Modeling the effects of introducing timber sales into volume-based tenure agreements

The problem of allocating cutting rights among competing licensees in Canada often entails assigning large discrete units of land to these licensees, typically for periods of fifteen to twenty-five years. The units of forest land are often large because it is economically infeasible for firms to maintain roads and operations widely dispersed across a forest. The assignment of these areas clearly frustrates the economic objective of sending the “right log to the right mill”. The objective of this research is to design a decision support model to evaluate the usefulness of incrementally introducing timber sales as an alternative method of allocation. An integer goal programming model was formulated to assign discrete units of land either to multiple competing mills or to timber sales - through which logs are then redistributed to these mills. The model is applied to a case study in British Columbia. Results from this case study indicate that the benefits of allocating forest land to timber sales decrease after approximately 40% of the annual allowable cut is redistributed through timber sales. The model can be used not only to evaluate but to plan for changes to Canada's forest tenure policy.