THE NATIVE FORESTS OF WESTERN VICTORIA

PRELIMINARY EVALUATION OF THE
COMPREHENSIVE REGIONAL ASSESSMENT FOR THE
WESTERN REGION OF VICTORIA

(Western Region, Forest Management, Timber Industry,
Plantations, Tourism, Water)


by

The Otway Ranges Environment Network
(OREN)

September 13, 1999

This document is printed on tree free electrons

 

CONTENTS

1. Introduction

2. Summary

3. OREN Approach to Evaluation of the Comprehensive Regional Assessment and General Observations on the Adequacy of the CRA and on the RFA Timetable

4. The Western Region (CRA Chapter 2)

4.1 One Region or Three?

4.2 Contribution of Tourism to the Regional Economy

4.3 No Examination of Important Demographic, Economic and Employment Trends

5. Forest Management and Managing for Timber Production (CRA Chapters 3 and 4)

5.1 Forest Management

5.2 Managing for Timber Production

6. Timber Industry (CRA Chapter 5)

6.1 Overview of Information Provided

6.2 Log Pricing and Allocation Arrangements

6.3 Structure and Value of the Hardwood-Based Industries

6.4 Hadwood Sawn Timber Industry

6.5 Outlook for Wood Product Industries and Industry Development Opportunities

6.6 Industry Paradigm Not Sustainable

7. Plantations (CRA Chapter 6)

7.1 General Observations

7.2 Impact of Native Forest Subsidies on Plantation Viability

8. Management of Forests on Private Land

9. Tourism and Recreation (CRA Chapter 8)

9.1 Overview of Information Provided

9.2 Downstream and Multiplier Effects of Tourism

9.3 Growth and Employment Potential of Tourism in the Otway Hinterland

9.4 Impact of Clearfell Logging on Tourism

10. Water and Catchments (CRA Chapter 9)

10.1 Overview of Information Provided

10.2 Value of Water versus Value of Timber and Woodchips

 

Appendices :

1. Analysis of Current Wood Utilisation Plan for the Otway FMA.

2. Determinants of Water Quality and Aspects of Water Production in the

Upper Barwon Catchment System. Report by P.F. Clinnick,

Department of Conservation, Forests and Lands. November 1985.

3. Breaches of Timber Harvesting Regulations and Codes of Forest Practices

in the Otway FMA.

 

1.Introduction

The Commonwealth and Victorian State governments are jointly committed to the completion of a Regional Forest Agreement (RFA) for the Western Region of Victoria by December 1999. In this context, a Comprehensive Regional Assessment (CRA) has been published "to provide a synthesis of the information on which the RFA can be developed and agreed between the Victorian and Commonwealth governments".

Following a very short period of consultation with the community, a Directions Report will be completed, which "builds upon information contained in the CRA report and the results of consultations with the community".

This document presents OREN's preliminary evaluation of the first nine chapters of the CRA document. OREN has been unable to complete an evaluation of the remainder of the CRA as critical information on bio-diversity has yet to be released by the Steering Committee.

This evaluation has been released as soon as possible to assist the Regional community to understand the implications of the current RFA process and contribute to the debate on an informed basis. An evaluation of the remaining chapters of the CRA will be released once relevant information has been received from the Steering Committee and analysed.

Inquiries in relation to this document should be directed to the principal author, Christopher Tipler, who can be contacted at the following address:

C/- OREN

Level 7, 412 Collins Street

Melbourne, Vic. 3000

 

Telephone (03) 9670 0455

Facsimile (03) 9670-6326

This document has been published on the OREN website at the following address:

www.oren.org.au

The CRA document itself is also published on the Internet at the following address:

http://www.rfa.gov.au

 

2.

Summary

OVERVIEW OF THE CRA

The CRA document, despite its volume, contains very little information that can be used as a basis for formulating forest management policy. The document fails to explore the important linkages between the various forest values in the region and contains much misleading and inaccurate information. In addition, the information needed to complete an assessment of bio-diversity has still not been released.

In the above context, the RFA timetable for the Western Region is completely unacceptable to OREN, and to the wider regional community (particularly in light of the fact that, until very recently, Geelong was excluded from the consultation process). It is simply not possible, on the basis of the inadequate research that has been completed to date, to formulate appropriate policy in relation to the Western Region.

THE WESTERN REGION (CRA Chapter 2)

This chapter of the CRA fails to explore the important subject of whether the Western Region is, in effect, one region or three. In addition, the significance of tourism to the region is not identified in the economic data presented, and there is no examination of important demographic, economic and employment trends in the region (which demonstrate that tourism is the main driver of growth).

FOREST MANAGEMENT AND MANAGING FOR

TIMBER PRODUCTION (CRA Chapters 3 AND 4)

This chapter of the CRA is essentially an unquestioning statement of DNRE dogma and contains many misleading statements. It fails to acknowledge readily available evidence that Codes of Forest Practice in the region are routinely broken (eg, the reclassification of Sawlogs to Residual logs).

In its review of silviculture, the CRA does not question the application of clearfelling techniques to Mixed Species forests, despite the fact that all of the research supporting clearfelling relates only to Mountain Ash species.

In its discussion of sustainable yield, the CRA fails to acknowledge that short rotations are leading to the large scale destruction of bio-diverse forests and it makes no attempt to acknowledge or discuss issues arising from the fact that no production limits are set on Residual logs. The CRA also does not consider the important issues of nutrient loss, wildfire, and regeneration failure in its calculation of sustainable yields for the Western Region.

 

TIMBER INDUSTRY (CRA Chapter 5)

Chapter 5 is the most disturbing and concerning chapter in the CRA, for several reasons:

It is almost in its entirety thinly-veiled timber industry propaganda that treats the facts very loosely in an attempt to cast the regional Hardwood Logging, Woodchipping and Sawmilling industry in the most favourable light possible. In a document purporting to be an assessment, intellectual dishonesty of this sort is unacceptable.

It contains a number of important errors of fact, and the data presented in a number of the tables does not reconcile.

It makes no attempt to come to grips with the fundamental issue, revealed by the data, that the regional industry is not viable without massive and continuing government subsidies. Rather, it attempts to argue, against the evidence, that the industry has potential.

It demonstrates that the DNRE considers itself to be part of the Timber industry, raising fundamental issues relating to stewardship of the forest.

The diagram opposite reveals the logic which is driving the current 'treadmill of destruction' in the Western Region. Every element of this argument is supported in evidence, which we have summarised in Section 6 of this evaluation.

PLANTATIONS (CRA Chapter 6)

The wide-ranging and unfocused discussion of softwood and hardwood plantation topics in the CRA does not focus on any of the main issues relating to plantations and their relationship to native forests in the region.

Importantly, the CRA does not give any consideration to the extremely low level of royalties charged for sawlogs, and particularly pulp logs, which will make it most difficult for hardwood plantations to be established on a viable basis.

TOURISM AND RECREATION (CRA Chapter 8)

Despite the importance of tourism to the region, and the significant adverse impact of clearfell logging on tourism values, this chapter of the CRA is only ten pages long (compared to 34 pages for Timber).

Whilst it confirms OREN research demonstrating the large size and rapid growth of tourism in the region, it does not give consideration to the growth potential of tourism in the forest hinterland, nor does it consider the major adverse impact of clearfell logging on tourism. Finally, no attempt is made to estimate the wider multiplier effects of the Tourism industry, although multiplier effects for Timber were calculated.

 

 

 

 

 

WATER AND CATCHMENTS (CRA Chapter 9)

Despite the availability of good quality research for both the Thomson Catchment and the Otways, the CRA makes no attempt to explore the question of the value of water versus the value of woodchips and timber.

Specifically, the CRA ignores an important study for the Department of Conservation, Forests and Lands in November 1985 which found that the value of water lost through logging in the Otways was almost twice the value of timber harvested.

Updating the assumptions used in this study, to take into account present day values for water and timber, would suggest that water values now exceed timber values in the Otways by a factor of three, with the result that logging in Otway catchments has a net cost to the community (negative value added) of $18 million p.a.

IMPLICATIONS FOR POLICY FLOWING FROM

OREN EVALUATION OF THE CRA

In this evaluation OREN has presented new information that has profound implications for the management of native forests in the Western Region. This information is as follows:

(i) We have provided a framework for a systemic analysis of forest values which needs to be further developed by all parties involved.

(ii) We have presented evidence that the Hardwood Logging, Woodchipping and Sawmilling industry in the Otway FMA is not financially viable, and is on an unsustainable 'treadmill of destruction'. The industry exists today only because our native forest is being given away on the assumption that it is a 'renewable resource' that has little value to the community in alternative use. This assumption is wrong. Logged on an eighty year rotation it is not a renewable resource, and the true cost to the community of its use for woodchips and sawn timber, in the Otway FMA alone, is a loss of at least $18 million per annum (see page 31 for analysis of industry value-added).

(iii) In this context, we have presented evidence that the value of water lost through clearfell logging in the Otways is approximately three times the value of timber harvested from forest catchments.

(iv) We have demonstrated, using woodchips as an example, that hardwood plantations are unlikely to be viable when they have to produce logs on a commercial basis at a cost six times greater than the royalties which currently apply to Residual logs. The same logic applies to sawlogs.

(v) We have demonstrated that large areas of bio-diverse native forest are being lost in the Otways, by presenting maps showing the extent of logging over the last thirty years, by revealing that most coupes being logged do not meet minimum sawlog-economic criteria, and by pointing out that silviculture research does not support clearfell logging in mixed-species forests.

(vi) We have presented evidence showing that tourism is the major driver of demographic and employment growth in the region and has very large multiplier effects. Clearfell logging of the Otway native forest and tourism growth are fundamentally incompatible.

(vii) Finally, we have presented evidence that the Otway native forest is not being managed responsibly by the DNRE and we have pointed out that, by its own admission in the CRA document, the Forestry Division of the DNRE views itself as part of the Hardwood Logging, Woodchipping and Sawmilling industry. This long overdue admission of allegiance raises profound issues with respect to the stewardship of native forests in the Western Region. The DNRE cannot be both poacher and gamekeeper. The community now has evidence before it of the need for independent review of, and control over, the management of native forests in the Western Region in particular, and probably in Victoria as a whole.

In OREN's view the policy direction indicated by the above information is clear:

OREN Recommendations

All logging in forested water catchments in the Otways should cease immediately, and permanently.

Clearfell logging in all other areas of the Otway FMA should also cease immediately.

The hardwood sawmilling industry should be given the necessary structural adjustment funding to enable most sawmills to exit the industry.

Sawlog royalties should be independently reviewed and set at commercial levels.

Calculations of Sustainable Yield should be based on the entire bio-mass of the forest, not on sawlogs alone.

The role of the DNRE in managing native forests must be clarified immediately.

Further recommendations will be put forward in relation to Bio-Diversity when all of the CRA information has been published.

 

3.

OREN Approach to Evaluation of the

Comprehensive Regional Assessment and General

Observations on the Adequacy of the CRA and on the

RFA Timetable

OREN's starting point for evaluation of the CRA is the assumption that the CRA is supposed to be a genuine attempt to provide a foundation for policy-making. To do this it needs to provide:

(a) comprehensive, accurate and unbiased information in relation to all of the relevant policy variables;

(b) a framework for analysing the significance of this information; and

(c) an analysis, within this framework, of the main policy variables and their interrelationships.

As the following diagram attempts to show, the scope of the CRA is critical in determining the outcome of the RFA process.

Exhibit 3.1

The Scope of the CRA Document is Critical in

Determining the Quality of Subsequent Policy Decisions

 

 

An understanding of the relationships between the various forest values requires a 'systems' approach in which the various forest-related activities and uses interact to produce an outcome in terms of economic outputs (for tourism, water, timber, etc) and ecological sustainability.

It is important to note here that a system can only be meaningfully assessed in terms of its outcomes. For example, we do not say that a car engine is a good or bad engine by examining its constituent parts; we deem it to be good or bad by reference to its power/torque output per unit of fuel input and its reliability/longevity. Similarly, one cannot meaningfully assess a forest values 'system' by viewing it merely as a set of essentially disconnected components.

Exhibit 3.2 opposite presents a very simplified model of the Otway Forest values "system". The system consists of a number of values - biodiversity, timber and woodchips, hardwood plantations, tourism, water quantity, water quality, social amenity, minerals, and other forest produce. Significant relationships between these values are described by the small circles (or regulators). For example, activities associated with the creation of timber and woodchip values have a negative effect on tourism in terms of the impact on scenic quality and tourist roads. Similarly, there are important pricing and employment linkages between native forest timber harvesting and hardwood plantations.

In this model, the system boundary is defined to include downstream effects within the region for each value, but it excludes downstream effects outside the region in each case. It is important to note also that this model describes a system for the Otways, and it would be feasible to construct a similar systems model for other FMAs in the Western Region, where the relationships between values are likely to be very different. This raises the very important question of whether the Western Region constitutes one system or a set of quite different systems with different competing values.

The above discussion suggests that, at the minimum, the CRA document should seek to define the system boundaries on a consistent basis, describe the relationship between the key values in the system and present an assessment of the trade-offs. Items that one would expect to see in such an analysis include:

clear definition of all the obvious linkages;

an analysis of the value of timber and woodchips versus the value of water;

an analysis of the impact of pricing policies for native forest produce on the embryonic hardwood plantation industry;

the impact of native forest harvesting activities on tourism values.

Assessment

(i) No meaningful analysis of 'trade-offs' provided.

Viewed in the above context, the CRA is neither comprehensive, nor an assessment in any meaningful sense. The document is essentially a collection of disconnected facts and items of information, of variable (and often very poor) quality. No attempt is made in the document to define the relationship between the main forest values and to assess the trade-

Exhibit 3.2

Simplified Model of the Otway Forest Values 'System'

 

 

Notes: Grey line indicates System boundary.

Not all linkages shown (eg, affect of mining activities on tourism and water)

offs that must inevitably occur between them.

(ii) System boundaries not consistent.

Further, no attempt is made to define the boundaries of the forest values system in any consistent way. For example, Chapter 5 discusses the downstream effect of native forest sawmilling activities, both within the region and beyond the region, but no attempt is made to complete a similar analysis for tourism, where the downstream implications are probably far greater.

(iii) No consideration of important local differences within the Western Region.

The CRA does not recognise the very important differences that exist between the three FMAs in the Western Region. The effect of this is to reduce the quality of any analysis to the lowest common denominator (eg, for the Western Region as a whole, woodchips account for around 75% of the total volume of timber harvested from the forest, but in the Otway FMA, which is not analysed separately, OREN research indicates that the woodchip percentage is far higher. Similar observations could be made in relation to a range of other important considerations, including flora and fauna, tourism and water).

(iv) Lack of Rigour and Impartiality.

A particularly concerning aspect of the CRA document is the extent to which it is heavily biased in favour of the woodchipping and timber values. This comes through in a number of ways:

in the volume balance of the document; eg, 34 pages are devoted to timber, yet the vital subject of forests and tourism receives only 10 pages;

in the completely uncritical presentation of DNRE 'dogma' in relation to forest management;

in the use of inappropriate and misleading information, apparently in an attempt to emphasise the importance of the hardwood logging, woodchipping and timber industry;

in the inconsistent treatment of downstream effects (between timber and tourism), and the use of old, inappropriate employment multipliers;

in the failure to provide comprehensive data in relation to flora and fauna.

(v) Inadequate Treatment of Tourism, Water

Tourism and water are clearly the two most important forest-related economic values in the region, yet the CRA fails to recognise this. For example, the brief tourism section contains no analysis of the extremely damaging effect of clearfell logging on scenic quality. The chapter on water, for example, ignores evidence showing that in the mid 1980s the value of water lost as a result of logging in the Otways was twice the value of timber harvested (OREN research indicates that lost water is now three times more valuable).

(vi) Errors in Data

In addition to the above, there are many errors in the document. Tables containing important information don't add up (eg, page 49) and there are inconsistencies in the information presented.

(vii) RFA Process and Timetable

The RFA process for the Western Region involves a total elapsed time of around nine months. In this absurdly short timeframe the regional community is expected to deal with grossly inadequate research (the CRA), engage in consultation with State and Federal officers who are obviously just 'going through the motions' and formulate some sort of considered response. It is impossible and both governments know it. In addition to the timetable issue, Geelong (the largest population centre in the region, with a vital interest in management of the Otway native forests) was deliberately excluded from the RFA process until very recently and the wider Geelong community has therefore had very little opportunity to engage in the consultative process.

(viii) Summary

In summary, the CRA document, despite its volume, contains very little information that can be used as a basis for formulating forest management policy and contains much misleading and inaccurate information. It is, frankly, a half-hearted and amateurish piece of work that suggests the authors, and the Steering Committee, are not serious in their desire to have a robust and meaningful RFA process.

This perception is compounded by the absurdity of the RFA timetable which gives the community almost no time to deal with the inadequacies in research and analysis. One is left with the inevitable conclusion that, unless the regional community provides the Committee with substantial input over the next few weeks, the Directions Report is likely to recommend a continuation of the status quo. Indeed the whole process seems to be a mechanical sham; the Federal and State governments appear to have no interest in, or commitment to, an outcome that genuinely seeks to strike an appropriate balance of forest values. Given the highly destructive nature of hardwood logging activities in the Otways and the obvious adverse effect that these activities are having on water, tourism and biodiversity values, this outcome would be completely unacceptable to the regional community and will lead to continuing conflict over the forest management.

In the following sections of this document, we provide commentary and analysis of each of the major forest values covered in the first nine chapters of the CRA document.

 

Table 4.1

Source: 1996 Census.

4.

The Western Region

(CRA Chapter 2)

4.1 ONE REGION OR THREE?

One would have expected the CRA to provide an assessment in this chapter of important intra-regional differences which may have implications for forest management policy. Disappointingly, there is no such analysis. Yet the Western Region consists of a number of very different economies, with very different determinants of employment and output. This is evident from the table opposite (4.1), drawn from 1996 census data for the Barwon region. Clearly, the forces shaping the City of Greater Geelong are unique in the region due to this city's close connection to Melbourne. Other regions - the coastline, parts of the Otway Forest hinterland, and areas such as Ballarat, Hepburn Shire and the Grampians, are heavily dependent on tourism. Other areas are driven economically largely by agriculture, which also varies greatly by type of activity. All of these factors are relevant when looking at forest management policy. For example, areas that have high tourist traffic, or have great tourist potential, are extremely sensitive to logging activities which have serious adverse effects. Large population centres such as Geelong, which draw their drinking water from forest catchments in the region, have a legitimate concern about logging because of its effects on water yields and water quality.

For the above reasons, the failure of the CRA to provide an insightful analysis of the economy of the region is a serious shortcoming.

4.2 CONTRIBUTION OF TOURISM TO THE REGIONAL ECONOMY

Table 2.2 on page 9 of the CRA presents an analysis of industry contribution to gross State product, but the ABS classification used does not define tourism as a separate industry. Rather, the significance of tourism is buried in a number of industries including construction, wholesale and retail trade, accommodation, cafes and restaurants, transport, communications, finance, property, government administration, cultural and recreational services, community services, personal services and so on. In other words, the impact of tourism is pervasive, yet no attempt has been made to make this explicit.

What we do know is that, relative to the significance of tourism, the forestry and logging section is extremely small indeed, as indicated in Table 2.3 on page 10. This point needs to be noted carefully by the Steering Committee.

 

4.3 NO EXAMINATION OF IMPORTANT DEMOGRAPHIC, ECONOMIC AND EMPLOYMENT TRENDS

It is remarkable that the CRA contains no analysis of regional and intra-regional economic trends, in order to highlight the drivers of growth. Figure 4.3 below and Table 4.3 opposite reveal, for example, that 'traditional' areas such as the Colac Otway Shire are going backwards both demographically and economically, whereas areas such as the Surf Coast Shire are expanding very rapidly. There are important implications here. Tourism is a major driver of population and employment growth along the coast. It is not unreasonable to conclude from the data that an opening up of the forest hinterland would lead to similar beneficial effects from tourist growth in areas that are currently in decline. Yet the CRA makes no attempt to explore this vital question, or the extent to which logging of native forests inhibits tourism development.

 

Figure 4.3

Barwon Population: Average Annual Rate

of Change, 1991 to 1996.

Table 4.3

Total Employment in the Barwon Region -

By Shire

 

Exhibit 5.1.1

 

 

 

 

 

 

Source: DNRE Log Royalty data obtained under FOI request.

5.

Forest Management and

Managing for Timber Production

(CRA Chapters 3 and 4)

5.1 FOREST MANAGEMENT

Chapter 3 of the CRA on forest management and resource utilisation is essentially an unquestioning statement of DNRE 'dogma'. As such it contains many misleading statements, as the reality of forest management in the Otways falls well short of stated policy. Specific observations on this matter follow below.

5.1.1 Compliance with the Code of Forest Practices (Pages 17 and 18 of the CRA)

The text of the CRA implies that Codes of Practice have been professionally and competently developed, and that they are observed and policed. This is far from the truth. Over the period 1991/92 to 1998/99, there have been 68 officially registered breaches of the Timber Harvesting Regulations and Codes Of Forest Practices in the Otway FMA (see Appendix 3). To this recorded figure, one could add many other breaches that were not recorded.

Although the CRA states that breaches of particular conditions of licences can result in penalties, the Committee should note that sawlogs are routinely classified as Residual logs in the Otways, making a nonsense of the sustainable yield limits determined under the Forests Act. The charts opposite show the massive increase in residual logs which has occurred over the last decade, and the sharp fall in the volume of D grade sawlogs over the same period. Illegal reclassification of sawlogs explains a significant proportion of these trends.

5.1.2 Forest Management Plans (Pages 18 and 19 of the CRA)

The CRA states on pages 18 and 19 that, as a consequence of complying with various Acts of Parliament, Forest Management Plans are required to consider a range of matters including ecologically-sustainable management and the maintenance of environmental values, water catchments, flora and fauna protection, sustainable yield, biodiversity, public participation in plan development and monitoring and review of management performance.

Whilst it may be a requirement of the plans that these matters be considered, in reality few of them ever are. OREN is currently finalising a research study entitled "Breaches of the Otway Forest Management Plan", which will be made available to the Steering Committee in the near future.

In this context, one can reasonably ask, why didn't the CRA complete an independent assessment of these matters? More particularly, why were community groups such as OREN not consulted to obtain some independent insight into the status of forest management in the Otways?

5.1.3 Wood Utilisation and Coupe Planning (Page 19 of the CRA)

The CRA states that "a three year schedule of coupes ... is prepared for each FMA annually" and that "these plans are made available for public comment prior to finalisation". Neither of these statements are correct. The Wood Utilisation Plan often includes coupes which have been scheduled at short notice without any prior consultation with the community and coupes scheduled for a particular year are routinely brought forward (e.g. Grey River Rd. 07/242/520/05). In addition, it is difficult for members of the public to obtain copies of the Wood Utilisation Plans, as they are only available at the DNRE offices in Forrest and Gellibrand.

5.1.4 Silviculture (Pages 20 to 27 of the CRA)

This section of the report is also a bland statement of current DNRE policy, without any attempt at an evaluation of silvicultural practices.

One fundamental question that should have been addressed is the application of clearfelling techniques in forest types other than Mountain Ash. All of the research supporting the clearfelling method of timber harvesting is based on the particular characteristics of Eucalyptus Regnans, yet as the chart opposite reveals, the vast majority of timber harvested in the Otways is from Mixed Species forests, with pure stands of Ash being only a relatively small proportion of the total.

Chart 5.1.4

WUP 1999/2000 - 2001/2002

Expected Gross Volumes of Sawlogs (D+) by Forest Type

In reality, clearfell logging is also the approach taken in Mountain Mixed Species and Foothill Mixed Species forests, but the case for clearfelling in these forests has not been established. Given the large-scale destruction of biodiverse forest which occurs as a result of clearfelling, this is a major question mark over current forest management prescriptions, yet the CRA does not address it.

5.2 MANAGING FOR TIMBER PRODUCTION (CRA PAGES 31 TO 43)

As with previous sections of the CRA, this chapter is also a bland statement of current DNRE policy, without any attempt at independent assessment. Yet there are many issues in relation to the determination of Sustainable Yield, and the management of the production of various timber types.

5.2.1 Sustainable Yield Not an Ecological Concept

It is important to note at the outset that sustainable yield, as defined, has nothing whatever to do with ecological sustainability; it is purely an economic concept. The maximisation of sustainable yield occurs by logging hardwood forests on very short rotations of eighty years or less. The problem here is that the maintenance of biodiversity requires logging rotations of at least two hundred years. The inescapable conclusion is that, in the Otways, the current Production Zone of 63,000 hectares is being turned progressively (and quite quickly) from a forest into a plantation; under current policy the Otway State Forest will be reduced in area from 93,000 hectares to the reserved area of 30,000 hectares within the next fifty years.

The point here is that what constitutes sustainable yield from a purely economic standpoint does not constitute ecological sustainability from any perspective.

If the Steering Committee is in any doubt on this issue, it can refer to the map opposite of the Eastern Otways, showing most of the coupes logged since 1970. It has been prepared by OREN from official data sources and is entirely accurate (but may exclude some coupes)1. It reveals an appalling and systematic pattern of destruction that has had a profound impact on flora and fauna. In this context, the Committee should also refer to the charts in Section 6.6 of this evaluation which reveal that most areas being logged in the Otways are below minimum economic sawlog yield and are being made 'viable' only through clearfelling and the resultant sale of woodchips. The pressure on the forest flowing from this relentless push into areas of lower quality is enormous and not sustainable.

5.2.2 Statements on Forest Regeneration are Incorrect

The text on pages 22 and 23 of the CRA asserts that "Regeneration success rates in low elevation mixed species forest, where even-aged silviculture has been practiced, have been satisfactory ... regular observations by forest officers indicate that coupes (where uneven-aged silviculture is practiced) are generally adequately stocked". OREN challenges these statements. We can take the Steering Committee to many coupes which, years after logging, are showing no sign of effective forest regeneration.

5.2.3 Sustainable Yield Methodology Flawed

The calculation of sustainable yield in the Otways relates only to D+ sawlogs; it excludes Residual logs, and there is no statutory limit on the quantity of Residual logs that can be removed from the forest in a given period.

Page 34 of the CRA states that Residual logs are produced as a by-product of harvesting for sawlogs, but this is simply not consistent with the facts. The industry is now 'woodchip-driven'. The completely inadequate DNRE supervisory regime is a significant factor contributing to this problem, as is the fact that contractors are paid more for Residual logs than they are for sawlogs2.

The net effect is that the quantity of sawlog quality timber being taken from the Otways is far greater than the production figures indicate and it may well be the case that the legislated maximum sustainable yield limits are being breached in the Otways.

In this context, the whole chapter in the CRA on Sustainable Yield has very little meaning or value.

NOTES: 1.

A similar map for the Western Otways is also available.

2

. Refer Auditor-General's Special Report No. 22, p. 119.

5.2.4 Sustainable Yield Calculation Takes No Account of Nutrient Loss

One of the most bizarre aspects of forest management practice in Victoria is that sustainable yield calculations, and DNRE policy, take no account of nutrient loss resulting from the complete removal of the forest biomass through clearfelling.

Well documented scientific research demonstrates that a substantial proportion of the essential nutrients of eucalypts is contained in the stemwood, as the table below reveals.

 

Table 5.2.4

Contribution of Biomass Elements

To Eucalypt Nutrition (%)

Main Nutrients

Nitrogen

Phosphorous

Calcium

Magnesium

Foliage

14

13

7

17

Bark

18

18

31

13

Understorey

4

3

2

2

Litter

15

8

21

16

Stemwood

31

27

7

12

Branches

18

31

32

40

TOTAL

100

100

100

100

Source: Turner, J. and Lambert, M. Nutrient Cycling and Forest Management. 1996. (Contained

in 'Nutrition of Eucalypts', CSIRO 1996.)

Yet, the DNRE view is that pulp logs and thinnings are 'waste' or 'debris' that can be sold for almost no value without any consequence. This attitude displays a complete lack of understanding of the principles of ecology. In nature, growth basically equals decay. Any farmer knows that if he cuts hay from his pastures year after year without fertilising the soil he will soon be left with depleted soil and a poor crop. Yet in the management of our forests this basic principle of agriculture is completely ignored.

We ask, why is it that the CRA did not consider this matter?

5.2.5 No Provision for Wildfire in Sustainable Yield Calculations

Notwithstanding the history of major wildfires in the Otways, and the ever present risk of such fires, no provision whatsoever is made for wildfire in the sustainable yield calculations for the Otways. This is another major flaw in the sustainable yield methodology deployed by the DNRE.

6.

Timber Industry

(CRA Chapter 5)

6.1 OVERVIEW OF INFORMATION PROVIDED

Chapter 5 is the most disturbing and concerning chapter in the CRA, for several reasons:

It is almost in its entirety thinly-veiled timber industry propaganda that treats the facts very loosely in an attempt to cast the regional hardwood logging, woodchipping and sawmilling industry in the most favourable light possible. In a document purporting to be a government assessment, intellectual dishonesty of this sort is unacceptable.

It contains a number of important errors of fact, and the data presented in a number of the tables does not reconcile.

It makes no attempt to come to grips with the fundamental issue, revealed by the data, that the regional industry is not viable without massive and continuing government subsidies. Rather, it attempts to argue, against the evidence, that the industry has potential.

It reveals that the DNRE, the apparently 'independent' forest manager, sees itself as part of the Timber industry.

6.2 LOG PRICING AND ALLOCATION ARRANGEMENTS (CRA PAGES 46 AND 47)

The CRA asserts here that residual logs are "generally logs which are either too small or to defective to meet current sawlog specification". As we have indicated in an earlier section of this evaluation, D grade sawlogs are routinely reclassified as residual logs, in clear breach of policy and legislation. In this context, the statement on page 47 that "the availability of residual logs is directly tied to and determined by the sustainable production of sawlogs" is incorrect. If the Steering Committee is in any doubt on this matter it should refer to Appendix One of this report and note the large number of coupes that have very low sawlog yields.

Page 46 makes reference to the determination of royalty rates for sawn timber, but it makes no reference to the determination of royalty rates for woodchips. Given that woodchips now account for more than 75% of the total volume of material taken from native forests in the Western Region, this is a major omission.

Average woodchip royalty rates in Victoria in 1997/98 were $3.60 per cubic metre. OREN analysis of the cost of producing woodchips on a commercial basis in Bluegum plantations (based on data extracted from recent Timber Corp prospectuses) reveals that the comparable cost of producing a cubic metre of woodchips commercially is in excess of $20. This figure excludes the cost of harvesting and transport to mill. It will be most difficult indeed for commercial plantations to establish themselves and become viable when they have to compete against a subsidised product which is 80% less expensive to procure.

Why is it that the CRA contains no analysis at all of this most important subject?

6.3 STRUCTURE AND VALUE OF THE HARDWOOD-BASED INDUSTRIES (CRA PAGES 48 TO 51)

The text here asserts that the twenty-two hardwood sawmills in the region are involved in a range of sawn timber processing activities "including a high proportion of further processed products such as kiln-dried and appearance grade products for both domestic and export markets". This statement is inconsistent with the facts presented in Table 5.9 (page 54) which reveal that appearance grade timber is a minute fraction of total output.

The table on page 49 simply does not add up. When faced with analytical work of such a low standard, the reader is entitled to ask "how can one have confidence in any part of this CRA when the basic information presented is wrong?"

On pages 48, 50 and 51, the CRA attempts to 'pump up' the very small size of the hardwood logging, woodchipping and sawmilling industry in a number of inappropriate and intellectually dishonest ways:

by including NRE employment numbers in industry employment data. This is nonsense; no credible macro-economic analysis includes in the industry employment calculation public servants employed at the community's expense to support the industry. At the same time, however, the information provided confirms what conservationists have long known - and the DNRE has denied - that the Forestry Division of the DNRE sees itself as part of the Timber industry. This raises profound issues of independence and stewardship which are addressed elsewhere in this evaluation;

by including softwood-based industries in the employment discussion. This is extraordinarily deceptive and misleading;

by using questionable State-wide employment multipliers. OREN research demonstrates that there are no significant downstream activities within the Western Region related to hardwood logging and sawmilling. Accordingly, if multiplier effects exist, they exist outside the region. When a wider view is taken of potential multipliers, it is necessary to take into account the fact that in the last fifteen years the range of hardwood substitute products available to the community has increased dramatically, to the point where in almost all areas, hardwood has lost share dramatically to pine, to softwood-based fibreboard, and to other materials. In this context, it is likely that the State-wide multipliers both for revenue and employment are extremely low. For this reason, reliance on very old multipliers calculated in the 1980s by the NIEIR is inappropriate.

The underlying reality is that the hardwood logging, woodchipping and sawmilling industry in the Western Region is a very small one measured either in terms of employment or revenue generated. In employment terms, it represents less than 2% of the regional workforce, and in revenue terms, the percentage is likely to be even lower. If this industry disappeared tomorrow, it would not be missed. Indeed, given its highly destructive and negative effects in relation to plantation-based industries, tourism, and water, it is almost certainly the case that its disappearance would lead to an improvement in the regional economy.

6.4 HARDWOOD SAWN TIMBER INDUSTRY (CRA PAGES 51 TO 55)

The data in Table 5.7 on page 52 does not reconcile with the table on page 49.

Table 5.8 on page 53 reveals that, even after revenue from woodchips is included, the hardwood sawmilling industry loses money. This is an extremely important fact, leading one to ask why the viability of the industry was not given careful consideration in the CRA. This matter will be discussed further in the conclusions at the end of this section.

The data on the last line of page 53 does not reconcile with the data on page 49, and similarly, the data on page 54 (including Table 5.9) does not reconcile with the data on page 49.

Table 5.10 on page 55 presents the results of a survey of future expectations of sawmillers. One must ask why this data was included in the CRA and, more particularly, why this information is not placed in an historical context. The charts presented overleaf for the Otway FMA reveal that over the last decade there has been no increase at all in sawlog production, and specifically that there has been no significant increase in the production of appearance grade timbers. This is the case despite constant assertions over

Exhibit 6.4


the years by the hardwood sawmilling industry that it was planning to increase its sales of appearance grade and further processed timber. This simply has not happened and a reasonable observer would question why, in the light of the evidence, it is likely to happen in the future.

It is also reasonable to ask, in this context, why a similar survey of future expectations was not completed for the tourism industry in the region. Again, what we are pointing to here is an unreasonable bias in favour of an industry which is not viable.

6.5 OUTLOOK FOR WOOD PRODUCT INDUSTRIES AND INDUSTRY DEVELOPMENT OPPORTUNITIES (CRA PAGES 56 TO 65)

This section of the CRA presents a generally bearish assessment of competitive forces as far as hardwood product markets are concerned, including :

a flat outlook for product prices;

increasing competition due to excess wood product manufacturing capacity in other countries;

continuing strong competition from softwood;

continuing strong competition from softwood-based fibreboards.

Despite these data, the CRA argues on pages 63 to 65 that the hardwood industry has improved its value-adding capability and is in a position to further develop. Specifically, the CRA concludes "these development options have been successful for a number of firms and there would appear to be scope for the sawmilling industry processing logs from the West Region to extend their successful application". OREN challenges this conclusion, which we believe is inconsistent with the data. The constant efforts by the hardwood sawmilling industry to present the industry in a growth context are inappropriate - no industry based on the utilisation of native forest material as its primary resource can be viewed as a growth industry. At best, hardwood sawmilling is, and will continue to be, a niche industry that only requires a niche resource. It would be more realistic, however, to view the industry as one that has a very finite life and which is no more appropriate to the future than the hunting of whales or seals.

6.6 INDUSTRY PARADIGM NOT SUSTAINABLE

The data contained in the CRA, combined with the results of OREN research and a good working knowledge of the hardwood industry in the region, reveals a paradigm which is not sustainable. The diagram overleaf is, in our judgement,

 

 

an accurate representation of the position and dynamics of the hardwood logging, woodchipping and sawmilling industry, and the associated DNRE regime. The paradigm represents a 'treadmill of destruction' which is ultimately not sustainable, which is resulting in a negative value added and which is having a major adverse impact on forest biodiversity, water catchments, tourism, and the growth of a viable plantation-based industry.

Each of the circles or rectangles on the diagram is grounded in evidence, which is presented below.

1/2 Industry Scale-Up

With government encouragement, there has been a substantial level of investment in sawmilling and woodchipping capacity and technology in the region, supported by development grants and an uninspected belief that the industry has value-added growth potential. The capital intensive sawmills resulting from this process require a high throughput of logs to be viable, and are also very wasteful. The technology thereby contributes to increased pressure on the forest. The more traditional style of sawmill, with a four-man bench, has much more flexibility, and a capacity to cut usable timber from small logs. These mills generate less waste (as indicated on page 53 of the CRA), and also utilise all the waste in running the mill.

3 Hardwood Markets Eroded

The virtual collapse of markets for sawn hardwood has been well documented. The major markets for hardwood were house framing, flooring and skirtings/architraves. These markets have been almost completely taken over by pine or by MDF and will not be recovered.

4 Failure of Industry Marketing Efforts

The Timber Promotion Council was established to carry out hardwood industry marketing, funded by levies on log volumes. The efforts of this body have not resulted in any tangible improvement in value-added market position.

5 Financial Losses on Sawmilling Operations

Table 5.8 on 53 of the CRA reveals that, in 1997/98, the hardwood sawmilling industry lost $2.5 million on sawmilling operations, notwithstanding the fact that the royalties paid on sawlogs (ie, the cost of raw material to the industry) do not reflect the full opportunity cost to the community. If the industry had to pay appropriate royalties for sawlogs, based on the commercial cost of production, the losses on sawmilling would be closer to $10 million p.a.1

6/7/8 Justification of Woodchipping

DNRE literature is replete with statements justifying clearfelling as a preferred method of silviculture in Mountain Ash forests notwithstanding the fact that current silvicultural research indicates that alternative methods are just as viable (refer CRA Page 25) and the fact that clearfelling in Mixed Species forests has no research-based logic. Conveniently, the DNRE also ignores the issue of nutrient loss resulting from biomass removal (specifically ignoring scientific research on this subject).2

9/10/11 Reclassification of Sawlogs to Residual Logs

This matter has been discussed elsewhere in this evaluation.

12 Logging of Low Sawlog Yield Coupes

State Government documents3 demonstrate that to be sawlog-economic a minimum sawlog yield of 100m3 per hectare is required for Mountain Forests and 30m3 for Foothill Forests. The Figure opposite reveals that in the forthcoming logging season in the Otway FMA, only a third of Mountain Species coupes (calculated by area) will meet the minimum requirement, and only half of Foothill Species coupes will meet the minimum requirement.

1. In Section 10 of this report we refer to an analysis by P. F. Clinnick in November 1985 which demonstrates that the value of water in the Otways is twice the value of timber removed from the forest. This analysis alone would suggest that royalties should be double their current level. A recent report by KPMG also concludes that current royalties are far too low.

2. Refer to The Nutrition of Eucalypts. CSIRO. 1996. Several articles in this collection of scientific papers demonstrate that the stemwood of eucalypts contains a significant proportion of required nutrients.

3. Pulpwood Harvesting for Woodchips in the Otways. Report of the Inter-Departmental Task Force, 1982.

13 Large Woodchip Sales

The CRA reveals that woodchips now represent 75% of the output of hardwood forests in the Western Region. In the Otways, OREN calculates that this figure is closer to 85%.

14 Royalty and Licence Fee Debts Not Collected

OREN has been advised from several sources that the State Government is owed up to $10 million in arrears of royalties and licence fees. This represents a further, hidden subsidy of the Logging, Woodchipping and Sawmilling industry. In correspondence with OREN (dated 27 May, 1999), the Minister for Conservation and Land Management has admitted that debts exist, although she claims that the figure is less than $10 million.

15 DNRE Provides Services Below Cost

The diagram overleaf presents OREN's estimates of the money flows relating to the hardwood industry in the Otway FMA. These estimates, based on accurate sources, indicate that the DNRE is subsidising the industry in the Otways to the extent of approximately $1.6 million per annum.

16 Low Royalties for Woodchips

We have earlier indicated that the cost of producing woodchips on a commercial basis in Bluegum plantations, operated on a ten year cycle, is in excess of $20 per m3. This compares with an average woodchip royalty across the State of $3.60, and an estimated woodchip royalty for the Otways of around $3.00.

17 Industry Propped Up by Subsidies at Enormous Cost to the Regional Community

Table 6.6.1 opposite calculates the Value Added of the Hardwood Logging, Woodchipping and Sawmilling industry for the Otway FMA in 1997/98. Value added is the revenue of the industry less the cost of DNRE services to the industry, less the cost of raw materials (logs) calculated on one of four different bases. In this analysis the cost of logs valued on two bases is shown: valued on the basis of lost water yield (this measure is relevant in the catchment areas), and valued on the basis of commercial cost of production. Two other bases for valuing logs - adverse tourism impact, and loss of bio-diversity - are highly relevant but OREN has not had time to explore them. The assumptions supporting key data are provided overleaf. The table reveals that, in the water catchment areas (40% of the FMA), the industry has a negative value added of $18.4 million p.a. (ie, the industry was subsidised by the community by this amount). This loss may well be higher if negative Tourism or Bio-Diversity effects exceed $24.4 million p.a. In the balance of the Production Zone a small positive value added is recorded only if Tourism and Bio-Diversity effects are ignored.

 

Table 6.6.1

Value Added of Hardwood Logging,

Woodchipping and Sawmilling in the Otway FMA

(1997/98)

 

Water Catchments

Balance of Production Zone

Total Production Zone

Area logged (h.a.)1

150

200

350

Log Volumes2 (m3)

B+

C

D

Residual

 

2758

8736

1383

35,800

 

3679

11650

1843

47727

 

64387

20386

3226

83527

Timber Revenues

Sawn Timber3 ($ millions)

Woodchips4 ($millions)

TOTAL REVENUE

 

4.3

3.3

7.6

 

5.8

4.5

10.3

 

10.1

7.8

17.9

Less Cost of Inputs ($ millions):

DNRE Services5

Raw Materials (Logs)

Valued on basis of lost water yield6

Valued on basis of commercial cost of production7

Valued on the basis of adverse impact on Tourism values

Valued on the basis of loss of bio- diverse forest

 

(1.6)

(24.4)

(1.9)

Not Calculated

Not Calculated

 

(2.1)

Not Applicable

(2.6)

Not Calculated

Not Calculated

 

(3.7)

(4.5)

Not Calculated

Not Calculated

VALUE ADDED($ millions)

HIGHEST

LOWEST

4.1

(18.4)

5.6

Not Calculated

 

 

 

Assumptions Underlying OREN Estimates

of Value Added for Hardwood Logging, Woodchipping

and Sawmilling in the Otway FMA

 

 

NOTES

1. In the 1999/2000 season the area of the Otway FMA to be logged that lies in water catchments totals 355 hectares, out of a total area allocated to licence of 921 hectares (WUP). This represents approximately 40% of the total area. This percentage has been applied to the recent average area actually logged of 350 hectares (although the area currently being logged is greater than this).

 

2. Log volumes have been allocated in accordance with area.

 

3. Sawn timber revenue estimates are based on the following assumptions:

Log Grade

Recovery Rate

Sold As

Price Per M3

B+

40%

KD Dressed

$2,000

C

45%

Green

$500

D

45%

Green

$380

 

4. Woodchip Revenues are based on a price of $80 per tonne (which is well above prices currently being achieved). All sawmill residue is assumed to be sold as woodchips at this price.

 

5. OREN estimates of DNRE expenses in the Otway FMA are as follows:

Payments to harvesting contractors $1.0 million

Roading $0.4 million

Operating and Head Office expenses $2.3 million

TOTAL

$3.7 million

 

6. The value of lost water per hectare of $162,800 calculated by P. F. Clinnick has been used here (see Appendix 2).

7. An analysis of Timbercorp prospectuses indicates that the cost of producing woodchips from Bluegum plantations over a ten year cycle is $20.83 per m3, excluding harvest costs. Clearly, producing sawlogs from slower-growing species over an 80 year rotation would have a far higher cost than this. Preliminary OREN estimates of appropriate commercial royalties are:

Residual Logs

$25 per m3

B+ Sawlogs

$100 per m3

C Sawlogs

$75 per m3

D Sawlogs

$50 per m3

 

7.

Plantations

(CRA Chapter 6)

7.1 GENERAL OBSERVATIONS

This chapter of the CRA contains a wide-ranging and unfocused discussion of softwood and hardwood plantation topics. It is difficult, however, to see what the purpose of this discussion is, and how it can contribute to the process of reaching decisions about the management of native forests in the Western Region.

In this regard, there would appear to be several critical questions:

(i) To what extent will the growth of the existing and proposed softwood and hardwood plantations in the region meet total market needs for timber products, and therefore obviate the need to log native forests?

(ii) What is the appropriate policy stance on the extraction of timber from native forests, versus timber from plantations - ie, if plantations were entirely adequate to meet all market needs, would logging of native forests then cease?

(iii) Related to the above, what is the effect of the pricing of timber from native forests (royalties) on the rate at which the plantation industry is likely to grow?

(iv) What are the employment linkages between the native forest industry and the plantation industry? Would the accelerated transfer of current employees involved in native forest logging, sawmilling and woodchipping to the plantation industry, for example, enable the latter industry to grow more quickly?

None of these critical questions are addressed by the CRA.

7.2 IMPACT OF NATIVE FOREST SUBSIDIES ON

PLANTATION VIABILITY

For Victoria as a whole, in 1997/98, royalties charged per cubic metre by the State Government for sawlogs ranged from $8.77 for D-Grade through to $40 for B-Grade. Preliminary analysis by OREN indicates that these royalties are extremely low, and well below the cost of growing trees of equivalent quality on a commercial basis (see note 7 opposite).

As we have mentioned earlier in this report, the situation in relation to Residual logs is even more concerning. We reiterate that the cost of producing a cubic metre of Bluegum woodchips on a commercial basis, excluding harvesting and transport to mill, exceeds $20 per cubic metre. Yet equivalent material is sold by the State Government from the Otways for around $3 per cubic metre. This level of subsidy has two major effects:

(i) it perpetuates the cycle of destruction under which forests of lower and lower quality are being logged; and

(ii) it inhibits the establishment and development of hardwood plantations.

 

8.

Management of Forests

on Private Land

The Otway Forest Management area consists of 900,000 hectares of land, of which 700,000 hectares is privately owned. A significant proportion of this is forested.

Given this fact, it is surprising that the CRA pays almost no attention to the issue of managing native forests on private land.

To date, OREN's focus has been on native forest management, but we acknowledge the important linkages that exist between outcomes in the native forest, and outcomes in forests on private land and, consequently, the importance of having comprehensive and adequate controls over the management of forests that are privately held.

OREN would like to discuss this important matter with the Steering Committee.

 

9.

Tourism and Recreation

(CRA Chapter 8)

9.1 OVERVIEW OF INFORMATION PROVIDED

This short chapter of the CRA presents important information evidencing the very large size and growth of the tourism industry in the Western Region and the significance to tourists in the region of sightseeing and the natural environment (refer Table 8.2 on page 89). Surprisingly, however, it makes no attempt to explore the obvious linkages that exist between the logging of native forests and tourism, or to define and quantify the downstream and multiplier effects of this large industry.

9.2 DOWNSTREAM AND MULTIPLIER EFFECTS OF TOURISM

Whilst Chapter 5 tries very hard to magnify the wider benefits of the Timber and Woodchipping industry, Chapter 8 is almost silent on the wider impact of Tourism is the region. First, as we indicated in Section 4 of this assessment, Tourism underpins many, if not most, of the industries in the region as defined by the Australian Statistician, from Construction through to Personal Services. Its linkages are far wider and more important than those of the Hardwood Logging and Sawmilling industry.

Further, Tourism within the region almost certainly has major flow-on effects for the wider Victorian economy. Melbourne, for example, benefits greatly from the flow of tourists visiting major attractions such as the Otways, as it is a regional hub for these visitors. The CRA makes no attempt to quantify these effects.

9.3 GROWTH AND EMPLOYMENT POTENTIAL OF TOURISM

IN THE OTWAY HINTERLAND

Section 8.4 of the CRA argues that the economic value for tourism and recreation in State Forests in the region does not exceed $13 million. The CRA does not discuss the fact that the growth of tourism in the forest hinterland has been severely inhibited by logging activities. As a result of the prevailing logging culture, tourist accommodation in the Otway hinterland is very limited (see table overleaf), major towns have few tourism attractions, and minor roads are often in a very poor state of repair. It is also important to note here that logging creates significant road safety issues for tourists.

9.4 IMPACT OF CLEARFELL LOGGING ON TOURISM

Clearfell logging, in particular, is having a major adverse impact on the tourism potential of the Otways. Clearfelling produces scenes of utter devastation which remain unsightly for years. Time and time again, members of the community interested in tourism complain to OREN about the effect that clearfell logging is having on their industry. The OREN report, "Breaches OF The Otway Forest Management Plan", soon to be released, details case studies of clearfell logging impacting on Otway hinterland tourism values.

 

10.

Water and Catchments

(CRA Chapter 9)

10.1 OVERVIEW OF INFORMATION PROVIDED

This chapter of the CRA provides useful and relevant information in relation to the relationship between forests, forest management and water.

The CRA acknowledges what is now generally accepted to be the case; that clearfell logging reduces water yields in forested water catchments and that there are significant issues in relation to the impact of logging on water quality.

10.2 VALUE OF WATER VERSUS VALUE OF TIMBER AND WOODCHIPS

A major deficiency of this chapter of the CRA is that it makes no attempt to explore the question of the value of water versus the value of woodchips/timber, notwithstanding the fact that there is good quality research available on this subject relating both to the Thomson Catchment and to the Otways.

With respect to the Thomson, the consulting firm Read Sturgess & Associates completed a study in June 1992 which demonstrated that the value of water lost through clearfell logging in the Thomson is much greater than the value of timber harvested. The diagram below summarises the results of a net present value analysis by Read Sturgess, showing that the no logging scenario generated a net present value to the community of $147 million greater than the status quo scenario. The results of this study are likely to be applicable to the Western Region, and particularly to the Otways.

 

Figure 10.2

Value of Catchment to the Community under

Alternate Management Regimes

Read Sturgess & Associates. Evaluation of the Economic Values of Wood and Water for the Thomson Catchment. June 1992. Page 42.

In relation to the Otways, a report prepared by the Department of Conservation, Forests and Lands in November 1985 found that the value of the water lost through logging was almost twice the value of timber harvested from the same area. This study, by P.F. Clinnick, concluded "the major effect of forest operations in the long term will be on water yield. A simple economic analysis was conducted and revealed that over a rotation period the value of water production was twice that of timber".

The economic analysis by Mr. Clinnick was based on the following assumptions (refer to page 8 of his report, which is appended to this evaluation - see Appendix 2):

an 80 year logging rotation

a water yield reduction due to logging of 4 megalitres per hectare per year

a price for water of $509 per megalitre (based on Geelong Water Board charges)

a sawlog and woodchip revenue yield per hectare of $87,500

It is important to note that, if this analysis was to be conducted today, the assumptions would almost certainly have moved in favour of water:

the appropriate charge for water per megalitre should probably be increased, given the very difficult water situation in the region

prices for sawn timber and woodchips have generally declined

OREN research has shown that in 1997/98, the Hardwood, Sawmilling and Woodchipping industry generated total revenue from the Otway FMA of approximately $18 million. This estimate is consistent with data presented in the CRA for the Western Region as a whole. The total area logged in the Otway FMA in 1997/98 to generate this revenue was approximately 350 hectares, giving a total revenue per hectare of approximately $51,000. On the assumption that the Clinnick estimate for the value of lost water is unchanged (ie, $162,800), then the value of the water lost through logging of native forest is now three times the value of timber products harvested from the same forest.

A detailed report entitled "Clearfell Logging In The Otway State Forest And Its Effect On Water Resources In The Region" has already been submitted to the RFA Task Force.

Value Added of Hardwood Logging,

Woodchipping and Sawmilling in the Otway FMA

(1997/98)

 

Water Catchments

Balance of Production Zone

Total Production Zone

Area logged (h.a.)1

150

200

350

Log Volumes2 (m3)

B+

C

D

Residual

2758

8736

1383

35,800

3679

11650

1843

47727

6438

20386

3226

83527

Timber Revenues

Sawn Timber3 ($ millions)

Woodchips4 ($millions)

TOTAL REVENUE

4.3

3.3

7.6

5.8

4.5

10.3

10.1

7.8

17.9

Less Cost of Inputs ($ millions):

DNRE Services5

Raw Materials (Logs)

Valued on basis of lost water yield6

Valued on basis of commercial cost of production7

Valued on the basis of adverse impact on Tourism values

Valued on the basis of loss of bio- diverse forest

(1.6)

(24.4)

(1.9)

Not Calculated

Not Calculated

(2.1)

Not Applicable

(2.6)

Not Calculated

Not Calculated

(3.7)

(4.5)

Not Calculated

Not Calculated

VALUE ADDED($ millions)

HIGHEST

LOWEST

 

4.1

(18.4)

 

5.6

Not Calculated

 

 

Appendix 1

OTWAY FMA - WOOD UTILISATION PLAN 2000-2002

Analysis of Sawlog Yields per Hectare

(Excludes Thinning Coupes)

 

Area (Hectares)

Sawlog Yield (m3)

ResidualYield (m3)

Sawlog Yield per Hectare

Residual Yield per Hectare

Mountain Ash Forest

Phillips South

No. 9 Ridge W

Bon Accord

Last Ridge

21

15

10

6

2500

1000

1000

2000

4000

2000

1000

2000

119

67

100

333

190

133

100

333

Total - Mountain Ash

52

6500

9000

125

175

Mountain Mixed Species

Rileys Ridge

Ciancio

Robinsons Rd BW

Aire Settlement

Crowes

Mt. McKenzie Hole

Junction Hole

McKenzie Longridge

Egans

Delaney Tk

Websters Hill

Jacksons Tk

Jacksons Caleo

Sayers Tk

Wild Dog Sth

Kincaid Rd

Coopers No. 1

Henrys

Mud Rd

Gail Clearing

Cumberland Tk

Middle Spur

Thompsons

Noonday-Kaang

Mt. Sabine Rd

Coldwater Ck

West Branch

Riley Ridge W

Riley Ridge E

Holywater Tk

Morris Tk

Chapple Ck

Camp Ck

Leahy Ck

Delaney Quattro

Asplin Ck

Plantation Hill

Sunnyside Rd Nth

Curtis Clearing

Callahan Ck

Seymour Ck

Newcombe

12

17

29

5

10

18

20

40

20

34

25

17

6

18

14

40

30

10

35

18

11

18

45

22

30

28

19

36

30

34

28

22

26

42

44

25

2

27

23

34

9

21

3000

3000

500

500

350

1500

3000

2300

1000

2000

2000

1400

600

700

1100

2000

1600

1000

2500

1200

1000

1100

2800

1500

1200

3500

2000

8000

9000

3000

2200

1500

2000

6000

5000

2000

250

2500

1500

4000

500

2400

5000

3000

200

2000

1000

3000

5000

4500

3500

5000

7000

3000

1500

2000

1500

4000

3200

3000

6000

2400

1500

2500

5600

2800

2500

5000

3500

12000

13000

7000

3500

2400

3000

8000

10000

4000

300

4000

3000

6000

1000

4000

267

176

17

100

35

83

150

58

50

59

80

82

100

39

79

50

53

100

71

67

91

61

62

68

40

125

105

222

300

94

79

68

85

143

114

80

125

93

65

118

55

114

417

176

7

400

100

167

250

113

175

147

280

176

250

111

107

100

106

300

171

133

136

139

124

127

83

179

184

333

433

206

125

109

115

190

227

160

150

148

130

176

111

190

 

Area (Hectares)

Sawlog Yield (m3)

ResidualYield (m3)

Sawlog Yield per Hectare

Residual Yield per Hectare

Mountain Mixed Species

(continued)

No. 1 Spur Tk

Head Cold

 

 

31

28

 

 

1300

2800

 

 

2400

4500

 

 

42

100

 

 

77

161

Total - Mountain Mixed Species

1053

98900

177300

94

168

Foothill Mixed Species

Wangerip

Link Tk West

Charleys Ck Sth

Goodlog

Escarpment Rd

Old Wonga Cnr

Neck Tk West Ext

Apollo Bay Rd 3

Bone Tk

Kennedy Pipeline

Link Tk

Charleys Ck Nth

Neck Tk

No Name

Quarry Top

Apollo Bay Rd 2

Ferguson

White House

15

40

44

46

29

19

35

31

64

61

38

43

34

48

14

19

39

100

2000

1000

1350

900

300

500

1800

1750

1000

1800

1000

1500

1000

800

1400

1100

600

3150

4500

4000

3000

4000

1200

2000

5000

3500

4000

3500

3000

3000

3000

3000

2000

3000

2700

7000

133

25

31

20

10

26

51

56

16

30

26

35

29

17

100

58

15

32

300

100

68

87

41

105

143

113

63

57

79

70

88

63

143

158

69

70

Total - Foothill Mixed Species

719

22950

61400

32

85

Total - All Species

1824

128350

247700

70

136

 

 

 

 

 

Copyright (c) Otway Ranges Environment Network Inc