1

Merritt TSA Type II Silviculture Analysis

Merritt, B.C.

April 5th, 2007

2

Presentation Overview

Project Objectives MPB in Merritt Basecase Sensitivity Analyses FFT Opportunity

3

Project Objectives

Impact of MPB on harvest levels and other forest values such as wildlife habitat

Evaluate how silviculture can reduce the impacts

More specifically: When, and by how much, will the beetle affect timber supply Recommend and assess potential ways to improve timber

supply and non-timber values Prioritize spending

4

Classification of Land Base

TSA Area

Retention Major SalvageSilviculture Opportunity

No Treatment

Restoration to Enhance

Partial Cut

Basic ObligationsBasic Silviculture:

Fire/Pest

Incremental Silv.:Fert., Thin, Prune

5

Mountain Pine Beetle

Severity % Affected

Trace 0 – 1

Low 1 – 10

Moderate 11 – 30

Severe 31 - 50

Very severe 51+

6

2006 projection - Merritt

7

2010 projection - Merritt

8

2015 projection - Merritt

9

2020 projection - Merritt

10

Merritt MPB Projections by Severity

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

2004 2005 2006 2010 2015 2020 2024

Year of MPB Flight

Vo

lum

e m

3

Trace Low Moderate Severe Very Severe

11

Defining a Base Case

Updated netdown; Updated resultant file, which includes an updated

inventory; New analysis units and yield tables; Recalculation of the PSI for each resultant polygon; Old growth management area (OGMAs); Disturbing the inoperable; Updated UWR modelling; and MPB projections to 2015.

12

Base Case

1,560,000990,000

2,840,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Harvest Level Available Stock

13

Conversion to Managed

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Vol

ume

Har

vest

ed (m

3/ye

ar)

0-5 25 45 65 85 105 125 145 165 185 205 225 245

Year

MPB Natural Managed

14

Harvest by Species

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Har

vest

vol

um

e (m

3/h

a)

0.5 25 45 65 85 105 125 145 165 185 205 225 245 265

Year

Pine Douglas_fir Spruce Balsam Decid Hemlock

15

ECA by CWS

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85

105 125 145 165 185 205

YearC

WS

EC

A (

area

*re

cov%

/tot

ar

ea)

BROOK-3011 ha ECA threshold

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85

105 125 145 165 185 205

Year

CW

S E

CA

(ar

ea *

reco

v%/t

ot

area

)

BELL-344 ha ECA threshold

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85

105 125 145 165 185 205

Year

CW

S E

CA

(ar

ea *

reco

v%/t

ot a

rea)

DILLARD-3875 ha ECA threshold

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85

105 125 145 165 185 205

Year

CW

S E

CA

(ar

ea *

reco

v%/t

ot a

rea)

HACKETT-168 ha ECA threshold

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85

105 125 145 165 185 205

Year

CW

S E

CA

(ar

ea *

reco

v%/t

ot

area

)

KWINSHATIN-2719 ha ECA threshold

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85

105 125 145 165 185 205

Year

CW

S E

CA

(ar

ea *

reco

v%/t

ot

area

)

LEE-470 ha ECA threshold

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85

105 125 145 165 185 205

Year

CW

S E

CA

(ar

ea *

reco

v%/t

ot

area

)

SKUAGAM-456 ha ECA threshold

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85

105 125 145 165 185 205

Year

CW

S E

CA

(ar

ea *

reco

v%/t

ot

area

)

TROUT-1474 ha ECA threshold

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85

105 125 145 165 185 205

Year

CW

S E

CA

(ar

ea *

reco

v%/t

ot a

rea)

DILLARD-3875 ha ECA threshold

16

-Return on Investment (ROI)-Merchantability

Economic Indicators

17

Return On Investment (ROI)

Uses TIPSY to generate:

•Yield Tables

•Costs and Revenues

Standardized FFT IRR Worksheet:•Calculates ROI and NPVs

18

Example ROI OutputStand Rehabilitation Financial Analysis

Unit Description: Example ROI

TreatedAge m3/ha Age m3/ha Calendar Cost

0 0 0 0 Year ($/ha)

10 0 10 0 Fill plant 2006 50520 0 20 0 IRR 30 1 30 9 NPV 2% 40 19 40 57 NPV 3% 50 50 50 105 NPV 4% 60 85 60 155 B/C 2% 70 126 70 202 B/C 3% 80 165 80 248 B/C 4% 90 208 90 297

100 247 100 338 110 286 110 379120 322 120 414130 354 130 446140 380 140 472150 406 150 494 Untreated Treated

160 429 160 517 Rotation Age 135 115170 451 170 538 Fixed Harvest Costs ($/ha) 2,270 2,270180 469 180 551 Tree-To-Truck Costs ($/ha) 5,732 6,175 Untreated Treated190 484 190 566 Haul Costs ($/ha) 2,386 2,587 2.7 3.5200 502 200 576 Milling Cost ($/ha) 14,506 15,020

Harvest Revenue ($/ha) 53,507 52,194

-$244

(benefits and costs of the incremental treatment)

3.38%$1,681$246

INCREMENTAL TREATMENT

cMAI

HARVEST COST ASSUMPTIONSPhysical Rotation

4.331.490.52

FINANCIAL INDICESCOST ASSUMPTIONSUntreated

YIELD TABLES ROI = 3.38%

19

Merchantability

A tool for describing the relative economics of timber harvesting opportunities across a forested landbase.

Merchantability = Product Value – Operating Costs

20

Merchantability- Product Value

Product value approximates the selling price for lumber and chips

Product Value is a function of: Site Index Species Stocking Age

21

Merchantability- Operating CostsCosts involved in operating, building roads, harvesting

wood, manufacturing products and reforestation

Operating cost is a function of: Slope Terrain Volume/ha Cycle time Species BEC zone Stocking Age

22

Merchantability- Index

•Each stand given a Merchantability Class

•Summarized by graphs and maps

Merchantability Class Merchantability Range Ranking SchemeHigh Return Stands >/= $45.00 0Moderate Return Stands $30.00-<$45.00 1Economic Stands $15.00 - < $30.00 2Marginal Stands $0 - <$15.00 3Deficit Stands -$15.00 - <$0.00 4Moderate Deficit Stands -$30.00 - <$15.00 5High Deficit Stands -$45.00 - < -$30.00 6Severe Deficit Stands <-$45.00 7

23

Merchantability- Map product

24

Merchantability- Area Summary

25

Sensitivity Analyses

26

Harvest all MPB Very Severe

1,560,000990,000

3,813,000

1,590,000

1,380,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase Harvest Level Harvest all MPB kill Harvest Level

27

Plant all unharvested MPB

990,000 1,560,000

1,360,0001,610,000

2,840,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase Harvest Level Plant all MPB (VSML) Kill Harvest Level

Plant 122,000 ha

Mid term increase: 370,000 m3/year

28

Plant Unharvested MPB-ROI > 2%

990,000 1,560,000

1,360,000

1,570,000

2,840,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase Harvest Level Plant all ROI treatable MPB (VSML) Kill Harvest Level

Plant 89,000 ha

Mid term increase: 370,000 m3/year

29

Faster MPB Spread

1,560,000990,000

2,840,000

1,530,000

590,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 20 40 60 80100 120 140 160 180 200 220 240

Year

Vol

ume

(m3/

yr)

Basecase Harvest Level Fast MPB Spread Harvest Level

30

Presently Utilized Uplift Level

1,560,000

990,000

2,340,000 1,560,000

850,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase Harvest Level Presently Utilized Uplift Level Harvest Level

31

Retain 150m3/ha non-Pl

1,560,000

990,000

2,840,000

1,580,000

960,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase Harvest Level Retain stands with non-pine volume Harvest Level

32

Kill MPB down to 10cm DBH

1,560,000990,000

2,840,000

1,560,000960,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase Harvest Level 10cm DBH MPB kill Harvest Level

33

Two year shelf life

1,560,000990,000

2,840,000

1,550,000680,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase Harvest Level 2yr Shelf Life Harvest Level

34

Two year shelf life-Availability

1,560,000990,000

2,840,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase Harvest Level Basecase Availability 2yr Shelf Life Availability

35

Plant GI spruce instead of pine

1,560,000990,000

2,840,000

1,720,0001,120,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase Harvest Level Spruce Genetic Gains Harvest Level

36

Retention Sensitivities FN Retention

990,000 1,560,000

960,0001,530,000

2,840,000

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase FN Retention

Ecological Retention

1,560,000990,000

2,840,000

1,560,000

910,000

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase Ecological Retention

Merchantability Retention

990,000 1,560,000

890,000

1,560,000

2,840,000

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase Merchantability Retention

All CWS Retention

1,560,000990,000

2,840,000

1,550,000980,000

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase All CWS Retention

37

FFT Opportunity Scenario

Increased Planting of Genetically Improved Spruce

Plant all unharvested MPB kill with an ROI > 2%

CWS Restoration (planting) occurs irrespective of ROI

Retention of 100% FN Retention areas

38

FFT Opportunity Scenario

990,0001,560,000

1,440,0001,780,000

2,840,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0-5 25 45 65 85105 125 145 165 185 205 225 245

Year

Vol

ume

(m3/

yr)

Basecase Harvest Level Most Probable FFT Scenario Harvest Level

39

FFT Opportunity Age class

Basecase

0

20,000

40,00060,000

80,000

100,000

120,000140,000

160,000

180,000

-10 10 30 50 70 90 110 130 150 170 190 210 230 250

10 year age classes

Are

a (h

a)

THLB non-THLB productive

Restoration Scenario

0

20,000

40,000

60,000

80,000100,000

120,000

140,000

160,000

180,000

-10 10 30 50 70 90 110 130 150 170 190 210 230 250

10 year age classes

Are

a (h

a)THLB non-THLB productive

40

FFT Opportunity ECA Impact

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85105 125 145 165 185 205

YearC

WS

EC

A (

area

*re

cov%

/tot

are

a)DILLARD-3875 ha ECA threshold Basecase

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85

105 125 145 165 185 205

Year

CW

S E

CA

(ar

ea *

reco

v%/t

ot a

rea)

DILLARD-3875 ha ECA threshold

41

FFT Planting Opportunity

Basecase FFT OpportunityHarvest 117,204 117,126Planted 0 91,428Left Unplanted 122,156 31,295

42

Classification of Landbase

43

Classification of Landbase

44

Environmental Reporting

Seral Stage Patch Size Fine filter- UWR/Grizzly/Woodpecker Harvest in FN Retention Area CWS- ECA/Road Density/Seral stage

45

Seral Stage

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Pro

duct

ive

Are

a (h

a)

NROV 15 45 75 105 135 165 195

Year

Total TSA Area

Shrub Pole Young Mature Old

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Pro

duct

ive

Are

a (h

a)

0-5

25 45 65 85 105 125 145 165 185 205

Year

NDT 2

Shrub Pole Young Mature Old

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Pro

duct

ive

Are

a (h

a)

0-5

25 45 65 85 105 125 145 165 185 205

Year

NDT3

Shrub Pole Young Mature Old

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Pro

duct

ive

Are

a (h

a)

0-5

25 45 65 85 105 125 145 165 185 205

Year

NDT4

Shrub Pole Young Mature Old

46

Harvest in FN Retention Areas

No harvest in FN 100% for 15 years

0

2,000

4,000

6,000

8,000

10,000

Har

vest

Are

a ha

/yea

r)

0-5

25 45 65 85 105 125 145 165 185 205

Year

Restoration Scenario

100

10

0

2,000

4,000

6,000

8,000

10,000

Har

vest

Are

a ha

/yea

r)

0-5

25 45 65 85 105 125 145 165 185 205

Year

Basecase

100

10

47

Patch Size-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

0to2 2to10 10to20 20to50 50to100 100to1000 >1000

Patch Size

Are

a (h

a)

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Patc

h Fr

eque

ncy

Shrub/Herb Pole/Sapling Young Forest Mature Old Frequency

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

0to2 2to10 10to20 20to50 50to100 100to1000 >1000

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

0to2 2to10 10to20 20to50 50to100 100to1000 >1000

Patch Size

Are

a (h

a)

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Patc

h Fr

eque

ncy

Shrub/Herb Pole/Sapling Young Forest Mature Old Frequency

48

CWS ECA

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85105 125 145 165 185 205

Year

CW

S E

CA

(are

a *r

ecov

%/t

ot

area

)

BROOK-3011 ha ECA threshold Basecase

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85105 125 145 165 185 205

Year

CW

S E

CA

(are

a *r

ecov

%/t

ot

area

)

BELL-344 ha ECA threshold basecase

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85105 125 145 165 185 205

Year

CW

S E

CA

(ar

ea *

reco

v%/t

ot a

rea)

DILLARD-3875 ha ECA threshold Basecase

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85105 125 145 165 185 205

YearC

WS

EC

A (a

rea

*rec

ov%

/tot

are

a)HACKETT-168 ha ECA threshold Basecase

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85105 125 145 165 185 205

Year

CW

S E

CA

(are

a *r

ecov

%/t

ot a

rea)

KWINSHATIN-2719 ha ECA threshold Basecase

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85105 125 145 165 185 205

Year

CW

S E

CA

(are

a *r

ecov

%/t

ot a

rea)

LEE-470 ha ECA threshold Basecase

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85105 125 145 165 185 205

Year

CW

S E

CA

(are

a *r

ecov

%/t

ot a

rea)

SKUAGAM-456 ha ECA threshold Basecase

0%

20%

40%

60%

80%

100%

0-5 25 45 65 85105 125 145 165 185 205

Year

CW

S E

CA

(are

a *r

ecov

%/t

ot a

rea)

TROUT-1474 ha ECA threshold Basecase

49

CWS Seral Stage

0

50

100150

200

250

300

350

400450

Prod

ucti

ve A

rea

(ha)

0-5

25 45 65 85 105 125 145 165 185 205

Year

Lee CWS

Shrub Pole Young Mature Old

0

200

400

600

800

1,000

1,200

1,400

Prod

ucti

ve A

rea

(ha)

0-5

25 45 65 85 105 125 145 165 185 205

Year

Trout CWS

Shrub Pole Young Mature Old

0

50

100

150

200

250

300

350

400

450

Pro

duct

ive

Are

a (h

a)

0-5

25 45 65 85 105 125 145 165 185 205

Year

Lee CWS

Shrub Pole Young Mature Old

0

200

400

600

800

1,000

1,200

1,400

Pro

duct

ive

Are

a (h

a)

0-5

25 45 65 85 105 125 145 165 185 205

Year

Trout CWS

Shrub Pole Young Mature Old