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Economic Freedom


Natural resource use


Forests are the subject of some of the most emotionally charged environmental controversies. The fear that we shall run out of trees dates back more than a century in the United States. In his address to Congress in 1905, President Theodore Roosevelt warned that "a timber famine is inevitable," and the New York Times ran headlines in 1908 proclaiming, "The End of the Lumber Supply" and "Supply of Wood Nears End--Much Wasted and There's No Substitute." Debate in Mexico surrounds the southern rain forests. The most diverse ecosystems on earth, rain forests are thought to contain many undiscovered medicines. Concern in Canada and the United Kingdom, as in m any countries, focuses upon forestry's impact on ecology and landsca pe.

Forests provide habitat, purify air, prevent run-off, and inhibit erosion by anchoring topsoil. Forests release water vapour into the air and play a critical role in the carbon cycle by absorbing CO2, storing the carbon, and releasing the oxygen. North America's diverse forest resources include over 130 species of trees and sustain a wide variety of plants and animals (Environment Canada 1991c: [10]4).

Canada and the United States play a significant role in world timber markets. In 1995, American and Canadian production provided over 50 percent of global wood pulp, over 25 percent of paper and paperboard, over 15 percent of wood-based panels, and almost 40 percent of other wood produc ts. 22 D espite the Asian financial crisis, the global demand for North American forest products is large and likely to remain so. The industry is a primary contributor to regional economies: one in 15 workers in Canada is employed directly or indirectly by the forestry sector (Environment Canada 1996c).

Despite this strong commercial reliance upon the forests, only a small portion of total forest resources is harvested each year in Canada and the United States. Environment Canada reports that of the country's 418 million hectares of forestland, 119 million hectares are accessible and actively managed for timber production. A mere 0.8 percent of managed forests are harvested per year, averaging 165 million cubic metres of harvested timber, with each cubic metre contributing $95 to the Gross Domestic Product of Canada (Environment Canada 1996c). In Canada, governments decide how much can be harvested based on the annual allowable cut (AAC), which is calculated by considering the quantity and quality of species, accessibility of the trees, growth rates, sensitivity of the site, and competing uses. The AAC calculation is not a measure of total new growth: it is a measure of growth available for commercial harvesting. The proportion of the AAC harvested was 66.1 percent in 1980; it climbed to 79.8 percent in 1985 and fell to 73.4 percent in 1993 (figure 46). Data collected by the Organisation for Economic Cooperation and Development (OECD) show that the United States consistently harvests less than the amount of annual new growth (figure 47). The United States harvested 56 percent of the annual new growth in 1980, 59 percent in 1985, and 60 percent in the early 1990s. Forests in the United Kingdom have been expanding since the introduction of the forest expansion program after the World War I. In 1970, there was 1.8 million hectares of land covered by trees, increasing to 2.4 million by 1995 (Department of the Environment, 1996). Part of this increase is due to the introduction of Broad-leaved Woodland Grant Scheme and its successor, the Woodland Grant Scheme, which provide incentives for private forestry. This success has led the government to set new targets for increasing forest cover in the United Kingdom. According to its 1995 Rural White Paper, the government wants English woodland to double over the next 50 years. The government regulates the forest industry through complex Forest Design plans but the amount of land under private ownership has also increased, from 45,000 hectares in 1988/89 to 640,000 in 1994/95 (UKDETR 1996: 73) In the United Kingdom, annual harvests are about 65 percent of growt h (Gillingham 1998; see figure 48).

In Mexico, annual growth also exceeds harvests. The latest Mexican data available indicate that harvests are roughly 17 percent of growth (figure 49), down from 23 percent in 1980. Mexico, however, has lost about 15 percent of its forest land since 1970. This is primarily due to increases in agriculture and cattle grazing (OECD 1998: 99).

Click Here to View Figure 46, Figure 47, Figure 48 and Figure 49

In all countries , many of the serious environmental debates surrounding forests and harvesting practices are local in nature; examples of such debates are those about the preservation of old-growth stands and the practice of clear-cutting. Old-growth forests are those stands that are over 140 years old, have over a specified number of trees, and have experienced minimal human disturbance. They have considerable commercial and environmental value. Today's commercial cutting cycle of 50 to 80 years means that once they are harvested, old-growth ecosystems will not be re-established. Second-growth forests, however, also provide commercial and environmental benefits.

Even forests that have been clear-cut and replanted support diverse wildlife populations and contain trees of various ages, sizes and species. The beautiful wilderness scenes in the popular movie Last of the Mohicans, for example, were filmed in a formerly clear-cut commercial forest, not a natural forest (Bast, Hill, and Rue 1994: 24).

Clear-cutting remains a popular method of harvesting. In Canada, almost 90 percent of trees logged are harvested by this means. There are two reasons for this. First, it is economically viable; second, clear-cutting simplifies reforestation. It allows easy preparation of the site for the re-establishment and tending of a new forest, and the open area provides the heat and sunlight needed for the new trees to grow. In addition, dead stumps support an extraordinary number of species, including fungi, spiders, beetles, and centipedes. Finally, leaves and branches contain plant nutrients and are often left as humus to replenish the soil. When clear-cutting is not performed properly, however, it can damage sensitive watersheds and the ecosystems of rivers. Overall it is important to bear in mind that the area harvested nationally is minimal in comparison to the annual extent of natural disturbances (Environment Canada 1996c).

Fresh water

Only 2.7 percent of the Earth's water is fresh water (Environment Canada 1991c). Sources of fresh water include snow, glaciers, and polar ice (77 percent); underground (22 percent); lakes and wetlands (0.35 percent); atmosphere (0.04 percent); and streams (0.001 percent) (White 1984: 252). Only about 0.01 percent of water sources are both fresh and accessible in lakes, rivers, soil, and atmosphere. When discussing the withdrawal (use) of water, it is important to remember that water is neither gained nor lost; it is always returned to the earth in one form or another.

Water is used to provide a source of power, for drinking, for irrigation, and for diluting waste. The cooling of power-generating plants uses the most freshwater resources in the United States and Canada, accounting for 38.6 percent and 59.7 percent respectively. In the United Kingdom, this process accounts for only 2.8 percent of use, and in Mexico, only 0.2 percent. Industry (other than electrical cooling) uses 7.9 percent of freshwater resources in Canada, 5.7 percent in the United States, 5.5 percent in Britain, and 3.4 percent in Mexico. The public uses 11.3 percent of freshwater in Canada, 11.4 percent in the United States, and 11.5 percent in Mexico. In the United Kingdom the public water supply accounts for 65.4 percent of water use. Irrigation accounts for 40.2 percent of freshwater use in the United States and 83.1 percent in Mexico due to agriculture and climate. In Canada and the United Kingdom, irrigation is only 7.1 percent and 1.6 percent of the total respectively (OECD 1997: 68-71).

North American water prices are relatively low. The cost per thousand litres is $0.40 in the United States and $0.35 in Canada. Prices can be up to three times higher in European nations. For example, the price per thousand litres is $0.65 in the United Kingdom, $0.77 in Sweden, $0.85 in France and $1.30 in Germany. It is interesting to note that, on average, bottled water costs about $497 per thousand litr es. 23 A s one would expect, lower prices tend to lead to higher levels of freshwater consumption and North Americans are the largest consumers of fresh water in the world. The average daily household use is about 420 litres in the United States and 360 litres in Canada. This is more than double the amount of water used daily in many European countries (Environment Canada 1991c: [3]8).

Total water use, according to data from the OECD, has decreased in the United States and the United Kingdom but increased in Canada and Mexico. Use decreased 9.5 percent in the United States between 1980 and 1990, and 30 percent in Britain between 1980 and 1995. Between 1980 and 1995, water use increased 20 percent in Canada and 32 percent in Mexico (figures 50-53) .

The United States has 2.5 trillion cubic metres of renewable freshwater resources and used 20.9 percent in 1980 and 18.9 percent in both 1985 and 1990 (figure 54). 24 Canada has about 2.8 trillion cubic metres of renewable freshwater resources and used 1.3 percent in 1980, 1.5 percent in 1985, and 1.6 percent in both 1990 and 1993. The United Kingdom has about 76 billion cubic metres and used 18.3 percent in 1980 and 6.8 percent in 1995 (OECD 1995). Of its 414 billion cubic metres, Mexico used 13.8 percent in 1980 and 14.5 percent in 1995 (OECD 1995).

Click Here to View Figure 50, Figure 51, Figure 52, Figure 53 and Figure 54

While this abundance contributes to lower prices, government subsidies also depress prices artificially. In some cases, municipalities charge a flat rate for water use and governments subsidize irrigation. In Canada, the provinces pay an average of 85 percent of the total cost of water use (Environment Canada 1996c). Subsidization policies eliminate the incentive for efficient use of water resources. Subsidies lead to inefficient agricultural use, less water recycling, and a greater need for waste-water treatment facilities. This places further pressure on water sources and increases the demand for new dam construction and water diversion projects. To eliminate the difference between the real cost and the actual price of water, Environment Canada, in its State of the Environment Report, recommends that "we should pay a fair price that will recover the full cost of water delivered to the tap, one that is based on actual quantity used" (Environment Canada 1996c).

Although people in North America and the United Kingdom use only a small portion of renewable freshwater resources, regional water shortages continue to be a problem. In parts of the United States where water is scarce, farmers have responded by changing irrigation technology and cropping practices, and by using recycled municipal waste water for agricultural purposes (Avery 1995: 68-9).

Energy resources

Canada and the United States are among the world's most intensive users of energy. Environment Canada lists several reasons why Canada uses so much energy: the cold climate, an energy-intensive industrial base, a large land area, and a widely dispersed population. This section shows, however, that, despite the obstacles to energy efficiency that confront Canada, the United States, Mexico, and Britain, energy resources are not being depleted and that today the energy being used per capita is the same as, or less than, that used in previous years.

Figure 55 show s that total energy consumption is rising in North America and the United Kingdom. A better measure of energy use, however, is per-capita consumption. While per-capita energy use rose steadily before the end of the 1970s, it has since leveled off. For example, in 1995 Canada and the United States both used less energy per capita than they did in 1979. The reduction in the use of energy per capita reflects improvements in energy efficiency . 25 I n Mexico and the United Kingdom, energy use per capita has remained roughly the same between 1980 and 19 95 (figure 56).

Click Here to view Figure 55

If the world were close to running out of energy, as some believe, one would expect to see a decline in the production of energy and an increase in prices in recent years. Instead, the opposite is true. In Canada, consumption as a percentage of production decreased from 76 percent in 1980 to 50.8 percent in 1995. The United Kingdom has seen a similar decline from 69.2 percent in 1980 to 61.1 percent in 1995. Although total consumption in the United States and Mexico increased between 1980 and 1995, consumption as a percentage of production has been fairly stable (about 85 percent and 47.5 percent respectively). All four countries are producing more energy than they are consuming. Figure 57 shows th at Canada, the United States, Mexico, and the United Kingdom are net exporters of energy.

Click Here to View Figure 56 and Figure 57

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Last Modified: Wednesday, October 20, 1999.