|Biological Diversity||Ecosystem Condition and Productivity||Soil and Water||Role in Global Ecological Cycles||Economic and Social Benefits||Society's Responsibility|
|Economic and Social Benefits||Distribution of Benefits||Sustainability of Benefits|
|Indicator 5.3.1 - Annual harvest of timber relative to the level of harvest deemed to be sustainable||Indicator 5.3.2 - Annual harvest of nontimber forest products relative to the level of harvest deemed to be sustainable||Indicator 5.3.3 - Return on capital employed||Indicator 5.3.4 - Productivity index||Indicator 5.3.5 - Direct, indirect, and induced employment||Indicator 5.3.6 - Average income in major employment categories|
5.3 Sustainability of Benefits
To ensure resource sustainability while maintaining a satisfactory flow of benefits, resource use should not exceed the long-term productive capacity of the resource base to provide a wide range of goods and services. Ahealthy and profitable forest industry is necessary to ensure that economic benefits continue to flow to Canadians. A competitive rate of return on capital employed is essential if Canada’s various forest-based industries are to attract the capital required to maintain their capacity to create jobs and incomes for Canadians.
Harvest control is consistently achieved on crown land through regulation of the allowable annual cut (AAC, Indicator 5.3.1). There is no single correct harvest rate for a forest, but rather a range of rates that are deemed to be sustainable, on the basis of the best available scientific data. Since harvest targets on private, federal, and territorial lands are not legislated, ensuring resource sustainability on these lands may be more difficult, despite the specific harvest targets sometimes set by the managers of these lands. Aggregate harvest levels in Canadian jurisdictions are still well below the aggregate AAC for the country.
The harvest level and values of nontimber forest products (NTFP, Indicator 5.3.2) are often not captured in official statistics. Although they currently contribute a relatively minor portion of the forest industry’s total outputs, they can nevertheless play a critical socioeconomic role regionally. They contribute to rural economies through local, often seasonal, employment and offer opportunities to further develop and promote social sustainability and development, although sustainable harvest levels must still be determined for most products.
The equitable distribution of the flow of financial benefits stemming from the forest sector among governments, corporations, and industry workers (Indicator 5.2.2) is important to sustainable forest management. In turn, maintaining this continued flow of economic benefits for Canadians means that the forest sector must stay competitive globally and attract investments. A rate of return on capital employed (ROCE) in the forest sector (Indicator 5.3.3) that is competitive domestically and globally is necessary to attract the capital to increase the productivity of its operations in its various subsectors (Indicator 5.3.4). This capital will also maintain industry’s capacity to provide economic stability through employment (Indicator 5.3.5) and income (Indicator 5.3.6) generation for Canadians.
The average ROCE in the forest sector has trailed that of the manufacturing sector and the total economy in Canada for much of the early and late 1990s. However, since 1999, it has performed about the same as the average ROCE of the entire Canadian economy. Studying the average ROCE of the forest sector at the aggregate level obscures the considerable variation in ROCE found among the subsectors. Recently, those range from very poor (in the market pulp operations), to moderately low (the paper operations), to very high returns (in the wood products operations), according to a recent study (FPAC 2003).
Productivity measures the efficiency with which the forest sector industries transform production inputs into outputs (Indicator 5.3.4). There has been considerable variation in productivity trends among the forest subsectors. Between 1997 and 2002, the average forest sector labor productivity growth at the aggregate level (4.96%) outperformed the average productivity growth of all business sectors in Canada. At the forest subsector level, labor productivity growth in wood products (7.07%), in logging and forestry (3.56%), and in paper and allied products (2.92%) all outperformed the average for all domestic business sectors.
Employment provided by the forest sector (Indicator 5.3.5) contributes significantly to the Canadian economy. It is an important source of sustainable economic well-being for Canadians and for resource-dependent communities. Employment in the forest sector at the aggregate level has remained relatively stable. At the subsector level, employment has declined in logging and forestry as well as in paper and allied products and has increased in wood products over the past decade or more, although all three subsectors declined in 2004 and 2005. Furthermore, employment in the forest industry generates 1.7 indirect or induced jobs in other sectors of the Canadian economy. Thus, over 500 000 jobs in other economic sectors depend on the forest sector’s economic activity.
Forest sector workers create these induced and indirect jobs partly through the spending of their income. So the average income earned in major employment categories in the forest sector (Indicator 5.3.6) also underscores the relative importance of this sector to the Canadian economy and to the sustainable economic well-being of Canadians. Average incomes in Canadian forest industries tend to be higher than the average income for all domestic manufacturing industries.