24, Table 19 Economic stratification Opportunity land base classes 26.
Table 20 Basecase Results THLB Area and Merch Volume by Return Class 27. Table 21 Scenario Comparison 56, Quesnel TSA Economic Operability Analysis Final Report. LIST OF FIGURES,Figure 1 Location of the Quesnel TSA 6. Figure 2 Quesnel TSA Map Land base classification 8. Figure 3 Descriptive statistics of each stand structure class Ian Moss RPF 12. Figure 4 Stand table summary for stand structure classes Ian Moss RPF 13. Figure 5 New Stand Structure Class Allocation 14,Figure 6 Old Stand Structure Class Allocation 15. Figure 7 Lumped stand structure classes in the Quesnel TSA Phase I 15. Figure 8 Revised 2009 Stand Structure Class Assignments 16. Figure 9 Updated MPB Predictions Severity 16,Figure 10 Updated MPB Predictions Status 17. Figure 11 Updated MPB Predictions Severity and Status 17. Figure 12 Estimated hauling distance zones from Quesnel Phase I 24. Figure 13 Updated Road Network and Major Haul Routes 24. Figure 14 THLB Area by Return Class and Supply Block Basecase 28. Figure 15 THLB Area by Return Class and SSC Basecase 29. Figure 16 THLB Area by Return Class and Distance From Quesnel Basecase 30. Figure 17 THLB Area by Return Class and Supply Block Basecase and BF OSB 31. Figure 18 THLB Area by Return Class and SSC Basecase and BF OSB 32. Figure 19 THLB Area by Return Class and Distance From Quesnel Basecase and BF OSB. Figure 20 THLB Area by Return Class and Supply Block Basecase Minus 15 Cost 34. Figure 21 THLB Area by Return Class and SSC Basecase Minus 15 Cost 35. Figure 22 THLB Area by Return Class and Distance From Quesnel Basecase Minus 15. Figure 23 THLB Area by Return Class and Supply Block Basecase Minus 25 Cost 37. Figure 24 THLB Area by Return Class and SSC Basecase Minus 25 Cost 38. Figure 25 THLB Area by Return Class and Distance From Quesnel Basecase Minus 25. Figure 26 THLB Area by Return Class and Supply Block Basecase 15 Value 40. Figure 27 THLB Area by Return Class and SSC Basecase 15 Value 41. Figure 28 THLB Area by Return Class and Distance From Quesnel Basecase 15 Value. Figure 29 THLB Area by Return Class and Supply Block 2015 Projection 43. Figure 30 THLB Area by Return Class and SSC 2015 Projection 44. Figure 31 THLB Area by Return Class and Distance From Quesnel 2015 Projection 45. Figure 32 THLB Area by Return Class and Supply Block 2020 Projection 46. Figure 33 THLB Area by Return Class and SSC 2020 Projection 47. Figure 34 THLB Area by Return Class and Distance From Quesnel 2020 Projection 48. Figure 35 THLB Area by Return Class and Supply Block 2025 Projection 49. Figure 36 THLB Area by Return Class and SSC 2025 Projection 50. Figure 37 THLB Area by Return Class and Distance From Quesnel 2025 Projection 51. Figure 38 THLB Area by Return Class and Supply Block 2010 Final Scenario 53. Figure 39 THLB Area by Return Class and SSC 2010 Final Scenario 54. Figure 40 THLB Area by Return Class and Distance From Quesnel 2010 Final Scenario 55. Figure 41 Scenario Comparison 57, Quesnel TSA Economic Operability Analysis Final Report.
1 Introduction, Operability in the strategic timber supply context refers to a classification of the land. base as either suitable or not suitable for timber extraction Suitability for timber. extraction is influenced by the physical characteristics of the land social and. environmental concerns and the potential economic return generated contrasted with. the costs incurred during all phases of production Economic operability can be a. difficult element to quantify, The report presents the results of Phase II of an economic operability analysis conducted. for the Quesnel TSA The approach taken with this analysis was to define the factors that. are important driv ers of the economics in the Quesnel TSA develop reasonable estimates. of those factors at a stand level evaluate the results and investigate areas of. uncertainty via scenario analysis Economic operability and the changes in economic. return will be used to assist in developing salvage strategies and harvest priorities in the. Quesnel TSA, Phase II of this project incorporated revised estimates for stand structure mountain pine. beetle attack road locations shelf life product yield and value and product pricing. The results of Phase II are presented in this report along with a comparison with the Phase. I basecase,1 1 Project Background, Phase 1 of the Quesnel TSA Operability project was completed in March 2008 for the. Quesnel TSA Mitigation Committee Project guidance was provided by the committee. with analytical work conducted by Forest Ecosystem Solutions Ltd and ForesTree. Dynamics Ltd Copies of the report were distributed to Quesnel licensees and the MOF. FAIB and Quesnel District Recommendations in the Phase 1 report stated. As with any modeling based analysis project the results and interpretations achieved. are only as precise and relevant as the data used for the inputs With this operability. model there are several input parameters that have a large influence over the end. result Some of these parameters currently have a high degree of uncertainty around. them In order to fully utilize the data generated from this operability analysis the. following next steps may be considered for future assessments. 1 Calibrate with actual returns Review recently harvested blocks and. compare value cost and returns with model estimates Use the. comparison to calibrate the model to provide a more accurate. assessment, 2 Phase II VRI Inventory Once the VRI inventory is complete rerun the.
model It is assumed that the more detailed and accurate inventory will. significantly improve the results of any economic analysis. 3 Compare with Volumes Compare cruise inventory sample volumes with. those estimated from the model, 4 Calibrate Stand Structure Classes Adjust the stand structure class. assignment process to accurately reflect the stand conditions in the. Quesnel TSA, 5 Apply actual more realistic costs In lieu of appraisal manual costs utilize. actual costs or relativ e estimates from licensees. Page 1 of 67, Quesnel TSA Economic Operability Analysis Final Report. 6 Scenario analysis log values operating costs shelf life Analyze the. impacts of shifting log markets operating costs and uncertainty around. shelf life, 7 Manufacturing end product value model Consider accounting for the. entire value of each stand by applying the manufacturing end use. model to the Quensel TSA It is expected that considering the entire value. generated by the stand and the variation in associated manufacturing. costs will provide a more detailed and accurate result. 8 Other forest products biofuel Consider modeling the impacts that. alternativ e forest products such as biofuels will have on the economics of. the Quesnel TSA, Phase 2 of the project focused on implementing recommendations 3 4 6 and 8 In.
addition Phase 2 incorporated improved Mountain pine beetle attack and spread. estimates and revised cost estimates using the most up to date Appraisal Manual 2009. The following background information is taken from the Operability Assessment and. Priority Classification in MPB Impacted Areas Quesnel TSA tender package. Physical limits on operability in the Quesnel TSA have not been considered a significant. issue in previous Timber Supply Reviews as only 0 2 of the THLB is comprised of slopes. greater than 60 However operability is now a large issue as the Mountain Pine Beetle. MPB is impacting traditional views of operability as large areas of timber are declining in. volume and value at rapid but varying rates Some stands that were traditionally. considered merchantable will be operable only for certain time periods or may not be. operable at all and will require renewal treatment The whole stand may not be. degraded and analysis must impose techniques to apply merchantability reductions. based on documented attribute assumptions moisture regime non pine component. class distributions Therefore temporal stand degradation issues and end product. estimates must be accounted for in defining operability in MPB areas This degradation to. the operable land base portfolio will be the major driver for harvest strategies and AAC. determinations for the next few decades In the near term operability over time will also. be defined by the timber and site characteristics that determine product viability for saw. log OSB bio fuel etc, Understanding and defining the current and near future 20 year operable land base is. instrumental in evaluating wood supply scenarios and developing mitigation strategies. This issue was recognized in the July 2006 letter from R Coleman the Minister of Forests. and Range to the Chief Forester outlining the Economic and Social Objectives of the. Crown as in part to assist the province and affected communities in planning their. responses to the beetle infestation it would be best to have realistic assessments of. timber volumes that can be utilized economically Therefore in determining the best rate. of harvest to capture the economic value from beetle killed timber I ask that you. examine factors that affect the demand for such timber and products manufactured. from it the time period over which it can be utilized and consider ways to maintain or. enhance the mid term timber supply, In addition to the rate of harvest AAC current harvest profiles and harvest sequencing. are impacting the future availability of near term operable timber Stands are currently. being sequenced and harvested without sufficient strategic planning and regard for the. impact on timber supply and other values For example a MPB attacked stand may be. harvested today that was economically viable for a longer time period than an adjacent. Page 2 of 67, Quesnel TSA Economic Operability Analysis Final Report. stand that is not planned for harvesting This impact is increasing annually as MPB. degradation is increasing the harvest areas required to achieve cut block volume targets. due to increasing waste levels It now takes approximately 30 to 50 more area to. harvest the same saw log volume The result is a higher than necessary risk to timber. supply hydrology wildlife habitat recreation other social values. Development of strategic level harvest priority guidelines from the view of optimizing the. near term timber availability and utilization on the land base is required An assessment. and a hierarchical classification of operability types will provide an indication of fibre to. be allocated to its highest value use while making better use of the declining available. resource This will provide direction to the goal of ensuring all harvesting is of value in. reducing the effects of the beetle and is not additive Any assessment must be usable as. guidelines for local harvest planners The assessment will also support development of. economic indicators and measures for sustainable forest management and certification. The process will indirectly indicate areas for potential retention salvage and renewal. strategies This information would be valuable to the Quesnel Enhanced Retention. Strategy Committee and the Forests For Tomorrow renewal assessments that are ongoing. in Quesnel The Chief Forester s Rationale for Timber Supply Review TSR 3 stated that. resolution of how to implement the recommendations contained in the paper Forest. Stewardship in the Context of Large Scale Salvage Operations was a priority issue. Operability classifications will assist with continuing refinement and implementation of the. recommendations, With the MPB attack level having peaked in mature stands in the Quesnel TSA and the. TSR 4 process currently scheduled for completion in 2010 it is timely to complete. operability assessment As partitioning of the AAC will likely be considered as part of the. TSR 4 process it will be necessary to have a well defined current and near term operable. component of the THLB,1 2 Objectives, The objectives for this project as stated in the 2009 2010 Workplan are as follows.
Ensure operability model and data are compatible with TSR 4 Data. Package as released April 2009, Integrate information from Quesnel licensee group current timber. availability accumulating timber constraints and potential saw log. utilization, Incorporate information on OSB and deciduous opportunities including. shelf life for OSB, Confirm data and model assumptions including range of pricing to be. modeled with licensees and MFR,Confirm model scenarios to be run. Run scenarios and analyze results, Produce draft report and maps meet with stakeholders.
Produce final report,Page 3 of 67, Quesnel TSA Economic Operability Analysis Final Report. 2 Data Sources, The sources of data used in this project are listed in Table 1. Table 1 Sources of data used in this project,Data Element Source Comments. Timberline Natural Resource Resultant for this project was based on the STTA resultant. Forest Inventory, Group used for several projects in the Quesnel TSA. Old Growth, Management Areas Canfor Updated OGMAs were incorporated into the resultant.
Stand Tables Log Stand estimates were derived from Stand Structure. ForesTree Dynamics, Yield Tables Classification system developed by Ian Moss. Landscape Units Canfor Landscape units were added, Recent Fires Canfor Several large fires were included. Depletions up to 2007 and planned blocks were,Updated Depletions Canfor. incorporated into the resultant, Enhanced Retention Canfor Enhanced retention areas were identified in the resultant. Supply Blocks LRDW Supply Blocks were added, Licensee operating areas Post bill 28 were overlaid with.
Operating Areas LRDW Canfor,the resultant,Timberline Natural Resource. Log Grade Group, Log Grade Distributions and shelf life curves were. Distribution Shelf ForesTree Dynamics,developed in conjunction with this project. life curves Forest Ecosystem Solutions,Quesnel TSA Licensees. While not used for this stage of the project a relationship. VRI Pilot Study Area Timberline Natural Resource, was established between the pilot area polygons and.
Mapsheets Group,the resultant, Year of death estimates based on 2006 Landsat imagery. MPB Infestation Rate MOFR and subsequent projections of beetle spread by. ForesTree Dynamics, Biogeoclimatic variants and zones were extracted from. PEM West Fraser,the recently completed PEM,Cost Estimates MOFR 2009 Appraisal Manual. Log Values were taken from the MOFR published,Log Value MOFR. average log market reports,Page 4 of 67, Quesnel TSA Economic Operability Analysis Final Report.
Table 2 Updated to spatial dataset for Phase II,Data Element Source Comments. MPB year of death data for 2007 that was intended to. MPB Year of Death MOFR be included in the Phase I dataset but was not available. at the time was included in the revised data, Site index was extracted from the PEM This data was. PEM Site Index Timberline,used in the SSC work,Updates to both the makeup of the SSC and the. Stand Structure assignment to Resultant polygons were completed by. Class Updates Ian Moss in 2009 The revised SSC data is the major. update to the data for Phase II,2 1 Spatial Resultant. Forest inventory data for this project was supplied in an existing resultant dataset from the. STTA analysis The resultant contained some of the data required for the spatial. reference portion of this project Additional data was added to the resultant to create. the final modeling database Details of the data in the final database are shown in. Table 3 Final data list used in analysis database, Data Included STTA Resultant Data Added Updated by FESL.
Forest Cover in the form of a roll,Landscape Units. Biogeoclimatic Zones Recent Fires,Timber harvesting land base. Updated Depletions,classification, Environmentally Sensitive Areas Enhanced Retention. Visual Quality Objectives Supply Blocks,Community Watersheds Operating Areas. Caribou Chilcotin Land use plan,MPB Infestation Rate.
Mule Deer Winter Range PEM,Old Growth Management Areas. Caribou Habitat,Moose Habitat,3 Description of the Study Area. The Quesnel TSA is located at the northern edge of the Southern Interior Forest Region. The TSA covers approximately 2 million hectares of which approximately 1 3 million. hectares is productiv e Crown forest CFLB Of the 1 3 million hectares of CFLB. approximately 975 000 hectares are classified as available for timber harvesting The area. covered by Quesnel Forest District encompasses the Quesnel TSA woodlot licence areas. as well as Tree Farm Licences 52 As this operability analysis was limited to Timber Supply. Page 5 of 67, Quesnel TSA Economic Operability Analysis Final Report. Area the information provided is this report is specific to the TSA The Quesnel TSA is. included in the area covered by the Cariboo Chilcotin Land Use Plan CCLUP. Figure 1 Location of the Quesnel TSA,3 1 Timber harvesting land base. The timber harvesting land base THLB definition for this project was taken directly from. the resultant as supplied with one exception Updated Old Growth Management Areas. OGMA were incorporated into the resultant dataset The new OGMA s represented in. increase of approximately 4000 ha over those used in the previous analysis Area within. the OGMAs was defined as within the Crown Forested Land base CFLB and excluded. from the THLB,3 2 Model Land base, The timeframe for this economic operability assessment extends from 2010 out over the.
next 20 years Currently immature logged and natural stands are not expected to be. harvested during the time frame of this analysis While these stands are part of the THLB. in the context of a short term operability economic analysis they do not factor in to the. equation As such only currently mature volume was considered during the analysis In. modeling terms the area of concern was limited to what is referred to as the Modeling. land base The modeling land base was restricted to THLB stands greater than 40 years. of age in 2010 and not currently under Category A cutting permit. Page 6 of 67, Quesnel TSA Economic Operability Analysis Final Report. Table 4 Quesnel TSA Land base Classification,Land base Classification Area ha. Total Land base Area 2 077 267,Crown Forested Land base 1 310 324. Non Contributing Land,Timber Harvesting Land,Model Land base 621 952. Page 7 of 67, Quesnel TSA Economic Operability Analysis Final Report.
Table 5 Quesnel TSA Timber harvesting land base definition. Land Classification Total Area CFLB ha THLB ha,Total Quesnel Land District 2 077 267. TFL 295 251,Total Timber Supply Area 1 782 016,Non Forested 277 039. Non Crown 63 029,Schedule N 126 021,Parks 5 602,Crown Forested Land base 1 310 324. Non Commercial 563 563,Caribou 65 430 65 430,Lake Buffers 209 209. Non Merchantable 40 037 40 037,Low Productivity 12 434 12 434.
Residual Non Merchantable 2 653 2 653,Deciduous 14 423 14 423. Riparian 17 261 17 261,OGMAS 102 000 102 000,New OGMA 4 890 4 890. Non Contributing Land base 259 900, Partial Reductions WTPs ESA Roads 1 050 424 74 758. Timber Harvesting Land base 975 667,Figure 2 Quesnel TSA Map Land base classification. Page 8 of 67, Quesnel TSA Economic Operability Analysis Final Report.
4 Methodology and Input Description, The following section defines the methodology used in this economic operability analysis. 4 1 Description of the Model Used,Forest Economic Assessment Model FEAM. FEAM provides a framework to assess and investigate the economics of a forest estate. The concept was initially designed as a model to connect existing knowledge of the. forest estate operational conditions manufacturing parameters and costs and. historical current and future market conditions to generate an economic assessment. The original focus of FEAM was on conditions expected in the interior of British Columbia. The design of the model has subsequently been modified in order to allow for data from. any provincial or regional jurisdiction to be used FEAM can be used to examine. economic conditions scenarios and strategies that range from a strategic to a tactical. level To allow for the wide range of analysis that can be done with FEAM a variety of. data scales from single forest stand to a landscape unit a supply block a timber supply. area or region can be incorporated into a FEAM model. The concept behind FEAM is that connections can be made between existing data to. produce a locally relevant value and cost estimate for individual forest stands The. estimates produced are specific to their geographic location stand attributes operating. conditions licensee preferences and constraints FEAM produces stand specific values. and costs that can then be aggregated or analyzed through user defined analysis. groupings e g woodsheds watersheds landscape units tracts development types or. cutting permits to produce an economic assessment FEAM is an application that allows. the user to develop relationships between existing data sources and forest resource. inventory information to create an economic model of the entire land base. FEAM has two methods of estimating the value of a forest stand Both methods begin. with forest stand structure classifications to estimate the species quality size and amount. of fibre available from each stand Building on the stand or inventory estimates the level. of detail used to assign value can be done in one of two ways the manufacturing based. model or the log market model, The manufacturing based model can utilize actual end product values to determine an. economic return The log market model allows us to capture the unique operating. conditions and product grades and log sales markets for coastal forest products The. grade market model is used in this project The FEAM cost model allows the user to. define what costs are to be tracked and how they are to be applied Analysis tools built. into FEAM can be used to compare and evaluate costs as they relate to economic. return FEAM does not tell you how to define economic operability for a giv en land base. The users define the appropriate economic parameters through a flexible data and. assumptions model interface,4 2 Operability Assessment Overview. The FESL approach to economic operability analysis involves combining a range of. assumptions about the forested land base including.


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