PERVERSE HABITS:
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Review Comments |
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Government of British Columbia | |
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June 9, 2000 BY FAX (202 7297610) Nigel Sizer Director - Forest Policy Mr. Sizer: As a general comment, you may want to be more circumspect in your uncritical use of source material regarding alleged subsidies in British Columbia. It appears you have based the subsidy estimates in your report on one report Accounting for the Forests: A Methodological Critique of Price Waterhouse’s Report, The Forest Industry in British Columbia 1997 by Gale, Gale and Green. It is our view that the Gale, Gale and Green estimates are seriously flawed, contain numerous errors and questionable assumptions. Even the study itself recognizes the limitation of its estimates noting that “the figures contained in these tables are preliminary and a full study is required of the various program components to obtain an accurate appraisal of the current situation”. I have attached a brief summary of some initial concerns with your use of the estimates provided by Gale, Gale and Green. With regard to the amount of the alleged subsidy that may be considered environmentally harmful or “perverse “, the draft report assumes that 50 percent of the total expenditure listed is perverse. This assumption appears to be put forward without any detailed examination of specific program expenditures or even a cursory examination of program objectives. Further, the report provides no justification for its estimate that 50 percent of program expenditures are perverse as opposed to 5 percent or 95 percent. This type of arbitrary analysis does not seem up to the normal standards of WRI. Finally, there is no consistent methodology or approach to defining subsidies in any of the jurisdictions examined in the report. For WRI to contribute to this complex, often-litigated, debate about subsidies in the forest sector, I would suggest that a more consistent methodology be developed and applied to all jurisdictions and all ownership classes. One jurisdiction should not receive undue criticism simply because of the availability of a poorly prepared paper that purports to estimate subsidies in that jurisdiction. Should WRI wish to seriously examine the issue of subsidies in the forest sector across a range of countries and land ownership classes the British Columbia government would be interested in. being involved in such a project. Yours truly, [Original Signature] CC: Larry Pedersen Chief Forester |
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Natural Resources Canada | |
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Policy, Planning and International Affairs Branch |
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Dear Dr. Janetos: Thank you for your electronic note of May 25, 2000, sent to Claude Léger of the Canadian Forest Service, requesting comments on the World Resources Institute draft report entitled Perverse Habits: The G8 and Subsidies That Harm Forests and Economies. I appreciate the opportunity provided by WRJ to the Canadian Forest Service to comments on this draft report. Selected CFS staff has analyzed and commented on the factual accuracy and science-based information of the report from the purview of the Canadian Forest Service. The WRI report is largely based on a single reference, namely, “Acounting for the Forests: A Methodological Critique of Price Waterhouse’s Report The Forest Industry in British Columbia 1997,” by Gale, Gale and Green (1999), hereinafter referred to as the Gale Report. The Gale Report itself has a number of problems in theory, methodology and statistics. A further limitation is that much of the Gale Report data is drawn from an unpublished draft of a 1997 study by Mascall and Campbell for BC Wild. Overall, the report lacks quantifiable data on forest-related government expenditures on a province-by-province basis and employs purely subjective assumptions to make up for the lack of information. The lack of diligence used in this study is alarming and the results will likely cause future problems since the only thing that will be remember or quoted is “50 percent of $3 - $9 billion should be considered perverse government subsidies”. The methods used in the report to develop the identified government subsidies are not sound. For example the main component of the subsidy estimate is sourced to stumpage and log export restrictions. The subsidy values are taken directly from the Gale Report, which is based on four earlier studies. The Gale Report adjusts the subsidy estimates to update them to 1997 by an arbitrary reduction of 50%. Methodologically, the author does not adequately develop the basis for the various assumptions employed in estimating the subsidies nor the adjustment factor. Furthermore, the comparability between countries and general conclusions are based on different assumptions, and subject matter and are misleading. Concerning your request about the suitability of the document to be published, the report is definitely not suitable for publication, in its present form. Beside the fact that the report is based on methodology and statistical data deficiencies, the report does not adhere to WRI objectives of authoritative information, transparency and non-partisan. Attached, are our comments explaining why the report is not suitable for publication. I hope these comments will assist your organization in producing a balanced report, which should provide factual, authoritative information and country omparable about Canada and other G8 countries on this subject matter. Sincerely, [Original signature] |
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