type 4 strategy update winter sisco

Type 4 Strategy UpdateWinter SISCOWhat’s done and what have we learned….

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Update Complete or Near Complete:

• Quesnel• Williams Lake • Lakes• Okanagan• Morice• 100 Mile • Prince George

• Just Started• Kamloops

• On Radar for 2014• Invermere, Cranbrook, Strathcona, Arrow

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For More Info:

http://www.for.gov.bc.ca/ HFP/silstrat/index.htm

What Have We Learned:

Ideas Fall into Three Broad Themes1. Technical Analysis / Solutions2. Planning Process3. Information Gaps

See abstract for details – lets dig into just one of them here:

Fertilization vs Rehabilitation Treatments – which one?

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Quesnel and Williams Lake TSAs

• Prioritize Rehab Treatments in short term because Fert Treatments can wait (but do both).

Preferred Strategy Expenditures (Williams Lake)

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Why Rehab over Fert?

• 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.

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Why is Fert Lower Priority?

• 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

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Fertilization vs Rehabilitation

Fertilization

• +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

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Base Case Review

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Short term: 3.2 MMidterm: 1.8 MLong term: 3.6 M

Midterm: Yrs10-5091% Pl in Yrs 1-5

Lowest Point of Available Growing Stock is in Years 30-50.

Base Case Review

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Salvage in first two periods.

Small but important role for IDF.

Transition to managed stands starts in 20 yrs.

Heavily reliant by 40 yrs.

Base Case Review

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Most >60% dead stands salvaged – leaving lesser impacted stands for Midterm

Youngest stand profile (smallest timber) harvested between 30-50 yrs

Base Case Review

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• 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.

BASE CASE SENSITIVITIES

Harvest FlowsMin Harvest Volumes Shelf LifeMin Harvest Ages

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Alternative Base Case Harvest Flows

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• 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.

Sensitivity: Revised Min Harvest Criteria

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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

Sensitivity: Revised Shelf-Life

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Sensitivity: Revised Shelf-Life

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• Short (+15%)• Mid (~)• Rise (+23%)• Long (+5%)

Sensitivity: Longer MHAs (Quesnel Ex)

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Sensitivity: Longer MHAs

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Sensitivity: Deciduous

• Currently very little utilization of deciduous material• Estimate opportunity• Deemed lower priority

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Sensitivity: Limit the Harvest of Small Pine

• Harvesting small pine becomes less economic with longer haul distances

• Deemed lower priority – not completed

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Key Points: Base Case and Sensitivities

• WL TSA is heading towards a low in available volume after the 4th decade (29.3 MM m³)

• Harvest forecasts are very sensitive to:• Salvage effort and stand types salvaged• Shelf-life• Minimum harvest criteria (MHA)

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SILVICULTURE STRATEGIES

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Strategy: Fertilization

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Incremental volumes achieved after 10 yrs (single or multiple treatments) Pl @ 12m³/haFd @ 15m³/haSx @ 15m³/ha (Mulitple Sx fertilization done every 5 yrs, with larger gains)

Area Treated Over Time


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• 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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• Short (~)• Mid (0-10%) (little to no ACE effect occurs) • Rise (+5%)• Long (+8%)

Strategy: PCT and Fertilize

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• 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

Strategy: Spacing Dry-Belt Fd(Thinning young thickets in NonUWR stands 10% volume increase at harvest

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AreaTreated

$’s Spent

Strategy: Spacing Dry-Belt Fd

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• Short (~)• Mid (+3%)• Rise (+1%)• Long (not investigated)

Delayed response as have towait 30 yrs after treatment toharvest.

Strategy: Rehabilitation Reforest MPB impacted stands that are non-merch (<80m3/ha)

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AreaTreated

$’s Spent

Extensive opportunity, full budget spent (~1,500 ha/yr).

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

Strategy: Partial Cut in Constrained AreasHarvest of 1/3 volume in constrained areas, no impact to non timber values

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AreaTreated

$’s Spent

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.

Strategy: Enhanced Basic ReforestationImproved well-spaced densities, fewer gaps (OAF1), more planting / class A seed

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AreaTreated

$’s Spent

Budget max reached in several periods, about 70% of stands logged in midterm get enhanced reforestation.

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.

Optimized Mix – $3 Million/yr Budget

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Area Treated $’s Spent

• 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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Midterm increased as priority over longterm.


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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

Area Treated $’s Spent

Strategy: Composite Mix @ $5M/yr

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Midterm increased as priority over longterm.

ECONOMIC ASSESSMENT

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Stand-Level Economics - Assumptions

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• 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).

Stand-Level Economics - Results

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41Multi Spruce Fert (3-5) most attractive fert option.Rehab, Partial Cut, and Enhanced Basic have positive return at 2%.

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Forest-Level Economics

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$3M Budget NPV = $122 M$5M Budget NPV = $182 M

Forest-Level Economics

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Key Points: Silviculture Strategies

• 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).

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PREFERRED STRATEGY

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?

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Optimize $5 M Budget?

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Next Steps and Timing

• Modelling and Analysis Report• Distribute for review - end of August

• Silviculture Strategy Report• Distribute for review – end of August

• Tactical Plan• Deferred

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THANKS FOR YOUR INPUT Augu

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Harvest Flow Differences

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SampleBase Case 2762000 1767000 2793000 3578000

Change relative to Base Case (m³/yr)

Scenario Short-Term Mid-Term Rise to Long-Term Long-Term

Fertilization of Sx, Pl, Fd 2,000 0% 42,000 2% 138,000 5% 297,000 8%

Spacing dry-belt Fd (4,000) 0% 50,000 3%

15,000 1%

- 0%

Rehabilitation (3,000) 0% 147,000 8% 353,000 13% 463,000 13%

Enhanced Basic Reforestation (4,000) 0% 83,000 5%

69,000 2% 433,000 12%

Partial cut in constrained areas (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%

type 4 strategy update winter sisco

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