Winter SISCO
February 25, 2014
Winter SISCO - Kamloops. BC
Type 4 Strategy Update
What’s done and what have we learned….
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Quesnel
Williams Lake
Lakes
Okanagan
Morice
100 Mile
Prince George
For More Info:
http://www.for.gov.bc.ca/
HFP/silstrat/index.htm
Web Meeting
Complete or Near Complete:
August 16, 2013
Update
• Just Started
• Kamloops
• On Radar for 2014
• Invermere, Cranbrook, Strathcona, Arrow
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1. Technical Analysis / Solutions
2. Planning Process
3. Information Gaps
See abstract for details – lets dig into just one of them here:
Web Meeting
Ideas Fall into Three Broad Themes
August 16, 2013
What Have We Learned:
Fertilization vs Rehabilitation Treatments – which one?
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Preferred Strategy Expenditures (Williams Lake)
Web Meeting
• Prioritize Rehab Treatments in short term because Fert
Treatments can wait (but do both).
August 16, 2013
Quesnel and Williams Lake TSAs
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Web Meeting
• Rehab has potential to provide merchantable volume for mills
at the time of treatment AND increase the effective landbase
in the long term.
• Example – a dead Pl stand with 35m3/ha of green spruce
scattered throughout is currently uneconomic and not
expected to amount to much in next 80 years. If rehabbed
now (FLTC or ITSL) it provides 35 m3/ha of merch volume into
the timber supply + capture the sites potential with a new
managed stand.
• Costs to treat are offset by realized merch volume.
August 16, 2013
Why Rehab over Fert?
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Web Meeting
• Limited number of currently suitable stands.
• Risk of loss reduced and ROI increased when fert done closer
to harvest.
• Still plenty of time to treat stands prior when they will be
harvested (midterm).
• Example – in fires t
August 16, 2013
Why is Fert Lower Priority?
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• +15m3/ha in 10 yrs
• Cost is $450/ha
Rehabilitation
• Re-establish stands
rendered uneconomic by
MPB related mortality –
with
• + ~30m3/ha now?
• +100m3/ha in 60 yrs
• Cost is $1000-2000/ha
Web Meeting
Fertilization
August 16, 2013
Fertilization vs Rehabilitation
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Midterm: Yrs10-50
91% Pl in Yrs 1-5
Web Meeting
Short term: 3.2 M
Midterm: 1.8 M
Long term: 3.6 M
August 16, 2013
Base Case Review
Lowest Point of
Available Growing
Stock is in Years
30-50.
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Small but
important role for
IDF.
Web Meeting
Salvage in first
two periods.
August 16, 2013
Base Case Review
Transition to
managed stands
starts in 20 yrs.
Heavily reliant by
40 yrs.
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Web Meeting
Most >60% dead
stands salvaged –
leaving lesser
impacted stands
for Midterm
August 16, 2013
Base Case Review
Youngest stand
profile (smallest
timber) harvested
between 30-50 yrs
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Web Meeting
August 16, 2013
Base Case Review
• Average harvest volume in short term is 100m3/ha and
then improves.
• Average harvest age is ~90 years in the long term but
gets a low as 68 in year 50.
• Harvest area is very high during salvage period (30,000
ha/yr) but reaches a long term average of 15,000 ha/yr.
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Web Meeting
August 16, 2013
BASE CASE SENSITIVITIES
Harvest Flows
Min Harvest Volumes
Shelf Life
Min Harvest Ages
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Web Meeting
August 16, 2013
Alternative Base Case Harvest Flows
• Alternative approaches to short term harvesting can yield
different outcomes in the midterm. Avoiding the harvest of
stands that remain viable in the midterm – improves the
midterm but foregoes the economic value of the pine lost.
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Web Meeting
August 16, 2013
Sensitivity: Revised Min Harvest Criteria
Always @80m³/ha
• Short (+12%)
• Mid (+21%)
• Rise (+13%)
• Long (+5%)
Always @110m³/ha
• Short (-4%)
• Mid (-9%)
• Rise (-1%)
• Long (-6%)
Base Case:
80 m³/ha for salvage,
110 m³/ha for second growth
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Web Meeting
August 16, 2013
Sensitivity: Revised Shelf-Life
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Web Meeting
August 16, 2013
Sensitivity: Revised Shelf-Life
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Short (+15%)
Mid (~)
Rise (+23%)
Long (+5%)
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Web Meeting
August 16, 2013
Sensitivity: Longer MHAs (Quesnel Ex)
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Web Meeting
August 16, 2013
Sensitivity: Longer MHAs
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Web Meeting
• Currently very little utilization of deciduous material
• Estimate opportunity
• Deemed lower priority
August 16, 2013
Sensitivity: Deciduous
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Web Meeting
• Harvesting small pine becomes less economic with longer haul
distances
• Deemed lower priority – not completed
August 16, 2013
Sensitivity: Limit the Harvest of Small Pine
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• Salvage effort and stand types salvaged
• Shelf-life
• Minimum harvest criteria (MHA)
Web Meeting
• WL TSA is heading towards a low in available volume after the
4th decade (29.3 MM m³)
• Harvest forecasts are very sensitive to:
August 16, 2013
Key Points: Base Case and Sensitivities
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Web Meeting
August 16, 2013
SILVICULTURE STRATEGIES
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Area Treated Over Time
Web Meeting
Incremental volumes achieved after 10 yrs (single or multiple treatments)
Pl @ 12m³/ha
Fd @ 15m³/ha
Sx @ 15m³/ha (Mulitple Sx fertilization done every 5 yrs, with larger gains)
August 16, 2013
Strategy: Fertilization
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Web Meeting
August 16, 2013
Strategy: Fertilization
• Budget maximized after 15 years
• The model harvests all stands that are treated and does not treat
stands that are not harvested.
• Half of volume harvested in midterm is comes from natural stands.
• Multiple Sx fertilization is prioritized (most cost efficient).
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Web Meeting
August 16, 2013
Strategy: Fertilization
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Short (~)
Mid (0-10%) (little to no ACE effect occurs)
Rise (+5%)
Long (+8%)
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Web Meeting
• Relatively little area eligible (6,800 ha)
• Lower priority than to fertilize existing stands with appropriate
density – higher cost and gain is similar.
• Low priority – dropped
August 16, 2013
Strategy: PCT and Fertilize
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Strategy: Spacing Dry-Belt Fd
Web Meeting
Area
Treated
August 16, 2013
(Thinning young thickets in NonUWR stands  10% volume increase at harvest
$’s
Spent
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Web Meeting
August 16, 2013
Strategy: Spacing Dry-Belt Fd
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Short (~)
Mid (+3%)
Rise (+1%)
Long (not investigated)
Delayed response as have to
wait 30 yrs after treatment to
harvest.
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Strategy: Rehabilitation
August 16, 2013
Reforest MPB impacted stands that are non-merch (<80m3/ha)
Web Meeting
Area
Treated
$’s
Spent
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Extensive opportunity, full budget spent (~1,500 ha/yr).
Web Meeting
August 16, 2013
Strategy: Rehabilitation
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Short (~)
Mid (+8%) - volume at time of treatment + some THLB back in
Rise (+13%) – Non merch stands brought back into production
Long (+13%) – Non merch stands brought back into production
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Strategy: Partial Cut in Constrained Areas
Web Meeting
Area
Treated
August 16, 2013
Harvest of 1/3 volume in constrained areas, no impact to non timber values
$’s
Spent
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Web Meeting
August 16, 2013
Strategy: Partial Cut in Constrained Areas
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Short (~)
Mid (+14)
Rise (no attempt to improve)
Long (no attempt to improve)
Significant improvement
in midterm due to accessing
stands that would otherwise not
be available.
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Strategy: Enhanced Basic Reforestation
August 16, 2013
Improved well-spaced densities, fewer gaps (OAF1), more planting / class A seed
Web Meeting
Area
Treated
$’s
Spent
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Budget max reached in several periods, about 70% of
stands logged in midterm get enhanced reforestation.
Web Meeting
August 16, 2013
Strategy: Enhanced Basic Reforestation
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Short (~)
Mid (+5%)
Rise (+2%)
Long (+12%)
First stands are ready in 35-45 years as
min harvest volumes are reached sooner.
Mid and long term benefit from enhanced
yields. Little to no ACE effect.
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Optimized Mix – $3 Million/yr Budget
$’s Spent
Web Meeting
August 16, 2013
Area Treated
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Budget max reached every year
Rehab and Enhanced Basic are dominant initially (first 5 yrs)
Fertilization ramps up over time (almost all eligible stands treated before harvest)
Majority of the budget spent on Rehab in all time periods
Partial cutting is key to improving early midterm.
Spacing of drybelt Fd is a focus in early periods.
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Web Meeting
August 16, 2013
Optimized Mix – $3 Million/yr Budget
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Short (~)
Mid (+22%)
Rise (+2%)
Long (+11%)
Midterm increased as priority over
longterm.
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Optimized Mix – $5 Million/yr Budget
$’s Spent
Web Meeting
August 16, 2013
Area Treated
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Budget max reached every year (5 Million)
Treatment decisions very similar to 3 million budget.
• Heavy spending on rehab
• Ramp up of fertilization
• Steady spending on enhanced reforestation
• Partial cutting to help the front end of the midterm.
• Most thinning of Drybelt fir in early periods
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Web Meeting
August 16, 2013
Strategy: Composite Mix @ $5M/yr
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Short (~)
Mid (+28%)
Rise (+10%)
Long (+17%)
Midterm increased as priority over
longterm.
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Web Meeting
August 16, 2013
ECONOMIC ASSESSMENT
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Web Meeting
• 2% discount rate
• Net economic benefit of $25/m3 on the additional volume
realized (net benefit to crown from additional cubic meter
harvested and moving through the economy).
August 16, 2013
Stand-Level Economics - Assumptions
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Web Meeting
August 16, 2013
Stand-Level Economics - Results
Multi Spruce Fert (3-5) most attractive fert option.
Rehab, Partial Cut, and Enhanced Basic have positive return at 2%.
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Web Meeting
$3M Budget NPV = $122 M
$5M Budget NPV = $182 M
August 16, 2013
Forest-Level Economics
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Web Meeting
August 16, 2013
Forest-Level Economics
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Web Meeting
• Rehab appears to be the largest opportunity and warrants
significant investment. It buys wood in the short term from
stands that will never be eligible, plus adds to the long term
harvest by putting them into production.
• Partial harvesting in constrained areas is the only strategy to
help fill in the front of the midterm. It borrows volume from
later in the forecast (i.e., no extra volume)
• Fertilization is important but not as time sensitive as other
treatments. There are several decades before any of these
stands will be harvested so time exists to treat them.
• Both Composite Scenarios (3M and 5M budgets) are similar in
treatment selections/proportions and have positive NPV at
the forest level (2% discount rate).
August 16, 2013
Key Points: Silviculture Strategies
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Based on the finding shown here and general knowledge
of the TSA and its options – what is the preferred strategy
for the next 5-10 yrs?
August 16, 2013
Web Meeting
PREFERRED STRATEGY
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Web Meeting
August 16, 2013
Optimize $5 M Budget?
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• Distribute for review - end of August
• Silviculture Strategy Report
• Distribute for review – end of August
• Tactical Plan
• Deferred
Web Meeting
• Modelling and Analysis Report
August 16, 2013
Next Steps and Timing
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Web Meeting
August 16, 2013
Scenario
Fertilization of Sx, Pl, Fd
2762000
Short-Term
1767000
2793000
Change relative to Base Case (m³/yr)
Mid-Term
Rise to Long-Term
3578000
Long-Term
2,000 0%
42,000
2%
138,000 5%
(4,000) 0%
50,000
3%
15,000 1%
- 0%
(3,000) 0%
147,000
8%
353,000 13%
463,000 13%
(4,000) 0%
83,000
5%
69,000 2%
433,000 12%
(4,000)
241,000 14%
(8,000) 0%
(2,000) 0%
Combined Silviculture ($3 M/yr)
(4,000) 0%
140,000
8%
202,000 7%
595,000 17%
Combined Silviculture ($5 M/yr)
(4,000) 0%
237,000 13%
290,000 10%
865,000 24%
Spacing dry-belt Fd
Rehabilitation
Enhanced Basic Reforestation
Partial cut in constrained areas
297,000
8%
Web Meeting
Base Case
August 16, 2013
Harvest Flow Differences
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