349MooneyAvenue ThunderBay,Ontario Canada P7B5L5 Bus:

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1 349MooneyAvenue ThunderBay,Ontario Canada P7B5L5 Bus: Queen sprinterforontario,2012

2 TABLE OF CONTENTS 1.0 Executive Summary... iii 2.0 Table of Recommendations Introduction Audit Process Management Unit Description Current Issues Summary of Consultation and Input to Audit Audit Findings Commitment Public Consultation and Aboriginal Involvement Forest Management Planning... 6 Forest Management Plan Plan Assessment and Implementation... 9 Plan Assessment... 9 Areas of Concern... 9 Silviculture Access System Support Monitoring Compliance Silviculture Annual Reports Achievement of Management Objectives and Sustainability Achievement of Management Objectives Forest Sustainability Contractual Obligations Conclusions and Licence Extension Recommendation KBM Forestry Consultants Inc. i

3 APPENDICES Appendix 1 Recommendations Appendix 2 Management Objectives Tables Appendix 3 Compliance with Contractual Obligations Appendix 4 Audit Process Appendix 5 List of Acronyms Appendix 6 Audit Team Members and Qualifications LIST OF TABLES Table 1. Table of Recommendations... 1 Table 2. Examples of Field Level Objectives from the French-Severn FMP Table 3. Summary and Analysis of Silviculture Success Table 4. Summary of the Status of the 2004 FMP Objectives Table 5. Compliance with Contractual Obligations Table 6. Summary of Progress on Actions to Address the 2006 IFA Recommendations Table 7. IFA Procedures Selected by the Audit Team Table 8. Audit Sampling Intensity for the French-Severn Forest LIST OF FIGURES Figure 1. Location of the French-Severn Forest... 3 Figure 2. Forest Composition of Crown Portion of Forest by Forest Unit... 4 Figure 3. Stop 10 on the Ranger Bay Road, Blair Township Figure 4. Graph of Silvicultural Expenditures and Account Balance over the Audit Period KBM Forestry Consultants Inc. ii

4 EXECUTIVE SUMMARY All Crown forests in Ontario are required to be audited at least every five years; the requirement for independent audits arising from MNR's Class Environmental Assessment Approval for Forest Management on Crown Lands in Ontario (2003). Regulation 160/04 of the Crown Forest Sustainability Act (S.O. 1994, c. 25) (CFSA) sets out the specific requirements for conducting the audits. This report documents the results of the Independent Forest Audit (IFA) of the French-Severn Forest (the Forest) conducted by KBM Forestry Consultants Inc. (KBM) covering the five-year period April 1, 2006 to March 31, Two forest management plans are included in the scope of this audit. Specifically, implementation of the last three years of the FMP, and planning and approval of the FMP as well as its implementation for the first two year period of its term. During the audit term the Forest was managed under a Sustainable Forest Licence held by Westwind Forest Stewardship Inc. (Westwind). The principal auditees were Westwind and MNR Parry Sound District. Based on the audit, seven recommendations were made. Recommendations arise from the audit team s observations of material non-conformances, or may be developed to address situations in which the audit team identifies a significant lack of effectiveness in forest management activities. Two recommendations centre on consultation with Aboriginal communities; one dealing with the need for improvements in MNR s record-keeping practices and the other with opportunities for Aboriginal communities to benefit through forest management planning. Two recommendations address deficiencies in the approach to preparation of exceptions and to direction provided in implementation manuals. Three recommendations focus on issues associated with the renewal program and one recommendation deals with ensuring that the content requirements of the Year 10 Annual Report are met. All audit recommendations must be addressed through audit action plans. Regenerating white pine on competition-prone sites is proving to be difficult and expensive as regeneration practices are relying more on artificial methods, rather than natural seeding. In addition, the ability to evaluate regeneration status of white pine harvest blocks is being complicated by the prolonged period between initial harvest and final assessment of free-to grow. As a result, the audit team was unable to definitively assess the success of the white pine renewal program. The minimum balance within the Forest Renewal Trust Account fell below requirements during two years of the audit term, as Westwind continued spending on renewal when renewal revenues had declined due to decreasing harvest levels. The minimum balance was restored; however, this was accomplished by significantly curtailing spending on silviculture during that time. This approach is not a long term solution. A successful renewal program requires stable funding, although this is presently difficult due to the ongoing financial challenges faced by the forest industry, low harvest levels and the funding formula for renewal. MNR s current tenure and pricing review may assist in addressing some of these issues. The audit team concludes that management of the French-Severn Forest was generally in compliance with the legislation, regulations and policies that were in effect during the term covered by the audit, and that the Forest was managed in compliance with the terms and conditions of the Sustainable Forest Licence held by Westwind Forest Management Inc. Forest sustainability is being achieved, as assessed through the Independent Forest Audit Process and Protocol. The audit team recommends that the Minister extend the term of Sustainable Forest Licence for a further five years. Rod Seabrook EP(EMSLA) Lead auditor on behalf of the audit team KBM Forestry Consultants Inc. iii

5 TABLE OF RECOMMENDATIONS Table 1. Table of Recommendations Recommendation on Licence Extension The audit team concludes that management of the French-Severn Forest was generally in compliance with the legislation, regulations and policies that were in effect during the term covered by the audit, and the Forest was managed in compliance with the terms and conditions of the Sustainable Forest Licence held by Westwind Forest Management Inc. Forest sustainability is being achieved, as assessed through the Independent Forest Audit Process and Protocol. The audit team recommends that the Minister extend the term of Sustainable Forest Licence for a further five years. Recommendations Directed to SFL Holder/MNR District 1. MNR should make improvements in record keeping procedures for Aboriginal consultation to ensure that records are complete. 2. MNR, in collaboration with Westwind and interested Aboriginal communities, should undertake a study to identify barriers and opportunities to Aboriginal community participation in the economic benefits provided through forest management planning. Such a study should take into consideration a community s willingness and capacity to participate and should identify innovative ways to participate. 3. MNR and Westwind should ensure that planning of exceptions to guide direction meet all FMPM requirements. 5. Westwind should report the results of the stocking assessments it carries out in the white pine forest units in its annual reports beginning with the 2011/2012 AR. 6. Westwind should complete its review of an appropriate regeneration assessment method for the white pine forest units and make any changes in time for the 2012 field season. 7. Westwind should maintain a ledger of areas on which regeneration assessment is due that enables comparison with its assessment work and its assessment obligations. This should be in place in time for the next IFA. 8. Westwind should ensure that the content requirements of future Year 10 Annual Reports are met. Recommendations Directed to Corporate or Regional MNR 4. Corporate MNR should review the process that permits exceptions to guide direction to ensure that forest management plans set out clear objectives in addition to a rationale, that exceptions monitoring programs are rigorous and that the results of implementing exceptions contribute meaningfully to the knowledge base of forestry. KBM Forestry Consultants Inc. 1

6 INTRODUCTION 3.1 Audit Process Independent Forest Audits (IFAs) are a requirement of the Crown Forest Sustainability Act (S.O. 1994, c. 25) (CFSA); every forest management unit in Ontario must be audited by an independent audit team at least once every five years. KBM Forestry Consultants conducted an independent forest audit on the French-Severn Forest for the five-year period April 1, 2006 to March 31, The audit assessed implementation of the Forest Management Plan (FMP) for the period April 1, 2006 to March 31, 2009 as well as the planning and approval of the FMP and the first two years of its implementation (i.e. April 1, 2009 to March 31, 2011). The on-site portion of the audit occurred from September inclusive, with document examination and interviews taking place prior to, during, and subsequent to this period. IFAs are governed by eight guiding principles as described in the Independent Forest Audit Process and Protocol. Recommendations arise from audit team observations of material non-conformances, or may be developed to address situations in which the audit team identifies a significant lack of effectiveness in forest management activities. All recommendations made in this report are correspondingly described in full in Appendix 1 and summarized above in Section 2. Reviews of the achievement of objectives and contractual obligations are summarized in Appendix 2 and 3 respectively. More detailed information on the audit process is provided in Appendix 4. A list of acronyms is presented in Appendix 5. Audit team members and their qualifications are presented in Appendix Management Unit Description The following description of the Forest is based primarily on material included in the FMP for the French-Severn Forest. The French-Severn Forest is located entirely within the Parry Sound District, in the southern Region of the MNR. The Forest extends from the eastern shore of Georgian Bay eastward to the boundary of Algonquin Park and the Bancroft-Minden Forest (Figure 1). The Forest is considered to be part of the Great Lakes-St. Lawrence Forest, which is characterized by deciduous species such as sugar maple, yellow birch, beech and coniferous species such as eastern hemlock, eastern white pine, and red pine. Figure 2 illustrates the composition of the Crown portion of the Forest by forest unit. Nearly 50 per cent of the Forest is comprised of the hardwood selection forest unit and the hardwood uniform shelterwood forest unit. The three white pine forest units account for approximately 20 per cent. The major communities located in the Forest are Parry Sound, Huntsville and Bracebridge. The Forest is bisected on a north-south line by Highway 11, and along the Georgian Bay coast, Highway 400 runs north to Parry Sound and continues as Highway 69 to the French River and northward. The Forest is easily accessed by a variety of municipal, provincial and private roads as well as hiking, snowmobile and all-terrain vehicle trails. The area within the French-Severn Forest boundary exceeds 1.25 million ha. Westwind manages approximately 1/3 of this area. The ownership of the management unit is 55% Provincial Crown, 2% Federal and 43% private. KBM Forestry Consultants Inc. 2

7 Figure 1. Location of the French-Severn Forest Significant changes to the administrative and licensing arrangements for the French-Severn Forest occurred around the time of development of the FMP. Previous to that there were two FMPs developed in the Parry Sound District; one each for the former Bracebridge and Georgian Bay Crown Management Units. Around the time of the FMP, these former management units were converted to a single sustainable forest licence area. There was no existing single forestry company operating within the area boundaries that had the capability or was positioned to assume compliance and management planning responsibilities. Westwind Forest Stewardship Inc. was formed to deliver management planning, compliance and silviculture on the Forest. The FMP was developed by MNR in cooperation with the then newly formed Westwind. The FMP represents the first FMP developed by Westwind. Westwind is a not-for-profit, community-based forest management company that does not harvest timber but holds the Sustainable Forest Licence (SFL#542411) for the Forest. It is described as communitybased and is governed by an eight member Board of Directors, three of whom represent forestry companies. One Board position available for First Nations remains vacant. The SFL which Westwind holds is for a twenty-year period and includes all tree species on 5,455 square kilometres of Crown land, 3,453 square kilometres of which is considered productive forest. KBM Forestry Consultants Inc. 3

8 Figure 2. Forest Composition of Crown Portion of Forest by Forest Unit (Source: French- Severn Forest FMP) OR1 3% HE1 2% MWUS 1% PWUS2 6% HDSEL 22% PWUS 8% HDUS 24% INT 15% PJ1 4% SF1 3% PWST 7% LWMW 2% MWCC 3% INT PJ1 SF1 LWMW MWCC PWST HDUS PWUS PWUS2 MWUS HE1 OR1 HDSEL 1. HDSEL: tolerant hardwoods selection (mostly on east side of unit) 2. HDUS: tolerant hardwood shelterwood; 3. PWUS: 3-cut white pine shelterwood; 4. PWUS2: 2-cut white pine shelterwood; 5. PWST: white/red pine seed tree clearcut; 6. OR1: red oak shelterwood; 7. HE1: 3-cut hemlock shelterwood; 8. MWUS: mixedwood spruce shelterwood; 9. LWMW: lowland mixedwood clearcut; 10. MWCC: mixedwood clearcut; 11. SF1: spruce-fir mixedwood; 12. PJ1: jack pine clearcut 13. INT: intolerant hardwood clearcut. 3.3 Current Issues The IFAPP requires a review of High Priority Aspects (HPAs) of the auditees systems or activities. These are areas of potential focus during the audit related to key issues or management challenges arising during the audit term. Three HPAs were included in the Audit Plan, as follows: 1. Lower than expected yields/stocking of tolerant hardwood selection stands: During the term of the 2009 FMP, Westwind stated that they were encountering previously managed maple stands that had stocking levels (basal area) that were lower than what was expected in the FMP. The yields in the FMP reflect growth and yield information supplied by MNR growth and yield studies. According to Westwind, the lower realized levels are having an effect on operations, as well as renewal revenues. 2. State of Forest Renewal Trust Account (FRT): During two years of the audit term the FRT fell considerably below the minimum balance requirement of approximately $1.5 million. Westwind submitted a two year recovery plan to MNR that was supported by the Region and District. Westwind was successful in bringing the FRT back above minimum balance by March 31, 2009 according to the plan. However, this was at a cost of having little silvicultural treatments outside of tree marking and stand improvement, with particular concern expressed by Westwind KBM Forestry Consultants Inc. 4

9 regarding the white/red pine component of the Forest managed under the shelterwood silviculture system. Westwind also expressed concerns related to the impact of the new Stand and Site guide requirements for Species at Risk, in particular Blanding s Turtle, and how these new rules may affect the ability to manage portions of the Forest. The full extent of the potential impacts of these new guide requirements on forestry operations and the ability to manipulate forest cover and meet forest management objectives has not yet been determined, as the requirements are only now being implemented. 3.4 Summary of Consultation and Input to Audit KBM used several different strategies for encouraging input to the audit process. Letters, including a one-page survey, were mailed to numerous stakeholders advising of the audit. The survey was also available to the general public on the KBM website ( A summary of the methods and input is provided in Appendix AUDIT FINDINGS 4.1 Commitment The IFAPP allows that if the management unit being audited is currently certified according to CSA, FSC or SFI standards, all commitment procedures, for either the company or the MNR, are not required to be completed unless an issue arises in relation to the company or MNR that causes the auditor to question whether this criteria is in fact being met. No such issues arose during the audit. 4.2 Public Consultation and Aboriginal Involvement The Local Citizens Committee (LCC) Terms of Reference (TOR) met the requirements of the 2004 FMPM and incorporated suggestions for improvement from the previous IFA. The TOR included suggested numbers of meetings that should take place during both FMP writing and non-fmp writing stages. The First Nation position, previously vacant on the LCC, has been filled. There were a number of members on the LCC who had been active for two plans prior to the 2009 French-Severn FMP. Such experience is valuable; however, this lead to a lack of interest (or complacency) surrounding forest management activities on the Committee. MNR recognized seven Aboriginal Communities in or adjacent to the French-Severn Forest management area with which they had a legal duty to consult; Dokis First Nation, Henvey Inlet First Nation, Magnetawan First Nation, Shawanaga First Nation, Wasauksing First Nation, Wahta Mohawks and Moose Deer Point First Nation. The Algonquins of Ontario have a portion of their land claim area within the French-Severn Forest and thus MNR acknowledges that they have an interest in the Forest but do not consider them in or adjacent to the Forest. Each Aboriginal community that participated in an interview reported that they had an excellent working relationship with MNR-Parry Sound Office and the Resource Liaison Officer in particular. However, likely due to the high turnover in staff within both the Aboriginal communities and MNR, all communities were unaware of the various reports that were to be completed in a collaborative way. A common response from all Aboriginal communities interviewed was that although MNR may be following all the required regulations, the regulations themselves are inadequate, treating Aboriginal communities like a stakeholder and not acknowledging their occupation and special interest in the territory. Furthermore, although it is recognized that the forestry economy is depressed and has not recovered since the recession, the Aboriginal communities felt that they were not provided with adequate opportunities to participate in the benefits of forest management planning. A recurring theme with all communities was that the lack of financial and human resources and human resource capacity limits their ability to fully engage in the consultation process and take advantage of potential benefits. KBM Forestry Consultants Inc. 5

10 As per the 2004 FMPM requirements, MNR sent letters to the seven Aboriginal communities six months prior to the commencement of the formal public consultation process, inviting them to participate in the preparation of the FMP and to develop a specialized consultation approach. None of the communities have developed a specialized consultation approach at this time. Positions on the planning committee were offered to all seven communities; however, only representatives from the communities of Magnetawan and Shawanaga elected to participate on the committee. A representative from Magnetawan also had some involvement in the LCC. Although the Aboriginal communities interviewed reported satisfactory communications with MNR, review of the record provided to the audit team indicated that there were some required consultation letters and public notices missing. This is likely the result of poor record keeping rather than a failure to meet the requirements. Building relationships with Aboriginal communities appears to be a priority of MNR; the audit team can only assume that the letters were completed and sent but the high turn-over of MNR staff may have resulted in misplaced correspondence. Improvements in record keeping will ensure that the record is complete even when there is staff turnover. Recommendation 1: MNR should make improvements in record keeping procedures for Aboriginal consultation to ensure that records are complete. MNR and Westwind reported on a number of steps taken to improve opportunities for Aboriginal communities to participate in the benefits provided through forest management planning. Despite these reported efforts, Aboriginal community leaders interviewed felt that they had not enjoyed economic benefits related to forest management. EA Condition 34 requires MNR to negotiate with Aboriginal peoples for their more equal participation in the benefits of forest management planning; however, there appears to be a gap between economic opportunities that Aboriginal communities are able to take advantage of and those that have been offered. Given this apparent gap, it is recommended that a joint study be conducted to determine ways in which Aboriginal communities in or adjacent to the French- Severn Forest can better benefit. The study should assist in focusing discussions between MNR, Westwind and the communities regarding EA Condition 34. Recommendation 2: MNR, in collaboration with Westwind and interested Aboriginal communities, should undertake a study to identify barriers and opportunities to Aboriginal community participation in the economic benefits provided through forest management planning. Such a study should take into consideration a community s willingness and capacity to participate and should identify innovative ways to participate. Métis communities have asserted Aboriginal rights in the French-Severn Forest. There are Métis community councils with territory overlapping the boundaries of the management unit. Also, the Métis Nation of Ontario, an organization created to represent Métis people and communities in Ontario that are a part of the Métis Nation, has developed a governance structure and consultation protocols for the Georgina Bay Traditional Territory, which overlaps with the management unit. Pursuant to these protocols, the Métis Nation of Ontario (MNO) wishes to be consulted based on the organization of their regional rights-bearing community. In keeping with the direction provided in the FMPM regarding the involvement of Aboriginal communities in or adjacent to the management unit whose traditional use may be affected by forest management planning, it is suggested that MNR consult within the Métis Community Councils and MNO to determine the most appropriate way to engage the Métis. 4.3 Forest Management Planning Forest Management Plan Planning Team The established FMP planning team and terms of reference was in compliance with requirements of the 2004 FMPM. Included in the FMP planning team TOR was a detailed risk list and risk matrix which outlined the likelihood of particular forest management issues delaying the planning schedule. Survey KBM Forestry Consultants Inc. 6

11 results, interviews with MNR staff and members of the LCC show that the planning team had sufficient representation of interests, skills and resources in developing the forest management plan FMP Development and Content The development of the Forest Management Plan met the requirements of the 2004 FMPM. The document is thorough and well written, with very few (91) required alterations. The list of required alterations should be updated to explain how the alterations were implemented in the development of the next plan. The foundation of any forest management plan is the forest resources inventory (FRI). Ontario s forest managers rely upon these data and computer simulation (e.g. SFMM) as part of a decision support system in setting objectives and determining forest sustainability. A systemic problem is that Ontario s standard FRI and most of the decision support systems are designed for even-aged forests common in Northern Ontario. The standard tools are not particularly well suited for the uneven aged forests in Southern Ontario. This underlies the problems identified in previous audits over the adequacy of the FRI and the determination of allowable harvest areas in excess of actual utilization. The gap between allowable harvest area and utilization was seen as a significant problem during the previous audit. The auditors recommended that this gap be shown as a surplus but the forest managers disagreed. By calculating a relatively high allowable harvest area, operators are given more choices to select feasible operating areas, thus hedging against the uncertainty associated with the FRI and market conditions. There is always the risk that such an approach could lead to high grading, leaving even more difficult conditions for future generations, but there is no evidence that this has occurred in the documentation or in the field; the stands that had been selected for harvest do not appear to have exceptionally high values relative to the average condition of the Forest. In fact, some areas will benefit from being by-passed in this term, allowing the stand to gain volume and value. A declared or undeclared surplus of area and volume (i.e. the gap) could give the impression that economic opportunities are foregone. However, the decision support and reporting systems mandated by MNR through the FMPM do not easily differentiate between an available harvest area and an economically feasible harvest area. Failing to meet the forecasted rates of harvest means that socio-economic objectives and forest composition/structure objectives may appear to be compromised. The achievement of socio-economic objectives is largely driven by forces beyond the control of forest managers (e.g. the collapse of housing markets). The lower than forecasted harvest rates will affect the rate at which the forest composition and structure objectives are realized, but does not necessarily lead to undesirable outcomes in the long run. The planning team responded to this problem and some of the previous IFA recommendations (see also Appendix 3) by doing additional analyses and sensitivity tests. The plan author made an extra effort to thoroughly explain the analysis, trends and implications of some of these systemic problems. These commendable efforts led to reasonable outcomes (i.e. allowable harvest area) and strategies given the tools at hand. Ontario is developing an enhanced forest inventory (efri) that features high resolution multi-spectral digital aerial photography. This is a significant advancement from the standard panchromatic black and white aerial photography associated with the traditional FRI. In addition, the efri classification recognizes both even-aged and uneven-aged stand conditions. The imagery is already available to the SFL-holder, although it requires investments in new computers and software. The complete efri will be available by 2014, well in advance of planning for the FMP. These new data should lead to improved planning and operations. MNR should review its decision support system requirements to take advantage of the new efri and the unique challenges of Southern Ontario forest conditions. KBM Forestry Consultants Inc. 7

12 Operational Planning MNR updated values information during the planning process. Approximately $71,000 was budgeted for values collection in the two years (2007 & 2008) as the FMP was being prepared. The principal method of values updating was through aerial moose aquatic feeding area (MAFA) surveys, with the focus being on areas of proposed operations. New stick nests observed during the MAFA survey were added and nests no longer standing were deleted. MNR has run a stick nest survey project for several years in which stick nests identified during winter tree marking are verified by an on-the-ground surveyor during the snow free season. Surveys of lakes to determine the presence of self-sustaining brook trout populations were also conducted, as were stream surveys, once again focused on areas of proposed operations. Screening was also done for species at risk. Approximately 50% of the proposed allocation was considered to have a medium to high likelihood for the presence of species at risk and 20% was considered high for eastern massasauga rattlesnake, Blanding s turtle and whip-poor-will. Winter deer habitat mapping and deer browse surveys were also conducted. Values information was provided to MNR s Natural Resource Values Information staff in Parry Sound for entry into the NRVIS database. Area of concern planning was conducted and prescriptions were prepared to address protection of a range of forest values. Prescriptions were typically based on direction provided in associated MNR management guides. Resource Stewardship Agreements were signed with five registered resource-based tourist operators and three AOC prescriptions were prepared. One exception to guide direction was developed for MAFAs. Departure from guide direction is permitted, provided a rationale is given and a monitoring program developed and implemented. The audit team found that no rationale for the exception was provided and the monitoring program was not adequately explained. The audit team does not take issue with forest managers challenging guide direction provided that exceptions meet the requirements of the FMPM. In addition, the audit team believes that requiring clearly stated objectives as part of the documentation for exceptions, in addition to the requirement for a rationale and monitoring program, should assist in understanding what the intent of the exception was and provide a measure against which to evaluate the success or failure of implementing the exception (Appendix 1). Recommendation 3: MNR and Westwind should ensure that planning of exceptions to guide direction meet all FMPM requirements. Recommendation 4: Corporate MNR should review the process that permits exceptions to guide direction to ensure that forest management plans set out clear objectives in addition to a rationale, that exceptions monitoring programs are rigorous and that the results of implementing exceptions contribute meaningfully to the knowledge base of forestry. Several species at risk are discussed in the French-Severn FMP; specifically: eastern fox snake, eastern hog nosed snake, Massasauga rattlesnake, milksnake, ribbon snake, Blanding s turtle, map turtle and spotted turtle. AOC prescriptions were documented for these species. Timing restrictions for any work being conducted in the presence of these species was implemented. Confirmed or suspected habitat used for gestation, oviposition or hibernaculum for any of these species was also protected and reserves were set. No roads were permitted in the reserves unless no other feasible options existed and approval from the MNR District Manager was obtained. The French-Severn Forest FMP met the requirements of the Endangered Species Act and the Fish and Wildlife Conservation Act. The French-Severn Forest is well accessed and no new primary roads were planned. Proposals for three new branch roads followed the planning process. Harvest area selection criteria were well documented and designed to help address the challenges of low harvest utilization on the Forest. There was a significant amount of age class substitution relative to other forest management units, but given the problems described above with the current FRI and decision support systems in use, the various aspects of operational planning appear to be well executed. KBM Forestry Consultants Inc. 8

13 Annual Work Schedules Annual Work Schedules (AWSs) were developed in a manner consistent with the operational planning elements of both the and FMPs. MNR addressed the concerns related to one of the High Priority Aspects identified in 3.3 (variable harvest rates over the past two decades) by working hard on all aspects of operational planning. Forest Operations Prescriptions (FOPs) were prepared for each stand and were consistent with the FMP. Interviews and field observations revealed that prescriptions were made by a registered professional forester. These prescriptions were consistent with the FMP objectives and appropriate for the site conditions. 4.4 Plan Assessment and Implementation Plan Assessment The conditions observed by the audit team in the field were consistent with descriptions of current forest conditions in the plan. Operations were also found to be consistent with the strategies outlined in the plan. Areas of Concern A sample of AOCs was viewed in the field specifically warm water fisheries, cold water fisheries, deer wintering habitat, an osprey nest, hawk nests, and heronries. All prescriptions were appropriately marked and implemented as required and there was no evidence of trespass into the AOCs. Harvest Harvest operations were consistent with the FMP, legislation and applicable guidelines. Harvest boundaries were properly laid out and respected by the operators. Tree marking guidelines were applied on most sites and were effective at ensuring that the strategies were implemented and operations followed the plan. Harvest operations were also completed with little disturbance to the site. Extra care was exercised on sensitive sites near unmapped springs and vernal pools. On several skid trails in steep terrain berms were built across the trail to reduce erosion. There was very little damage to residual trees. Some rub trees along skid trails could be removed in the final stages of the harvest to further improve the appearance of the stand and to help maintain the health of the residual trees. Utilization was excellent given the terrain, forest conditions and market challenges. All of these observations are a result of the high skill levels and experience of the operators. According to the SFL representatives, many operators are certified tree markers. The most common silvicultural system was the selection system in tolerant hardwoods followed by shelterwood in hardwoods and white pine forest types. There are very few clearcuts on the Forest. Tree markers identify group selection openings in a manner consistent with plan objectives and these are cut to encourage regeneration of black cherry and other mid-tolerant hardwoods. The locations of group selection openings were mapped using a GPS to facilitate monitoring. One site dominated by white pine was strip cut, site prepared by ground spraying and planted with white pine and spruce. The quality of this reforestation project was poor; however, this was the only exception to an otherwise highly effective system of management and operational control. The low performance on this project was in part result of rushing the job under Forestry Future Trust stimulus funding for a beleaguered forest renewal sector in The Forestry Futures Trust Committee might consider evidence of planting and tending quality assurance programs before releasing funds for these types of projects. Should this project area not meet FTG requirements, the SFL holder will be responsible for retreating the area. KBM Forestry Consultants Inc. 9

14 Silviculture The French-Severn Forest is located in the Great Lakes St. Lawrence Forest Region, where partial cutting systems are the norm and where the silvicultural treatment is often effected by the harvest operation. It is difficult to discuss the silviculture without discussing the harvest, and vice versa. There were no silvicultural compliance issues encountered in the field. A FOP was prepared for all of the silvicultural treatments except the salvage of blowdown. A tree marking audit was carried out at each location where tree marking was done. In every case, the locations corresponded with the AWS and the Forest Operations Information Program confirmed that operations were conducted in accordance with the tree marking and the FOP. Logging damage appeared to be well within damage standards in every case. It was obvious that Westwind staff and the overlapping licensees workers are competent and care about the Forest in which they work. Both Westwind s staff and its overlapping licensees loggers should be commended for their high standard of care and commitment. Two silvicultural issues emerged during the audit, neither of which is unique to the French-Severn Forest. The first is the large area of tolerant hardwood HDSEL harvest allocations that were found to be not ready or not suitable for selection management and that were transferred to the HDUS forest unit for shelterwood removal cutting instead. This issue was being addressed by a collaborative study between Westwind, Tembec and MNR (2009/2010 Tolerant Hardwood SEM Project, Southern Science and Information Unit). Now at the draft stage, the report is expected to confirm that many tolerant hardwood stands managed under the selection system in the past are no longer suitable for the same treatment because of low stand stocking and/or poor tree quality. Of those that are suitable, most will not be ready for cutting at the end of their expected 20-year cutting cycle and an additional seven years would be needed, on average, to reach their ideal pre-harvest basal area. The draft report discussed the possible causes of this phenomenon but did not arrive at a final conclusion. It stated that an overestimate of growth and yield and top dieback were probably not the cause, but that the past application of selection cutting on unsuitable sites and logging damage might be at fault. It suggested a range of corrective actions, from not cutting these allocations now and extending the cutting cycle, to allowing the cut to proceed and accepting a lesser yield. The audit team felt that both strategies would work silviculturally but that both would create issues of wood supply and/or operability for the overlapping licensees who hold these allocations. However, the audit team is confident that Westwind and MNR are on the right track and that no recommendations are needed on this issue. Slower than expected growth rates are not a new problem in tolerant hardwoods, nor are they unique to the French-Severn Forest. A study on the adjacent Minden Crown management unit identified the same problem in 1990, attributed it to hardwood decline and offered an extended cutting cycle as the solution. Today, most FMPs in the Region have extended their cutting cycles to deal with this problem. In their allowable cut calculations, the Bancroft-Minden Forest and Ottawa Valley Forest FMPs both use a cutting cycle of 40 years in Phase 1. The Mazinaw-Lanark Forest and the Algonquin Park Forest Phase 1 cutting cycles are 30 years and 25 years respectively. This suggests a range of growth rates or cutting regimes across the Region, which really isn t the case. All of the Southern Region SFLs use the silvicultural guides to determine cutting regime and most of them use 25 years as the cutting cycle in future FMP terms. They are simply extending the normal phase by one cutting cycle to give their past selection cuts more recovery time. White pine regeneration is the second issue, which is not new to the French-Severn Forest. Problems with white pine regeneration were identified as a concern in the 1999, 2004 and 2009 FMPs and in the 2009 Year 10 AR. This was confirmed by the white pine FTG assessments carried out by Westwind during the audit period, in which fewer than 60% met the FTG standard. Competition and the difficulty KBM Forestry Consultants Inc. 10

15 of controlling competition have been identified repeatedly as the underlying problems on all but the shallowest of sites. The crux of the question is whether the silvicultural activities carried out in the white pine forest units will eventually allow cutovers to meet the FTG standards. The audit team found no default on the part of the licensee with respect to its silvicultural obligations but, still, the audit team was unable to identify a definitive solution. There are three reasons for this: o o There has been significant change in pine silviculture in recent years. The current FMP no longer relies on natural regeneration after shelterwood cutting and focuses more on artificial regeneration. FTG assessments in some situations are now made after the final removal cut and any post-removal follow-up treatment. Most final removals won t be made until Phase 2 of the FMP, which means little of the current practice has been assessed. Most of the failures reported in the past occurred in areas assessed after the seeding cut and before the first removal cut. The current SGRs call for these areas to receive further treatment, such as chemical tending/site preparation and in-fill planting. Areas assessed as past failures may yet be turned into successes. o There is some debate among experts about how best to measure and judge regeneration success in white pine. The FMP uses the traditional FTG stocking method and a 30% standard, while at the same time MNR is promoting its STARS methodology, which uses site occupancy as the measure of success. Westwind is currently examining the pros and cons of each. Stop 10 on the field audit (the Ranger Bay Road) is a good example of the difficulties and the complexities associated with this issue (Figure 3). Both photos were taken at Stop 10; the photo on the left has a white pine understory that meets the stocking but not the height requirement for FTG. The photo on the right has a competitive maple understory that so far has prevented successful white pine establishment. Stop 10 is a white pine block being managed under the three-cut shelterwood system. The soil is a variable depth, water-worked silt loam over low-profile, ridgy granitic and gneissic bedrock. The block is a maze of very shallow-soiled microsites that are well stocked with white pine regeneration and deeper micro-sites that are choked with red maple and bracken fern. This is a common condition and Stop 10 is a typical example. The block was subject to uniform shelterwood seeding cuts in a patchwork of cutting and treatments from 1983 to 1989, when the area was part of the Parry Sound Crown management unit. Parts of the block were mechanically site prepared in 1983, planted in 1984, and had two brush saw release treatments in 1983 and Other parts received basal bark release treatments in 2001 to 2003 using Forestry Futures Trust funding. In 2009 the block had its first removal cut, turning it from a Class Z to an SFL Class X responsibility and making Westwind responsible for meeting the silvicultural standards. Class Z Lands are defined in the licence as areas harvested prior to April 1, 1995 on which no Eligible Silviculture Work has been initiated using funds made available to the Licence Area from either the Special Purpose Account or the Forest Renewal Trust, but on which a tending treatment may be required to bring the area to free-to-grow status. Class X Lands are defined as areas harvested on or after April 1, If it were assessed today, Stop 10 would not meet the FTG standards for the PWUS forest unit, but it remains years away from final assessment. Today, the block is planned for aerial site preparation/tending, followed by in-fill planting. Its FTG assessment will be due in KBM Forestry Consultants Inc. 11

16 Figure 3. Stop 10 on the Ranger Bay Road, Blair Township. This array of treatments over the years shows just how difficult and expensive it can be to regenerate white pine on difficult sites. Adherence to the silvicultural guides (as was done at Stop 10) hasn t yet brought about silvicultural success, which brings into question the applicability of the shelterwood system and the white pine guide on competition-prone sites like these. It was fire that put white pine on the Georgian Bay landscape in the first place and MNR s response to 2006 IFA Recommendation #17 has done little to bring it back. The audit team is concerned about the adequacy of white pine regeneration but was unable to determine conclusively that the silvicultural standards were not being met. Completing actions necessary to address Recommendation 7, below, should assist in providing a more definitive answer at the next IFA. Financial problems compound the silvicultural problem. Repeated treatments like those at Stop 10 can easily cost more than the renewal revenues the white pine harvest is able to generate. This brings into question the feasibility of the current model in which the forestry sector carries most of the financial costs of forest management, including endangered species protection. Stop 12 on the field audit was the exception to the rule. It too was a complex of very shallow micro-sites and deeper, competition-prone silt loams but it was disturbed by blowdown and salvage rather than the usual extended shelterwood methods. Stop 12 received a uniform shelterwood seeding cut in 2002 followed by a heavy blowdown in It was salvage cut immediately, aerially sprayed in 2007 and planted with 1,051 trees/ha of white pine, red pine and white spruce. It differed from the usual shelterwood regime in that the first removal cut (the salvage) followed immediately after the seeding cut and was much heavier. It was also more successful than any other white pine sites that the audit team visited. Access Road construction, maintenance and water crossing installations and removals conducted during the audit period were viewed. Water crossing installations were well done with attention paid to minimizing associated disturbance. There is an ongoing issue with decommissioned water crossings being reactivated by other forest users. An example was viewed in which the decommissioning work associated with a portable bridge removal appeared to have been properly done but a new deck had been built by other users to regain access. Unauthorized work of this nature is an MNR enforcement issue and beyond the scope of this audit. Invoices for road work conducted under the Road Maintenance Agreement between MNR and Westwind were checked. Work conducted included culvert replacement, ditching, gravelling, grading, drilling and blasting, crushing, bridge repair, and winter maintenance. The invoices were consistent with the KBM Forestry Consultants Inc. 12

17 summary reports of expenditures and the work listed in the invoices was consistent with the condition of roads viewed in the field. 4.5 System Support MNR and Westwind have sufficient human resources, training and information systems in place to deliver an effective forest management program. Maintenance of these systems is a serious issue for Westwind given the protracted market failure for forest products. These conditions make it hard for the overlapping licensees to afford the management fees that keep the systems that support forest management in place. Training programs have also been cut back in response to these market conditions. The Forest Information Management (FIM) portal, an online data exchange system, helps to ensure document control. The audit team made use of the portal to access documents and the Geographic Information System data shared by MNR and the SFL holder in the site selection and document review portions of the audit. These systems are constantly evolving. Problems identified by Westwind in ownership layers used in developing the planning inventory for the FMP have been corrected by MNR under its Land Tenure Information Integration Initiative. MNR is also committed to working with Westwind to continually improve information in NRVIS and other data sets used to develop AOCs. 4.6 Monitoring Compliance Both MNR and Westwind developed compliance plans and implemented them in an effective manner. Overall compliance is high; again reflecting the use of skilled operators. The audit team found the conditions in the field matched those reported in the online Forest Operations Inspection Program. Ontario s approach to compliance monitoring, reporting and enforcement has been effective in maintaining high standards of forestry practice. The audit team shares a concern expressed by Westwind that an increased reliance on online training may limit the peer learning from operators that is best achieved in hands-on field settings. Online training systems are continually improving and are becoming standard practice for professional development. Future audits will determine if the concerns over new training methods are warranted. MNR maintains proper oversight of the compliance and monitoring programs although there are opportunities for improvement. Some compliance reporting issues occurred in 2009 when Westwind staff was laid off as result of the market downturn. Although the inspections were made, the reports were delayed. The challenge in maintaining the compliance program is the same as that which threatens the entire management system under the protracted market depression affecting Canada s forest sector. Interviews with MNR staff were consistent with field observations of a competently run forest management program by Westwind and a cadre of responsible overlapping licensees. There were some issues over unauthorised hauling of logs and some problems with new operators in meeting utilization standards and safety issues, but these were the exceptions to a good compliance record. Silviculture A concern was also raised about what standards should be used in monitoring the group selection system (referred to as group openings). Silvicultural effectiveness monitoring has been a significant problem in Ontario in general and is even more of a problem under the selection system. A case in point is the lower than expected yields in the return harvest under the selection system described in this report. Corporate MNR is well aware of this problem and the Silvicultural Effectiveness Monitoring Guidelines (2002) are currently under review; as a result, no recommendation is required at this time. KBM Forestry Consultants Inc. 13

18 The FMPM requires the Silvicultural Effectiveness Monitoring (SEM) program to assess the success of renewal activities in achieving the standards specified in the SGRs. It does not specifically require the reporting of other survey types where there is no silvicultural standard or stated plan objective. Westwind has done a large number of stocking assessments in recent years (over 11,000 ha) and the company shared its findings with the audit team. Westwind uses these surveys not to determine success, but to determine further treatment needs before removal cutting. White pine regeneration is an issue on the French-Severn Forest and it has been for decades. The audit team felt that the reporting of these surveys in the AR would help other interested parties understand the issue better. Recommendation 5: Westwind should report the results of the stocking assessments it carries out in the white pine forest units in its annual reports beginning with the 2011/2012 AR. Westwind is lagging behind in its white pine regeneration assessments. If the choice of an approved methodology is one of the barriers, this should be settled soon. The present version of STARS uses FTG stocking as the measure of success and is compatible with the SGR-FTG standard for white pine. Westwind needs to settle on an assessment methodology for its white pine FTG surveys and catch up with its assessment obligations. Recommendation 6: Westwind should complete its review of an appropriate regeneration assessment method for the white pine forest units and make any changes in time for the 2012 field season. The Silvicultural Effectiveness Monitoring Manual for Ontario (SEMMO) requires FMP-SGRs to provide a timeframe by which stands must reach FTG and be assessed. Together, the and FMPs forecast an assessment requirement of 8,587 ha for the white pine forest units during the five-year audit period. ARs for the audit period show that only 781 ha of pine shelterwood cuts were assessed for FTG during the same five-year period. The Year 10 AR acknowledged that survey levels were well below FMP projections, particularly in the conifer (white pine) shelterwood FUs. It attributed this to an ongoing dialogue between industry partners regarding survey methods and to a disagreement with certain aspects of the Silviculture Treatment, Assessment and Reporting System (STARS) methodology. Recommendation 7: Westwind should maintain a ledger of areas on which regeneration assessment is due that enables comparison with its assessment work and its assessment obligations. This should be in place in time for the next IFA. Annual Reports The annual reports were well written and included a novel method for reporting of field level or tactical objectives that support the strategic objectives of the FMP. This approach emerged in response to the FSC certification audit process but was abandoned under the FMP so as to have reporting align with the 2004 FMPM requirements. The field level objective reporting deserves reconsideration as a way of improving monitoring across the Province. The current suites of indicators are useful but for many indicators the response to management actions takes a considerable period of time before it can be reliably detected. In addition, some indicators are objectives to carry out actions rather than outcomes of strategies. The current focus on outputs is useful under the 2009 FMPM but understanding the effectiveness of a forest management system also requires the monitoring of inputs such as the number of trees planted. The FMPM requires that MNR staff review the Yr 10 AR and provide comments to the plan author within 30 days of receipt of the annual report; however, this review was not done. The process requirements associated with forest management planning are numerous and complex. This is an example of an FMPM procedure that can be overlooked in delivering a comprehensive forest management program within a large organization such as MNR. The solution to similar problems in forest management in other jurisdictions was to implement a quality management system under ISO 9001 to minimize and correct system and process errors. MNR should consider either pursuing certification or adopting the procedures under ISO 9001 as a means of improving the agency s performance in delivering forest management. KBM Forestry Consultants Inc. 14

19 4.7 Achievement of Management Objectives and Sustainability Achievement of Management Objectives The audit team s review of documents and site inspections support many of the observations made by the author of the Yr 10 Annual Report (2008) related to objectives achievement of the FMP. The wide spread use of selection harvests and tree marking will maintain a range of native tree species at current levels across the Forest. The associated forest cover, wetlands, recreational use, heritage values and wildlife habitat objectives are also being met through the allocation of appropriate harvest areas, guidelines and the application of AOC prescriptions. The objective to increase, where practical and appropriate, under-represented tree species and forest units, in proportions similar to the pre-settlement forest will likely not be achieved given the high costs and variable regeneration success in the white pine forest unit, as discussed in detail in the Silviculture section of this report. There is also a lack of movement in advancing prescribed fire for red oak regeneration. Group selection or group openings are helping to encourage black cherry and other midtolerant species regeneration. This objective was not carried forward in the FMP. The low rate of harvest during the full term of the FMP compromises the rate at which the desired forest condition will be reached. The situation is based upon globally significant market forces and is not a reflection of the forest manager s skills or resources. Not surprisingly, wood supply and socio-economic plan objectives will not be realized to the same levels as those predicted in the plan. The objective to continue to research, test and implement, viable, economical and ecologically-based alternatives which will reduce dependence on herbicides was not met. In fact, the use of mechanical site preparation which can reduce (but not necessarily eliminate) the use of herbicides was greatly reduced. Appendix 2 provides a tabular analysis of the audit team s assessment of progress toward achieving the objectives set in the FMP. The use of reporting field level objective (target) performance in support of strategic level objectives was a novel approach and adds value to the analysis. Table 2 illustrates some examples. Table 2. Examples of Field Level Objectives from the French-Severn FMP Objective Field Specific Target Five Year Target Forest Diversity Mechanical site prep or burning for Yellow birch Conversion of off-site hardwoods or mixedwoods to Pw/Sw/Pr (Pwus2 or Mwus) Planting of Red oak 20,000 seedlings Current Year 2008/09 To Date Balance 80 ha ha 40 Ha ha 7,870 12,130 seedlings This field level reporting is not being carried forward under the new plan, to be consistent with direction in the 2004 and 2009 FMPMs. The trend under the past and current planning manuals is to use higher level objectives that, although they are entirely appropriate, take many years for the associated indicators to show a response to management actions. The FMPM direction is consistent with a results-based approach where objectives are linked to outcomes rather than inputs. Results-based management is widely embraced in all types of planning in Canada s civil service. In fact, budget planning for the federal government uses a Results Management and KBM Forestry Consultants Inc. 15

20 Accountability Framework. Proponents of this system would argue that Westwind s field level objectives are in fact strategies supporting the forest diversity objective. Despite the semantics of strategies versus objectives, fully understanding a system requires knowledge of inputs and outputs. The field level objectives are an example of inputs into the system. Westwind s approach in the Year 10 AR is worth a second look by both Westwind and the MNR and may have utility in other forests in Ontario. It is suggested that Corporate MNR consider a requirement for reporting field level objectives/targets/strategies in the next revision of the FMPM. Looking forward, the objectives set in the FMP can be summarized as follows: Emulate natural forest landscape pattern; Provide forest diversity through forest structure, composition and abundance including old growth (not necessarily tied to natural or pre-settlement levels); Maintain red and white pine forest area; Maintain red oak and hemlock area; Maintain or enhance habitat for forest-dependent species (non-spatial and spatial); Maintain roads for forest operations while limiting liability Ensure successful regeneration and improve the health of harvested stands Protect other natural resources values; Ensure a predictable wood supply; Protect the environment (soil and water) Provide opportunities for Aboriginal involvement; and, Encourage and support involvement of the Local Citizens Committee. The evidence compiled in this audit suggests that the factors under the control of the forest manager are being addressed in a manner consistent with meeting the above objectives with some concern related to meeting objectives for white pine (and to a lesser extent red oak and hemlock, as identified in the Year 10 AR). Forest Sustainability The Year 10 AR for the plan period April 1, 2004 to March 31, 2009 was reviewed and found to be generally complete and accurate, although it lacked an adequate discussion of both the achievement of non-quantitative objectives and the implementation of the action plan associated with the previous IFA. Recommendation 8: Westwind should ensure that the content requirements of future Year 10 Annual Reports are met. Overall harvest area was approximately 50% of planned during the ten years Poor quality of many stands and access constraints were noted as contributing factors. A similar situation existed with harvest volume. Regeneration of tolerant hardwood stands (primarily sugar maple) was considered to be guaranteed and therefore formal surveys were not conducted. Clearcut stands have also typically regenerated successfully. White pine regeneration has been less certain and there was a greater reliance on artificial regeneration given the poor success of natural regeneration methods. Vegetation management to control competition has become a required practice for pine stands. The author provided an insightful list of observations related to pine regeneration. The Year 10 AR summarized the achievement of five quantitative objectives. Habitat for selected wildlife species were within acceptable ranges, total area of red/white pine was on track, total area of red oak was under target although there was no overall loss on the landbase, and targets were met for available volume of all species groups. Managed Crown forest area for timber production by forest unit was considered difficult to assess due to planning inventory and forest unit shifts. The Year 10 AR author considered the determination of sustainability through AR-14 to be not particularly useful. The author further stated that changes in approaches based on field observations, such as the creation of the white pine seed tree forest unit, are being used to address identified issues. The author considered the forest to be on track to sustainability and that, short of a large scale catastrophe, actual forest condition will not change substantially on a broad basis. KBM Forestry Consultants Inc. 16

21 The audit team concurs with the observations and qualifying comments of the Year 10 AR author with respect to assessing forest sustainability, i.e. it appears that forest sustainability criteria are being met, with the qualification that changes to the forest land base, cover classifications, planning and reporting requirements pose significant challenges in measuring progress and validating the assumptions related to forest sustainability. Forest sustainability is being achieved, as assessed through the Independent Forest Audit Process and Protocol (IFAPP). This determination assumes that the process and protocols of the IFAPP and the determination of sustainability, as followed by planning teams under forest management planning manuals, support a robust definition of sustainability. This is illustrated by the following example as it relates to the IFAPP requirements of presenting a summary table and analysis of silvicultural success from the Year 10 Annual Report (Source: Table AR 13). Table 3. Summary and Analysis of Silviculture Success Area Surveyed (ha) Silvicultural Success (ha) Not Sufficiently Restocked (ha) Forest Unit Regeneration Success (ha) HDSBB HDSGB PWUS 123 HDUS Total AR Ignoring a summation error in Table AR-13 caused by omitting the 29 hectares of HDSGB, the table shows a remarkably high rate for silvicultural success (100%) for hardwood cover types and no success in the white pine cover type. These results are an artifact of the convention for tolerant hardwoods used by MNR and defined in the FMP whereby selection is always deemed to have 100% success. After all, when the stand is finished being harvested it would remain a forest with similar preharvest species composition, albeit with a reduction in crown cover. In contrast, white pine is deemed not sufficiently restocked until the final felling and subsequent assessment of the shelterwood and there are no stands at that stage in the period under review. It could be argued that the total area surveyed of 2,004 ha is not enough to assess the harvested area of approximately 21,880 hectares. However, auditing more than 10% is a significant cost burden and given the high rates of compliance observed by the audit team it would appear to be an unnecessary cost. The table provides an incomplete picture. Although species composition objectives are likely being met, structural targets are not. As identified earlier in this report, the problem of second entry cuts not having the anticipated sufficient volumes of growing stock begs the question why the process assumes 100% silvicultural success. Furthermore, the persistent problems of supporting a first class forest management program and expensive renewal programs for white pine from forest revenues generated by harvesting timber in depressed markets questions the sustainability of the forest management program itself. This is more than counterintuitive and supports the need for MNR to develop decision support systems suitable for Southern Ontario. MNR is well aware of the problems and has launched an independent review of the process it uses to determine forest sustainability and silvicultural effectiveness. MNR is also in the midst of a tenure and pricing review. 4.8 Contractual Obligations Overall, the SFL conditions were met, (Table 5. Compliance with Contractual Obligations the most significant exception being failure to meet minimum balance requirements in the Renewal Trust Fund, as discussed below. KBM Forestry Consultants Inc. 17

22 Westwind allowed the Renewal Trust Fund for the Forest to fall below the minimum balance required of it in two of the five years under audit ( and ). The company produced a two-year recovery plan that was accepted by MNR and the minimum balance was restored. This default was a product of the unanticipated economic crisis facing the entire forest sector. Plunging prices and mill closures have reduced the harvest, which has in turn reduced renewal revenues. From a renewal point of view, the reduced harvest is less of a concern in the hardwood types where silvicultural activity is tied to harvest and more of a concern in the pine types where treatment is still required on areas harvested years ago. It is a problem without an easy answer because raising renewal rates will only result in a further reduction in harvest. Instead of raising renewal rates, Westwind opted (with MNR s reluctant consent) to reduce silvicultural activities as the principal way of restoring the minimum balance (Figure 3). The red line shows the minimum balance required on March 31st each year. This graph shows that the balance was below the minimum in four of the five years. However, in two of these years this was due to late payment by overlapping licensees, which is not a Westwind issue as it was MNR s responsibility to collect these amounts. The recovery plan contained other strategies that Westwind has acted on, but without a reduction in expenditures recovery wouldn t have been possible in the timeframe provided. These events and associated issues are having a province-wide impact on forest renewal. Program liabilities and funding mechanisms are currently under review by Corporate MNR. Figure 4. Graph of Silvicultural Expenditures and Account Balance over the Audit Period. Table 6, Appendix 3, summarizes progress towards completion of actions developed to address the 25 recommendations arising from the 2006 IFA. Overall, the audit team found that the actions developed and implemented by the auditees were appropriate and effective in addressing the individual recommendations, although some outcomes (e.g. use of prescribed burns) may not fully align with what the previous audit team had envisioned. KBM Forestry Consultants Inc. 18