Selective Cuttings

Climate is changing… I am a mill manager: should I be worried?

January 31, 2013

“Climate is changing… I am a mill manager: should I be worried?” This is one of the questions that the Canadian Forest Service has set out to explore under its new Forest Change initiative (for more details, see Forest Change – A CFS Initiative for Enhancing Forest Sector Competitiveness in a Changing Climate in Forestry Chronicle vol 88(3)). Or, to phrase it more formally, we are undertaking an integrated assessment to examine the economic impacts of climate change on the forest industry and its competitiveness.

Conceptually, changing climate conditions could impact both stand dynamics (how trees survive and grow in a given stand) and landscape dynamics (how natural disturbances, human interventions and stand dynamics cumulatively change the forest). In this project, we are looking at fire and insect disturbance regimes under a range of plausible future scenarios, since they are already such prominent features of Canadian forests. Those are the events most likely to drastically affect the availability of timber for industrial use in the short to medium term. Since trees grow relatively slowly, the trees that make up imminent harvests are already mostly “grown” and changes of growth rates due to climate change are not expected to have a significant impact on timber supply in the short to medium term. In the long term however, changes in forest regeneration, growth rates and mortality will likely combine with disturbance regimes to transform the forest.

Another aspect of this issue is linking the expected physical changes in the forest with operating and processing costs at both the forest and at the mill level, and then finally product revenues to get a more comprehensive idea of climate change impacts on forest sector (see Figure below). A change in timber supply could have radically different consequences on forest industry economics depending on the industry structure. For example, manufacturers might be able to alter their products and production process in response to changes in the fibre quality more easily in some cases than others based on their equipment. Alternatively, if fibre costs move above an economic threshold (e.g. the local fibre is not readily available), some manufacturers might need to shift the location of mills.

Value chain of forest product manufacturing from the forest to the market

The figure represents a conceptual view of the integrated assessment of the Forest Change project with the subsystems involved in the forest product manufacturing value chain under climate change. These subsystems include climate, management, forest, and mills. The interface variables that connect these subsystems are shown in brackets. Climate and management influence forest dynamics. Forest dynamics in turn determines timber supply. Of particular importance, interface data at this point include the quantity and quality of fibre that comes out of the forest into the mills subsystems. All else being equal, the production and value generated from manufacturing is determined by timber supply.

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The CFS is looking to integrate timber supply models with industry models to better understand how the forest sector might be affected from an economic perspective in the short, medium and long term by climate change and to assess the range of adaptation interventions that might be required from ‘soft’ interventions (e.g. modifications to current lines) to ‘hard’ interventions (e.g. shifting the location of mills). If you have suggestions, please, feel free to contact us.