Posted: May 12, 2008, 7:06 PM by Jeff White
Avrim Lazar, environment, forestry
By Avrim Lazar
There is no doubt that current economics in the Canadian forestry sector are grim. However, when you look out at the horizon, at where global economics are quickly going, it’s clear that the industry’s longer-term prospects are excellent. And strangely, the future of Canada’s most distressed sector provides the most compelling story of how privileged Canada will be in tomorrow’s world economy.How can there be any cause for optimism during what is arguably the worst times in our industry’s history? Because natural resources that are produced sustainably will be the most prized products in tomorrow’s global economy. The math of where the world is heading is simple: Economists are predicting that global GDP will double in the next 20 years and per-capita incomes in developing nations will triple. This march of the world’s poor in developing countries out of a subsistence existence and into the modern economy has long been part of humanity’s dream, but it will put pressure on the planet. Just look at where we are today, with prices for energy and natural commodities rising and the evidence of the harm we are doing to the planet all around us. Now project out from today as global GDP doubles in just two decades.With increasing global wealth, global demand for paper and wood is projected to grow significantly over the years ahead. However, global levels of production of forest products will fall far short of increasing demand. In the past, the answer to growing demand was the establishment of low-cost tree plantations in the tropics. But the emerging social and economic reality will all but stop any expansion of land use for tropical plantation forestry.There is already a shortage of land to grow the food that a more prosperous world is demanding. A first priority of the world’s poor as they move from subsistence to the modern economy is animal protein, especially for their children. But protein production requires 10 times the land base that their traditional foods needed. Add to this the pressures on the agricultural land base that are resulting from massive investments in growing biofuels from sugar cane, corn and palm oil, and it is clear there will be a severe global land shortage. The story for water is, if anything, more sobering. The world will turn to Canada and other boreal nations that have a vast forest base, energy and water for the supply of forest products. But this is only half the story. Illegal logging and widespread deforestation are global scourges that have not been stopped or even significantly slowed. Their impact on global climate change and environmental degradation is enormous.In Canada, we have chosen a different path. We regenerate our forests promptly, regulate the industry and invite outside scrutiny of our forest practices. Government regulation and industry initiative ensure that we don’t rest on our laurels and continually set the bar higher. The market reward for these environmental choices will grow each year as the world increasingly rejects buying from illegal loggers and countries with unchecked deforestation. The industry’s environmental responsibility may be a virtue now, but in the near future it will be a key market advantage and translate into jobs for Canadians.The world is rapidly moving to a place where demand for forest products will have to be met by countries that can produce those products sustainably and without displacing land that could otherwise be used to grow food or fuel. Few countries are as well-positioned as Canada to meet this demand in this way. And therein lies the reason for great confidence not just in the forest industry but in Canada’s overall economic prospects in the new global economy.
Financial Post Avrim Lazar is the president and chief executive of the Forest Products Association of Canada. -->
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