Forest industry investment in tree improvement – a wise business decision or a bottomless pit? Answers from a new tree improvement valuation model for Alberta, Canada

Abstract

Continued investment in tree improvement (TI) in Alberta is currently at a crossroads despite the demonstrated benefits of TI worldwide. According to private industry, the major roadblock for further investment is the minimal amount of genetic gain currently recognized in the annual allowable cut (AAC) set by the provincial government. In order to better understand the key parameters that drive profitability in TI programs, we developed the "Tree Improvement Investment for Forestry in Alberta" valuation model (TIIFA). Besides the large effect of the annual discount rate, sensitivity analyses using the TIIFA model revealed that not only genetic gain, but also the area on which improved seed is deployed represent key parameters influencing the profitability of TI programs. Furthermore, results show that the benefits of TI programs largely outweigh associated program costs, whether they were set at $1, $3 or $5 million dollars per decade. We conclude that despite the current levels of genetic gain recognized in the AAC for private industry, investment in TI still remains a profitable enterprise and a viable option for increasing or maintaining timber supply, if the area planted is maximized on which improved seed is deployed.Keywords: Alberta forestry, annual allowable cut (AAC), allowable cut effect (ACE), cost-benefit analysis, genetic gain RéSuméOn remet présentement en question le maintien des investissements en amélioration génétique des arbres (tree improvement-TI) en Alberta malgré les avantages reconnus de cette pratique ailleurs sur la planète. Aux dires de l'industrie, le principal obstacle à la poursuite des investissements réside dans la faible portion de gain génétique pris en compte à l'heure actuelle dans la possibilité annuelle de coupe (annual allowable cut-AAC) calculée par le gouvernement provincial. Dans le but de mieux comprendre les paramètres-clés de la profitabilité pour les programmes d'amélioration (TI) nous avons élaboré un modèle d' évaluation intitulé « Meilleur investissement en amélioration génétique des arbres en Alberta » (TIIFA). Mis à part l' effet important du taux annuel d'actualisation, les analyses de sensibilité à l'aide du modèle TIIFA ont montré que ce n' est pas seulement le gain génétique, mais aussi la superficie sur laquelle on utilise les semences amélio-rées qui influencent le plus la rentabilité des programmes d'amélioration. De plus, les résultats indiquent que les avantages des programmes d'amélioration surpassent de beaucoup les coûts du programme, qu'ils soient de 1, 3, ou 5 millions de dollars par décennie. Nous en sommes venus à la conclusion que, malgré les niveaux actuels de gain génétique pris en compte dans le calcul de la possibilité annuelle de coupe pour l'industrie, les investissements en amélioration demeurent une option viable et rentable pour accroître ou simplement stabiliser l'approvisionnement en matière ligneuse, à condition de maximiser les superficies plantées avec des semences génétiquement améliorées.Mots clés : foresterie en Alberta,...

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“…In addition, the GYPSY model does not yet give full recognition of the yield gain from tree improvement programs. There has been a large investment in tree improvement programs for lodgepole pine and white spruce in Alberta and results indicate substantial growth increases for improved stock but this is reflected in only a 2% growth gain relative to natural stock being granted by regulators to approved forest projections [39].…”

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“…The harvest levels of each forest company are approved by the Government of Alberta through an annual allowable cut (AAC) (Schreiber and Thomas 2017). The fundamental components of an AAC determination includes quantity of available land, age class distribution of the forest, yield information, and constraints associated with managing the forest.…”

“…Therefore, C-P indicates a stratum with conifer and pine. 10 Though AACs are higher than actual harvesting levels since about 2005 due to the approval of increased coniferous AACs to deal with the mountain pine beetle threat (Government of Alberta 2017), timber supply is expected to reduce in Alberta due to mountain pine beetle-induced surge cuts ending and land-based reductions (Schreiber and Thomas 2017). The actual harvesting level and AACs are expected to be close in the near future.…”

“…For Alberta, the annual allowable cut has increased in recent years due to new management strategies in regards to the mountain pine beetle infestation. However, in the near future, timber supply is expected to decrease and revert back to pre-mountain pine beetle infestation levels as a result of mountain pine beetle surge cuts ending and land-based reductions (Schreiber and Thomas 2017). Together, these changes lead to a 25% reduction in timber supply.…”

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“…10 Though AACs are higher than actual harvesting levels since about 2005 due to the approval of increased coniferous AACs to deal with the mountain pine beetle threat (Government of Alberta 2017), timber supply is expected to reduce in Alberta due to mountain pine beetle-induced surge cuts ending and land-based reductions(Schreiber and Thomas 2017). The actual harvesting level and AACs are expected to be close in the near future.…”