Forestry in Canada

Canada has some of the world’s richest forest resources, which have allowed the development of one of the world’s leading forestry industries. According to Natural Resources Canada, an agency of the Canadian federal government, Canada is a world leader in forestry-product-trading balances since reliable trade data first became available.

Forestry was a major contributor to the Canadian economy, with the forestry industry and support activities combining to account for more than 212,660 jobs in 2022. Forestry also employed 11,000 Indigenous people and generated approximately CAD$17.1 billion in export revenues. Key centers of forestry production include British Columbia, Ontario, and Quebec, all of which mainly supply softwood products for both domestic and export markets. Canada has cultivated an international reputation for its sustainable forest management practices, with industry observers characterizing the Canadian forestry industry as a global leader in ecological responsibility.

Brief History

Wood and forestry products have played a major role in Canada’s economy since the earliest stages of the country’s colonial history. Demand for wood and wood products in European consumer markets prompted the initial development of Canada’s commercial forestry industry, which attracted a significant amount of early investment from colonial powers including France and Great Britain. The accompanying economic opportunities attracted immigrants to what is now eastern Canada, where a thriving logging and forestry industry developed in the eighteenth century.

In addition to providing the raw materials for construction and urbanization, Canada’s forestry industry maintained a strong initial focus on supplying shipbuilding activities. Until the mid-nineteenth century, Canada maintained links to its colonial motherlands and to lucrative European export markets via a network of large wooden ships. Shipbuilding dominated Canada’s colonial logging and manufacturing economies for approximately two centuries.

Canada’s forestry industry began to diversify away from its core focus on shipbuilding in the early nineteenth century. By that time, Great Britain had assumed complete colonial control of Canada, and it had depleted its domestic forestry resources. After France cut off Britain’s access to imported lumber from the Baltic States of northeastern Europe, Britain began subsidizing North American wood producers, and Canada’s forestry industry entered a boom period. In 1805, Canada sent approximately 9,000 shipments of lumber totaling 5,500 tons to Britain; by 1846, those figures had soared to 750,000 shipments totaling 465,000 tons.

Pulp and paper also emerged as key Canadian forestry products in the early nineteenth century, when paper mills developed along the St. Lawrence River. The paper mill network expanded eastward to Atlantic Canada, facilitating the direct export of paper products to export markets in Britain and Europe. Canada went on to become one of the world’s leading producers of paper and board products, a position it has maintained into the twenty-first century.

During the first half of the twentieth century, the environmental conservation movement began to impact and transform Canada’s forestry industry. Many of Canada’s national and provincial parks were established during the period spanning 1900–1950, prompting significant changes in the sourcing and development of forestry resources. Multiple agencies dedicated to responsible forest management, including the Canadian Forestry Association, the Canadian Society of Forest Engineers, and several postsecondary schools of forestry, were established during this period.

By the mid-twentieth century, Canada’s evolving forestry industry began to modernize and adopt a set of practices known as extensive forestry. Extensive forestry maintains a dual focus on minimizing investment and operating costs while simultaneously using natural methods of forest regeneration. Canada conducted its first nationwide inventory of forestry resources in 1951, a development that coincided with the complete automation and mechanization of Canadian logging activities. Canada’s forestry industry began actively incorporating reforestation practices into its activities in the mid-1980s, with forestry operators and scientists increasingly participating in initiatives designed to salvage losses, limit wildfires, and inhibit pest infestations.

In 1982, a softwood lumber trade dispute began between Canada and the United States. The dispute became one of the most contentious and bitter disagreements in the history of bilateral Canada–US trade, with the United States claiming Canada unfairly subsidizes its softwood lumber industry, and Canada countering that its practices do not constitute a subsidy under US law. The two countries reached a nine-year agreement in 2006, but trade tensions have recurred since the agreement’s 2015 expiration. Canada has challenged US softwood lumber importation policies in both the United States and internationally under mechanisms provided by the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA), the predecessor to the United States-Mexico-Canada Agreement (USMCA). Despite attempts to resolve the situation, it continued into the 2020s. By 2021, the United States had doubled the tariffs it had imposed on Canadian softwood to dissuade American companies from purchasing the wood from Canada. This increased inflation in the United States. By 2024, the United States had again increased the tariffs, this time from about 8 percent to more than 14.5 percent.

Overview

Canada’s forestry industry has developed to include three main subsectors: forestry and logging, pulp and paper manufacturing, and solid wood product manufacturing. According to data published by the Canadian Forest Service, the solid wood product manufacturing subsector is the largest of the three subsectors, employing more than 91,630 people in 2021 and paying wages totaling CAD$19.8 billion. Pulp and paper product manufacturing ranked second among the three subsectors by supplying approximately 47,900 jobs and paying CAD$9.7 billion in wages in 2021. Meanwhile, forestry and logging employed about 25,620 people who earned a combined total of CAD$5.27 billion in wages in 2021. An additional 12,500 people worked in jobs directly supporting activities in one or more of the three main forestry subsectors.

The forestry and logging subsector mainly engages in field operations such as felling trees, harvesting their lumber, and transporting it to refinement and production facilities. It accounts for approximately 20 percent of all activity in the Canadian forestry industry.

Pulp and paper manufacturers produce a wide range of paper and board products, including newsprint, of which Canada remains one of the world’s leading producers. In 2021, Canada supplied 34 percent of all newsprint exports in the world. It ranked first in the world for newsprint exports, with Sweden ranking second. Canada’s pulp and paper manufacturing subsector generates approximately one-third of the forestry industry’s total economic value.

The solid wood product manufacturing subsector is further divided into primary and secondary industries. Primary industries refine the wood supplied by field operators and turn it into products for consumer markets, such as building panels and softwood lumber products. Secondary industries create finished wooden goods, such as furnishings and engineered wood products. These primary and secondary industries combine to account for more than half of the forestry industry’s contributions to Canada’s gross domestic product (GDP).

The value of Canada’s net forest product trade balance is the second-highest in the world as measured by financial value. Data published by Natural Resources Canada reported a net trade balance of CAD$31.9 billion in 2021. This was outpaced by the United States, which had a net trade balance of CAD$34.81 billion. However, Natural Resources Canada noted that Canada’s net trade balance over global competitors had consistently widened since 2009. However, Canada’s forestry industry also faced significant challenges arising from both domestic and international market dynamics.

Markets for forestry products are notorious for following cyclical “boom and bust” cycles, with demand following an unpredictable schedule of soaring and crashing as dictated by broader economic forces. A prolonged downturn began in the early twenty-first century but has been accelerating since at least 2011, with Canada’s overall output of wood pulp, printing and writing paper, and newsprint holding steady or increasing during most years up to 2021.

The industry experienced a temporary decline in 2019 and 2020 due to the global coronavirus (COVID-19) pandemic but increased to reach CAD$34.81 billion in nominal GDP in 2021. Notably, Canada’s wood product manufacturing industry had steadily grown over that timeframe to offset the losses caused by contracting pulp and paper markets.

Canada’s forestry industry has also responded to changing market conditions by innovating in other important ways. Canadian forestry products are now being used to create new and sustainable building materials with improved energy efficiency ratings along with emerging biofuels; biochemicals; and pharmaceutical, plastic, and personal care products that contain organic wood-derived ingredients. Specific examples include nanocrystalline cellulose and cellulosic fibrils, two novel engineered products increasingly used in modernized pulp and paper manufacturing.

Bibliography

Bourchier, R.J., C.R. Stanton, and Mark Kuhlberg. “Forestry.” The Canadian Encyclopedia, 2 Jun. 2015, www.thecanadianencyclopedia.ca/en/article/forestry. Accessed 23 Mar. 2023.

“Canada’s Forestry Sector: Rooted in Canada’s Economic History.” Export Development Canada, 31 May 2017, www.edc.ca/en/article/canadas-forestry-sector.html. Accessed 23 Mar. 2023.

“Canada’s Softwood Lumber Industry.” Natural Resources Canada, 1 Apr. 2022, natural-resources.canada.ca/our-natural-resources/forests/industry-and-trade/canadas-softwood-lumber-industry/19601. Accessed 23 Mar. 2023.

“Canadian Forest Sector History.” Natural Resources Canada, 19 Feb. 2014, cfs.nrcan.gc.ca/selective-cuttings/68. Accessed 23 Mar. 2023.

“How Does the Forest Sector Contribute to Canada’s Economy?” Natural Resources Canada, 2 Feb. 2023, natural-resources.canada.ca/our-natural-resources/forests/state-canadas-forests-report/forest-industry-contribute/16517. Accessed 23 Mar. 2023.

"How Do Forests Benefit Canada?" Natural Resources Canada, 1 May 2024, natural-resources.canada.ca/our-natural-resources/forests/state-canadas-forests-report/how-do-forests-benefit-canadians/16509. Accessed 14 Nov. 2024.

“Overview of Canada’s Forestry Industry.” Natural Resources Canada, 14 Apr. 2022, natural-resources.canada.ca/our-natural-resources/forests/industry-and-trade/overview-canadas-forest-industry/13311. Accessed 23 Mar. 2023.

“Statistical Data.” Canadian Forest Service, 9 Dec. 2022, cfs.nrcan.gc.ca/statsprofile/employment/ca. Accessed 23 Mar. 2023.

Watts, Jonathan. “Canada Accused of Putting Its Timber Trade Ahead of Global Environment.” The Guardian, 1 Dec. 2022, www.theguardian.com/environment/2022/dec/01/canada-accused-of-putting-its-timber-trade-ahead-of-global-environment. Accessed 23 Mar. 2023.