0812-C1

Large-Scale Community Forest in Ontario, Canada - A Sign of the Times

Tom Clark^[1], Stephen Harvey, George Bruemmer and John Walker

Abstract

Five years ago Westwind Forest Stewardship Inc. was created to manage a 540 000 ha public forest in central Ontario. This was a result of a major policy shift in government that moved forest management from government to the private sector across the province. The institution is notable as a non-profit, community-based forest management company certified by the Forest Stewardship Council (FSC) (February 2002). It has a seven-member, consensus-based, board of directors: four community members and three forest industry members. Community members have no connection to the forest industry. Forest product companies are clients of Westwind. This turns the forest into a "profit centre" rather than the standard cost centre model. Westwind effectively turns "profits" back to the forest estate. The absence of shareholders means responsiveness to community aspirations balances with finance and environment. Actual community response to FSC certification has been very positive. Some marketplace reward has occurred.

Westwind is partly an accident of history and geography but there are lessons. Initiating a new model means acceptance of risk on the part of:

1) government - removing connections between mill infrastructure and woodlands tenure requires political commitment.

2) forest industry - acknowledging, in some cases, that other institutions may be in a better position to be forest managers requires corporate maturity.

3) community individuals - board members (including forest industry appointees) must accept responsibility (with compensation) for the company welfare, sometimes in face of outside criticism. Board structure rigorously follows conventional structure and procedures such as the Canadian Institute of Chartered Accountants guidelines. Board and staff must be entrepreneurial. To gain client, stakeholder and First Nation confidence, openness is essential: there must be independent certification, a local advisory group and a First Nations advisory group.

Ironically, many for-profit woodlands operations in large forest products companies are functionally non-profit, with a major commitment to community. Westwind is the independent expression of that reality. It is arguably the future for many management companies, given societal (government) moves to push responsibility downward to local decision-making. The softwood lumber dispute with the United States is pushing Ontario towards disconnecting woodland tenure from industrial infrastructure. Westwind is not an anomaly; it is a sign of the times.

Introduction

Five years ago Westwind Forest Stewardship Inc. was created to manage a 540,000 ha forest in central Ontario. The forest was named the French Severn Forest (FSF) after the rivers that bound it north and south. This was a result of a major policy shift in government which moved forest management from government to the private sector across the province. Westwind is different from other forests in the province because it is a non-profit, community based forest management company certified by the Forest Stewardship Council (February 2002). It has a seven member, consensus based, Board of Directors (Board): 4 community members and 3 forest industry members. Community members have no connection to the forest industry. Forest products companies are clients of Westwind. This turns the forest into a "profit centre" rather than the standard cost centre model typical in Canada. Westwind effectively turns "profits" back to the forest estate. The absence of shareholders encourages responsiveness to community aspirations; and a balance between finance and environment.

As background, this paper describes central Ontario social and natural environment; the policy framework for forestry; the chronology of the evolution of the new company; the board structure and nature of the Westwind community forest and the certification decision. Discussion covers community forestry (CF) in Ontario; the role of certification; and lessons. The purpose of this paper is to review the performance of the company after five years and to discuss aspects of this approach that may be of value in other jurisdictions.

Background

Ontario context

Forests and their management are symbolically important to the people of Ontario. About three quarters, or 170 million acres, of Ontario's land is forested. 90% of the forest is Crown land, owned by the public. Some 70,000 people work directly in the forest products industry to produce $15 billion of goods. Ninety percent of Ontario's population lives on 10% of the land in the highly urbanised industrial and agricultural belt referred to as southern Ontario. As many as 50,000 persons of aboriginal origin live in forest communities and have a special interest in forest lands and their management.

Forest type

Biologically, Muskoka is part of the Great Lakes St. Lawrence Forest. This is characterized by a mixture of thin soils over granite in some areas and deep well drained soil in others. Winters are snowy, long and cold. Conifer tree species include White Pine, Red Pine (Pinus resinosa), Eastern Hemlock (Tsuga canadensis) and Eastern White Cedar (Thuja occidentalis). Deciduous trees include the valuable Sugar Maple Acer saccharum, as well as Beech (Fagus grandifolia) Red Oak (Quercus rubra), White Ash (Fraxinus americana). White Birch (Betula papyrifera) and Trembling Aspen (Populus tremuloides) are common throughout Ontario.

Community structure

The forests of central Ontario lie within two to four hours drive of Canada's largest city, Toronto. These forests receive little notice, either provincially or nationally, because the wood volumes are small, relative to operations in boreal Canada or British Columbia. The primary products are tolerant hardwoods and pine which are low volume, but high value species (Map Figure 1). With a population total of approximately fifty thousand there are four main communities with populations between 5 to 20 thousand, numerous smaller towns, and six First Nations.

Figure 1. Map of French Severn Forest, Ontario, Canada.

The French Severn Forest is known for many clean lakes in a continuous forest setting, and as the summer cottages for people from the Toronto area. It is a destination tourism area popular with European and Japanese tourists in particular. It is adjacent to Algonquin Park on the east side, and is the Georgian Bay coast of Lake Huron, on west side, known for the "thirty thousand islands" tourism area. Lesser known in the FSF are forest products facilities and other manufacturing. Other significant land uses include an expansive snowmobile trail network, and fur trapping. The economy is small but well diversified between tourism and manufacturing.

Planning and Policy Framework

As owner of 90% of the land, government has put in place a licensing structure that enables private forest companies to manage this extensive forest area. Sustainable Forest Licenses (SFLs) are granted to companies and convey long term tenure for wood supply. The government has a fairly sophisticated regulatory structure in place to direct the SFL holders. All of the SFL holders, except Westwind, are for-profit companies, owned by forest products companies such as Tembec, Abitibi, Domtar, Bowater, and Buchanan Forest Products. Westwind clients include Tembec and Domtar.

Ontario was the first jurisdiction in Canada to develop a comprehensive policy framework for forest management (Duinker et al 1993). This became part of the principles included in the Crown Forest Sustainability Act, which became law in 1994. It directs SFL holders to prepare 20 year management plans renewable every five years (Ontario Ministry of Natural Resources 1996). Annual Work Schedules describe the actual implementation of operations each year. A major part of the planning process involves participation of stakeholders and First Nations. A separate, culturally appropriate, consultation process is available for First Nations. A Public advisory group (Local Citizen's Committee) is required by law; to inform the government planning team of controversial issues.

Historical and Current Land Use context

There is a long history of repeated highgrading in this forest. Since the demand for Canadian wood for England began in the 19th century, until the start of more sustainable management in the 1970's, highgrading of White Pine, Hemlock, Yellow Birch was the standard practice. Highgrading of quality hardwoods started early this century. These practices lowered the overall genetic quality and value of the woodlands to the point where a significant part of the forest only had a value as firewood or pulpwood, neither of which has enough value to support proper management. Restoration efforts, primarily by government funding over the last 25 years have improved management practices dramatically, through the development and evolution of sophisticated tree marking systems referred to as the Selection System.

Ontario is one of a few provinces that have started to deal with some of the higher landuse issues through a land use planning process (Ontario Ministry of Natural Resources 1999). The French Severn Forest as a result of the process has approximately 23% of the crown forest in designated protected areas that are protected by legislation. This is significantly more than most jurisdictions in Canada (Clark 1994). The land use decisions have many social benefits, in an area with many forest users.

Chronology of Westwind Formation

The concept of a different approach to tenure for SFLs has frequently been discussed and rarely written about, at least publicly. Moving from discussion to implementation was slow and fraught with misgivings. Table 1 is a brief time sequence. Notable is the timeframe, approximately 2 years.

Board Structure and Accountability

The concept worked out by the transition team sought to create a company that was independent of direct influence by forest products companies. The company mission is "to orchestrate ecologically based forest management on the diverse and intensively managed forests of the Parry Sound and Muskoka area. Under the authority of an SFL, it serves forest businesses and other forest users while maintaining the highest standards for business practice and public accountability". As a self sustaining entity, without the deep pockets, and internal controls of some large corporations, the transition team felt strongly that good business practices must be first and foremost.

Funding for Westwind's activities comes primarily from the operators who are entitled to a volume of the harvest. Each pays a proportional amount to Westwind for the costs of management (e.g., currently Tembec with the largest volume is the largest contributor). Funding for certification activities is from a grant of the Richard Ivey Foundation.

Board structure:

• 7 person (responsible only to Westwind)

  • 4 selected from the community based on skills and perspective

  • 1 independent logger

  • 1 largest allocation (Tembec)

  • 1 medium size mills

• Chair selected from community members

• Consensus based decision making

• Nomination committee responsible for keeping the vision alive

Board structure rigorously follows conventional structure and procedures such as the Canadian Institute of Chartered Accountants (1995).

Board and staff must be entrepreneurial. Funding opportunities arise in unsuspected places for example, Westwind, as a non-profit, has been named as the administrator of some resource penalties levied in the courts. Funding from the Ivey Foundation has been a significant contribution to establishing Westwind, even to the point of encouraging government officials to accept more risk.

Westwind's Board developed a strategic plan early in their mandate. Several aspects of that plan have come to fruition within the timeframe, but the plan was not rigorously updated. Planning when done properly for a small organizations is also a significant drain on resources. Resources and capacity is one of the main issues that Westwind must deal with, especially given the general trend to push for economy of scale.

Community Forestry in Ontario

Community Forestry is part of the movement referred to as the "democratization of government" (Harvey 2002). There has been a slow movement from government or industry "control" to involvement of "public" for many aspects of governance in Canada. Often the responsibility has been pushed down to the community without the funds to administer it. In the case of Westwind, forest companies "willingly" accepted payment of management fees for administration, while responsibility remained with Westwind. Although there was no choice about whether there would be new management fees, because of government dictum, the acceptance of a non profit as the SFL holder was a key step in the formation of the new arrangement. This took leadership on the part of key individuals within the forest products sector.

Community needs are addressed through the planning of forest operations, the maintenance of the forest resource capital and the establishment of a secure investment climate for forest based commerce.

Discussion

Westwind is in many ways an accident of history and geography but there are lessons.

Accountability

Initiating a new model means acceptance of accountability on the part of:

1) government - removing connections between mill infrastructure and woodlands tenure requires political commitment.

2) forest industry - acknowledging, in some cases, other institutions may be in a better position to be forest managers requires corporate maturity.

3) community individuals - board members (including forest industry appointees) must accept responsibility (with compensation) for the company welfare, sometimes in face of outside criticism.

Board Structure and Accountability

Board members of any business must follow basic rules of corporate governance which, in essence, means "board responsibility is founded on the principle that the directors are stewards of the organization" (Canadian Institute of Chartered Accountants, 1995). This simple statement is commonly not followed by boards. Recent corporate misdeeds have called attention to board responsibilities and due diligence. Boards must act independently of other considerations and focus on the stated purposes of the company. The overall board makeup must be a balance of different perspectives chosen to best guide the company. Typically in Ontario forest management company boards have a narrow range of backgrounds, often focussed on forest products.

For Westwind, consensus decision making in practice was not as difficult as in concept. On occasion some key decisions have been deferred, some for several meetings, but ultimately there has not been a need for issue resolution. It is a principle that the Westwind board still supports.

Community Forestry (CF) as a viable alternative in Ontario

Community Forestry (CF) is:

• meaningful community involvement in, or control of decision making about forest management

• retention of benefits of forest use and management within the community

Canadian literature on forestry does not provide a framework to evaluate the relative achievement of "community involvement". Yet it is an important measure for any management company or community claiming to be a community forest. Westwind's Board sought such a framework. The only paper describing a framework at the British Columbia Community Forestry Forum (POLIS Project, 2002) was an excellent review of community forestry in Africa (Alden Wily, 2002). Table 2 is an adaptation of the framework in that paper. Westwind is at the Consigned level of CF (shaded in the table) with a significant role in decision making. It is not a full community forest which has ownership. For many reasons ownership of large forest areas is unlikely in Ontario.

There are some (unpublished) misgivings in academia about whether any company managing a large SFL can be considered community based. Given the nature of our small communities, reliance on the forests and participation of community members in many aspects of management, the Alden Wily framework would place Westwind clearly in the CF hierarchy, although not at the top.

Profit centre

One of the ongoing issues in forest management is the role of woodlands operations in a large corporation. As the source for forest products, woodlands are traditionally viewed by accountants as a cost centres, i.e. the cost of doing business. Since wood in Ontario is often dedicated to one forest products company, it is easy to see why. Westwind is a profit centre (although a non-profit company) insofar as planning and management activities must pay for themselves. The almost thirty tenure holding operators on the forest can buy and sell their licenses on a small but open market. Wood flowing from the forest can head in any direction, via the operators.

Ironically many forest management companies or woodlands operations operate in a functionally non-profit mode, with a major commitment to community. Westwind is the full expression of that reality. Arguably it is the future for many management companies, once the forest products industry acknowledges the importance of community involvement, given the already undeniable strength of environmental objectives.

Further to this point, the softwood lumber dispute with the United States is pushing Ontario towards disconnecting woodland tenure from industrial infrastructure. Westwind is one of, if not the only, extant example of such an arrangement in Ontario's public forests.

Certification

Westwind identified certification in the letter's patent of the corporation as one of its founding tenets. In a "for profit" management model performance indicators used by the board and shareholders are usually dominated by financial performance. In a non-profit community based model there are no shareholders, only members. In the case of Westwind the company responsibility is to demonstrate good resource management to the community. Certification, particularly a high profile certification such as FSC, provided an independent measure of performance that had some credibility with the public of the forest. Westwind's Board set FSC Certification (after comparison of several systems) as a target and performance measure for Westwind.

One consideration was that certification was not as big a risk to reputation for a small company with a lower profile. On the other hand, successful certification was greeted by significant media coverage including newspaper and television coverage in Toronto. Local coverage was actually more meaningful for the Board, and anecdotally at least, has provided a greater confidence with the local public for Westwind's forest management. Public confidence is one significant measure of good performance for an SFL.

First Nations

Now, as an established organization, Westwind has gained credibility. It is now in a position to consider expansion of the board role to bring in the perspective of first nations. It is hoped that the next five year review will have some significant progress to relate regarding First Nations. Ongoing discussions between Westwind and the First Nations preclude a description at this time. This is the current focus of the Board, and probably its greatest challenge. A First Nations advisory group is providing useful input.

Bottom Up Phenomenon

Westwind started as a local idea from government staff, moved to gather support from senior government levels, then expanded out to stakeholders, and may soon engage First Nations. It is important for policy makers to recognize the "bottom up" phenomenon and support it. The ability of governments to facilitate local action through traditional policy tools is decreasing. An opportunity does exist for governments to recognize a new role that it can play in directing local action; a role which may rely more heavily on education, training, and minimizing risk associated with local innovation.

Conclusion

It is ironic that Governments with one hand are devolving control to lower levels of government or the private sector, but are hesitant to explore new governance arrangements. Westwind was one such experiment that has after five years shown stability, and achieved community recognition for their management. Its greatest challenge is continuance of the relationship building with First Nations, and overcoming limited resources.

Lessons from this particular experiment:

• Modest risk taking is necessary on the part of individuals, government and industry.

• Recognize good ideas flow from the bottom up

• Community Forestry is a logical expression of society's apparent desire to reduce the size and role of government

• Certification plays a useful role as an independent measure of performance

• Profit centre is the way of the future, and separation of woodlands from forest products infrastructure brings credibility with the public and potential relief from endless softwood lumber trade disputes

• As vested interest, forest products companies as public forest managers complicate management decisions

• Board structure should embrace a broad perspective, and follow conservative business practices as described by the Canadian Institute of Chartered Accountants.

• Careful, although basic, business planning and strategic planning are needed.

It would be nice to describe Westwind as something thoughtful, and carefully planned, rather than as an accident of history and geography. Strategic planning capitalized on existing opportunities that to some may have appeared as problems. In fact, the authors would describe Westwind not as an anomaly; but as a sign of the times. Aspects of Westwind are instructive. The authors would suggest that as governments in Canada devolve responsibility, the Westwind example will be prominent on a list of options.

Literature Cited

Alden Wily, L. 2002. Community Forestry Management as Social Process: The African Case. Presented at: British Columbia Community Forestry Forum, March 14-16 2002.

Canadian Institute of Chartered Accountants. 1995. Guidance for Directors - Governance Processes for Control. Series Control and Governance CICA. 17 pp.

Clark, T. 1994. Timber supply and endangered spaces. World Wildlife Fund Canada, Toronto. 68 pp.

Clark, T and S. Harvey. 199? Case Study: Sustainable Forest Management in Central Ontario - here today, gone tomorrow? Intergovernmental Panel on Forests Japan

Duinker, P., M. Wanlin, T. Clark and F. Miron. 1993. Diversity: forests, people, communities. Ontario Ministry of Natural Resources. 147 pp.

Duncanson, J.M. 1998. Ontario's Forests: Managing the Investment. In: Planning for Prosperity, Supporting Expert Analysis, Partnership for Public Lands. 52 pp

Harvey, S. 2002. Public Involvement in Forestry in Ontario. Presented to: Communities and the Forest: A Forum on Public Influence in Forest Management. Great Lakes Forest Alliance, January 2002.

Ontario Ministry of Natural Resources. 1999. Ontario's Living Legacy, Land Use Strategy. Queen's Printer for Ontario. 136 pp.

Ontario Ministry of Natural Resources. 1996. Forest Management Planning Manual for Ontario's Crown Forests. Toronto: Queen's Printer for Ontario. 452 pp.

Polis Project. 2002. Highlights of the British Columbia Community Forestry Forum: Exploring Policy and Practice, March 14-16 2002. www.polisproject.org. University of Victoria.