Evaluation Report: Forest Products Market Access and Development

Table of Contents

• Acronyms
• Executive Summary
• 1.0 Introduction and Background
  • 1.1 Context
  • 1.2 Forest Products Market Access and Development Sub Program
• 2.0 Evaluation Approach and Methodology
  • 2.1 Evaluation Limitations
  • 2.2 Approach - Contribution Analysis
• 3.0 Evaluation Findings
  • 3.1 Key Relevance Findings
  • 3.2 Performance
  • 3.3 Efficiency and Economy
• 4.0 Conclusions

Acronyms

APA	The Engineered Wood Association
BSLC	Binational Softwood Lumber Council
BCFII	British Columbia Forestry Innovation Investment
CMHC	Canada Mortgage and Housing Corporation
CBFA	Canadian Boreal Forest Agreement
CWC	Canadian Wood Council
CLT	Cross-laminated timber
ENGO	Environmental not-for-profit organization
EMO	Expanding Market Opportunities
FPAC	Forest Products Association of Canada
FPMAD	Forest Products Market Access and Development
FTE	Full Time Equivalent
GAC	Global Affairs Canada
G&Cs	Grants and contributions
GDP	Gross Domestic Product
LSL	Laminated Strand Lumber
LVL	Laminated Veneer Lumber
MOU	Memorandum of Understanding
MOE	Ministry of Education
NRCan	Natural Resources Canada
O&M	Operations and Management
OSB	Oriented Strand Board
PAA	Program Alignment Architecture
QWEB	Quebec Wood Export Bureau
SPF	Spruce-Pine-Fir
WFC	Wood Frame Construction

Executive Summary

Introduction

The evaluation presented here covers the Forest Products Market Access and Development (FPMAD) Sub-program, approximately $83 million in Natural Resources Canada (NRCan) expenditures, from 2010-11 to 2014-15. The overall expected results for the Sub-program are as follows:

• Forest industry has increased sales of Canadian wood products in international markets and in new market segments; and
• Stakeholders in targeted international markets have positive perception of Canadian forest practices and products.

The Sub-program consists of market access and market development activities delivered through contribution agreements with industry forest product associations and encompassed under the Expanding Market Opportunities (EMO) Program. The Sub-program also includes market access activities delivered through the Industry and Trade Division, Canadian Forest Service (CFS).

The EMO Program includes both Offshore Markets and North American Components. The Offshore Markets component is intended to maintain and grow international forest product markets while promoting Canadian forest products as an environmentally responsible choice. This component is primarily delivered through contribution funding to industry wood product associations including the Canada Wood Group (CWG)^{Footnote 1}.

The North American component aims to expand wood use in the North American non-residential and mid-rise construction market by supporting the Canadian Wood Council and United States Wood Products Council (notably through delivery of the Wood WORKS! Program.) This component also has an environmental reputation element. EMO works in collaboration with forest sector stakeholders to advance sustainable development. As well, CFS provides funding to the Forest Products Association of Canada (FPAC) to support the implementation of the Canadian Boreal Forest Agreement (CBFA)^{Footnote 2}.

Evaluation Methodology

Multiple lines of evidence were utilized and include a document review; interviews (123) with internal and external stakeholders; surveys (2) (offshore trade show and training participants); and case studies (7) covering a variety EMO funded activities such as trade shows, training and education, and support for codes and standards. The evaluation team consulted with a broad range of stakeholders and end-users including industry association representatives, industry association members including industry association members representing the value-added sector, builders, architects, engineers, and trade show and training participants.

Relevance

The evidence confirms the need for both the North American and Offshore Markets components of the EMO Program. As well there continues to be a need for CFS market access activities. These programs and activities are aligned with federal government and departmental strategic priorities that focus on economic competitiveness.

The core rationale for the EMO Program, Offshore component, is to respond to the need to reduce the sector’s reliance on the U.S. as an export market. While gains have been made in this respect, evaluation evidence shows that establishing new markets for forest products requires sustained market access and market development efforts. Moreover, market diversification provides a buffer against cyclical swings and price volatility. Although the overall economic health of Canadian forest products sector has improved since 2008-09, federal support is considered to be appropriate for high-risk offshore markets such as China, South Korea and Japan.

Regarding the North American component, there is a continuing need to test innovative products and systems in a familiar market such as North America, particularly in view of a an increasing trend towards residential multi-story structures, creating opportunities in this and the non-residential sector for increased use of wood. As with all new technologies, there is also a need to develop capacity for target groups to understand and use them (e.g. builders, architects, engineers and others). Federal support of research, technology transfer and training and promotion, and support to amend the National Building Code of Canada are considered appropriate to facilitate these novel applications of wood products and systems.

There is a continuing need for direct federal involvement and funding support in market access issues in North American and offshore markets. Codes and standards development, requiring long time horizons, is critical to enabling and increasing the use of wood products in construction. Moreover, phytosanitary issues are growing and domestic protectionism is an ongoing challenge in all markets. CFS works effectively and collaboratively with other federal players to address non-tariff barriers and plays a critical role in providing expertise, communicating with industry, and brokering partnerships and networks.

The EMO Program, Offshore Component, appears to be less well tailored to the to the needs of the value-added sector as this sector is generally more interested in North American markets.. According to documents and interviews, Canada and the United States continue to provide the best opportunities for value-added products due to market size and proximity. As well, Associations outside Quebec and British Columbia face more capacity issues making it difficult for them to utilize EMO funding.

Environmental advocacy continues to be an important need for the forestry sector. Environmental reputation issues are increasing in importance and federal support and involvement to address market access issues is considered critical by industry stakeholders. Regarding CBFA, there were mixed views among stakeholders consulted as to the need for additional input into provincial land use planning processes such as CBFA recommendations regarding sustainable boreal forest practices. Some respondents expressed the view that provinces already have extensive stakeholder consultation processes in place and sustainable forestry practices. Others noted that CBFA provides credible, integrated and useful input into provincial planning processes. Industry and environmental non-profit organization signatories consulted indicated that there are continuing opportunities to achieve outcomes.

Performance (Effectiveness)

The combination of programs and importantly CFS expertise and experience, sustained CFS funding, established relationships, and complementary provincial programs contribute to market access and market development outcomes for the forestry sector. There are also those influencing factors completely outside of the program’s sphere of influence such as limited fibre supply, the expiration of the Softwood Lumber Agreement, and marketing practices of others. Other hindering factors include insufficient reach to the value-added sector and a focus on Wood Frame Construction (WFC) and dimension lumber, particularly with respect to offshore markets. Case study, document and interview evidence suggests that a more systematic assessment of opportunities such as hybrid structures integrated with WFC may facilitate increased interest of target groups in wood structures. However, there is growing recognition among industry members as to the need to consider a broader range of opportunities, as is evidenced by CWG’s 2015 market strategy for China, “Wood in Construction” which has broadened its focus to include remanufacturing and hybrid building opportunities.

North American non-residential and mid-rise construction continues to show improvement as building codes become more conducive to wood frame construction in mid-rise buildings

NRCan’s funding of technical research, and support of Wood WORKS! promotional and educational efforts were seen as key enablers to the development and adoption of the National Building Code and provincial building codes that have recently been modified to allow for six-storey wood structure buildings. The case study on the National Building Code highlighted the importance of consistent and sustained funding. Funding for technical support from NRCan and other players commenced in the 1990s. As compared to other key sources of provincial funding, NRCan funding has been comparatively consistent.

In British Columbia, the 2009 provincial building code has led to the building of 250 multi-storey wood structure buildings since its adoption. The recent provincial code changes in Quebec, Ontario, and Alberta, are expected to lead to increases in the number of wood frame construction multi-storey buildings. Evidence suggests that Wood WORKS! efforts made a difference in terms of both encouraging governments to adopt building code adjustments to allow mid-rise and multi-storey units and in providing supportive education and capacity building related to the code adoption. Tailored Wood Work promotional strategies which fit specific contexts were facilitating factors. For example, in Ontario and Quebec Wood WORKS!, a ‘Wood equal’ approach was used to work with user groups related to the construction and housing industries.

CFS market access activities, in collaboration with its partners, have facilitated the maintenance or enhancement of market share in a number of instances

In offshore markets, the Sub-program, by addressing non-tariff barriers directly or by supporting Associations, has facilitated the maintenance or enhancement of market share regarding exports of wood pellets to Europe, and sawn lumber to South Korea.

EMO support for offshore markets (South Korea and China) has created a small, niche market for WFC single family homes

In China and South Korea, given the absence of a wood culture, the strategy in both countries has been to use single family home construction as an entry point to developing capacity, while engaging in long-term efforts to expand the use of wood in other applications such as mid-rise construction. EMO support for training, knowledge transfer and codes and standards, the sustained presence of the CWG, and strong relationships with offshore governments have enabled the development of a niche group of wood frame construction builders. This has facilitated the increased use of wood in single family home applications of primarily villa or vacation homes.

There has been a small, steady annual increase in wood frame housing starts (from 9,585 in 2010 to 11,493 in 2014)^{Footnote 3} in South Korea. In China, where housing statistics are not publicly available, it is challenging to accurately estimate wood frame housing starts. In a 2012 market study, it was estimated that 15,500 wood frame construction units were in the planning stages or under construction and that 91% of these were single family units. The CWG China, based on a review of financial information for companies known to be primarily involved in wood construction, indicated that sales of WFC buildings have grown from less than $10 million in 2007 to $350 million in 2014. CWG representatives and builders consulted noted that in the construction of wood frame single family homes, Canadian lumber was primarily used.

It is highly plausible that the use of wood in structural applications in these offshore markets is due to the EMO and provincially supported CWG efforts. Evidence from interviews and case studies suggests that CWG is the main source of information on wood use in Korea and China, influencing builders, architects, tradespeople, and designers through its program. Importantly, EMO and other funding support for code and standards development has contributed to code changes allowing for the construction of wood frame single family homes.

There continues to be a noted lack of a critical mass of stakeholders in the WFC industry to be self-sustaining. In both countries, there is a lack of qualified architects, structural engineers, and designer. Moreover, it is difficult to interest established developers accustomed to large concrete projects, in seeing a financial advantage, particularly given the insufficient skill sets for WFC in the overall work force. Capacity building efforts have been assisted by strong relationships between CWG and offshore governments and strong linkages established between the University of British Columbia and universities. For example, significantly strong relationships between the CWG and the Ministry of Housing and Urban Rural Development have strongly influenced the establishment of the vocational school WFC program in 2012. This program has been established in 22 vocational schools in numerous provinces across China.

Progress is being made in Offshore markets towards the structural use of wood in new applications such as mid-rise construction and requires sustained efforts to develop a ‘wood culture’ in these emerging markets

Opportunities for significant increased growth in wood use through single family home applications are limited in markets such as China and South Korea as most residential housing is multi-storey. It has been particularly challenging advancing codes for the structural use of wood in mid-rise buildings in offshore markets. Nevertheless, there has been progress. In China, the code for fire protection design of buildings took effect in May 2015 and allows up to a seven-storey hybrid building: three-storey wood frame on a four-storey concrete or steel structure. Documents and interview evidence showed that development of this code, involved intensive, multi-year collaboration including fire research and expert exchange with code developers in China and Canada and its partners in Europe and the U.S. Respondents indicated that this code should enable more opportunities for wood frame construction. In South Korea, EMO and provincial support of the CWG as well as FPInnovations technical research has contributed to a great extent to the establishment of codes allowing for small wood frame multi-family units in addition to single family homes.

In addition to code developments, the CWG supported by EMO funding, have contributed to the building of several showcase or demonstration wood frame buildings or developments. CWG capacity building efforts have contributed to the creation of a small group of builders/developers that have become wood champions. In turn, these wood champions have become involved in a number of showcase or demonstration projects. These projects have the potential to address some of the noted barriers to wood use related to public and government concerns about the structural use of wood. For example, two wood frame four-storey apartment buildings (a first in China) were recently built. This project stemmed from an agreement signed with the Chinese government, Natural Resources Canada and BC in 2010 to work collaboratively to promote wood-frame building technology. The Canada Wood Group, with EMO and British Columbia Forestry Innovation Investment (BCFII) support, provided quality assurance and training support for this project.

In 2012, a Memorandum of Understanding between Canada and the Chinese government was signed with respect to the cooperation in the development of “Eco-cities” technology across China. The memorandum focuses on the use of wood in multi-storey buildings as well as energy-efficient building systems. In South Korea, a leading architect has pioneered the Tankong or “Peanut” house design which resulted in significant positive media attention in that country. Tankong homes can be created in any row house formation and are not as costly as traditional wood frame single family homes.

While Canadian softwood lumber exports to China increased from 2010 to 2014, most of the lumber was estimated to be of lower grades and only a small portion was used for wood in construction. Potential growth for higher value exports remains plausible

From 2010 to 2014 there was an increase in exports of Canadian softwood lumber to China, with a decrease occurring in 2015. In this time period, a key expected result for the CWG was to increase the use of wood in construction and to increase the quality of wood exported to China. According to documents reviewed, the largest portion of Canadian wood exports in the past five years has gone to non-structural applications. Moreover, most Canadian lumber exports to China are estimated to be lower grades. Given the difficulty of estimating the end-uses of Canadian lumber, it is challenging to ascertain whether the use of lumber in structural applications has improved since 2010. A comparison of estimations of wood use for structural applications in NRCan’s previous evaluation of market development programs (2010) to current estimations conducted through market research (2015) would suggest that the portion of Canadian lumber exports being used for structural applications has not increased.

There are a number of external market factors influencing the demand for and use of wood products in China such as the slowdown of the Chinese economy, including reduced activity in the construction sector, and increased competition from other countries especially with respect to low-value products. Case study and interview evidence suggests that there are potential opportunities for Canadian environmentally-friendly wood products given China’s increasing interest in exploring green and energy efficient building practices. There are also emerging regional markets in China that are considered to have opportunities for a range of wood products.

EMO support and other coordinated activities contributed to a sales rebound for Oriented Strand Board in Japan

In Japan, various initiatives funded by the EMO Program in addition to other coordinated activities appears to have helped reverse a downward trend in Canadian Oriented Strand Board (OSB) sales assisting them to rise by more than $20 million per year from 2010 to 2014.

As well, its wood frame construction building code is expected to be revised to include the Midply wall system in 2015. The Midply wall system was originally developed by FPInnovations. Additional testing of the structural integrity of the system was conducted in Japan. The system is also featured in the design of a five-storey, elderly care facility, and will be the largest wooden building in Japan, paving the way for the increased use of wood in mid-rise buildings.

Performance (Efficiency and Economy)

FPMAD is generally being delivered in an efficient and economical way. The EMO Program has over the past five years encouraged the consolidation of association initiatives under the CWG internationally and under the Canada Wood Council domestically which has in the view of many respondents improved economy, efficiency and effectiveness. Moreover, the merging of two previous programs (Canada Wood Export Program and International Influence Program) into one program has allowed for streamlined program delivery. The application of dedicated, experienced NRCan-CFS staff over decades has similarly had a positive effect on trust and applied expertise.

The leveraging ratio is 1:3.5 (NRCan to other sources of funds). Industry contributions have increased over the past five years from $4.84M in 2010-11 to $11.26M in 2014-15 while NRCan expenditures have decreased from $19.3M in 2010-11 to $14M in 2014-15. NRCan has required increased minimum industry contributions. The minimum industry contribution in 2014-15 was 20%, and increases each year thereafter: 25% in 2015-16 and; and 27% in 2016-17 to approach a contribution of one-third of the total expenditures by each of industry, EMO and provincial funding^{Footnote 4}.

Evidence suggests that industry stakeholders would not be able to deliver the program to the same extent without EMO funding. For many market access activities, government support and involvement is considered to be critical to address market barriers.

The evaluation also identified some areas where efficiency and economy could be improved. Program design is more challenging for engaging smaller / value-added players as well as associations outside of BC and Quebec. The program’s leveraging requirements are difficult for smaller associations, particularly those representing the value-added sector, to meet.

Most of market access and many market development activities require longer time horizons for achievement of outcomes and require multiple year commitments. Moreover, the reporting process was found to be burdensome. More focused and strategic reporting would also be more useful for program decision-makers while still meeting accountability requirements.

Conclusion and Recommendations

The program is relevant and continuing funding is needed for forest products to address market access issues in both mature and emerging markets. Support for market development activities in emerging markets or to support new wood products or systems is appropriate and important to achieving long-term objectives in these markets. The EMO Program has contributed to increased use of wood in both North American and offshore markets. In offshore markets, progress is being made in terms of capacity-building, and codes and standards development to further enable the design and development of mid-rise wood structures.

Program’s reach needs to be enhanced to associations representing the value-added sectors and to associations in provinces outside British Columbia and Quebec. Value-added sector respondents and the case study on the value-added sector noted two primary barriers to accessing the EMO Program for the value-added sector 1) their market is primarily North America (whereas EMO’s focus in North America is to expand wood use in non-residential and mid-rise construction markets), and 2) associations representing the value-added sector may not have the financial resources to meet the minimum industry contribution. This latter barrier is exacerbated by the Program’s requirement for annual increased minimum industry contributions.

Similar findings were noted in previous evaluation of CFS Market Development Programs (2010-11). In the past five years, CFS has attempted to address this issue through increased provision of funding to industry associations representing the value-added sector. However, the majority of value-added sector respondents indicated that these issues persist. This suggests that there are structural program issues, in addition to other factors, contributing to insufficient access to EMO funding through associations.

The evaluation found that market access activities conducted by the CFS in collaboration with other government departments were highly effective. Moreover CFS is a critical source of technical information and plays an important coordinating and integrating role in various market access and development initiatives. The success of the overall Sub-Program owes much to these activities and to the combined effects of these activities with market development activities.

Currently CBFA faces human resource capacity issues. Achievement of outcomes requires considerable human resources for planning and consultation. Moreover, achievement of these outcomes would have to occur within the provincial planning cycles, which are typically of long duration. The evaluation raises questions as to the capacity of various stakeholders, particularly environmental groups, to sustain this type of involvement. As well, while there has been some success engaging Indigenous groups, provinces and other sectors (e.g. oil and gas), overall these relationships need to be strengthened for the Agreement to better achieve its goals.

Recommendations and Management Response

Recommendations	Management Response	Responsible Official/Sector (Target Date)
Develop alternative delivery mechanisms to better align the Expanding Market Opportunities Program or a CFS market development alternative program with the needs of the value added sector. This endeavor should include consultation with various value-added segments and other government departments.	Accepted. The CFS recognises that this sector may face unique challenges with respect to market development activities. The CFS will engage in consultation with representatives from the value-added product sector and other government departments to identify potential modifications to program parameters to support the needs of this sector, should this program be renewed.	ADM, CFS November 2016
CFS should investigate the feasibility of adopting multi-year project funding approvals in consultation with NRCan’s Centre of Expertise and key partners such as British Columbia Forestry Innovation and Investment.	Accepted. Within the context that some projects will lend themselves to this approach more easily than others, the CFS will consult with departmental experts and other partners on the feasibility of multi-year project planning and approvals.	ADM, CFS November 2016
In consultation with its partners, CFS should streamline and focus reporting requirements. This would support an improved outcome focus based on valid metrics. It could reduce reporting burden on recipients – as well as on program administrators, while still maintaining accountability requirements	Accepted. The CFS will engage with partners to identify means to streamline reporting requirements, within the accountability frameworks of the program and department.	ADM, CFS November 2016
Renewal of federal funding for Canadian Boreal Forest Agreement should include an assessment of the proponent’s (Forest Products Association of Canada) plan for addressing capacity issues and strategies for engagement with key stakeholders such as Indigenous groups, provinces and other resource sectors	Accepted. By July 2016, officials from the Canadian Forest Service will meet with the Forest Products Association of Canada and the Canadian Boreal Forest Agreement Secretariat to discuss capacity issues amongst CBFA signatories and engagement with key stakeholders. CFS will request that a strategy be submitted by October 2016, regarding how the CBFA will seek to strengthen their capacity and broaden their engagement with stakeholders, including Indigenous groups, provinces and resource sectors.	ADM CFS July 2016 and October 2016

1.0 Introduction and Background

The evaluation assesses the issues of relevance and performance (effectiveness, efficiency and economy) of Natural Resources Canada’s (NRCan’s) Canadian Forest Service (CFS) Forest Products Market Access and Development Sub-Program in NRCan's 2014-15 Program Alignment Architecture (NRCan's 2014-15 PAA 1.1.2). The evaluation questions and methods (including the associated level of effort) were informed using a risk-based approach. Moreover, the approach was calibrated to ensure compliance with the Directive on Evaluation while respective of available time and resources.

The evaluation covers the last five year period from 2010-11 to 2014-15 and approximately $83 million in NRCan’s expenditures. The Sub-program includes both market access and development activities delivered through the Market Access team in the Industry and Trade Division, CFS and via industry associations through contribution agreements. Expenditures cover CFS resources devoted to approximately 30 signed contribution agreements focusing on areas of infrastructure, marketing, market research, market access – codes and standards, technical research and testing, and technology transfer and training. It also provides funding to provide scientific and planning support for the Canadian Boreal Forest Agreement (CBFA).

1.1 Context

To address the economic downturn for the forestry sector, the government announced the Forest Industry Long-Term Competitiveness Strategy in 2007 which included Expanding Market Opportunities (EMO) and Promoting Forest Innovation and Investment to help Canada’s forest sector shift towards higher-value products and tap into new markets.^{Footnote 5}

The forest sector has started to recover post-recession as indicated by the stabilization of the sector’s contribution to the Gross Domestic Product (GDP). In 2013, production in the forest sector contributed $19.8 billion or 1.25% to Canada’s real GDP. This proportion has been stable since 2009, with wood product increases compensating for continued declines in pulp and paper.^{Footnote 6}

There have been signs of economic renewal in the United States (U.S.) such as increased housing starts^{Footnote 7}. In 2013, softwood lumber exports to the U.S. rose by 29.5% and structural wood panel exports rose by 33.3% over 2012 levels. While the recovery in the U.S. has been slower than expected, a weaker Canadian dollar and lower energy costs are contributing to increased forest product exports to the U.S. The expiration of the existing Canada-U.S. Softwood Lumber agreement in October 2015 contributes to uncertainty.^{Footnote 8}

The Canadian forest products sector continues to experience some challenges. Growth has slowed in both China and Japan resulting in decreased demand for wood products. British Columbia (BC), Ontario and Quebec do not have the same volumes of harvestable timber they once had and the annual allowable cuts in these provinces has shrunk^{Footnote 9}.

1.2 Forest Products Market Access and Development Sub Program

1.2.1 Expected Results for the Sub Program

Within the context of NRCan's 2014-15 Program Architectural Alignment (PAA), the Forest Products Market Access and Development Sub-Program is part of the Market Access and Diversification Program, which feeds into Strategic Outcome 1, which states that Canada’s natural resource sectors are globally competitive.^{Footnote 10} The expected results for the Sub-Program are as follows:

• Forest industry has increased sales of Canadian wood products in international markets and in new market segments
• Stakeholders in targeted international markets have positive perception of Canadian forest practices and products

A results chain (aligned with the Sub-program logic model) was developed for Forest Products Market Access and Development Sub-Program.

1.2.2 Sub- Program Structure

The Forest Products Market Access and Development Sub-program includes market access and market development activities delivered through contribution agreements with industry forest product associations. These activities are encompassed under the EMO Program. It also includes market access activities delivered through the Industry and Trade Division, Canadian Forest Service and supported through A-base funding.

The EMO Program includes the Offshore Markets and North American Components, and is a market development program that supports the maintenance and growth of offshore and North American markets for Canadian forest products. NRCan provides financial contributions to Canadian forest industry associations to support initiatives to expand exports to international markets and increase the use of wood in North American non-residential construction. It also provides financial contributions and science-based information to industry partners to support the development and dissemination of information products that promote the environmental reputation of Canada's forest sector in international markets. As well, it offers expertise to other federal departments, primarily Global Affairs Canada, in support of Canada's international negotiating positions on trade and environmental issues.

EMO Program Structure:

a) Offshore Markets Component: The objective of the Offshore Markets component is intended to maintain and grow international forest product markets while promoting Canadian forest products as an environmentally responsible choice. This element maintains and expands a network of offices and staff located in offshore markets; funds activities to increase wood product knowledge of consumers, builders, and architects in international markets; provides technical support, and promotes the sector’s environmental performance to address market access and regulatory issues which can limit trade. It provides forest industry and stakeholders with the capacity to act on EMO.^{Footnote 11}This component is delivered through contributions to wood product industry associations, including the Canada Wood Group (CWG)^{Footnote 12}. Approximately $48.0 million in NRCan’s Sub-Program component expenditures.

b) North American Component: This element focuses on two areas - non-residential and environmental reputation. The objective of the North American component is to expand wood use in the North American non-residential and mid-rise construction market and position Canada as a world leader in sustainable forest management and a preferred source of sustainable forest products. Regarding non-residential construction, it is delivered through the Canadian Wood Council (CWC) via its program Wood WORKS! in Canada and the Wood Products Council in the United States. Approximately $35 million in NRCan’s Sub-Program component expenditures (also includes the Canadian Boreal Forest Agreement).

The Canadian Boreal Forest Agreement (CBFA) is a private agreement between industry (members of Forest Products Association of Canada (FPAC)) and environmental not-for-profit organizations (ENGOs). The Agreement entails a commitment by the environmental groups to stop marketing campaigns against the forest companies involved. In return, the companies have suspended logging operations on almost 29 million hectares of boreal forest. The goal is to develop a new model of collaboration among these stakeholders to facilitate a stronger, more competitive forest industry as well as a more sustainably managed boreal forest. Under the North American component, NRCan provides funding to the FPAC to support the implementation (science and planning) of the CBFA. The CFS, in support of the CBFA, also develops scientific and technical information and provides expertise to signatories^{Footnote 13}.

1.2.3 Governance

The EMO Program is governed through the CFS Wood Markets Management Committee comprised of senior representatives of the Canadian Forest Service. The committee provides strategic advice and guidance on the management and delivery of the EMO Program.^{Footnote 14} Industry input is obtained through direct meetings with associations and their members companies including industry mission strategy roundtables, Annual General Meetings, Board meetings, funders’ meetings, etc.

There is also an Evaluation Committee (NA and Offshore Markets Components) that offers advice to NRCan EMO Secretariat on program strategy, the development of project selection criteria, and program outcomes and priorities, and participates in the evaluation of submitted applications for funding. This committee includes the participation of representatives from the federal government (primarily NRCan), provinces and industry.^{Footnote 15}

1.2.4 Resources at the Sub Program Level

Table 1 shows the breakdown of NRCan expenditures by salary, operations and management (O&M), and grants and contributions (G&Cs). In 2014-15 there were 4 Full Time Equivalents (FTEs) allocated to market access activities and CBFA (A-based funding) and 8 FTEs for the EMO Program (C-based funding).

Table 1: NRCan Expenditures for salaries, O&M and G&Cs ($ millions)^{Footnote 16}

Levels of Funding by Component	Fiscal Year					Total
	2010-11	2011-12	2012-13	2013-14	2014-15
Offshore Markets
Salary and EBP	0.43	0.53	0.86	0.89	0.96	3.67
O&M	0.22	0.44	0.93	1.16	1.24	4.00
G&Cs	9.75	7.28	9.58	7.06	6.68	40.35
Sub-total	10.4	8.25	11.37	9.11	8.88	48.02
North American (NA) Market
Salary & EBP	0.11	0.09	-	-	-	0.20
O&M	0.07	0.09	0.07	0.05	-	0.28
G&Cs	8.71	5.71	4.49	4.08	3.71	26.70
Sub-total	8.89	5.89	4.56	4.13	3.71	27.18
Canadian Boreal Forest Agreement (part of NA component)
Salary & EBP	0	0	0	0	0	0
O&M	0	0	0.75	0.68	0.9	2.32
G&Cs	0	0	1.96	2.20	1.35	5.51
Sub-total	0	0	2.71	2.88	2.25	7.83
Total	19.29	14.14	18.64	16.12	14.84	83.03

2.0 Evaluation Approach and Methodology

The Evaluation of the FPMAD employed multiple lines of evidence approach, which consisted of:

• Document and literature review: An overall review of key program and performance, planning and reporting documents was conducted.
• Interviews: A total of 123 individuals (internal and external) were interviewed from April 2015 to September 2016. Interviewees included representatives from NRCan senior management, program management staff and managers; in-market representatives in Canadian Missions and the CWG (as appropriate); representatives of the Canadian wood products industry (industry association members and association representatives); provincial government representatives; FPInnovations; academia; and audiences in target markets (i.e., designers, builders, and regulators).
• Case studies (7): Canada Wood Training/Education in China; Codes and Standards Support/China; Trade Shows; Wood WORKS! Canada; Value-Added Sector; National Building Code; Canadian Boreal Forest Agreement.
• Online Surveys (2): Two surveys were conducted with the following groups: Trade show participants (China, Korea and Japan); University, Vocational and Canada Wood College students, architects, engineers, builders (China).

2.1 Evaluation Limitations

Three key evaluation limitations and mitigation strategies are discussed below:

• Attribution issues: The sub-program is built on the premise that collaboration across the forestry sector on common projects, programs and priorities will be more effective in achieving a globally competitive sector. However, this creates issues of attribution making it difficult to measure NRCan’s unique contribution to desired outcomes. While the evaluation design cannot fully resolve this issue, it was mitigated through the use of “contribution analysis” approach which assessed how internal factors (those within the control of NRCan) and external factors have influenced outcomes along a results chain.
• Challenges reaching all end-user groups: The group most knowledgeable about the program and its impacts are industry associations and their members (Industry associations being the contribution recipients). This in turn created an emphasis on the views of industry association members that are direct recipients of funding. In order to address this bias the interviews were extended beyond the original number of selected interviewees. A ‘snowball’ technique or purposive sampling technique was used to solicit respondents who are knowledgeable about certain phenomena – but who have not been suggested by NRCan or others very close to the program. A concerted effort was made to interview a considerable number of industry members from the value-added sector and from various provinces to obtain a broad range of perspectives. To minimize selection bias, interviews were conducted with industry members recommended by other respondents that were noted to be less engaged in Association activities (funded through EMO). To further address this challenge, interview responses were analyzed in conjunction with complementary sources related to the surveys, case studies, correspondence and documents. As well, surveys were conducted with key end-user groups for the Offshore component (trade show participants, training participants – university architectural and engineering students) who were not recipients of funding. The evaluation team, however, had difficulty obtaining adequate numbers of North American specifier (particularly architects, engineers) respondents given their low response rate. To compensate, secondary data was utilized such as recent North American surveys of architect and engineering groups including a recent survey conducted of target groups of Wood WORKS! programs, which includes specifiers.
• Representativeness of survey samples: The evaluation team relied on CWG and teachers suggestions for respondent names of trade show participants and training and education students (with the exception of Canada Wood College participants who were randomly selected) leading to selection bias. The survey responses were analyzed in view of this limitation and in conjunction with other information sources.

2.2 Approach - Contribution Analysis

The Forest Product Market Access and Development Sub-program operates in an environment characterized by complex adaptive systems. The evaluation risk assessment conducted for the terms of reference highlighted the policy delivery complexity of this Sub-Program. Hence, the attribution of outcomes related to the activities of the sub-program is very difficult to ascertain because it is highly collaborative with a number of other programs and initiatives contributing to the same outcomes. Contribution analysis was utilized for this evaluation and examines the contribution the Program makes to the results in the context of other influencing factors.

3.0 Evaluation Findings

3.1 Key Relevance Findings

Relevance Issue 1: Ongoing Need

There is an ongoing need for the North American and Offshore elements of the EMO Program

Offshore Markets Component

Industry and government stakeholders reported a continuing need to diversify markets away from the U.S. to protect the industry against cyclical swings in the North American market. While the economic health of the forest products industry has improved, government support is considered appropriate because establishing new markets is a high-risk and long-term endeavour. Industry respondents noted that the momentum built in emerging markets such as China over the past decade must be maintained and that government support is needed to maintain this momentum.

Market development needs vary by country and product type. Offshore, the priority markets have been China, Japan and South Korea. China and South Korea have little experience building with wood. Their market strategies are focused on maximizing growth potential of Wood Frame Construction (WFC).^{Footnote 17} A WFC focus for these markets is considered appropriate by industry members because it offers optimal growth potential. Moreover, emphasis on single family homes, as noted in Korea’s market strategy, is an appropriate entry point into the market to build awareness and capacity of key target groups.

Some industry stakeholders indicated that an assessment of a broader range of opportunities is warranted for offshore markets. Indeed, the China 2015 Strategy shifted focus from WFC to “Wood in Construction”. While WFC remains a priority segment the new strategy aims to increase opportunities for high-value lumber and includes remanufacturing and hybrid buildings opportunities.^{Footnote 18} In the Korea Market Strategy Report it was noted that increasing the interest of specifiers and developers in the structural use of wood requires showing the potential for a variety of wood building applications in addition to WFC, including post and beam and the use of engineered wood products.^{Footnote 19}

While Japan is a well-established market for wood products, interview and case study evidence indicates that there are sound reasons for continued EMO funding. The Canada Wood Office has started to focus on larger building system applications like senior homes which are beyond conventional residential applications and feature the integration of Canadian forest products in mixed and hybrid applications with engineered wood products. Conventional wood frame construction is being integrated with post and beam in some designs, and sometimes with steel structures.

North American Market Component

In North America there are some risks to the conventional housing market as densification has meant more apartments and multi-storey buildings which typically use less wood.^{Footnote 20} While wood holds over a 90% market share in single family construction, it has a much lower market share in traditionally constructed (i.e. concrete/steel structures) non-residential and multi-storey construction.^{Footnote 21}

To enhance the use of wood in these new applications, EMO collaborates with wood products associations to support direct promotion, technology transfer and training activities aimed at raising awareness and increasing capacity of specifiers, builders and code officials with respect to the use of wood in non-residential and mid-rise construction. Support is also provided for technical research for the revision of the National Building Code to address barriers to the use of wood in these applications. External and internal stakeholders consulted view these activities as appropriate for diversifying wood applications in construction. Some industry association respondents also indicated that the more familiar North American market was appropriate for the trial of innovative products and systems. Moreover, given recent building code developments and heightened interest in mid-rise wood frame construction, education was seen as a key activity by Wood WORKS! respondents.

The 2010 Evaluation of the U.S. WoodWorks program and the 2014 Evaluation of the Canadian Wood WORKS! Program indicates that this type of programming (promotion and technology transfer and training) is well-suited to prepare target groups to expand the overall North American market for wood.^{Footnote 22} The National Building Code case study illustrates the importance of code changes in expanding the use of wood in multi-storey construction. Indeed, in examining past efforts, the case study notes that demonstration and promotion activities without supporting code activities were generally not effective.

Some industry respondents reported that there was a need to better incorporate a “building systems” approach into programming. A white paper produced by the Canadian Wood Council noted that the Construction Value Pathways could be enhanced through a “building systems” focus. They recommended the development of a vision for the “wood-based construction materials and systems manufacturing sector” and in support of the vision or to develop the vision a deployment roadmap to help inform future code work, science and public policy and education needs.

There is an ongoing need for direct federal involvement and funding support pertaining to market access activities in North American and offshore markets

Market access activities (codes and standards, technical research and testing, technology transfer and training) are considered critical in both offshore and North American markets. Case studies^{Footnote 23}, interviewed and documented evidence indicates that there is a high degree of non-tariff barriers currently being faced worldwide by this sector, and the government role in codes and standards is critical and if anything is increasing in importance.

Phytosanitary concerns in European, Australian and some Asian markets, and structural wood fire and seismic resistance – particularly in Asia, as well as durability (e.g. termite and rot resistance) in warmer climates such as South Asia were noted by government and industry respondents. Domestic protectionism issues are ongoing and noted to be on the rise in a number of offshore markets. In a survey of specifiers and builders in North America and internationally it was found that compliance with codes and standards has a critical impact on the decision to opt for wood as a building material.^{Footnote 24} Case Studies evidence illustrates the value of this support in offshore markets in enabling wood use in construction and enhancing alignment with North American codes and standards.

A constant theme gleaned from evaluation evidence was the critical role of the federal government in opening and maintaining markets through its support of codes and standards, and addressing non-tariff barriers. The Federal collective role was key to persuading foreign governments and buyers that Canadian wood products meet rigorous standards.

Interviews suggest that a lot of the activities conducted in some market access areas – especially government to government types of discussions related to non-tariff barriers were very important to them and represented one of the main elements they valued in CFS and Government of Canada support. This suggests that such work – typically part of staff work and funded by Operations and Maintenance (O&M) supporting CFS Industry and Trade Division – could be recognized as parts of the initiative more directly. Without such recognition respondents acknowledged that there is a risk that these important elements may be undervalued and sub-optimally resourced and managed.

EMO, Offshore component, appears to be responsive to the needs of Wood Frame Construction and dimensional lumber but less relevant for the value-added sector^{Footnote 25} which is largely made up of smaller and medium sized enterprises (SMEs) and for those outside Quebec and British Columbia

Both the North American and Offshore markets components of the program are intended to support the forest product industry including the value-added sector/s.^{Footnote 26} The sector tends to consist of smaller companies and have diverse needs. Moreover, these companies tend to compete on the basis of differentiation, perceived quality and product-market niches.

Value-added sector respondents and the case study on the value-added sector noted two primary barriers to accessing the EMO Program for the value-added sector 1) their market is primarily North America (whereas EMO’s focus in North America is to expand wood use in non-residential and mid-rise construction markets), and 2) associations representing the value-added sector may not have the financial resources to meet the minimum industry contribution. This latter approach is exacerbated by the Program’s requirement for annual increased minimum industry contributions. Internal and external stakeholder respondents agree that the increased minimum industry contribution, encourages the sustainability of the industry and ensures their strong commitment, it may also pose a barrier to associations with limited resources.

According to documents^{Footnote 27} and interviews, Canada and the United States continue to provide the best opportunities for value-added products due to their market size, proximity and improving economic conditions. The most frequently mentioned marketplace for growth^{Footnote 28} for the remanufacturing, engineered wood products, package building solutions, millwork products, cabinets, furniture and cedar segments is either Canadian regional or U.S. markets. Nevertheless, there is some interest from the industry in overseas markets. Value-added industry stakeholders indicated that these markets should be pursued on an opportunistic basis and by targeting specific niche products and market segments that offer the greatest value.

Many of the value-added association and industry member respondents indicated that they did not have a sufficiently strong voice or influence regarding overall priority-setting and planning processes among associations within the CWG, , resulting in market strategies and activities less suited to the needs of the sector. Wood product associations outside Quebec and BC^{Footnote 29} tend to have more capacity issues making it more difficult to leverage sufficient funding for appropriate projects and to submit funding proposals.

Similar findings were noted in previous evaluation of CFS Market Development Programs (2010-11). In the past five years CFS has tried to address this issue through increased provision of funding to industry associations representing the value-added sector such as the Ontario Wood Products Exports Association and Bluewater Alliance.

However, the majority of value-added sector respondents indicated that these issues persist. This suggests that there are structural program issues, in addition to other factors, contributing to insufficient access.

A review of proposals showed that associations representing the value-added sector most frequently used the EMO Program to support trade show activities. However, interviews and the value-added case study suggests that the value-added sector/s have a range of market access and development needs which are not being met or are inconsistently being met (e.g. export readiness needs, pursuing greater market opportunities in North America, insufficient capacity to conduct marketing activities, particularly online marketing, insufficient capacity to stay current on regulatory changes/ trade policies in different export markets)^{Footnote 30}. Related to market development (and also noted in the Evaluation of Forest Sector Innovation programs) is the difficulty of meeting research and technology needs of the value-added sector due to industry’s fragmentation, limited resources and capacity for innovation and research. As suggested by some industry association member respondents, this may contribute to insufficient linkages between CFS funded innovation and market development programs for the value-added sector.

The Program funds market strategy studies to assist its stakeholders, although some find they are based on varying qualities of market research and generally focus on WFC construction opportunities.^{Footnote 31} A better alignment of opportunities and needs with market strategies would provide better guidance as to the focus and size of investment for market development activities in various countries.

There is a continuing need for environmental advocacy

Environmental reputation issues are increasing in importance and federal support and involvement to address market access issues is considered critical by industry stakeholders.

There were mixed views as to the need for additional input into provincial land use planning processes such as CBFA recommendations regarding sustainable boreal forest practices.. Some provincial representatives noted that there were forest sustainability strategies and consultative planning processes in place. Other provincial respondents valued the integrated and well-informed industry-ENGO input into provincial planning processes. While some signatories consulted noted that “on the ground” progress has been slow (i.e. in terms of provincial policy and sustainable forest management practices), they indicated that there continues to be opportunities for progress at the provincial level.

Relevance Issue 2: Alignment with Government Priorities

FPMAD is aligned with Canadian and NRCan government interests and priorities

The offshore and North American components of FPMAD are consistent with NRCan’s priority of Canada’s Natural Resource Sectors being globally competitive, NRCan’s strategic outcome. The focus of the North American component on multi-storey, non-residential buildings and innovative products supports market diversification and is consistent with this outcome. Diversification of markets, the key mandate of the offshore component, directly supports enhanced economic competiveness.

According to 2014-15 Report on Plans and Priorities, NRCan works to foster a competitive forest sector by developing new forest products and end-uses in existing markets, and diversifying its geographical markets. It reduces barriers to market access posed by trade restrictions, tariffs, regulations and misconceptions of the environmental record of Canada’s forest sector and its products.^{Footnote 32}

CBFA’s mandate is consistent with the federal government’s priority of forest sector environmental reputation. NRCan financially supports the implementation of the science program of the CBFA to help the CBFA’s science program carry out independent research that aims to enable signatories to meet their commitment of making informed decisions on conservation issues.

Relevance Issue 3: Consistency with Federal Roles and Responsibilities

The federal government has jurisdiction over trade and international issues respecting forests and the federal role is appropriate to national interests.

Legislative guidance as to the appropriateness of NRCan’s role is contained in Section 6-f of the Natural Resources Act states that the Minister of Natural Resources shall, “participate in the enhancement and promotion of market access for Canada’s natural resources products”.

Provinces have legislative authority over most publicly owned forest lands while the federal government jurisdiction is based on ownership of 2% of Canada’s total forest land. However, the forest sector is important to Canada’s economy, indicating that a national interest in it is reasonable. According to the CFS 2013-14 Business Plan, the Canadian forest industry in 2011 contributed over $23.7 billion in GDP (1.9% of total), provided direct employment for 233,000 Canadians and supported 200 forest-dependent communities, mostly rural and remote.^{Footnote 33}

Opinions as to the federal / NRCan role in market development vary, but support for market development in areas of high risk, product niches and new markets generally viewed as appropriate

While there is overall agreement among respondents as to the importance of the federal government role in market access activities, there is a more ‘variable’ reaction to the federal role in market development on the part of respondents. The variability was in the degree to which it needs to be involved in market development activities – particularly those related to more mature markets for established products such as dimensional lumber. Federal support for market development activities was viewed by many stakeholders as appropriate in high risk areas such as new products, new applications and emerging markets. Market development in these circumstances requires sustained intervention for developing a market presence.

As well, the rationale for CFS involvement in market development activities becomes clearer when one looks at the complementarity of the FPMAD program with the CWG’s market access (codes and standards activities.) The market development activities are often extensions of their access activities. For example, seminars and publications have informed Japanese decision-makers (architects, builders) about changes in codes (building and fire code relaxation) and new certifications (e.g. Ministerial Approval for the Emergency Hallway Floor Assembly) which extend the use of wood in new applications.

NRCan-CFS is well positioned to provide market access and development support given its longstanding experience of the forest sector and its stakeholders and its technical and scientific expertise

There was general agreement among external stakeholders that NRCan-CFS is well suited to fund and support market access and development activities given its longstanding experience with and knowledge of the forest sector. According to documents reviewed and interviews with external stakeholders CFS is considered the most authoritative source of information on Canadian forest management and sustainable forest practices and plays an important role in informing stakeholders in these matters.

External stakeholders also highlighted the importance of NRCan’s coordinating function, coordinating the efforts of many stakeholder groups including industry associations, individual firms and forest product sub-sectors, provinces, and other federal government departments.

The NRCan-CFS role in environmental reputation activities is appropriate

Respondents from all stakeholder groups agreed that the CFS role in supporting environmental reputation to address market access issues was critical. Federal support for CBFA science was viewed by the majority of external stakeholders consulted as acceptable. Moreover, some provincial respondents view federal support as critical for enhancing the credibility of CBFA. A few respondents indicated that the CBFA aims to influence provincial policy and practices, and therefore the exclusion of the provinces from this Agreement is inappropriate and subsequently federal support for implementation of the Agreement was viewed as inappropriate.

3.2 Performance

Performance Issue 4: Effectiveness

3.2.1 Target groups have interest, capacity and support for decisions

The evidence suggests that EMO supported activities both in Offshore and in North American markets have contributed to enhanced capacity amongst designers and builders in designing and using wood through education, training, and direct technical assistance

The relationship between marketing information and wood use in potential markets is not fully understood, and emerging users (i.e. specifiers) present special communication challenges.^{Footnote 34} Studies have shown that specifiers (architects, engineers, developers, builders, etc.) have a number of concerns about wood use in the context of non-residential construction regarding structural, fire and durability performance and tend to rate steel and concrete higher than wood on product attributes (e.g. durability, fire resistance). Builders and developers are particularly concerned about costs, risks, labour, speed of construction and product quality.^{Footnote 35}

There is some evidence to show that specifiers’ interest and use of wood is increasing, and the gap between satisfaction levels between wood and steel is closing (although a preference for steel remains). A recent survey of 250 architects^{Footnote 36} concludes that visual wood products (both structural and non-structural) are growing in popularity as an architectural design element.

In a recent survey of Canadian and international specifiers^{Footnote 37} one-third of respondents, mainly European and Asian professionals, reported that they were more likely to specify wood as a building material as compared to 5 years ago. For North American professionals the reported likelihood has stayed the same. The survey also found that building professionals familiar with EMO Program reported that they were more likely to be knowledgeable and satisfied with wood, and to specify it as a building material.^{Footnote 38}

Industry members are provided with market research information and market intelligence (through the Canada Wood Offices) to pursue market opportunities, particularly WFC opportunities

Industry members reported that market research supported through the program helped to better understanding market opportunities. However, there were some noted criticisms by industry members regarding the research in terms of insufficient quality and level of detail (i.e. too general.) The various sub-sectors of value-added noted a dearth of strong market research information of key market sub-segments. This situation has been made worse by Industry Canada’s elimination of specific officers dedicated to industry groups sub-sectors.

Industry members were generally positive as to market intelligence provided by Canada Wood offices. The design of the program itself, which emphasizes collaborative arrangements (CWG, and CWC) was noted to facilitate information sharing among industry members.

Science support has contributed to the increased capacity of the CBFA science committee. However, insufficient dialogue with CFS scientists was a noted constraint. Science support has contributed to ENGO and industry consensus on recommendations in a number of areas

Signatory and science respondents noted that NRCan science support (both funding and CFS science input) has been very important to their work. It has also helped in addressing and expanding focus pertaining to goals related to developing a network of protected areas and recovery of species at risk (e.g. Caribou). Science committee members noted that they would have liked more face to face interaction with scientists. Teleconferences and webinars were noted to have mitigated this somewhat, but more engagement of CFS scientists in the dialogue would have better facilitated the process. It was also noted that the CBFA timelines and the annual planning cycle were extremely challenging for the Science Committee, particularly for academic work.

Both industry and ENGO signatory respondents acknowledged that they underwent a significant learning curve in the first few years of the agreement. Subsequently they better understood the others’ perspectives and increased their capacity and commitment to using scientific evidence. This facilitated the development of internal CBFA consensus between industry and ENGO signatories on recommendations in a number of areas: caribou range planning in Northeast Alberta, caribou action planning and wood supply in Northeast Ontario; the Caribou Action Plan on the Saskatchewan portion of the Pasquia-Bog caribou herd range; and caribou action plans and protected areas plans in Northwestern Manitoba. A number of signatories noted that the science support, while important, did not address other significant capacity demands (e.g. substantial human resources required for consultation with stakeholders) facing the implementation of the Agreement.

3.2.2 Changes to policies and practices

This section assesses the impact of FPMAD on the regulatory acceptance of Canadian wood products and building systems in building codes, standards, and policies; reduced market access issues; and the contribution to a positive environmental reputation of Canadian forest products among industry in target markets.

Codes and Standards

NRCan-CFS, including EMO, as part of a broader set of investments and activities has provided sustained funding for research support for amendments to the National Building Code of Canada allowing for six-storey multi-level wood buildings. It has also helped advance the adoption of provincial codes and standards related to multi-level wood frame construction

Various amendments to the National Building Code (2015) and to provincial building codes (BC, Quebec, Ontario and Alberta) have been made to support the building of wood structures of up to six storeys (from 4 storeys).

There is strong evidence that NRCan – including the EMO as part of a broader set of investments and activities and through its support of technical information developed under collaborative projects with the National Research Council, the Canadian Wood Council and FPInnovations– helped advance the adoption of codes and standards related to the multi-level wood frame construction by at least five years and possibly by as much as 15 years given the national model building code change process.

The change to codes allowing multi-storey wood frame buildings appears to have triggered the adoption of multi-storey building projects, as BC (provincial code adoption in 2009) went from essentially zero projects to 152 projects and 250 buildings in the five years since 2009. By contrast, Quebec, sharing a similarly keen interest in this area and going as far as to conduct the first significant demonstration of a multi-level wood building in 2006, showed no unsubsidized adoptions of multi-level wood frame construction in the years following the demonstration. With code adoption, a number of projects have begun to emerge – as economic demand has encouraged the adoption of wood frame construction for urban mid-rise housing. This suggests that explicit code acceptance is a key factor in promoting this change.

Evidence from BC, Ontario and Quebec, suggests that Wood WORKS! efforts made a significant difference in terms of both encouraging governments to adopt building code adjustments to allow mid-rise and multi-storey units and in providing supportive education and capacity building related to the code adoption. In Ontario, for example, the linkage with housing corporation officials and city planners was an important contributing factor to adoption.

The case study on the National Building Code highlighted the importance of consistent and sustained funding. Funding for technical support from NRCan and other players commenced in the 1990s. As compared to other key sources of provincial funding, NRCan funding has been comparatively consistent.

Support for codes and standards in offshore markets has enabled an increased use of wood

FPMAD also provides support for codes and standards development in offshore markets. Canada’s ability to draw on technical expertise to demonstrate fire, seismic and other structural characteristics of Canadian products – along with the trust built up among key actors over the years have been critical in influencing codes and standards development in offshore markets. Interviews and case study evidence indicate that sustained and long-term involvement is critical to the success of codes that are complementary to Canadian codes and standards. Support for testing (generally provided by FPInnovations), technical advice (CWG and FPInnovations), and the constancy of a Canadian presence and positive relations developed between CWG and code developers and government officials (afforded through EMO support for infrastructure of Canada Wood Offices) are critical enablers for success. The evaluation evidence suggests that codes and standards support in offshore markets is critical in opening up opportunities for wood use in construction.

In South Korea, the CWG is involved in the revision process to the Korean Building Code and in drafting and updating of standards covering fire testing, product performance and construction standards. CWG has worked consistently with Korean industry and government to develop the building code to enable WFC. EMO funding in support of CWG and FPInnovations technical research has contributed significantly to the establishment of codes that allow for single family and small multifamily units. However, code development for multi-family, multi-storey homes continues to require considerable time and expertise.^{Footnote 39}

In Japan, its 2x4 wood frame construction building code is expected to be revised to include Midply in 2015. The Midply wall system was developed by FPInnovations and the University of British Columbia under funding from NRCan’s Forest Innovation Program. Additional testing of the structural integrity of the system was conducted in Japan. The system is also featured in the design of a five-storey, elderly care facility, and will be the largest wooden building in Japan.

In China, the objective of code work is to support a shift in Chinese wood use to more value-added applications in wood frame construction and to increase the use of higher quality dimensional lumber. A case study on support for codes and standards in China indicates the following areas of progress:

• Code for fire protection design of buildings (GB50016-2014) was officially promulgated by Ministry of Housing and Urban Rural Development and took effect in May 2015. This code allows up to a 7-storey hybrid building: three-storey wood frame on a 4-storey concrete or steel structure. Development of this code involved intensive, multi-year collaboration including fire research and expert exchange with code developers in China and Canada and its partners in Europe and the U.S. Respondents indicated that this code should enable more opportunities for WFC.
• The Shanghai local code pertaining to WFC addressed all technical issues in one code. Attributed to this code work was the Jiangsu provincial wood frame construction design code developed and issued (2012) based on Shanghai technical code for WFC.^{Footnote 40} This is the first provincial code to allow 3+3 hybrid structure for non-residential buildings.

Some of the initiatives such as those relating to lumber grading system conformity, wood structural reroofing, wood infill walls and wood use in landscaping have not met early expectations. Furthermore, a key challenge has been to allow 4-storey (and above) wood-frame construction and taller mass timber buildings in the Chinese fire code. While progress has been made with respect to building and fire codes, Canada Wood is working within a Chinese institutional structure. It is also challenging to address some of the risk averse approaches that were taken by Chinese code committee for the assignment of design values for Canadian wood products (such as load duration effect for wood products).

Non-tariff Barriers

The Sub-Program’s market access has contributed to a great extent to the removal of non-tariff barriers for phytosanitary, seismic, fire and other risks

Interview and document evidence show that the federal government is actively involved in addressing non-tariff barriers. CFS works closely with other federal departments particularly Global Affairs Canada (GAC), CWG Offices, provincial governments and organizations such as National Lumber Grades Authority to deal with European market access issues. Canadian Food Inspection Agency, GAC and CFS work together through the Canadian Forest Phytosanitary Working Group (comprised of industry associations as well as federal and provincial government representatives). According to federal government and industry stakeholders, CFS plays an important role in providing technical support in this process, and communicating and coordinating with industry.

CFS in collaboration with its federal partners has successfully intervened in a number of market access issues. For example, Canada’s advocacy efforts on new sawn timber standards proposed by Korea led to an estimated two year postponement of these standards, allowing Canadian lumber producers to continue to export under existing rules (from late 2014 and expected to continue until at least early 2017)^{Footnote 41}. With the support of the FPMAD program, the Wood Pellets Association was able to attend sessions in Europe to work in cooperation with European power producers on a mandatory wood pellet sustainability certification system. Industry respondents noted that without that support they likely would have ended up with an unworkable certification system that would have been difficult or impossible for Canadian producers to comply with, resulting in a loss of market share.

The Wood Use Points Program,^{Footnote 42} a major Japanese government initiative (which commenced July 1, 2013) provided subsidies for using domestic wood^{Footnote 43} in both new home construction and renovation projects. According to respondents, CFS kept a “bird’s eye view” on all the pieces of the puzzle, and provided support to the federal advocacy work which was led by Global Affairs Canada. Canadian government and industry engaged in discussions with counterparts similarly affected by the Wood Use Points Program, to press for transparency, clarification of assessment criteria and fairness in recognizing non-Japanese forest products.^{Footnote 44} Several interviewees have mentioned how important the Canadian joint efforts have been. Council of Forest Industries (COFI) / CWG lobby efforts were successful as this program was discontinued and there are no further plans to bring it back. Sources indicated that raising this issue to the World Trade Organization was successful in letting this program expire without renewal. The mobilization of multiple parties in a three pronged strategy may be seen both as an illustration of Canada’s coordinated approach and possibly may have deterred future protectionist efforts.

Eastern Canadian spruce species were officially recognized in India in July 2013. Prior to that, CFS scientists participated in providing technical justification for the inclusion of these species in India’s phytosanitary regulations.

Changes to building and design practices

In Canada there has been an increased use of wood in multi-storey building construction applications. The adoption in part or full of the National Building code by a number of provincial building code changes demonstrates this enabling function.

CWC’s Wood WORKS! program has in the past five years helped the sector to expand into non-residential multi-storey construction. It has done so employing strategies ‘on-the-ground’ which appropriately fit the context. For example, in Ontario and Quebec Wood WORKS!s used a ‘Wood equal’ as opposed to ‘Wood First’ strategy such as that used in BC, working with user groups related to the construction industry and housing to garner unexpected success in terms of provincial building code acceptance of multi-storey wood frame buildings.

Various studies conducted by Wood WORKS! and industry associations suggest that events, training and information products are well received by users. End-user surveys typically show high satisfaction levels and reported increases in knowledge.^{Footnote 45} While there was more variation in percentages of respondents reporting an increased use of wood, overall the responses tended to be fairly positive. According to the Toronto 2012 survey, 70% of specifiers said Wood WORKS! offerings (i.e. Wood Solutions Fairs, technical presentations, publications, case studies, free technical support) influenced their decision to use wood in the buildings being designed by their firm.

NRCan took a leadership role through the creation of Canadian tall wood building demonstration initiative. Its efforts under this initiative are being leveraged by the Quebec and British Columbia governments, as well as the Binational Softwood Lumber Council (BSLC). This initiative inspired collaboration between the BSLC, the US department of Agriculture, the Softwood Lumber Board and the BSLC to launch a $2M US tall wood building competition in the United States.

As well, NRCan launched a Tall Wood Building Demonstration Initiative in 2013. Among demonstration projects selected are an 18-storey UBC building and a 13-storey Quebec City tower. The Binational Softwood Lumber Council, BCFII, FPInnovations and the National Research Council are also contributing financially and in in-kind. Tall wood buildings are considered viable largely because of a new generation of mass timber engineered wood products such as cross-laminated timber (CLT), laminated strand lumber (LSL) and laminated veneer lumber (LVL).

In Japan, a multi-faceted strategy is enabling Canada to gain access to markets involving larger scale multiple units

Japan is a sophisticated forest products market. As such, it appears from documents reviewed, interviews and a case study that a multifaceted strategy to address nontariff barriers (i.e. various code requirements) along with information, guidance and some education has been critical to success. This was illustrated in the case of Oriented Strand Board (OSB) where a number of government approvals, along with information, education and trade show promotions performed by CWG allowed for an increase in Canadian Forest products market share in terms of high strength shear walls using OSB. The work is poised to also allow Canada to gain access to markets involving larger scale multiple unit (e.g. eldercare) designs and even non-residential designs.

In China and South Korea a core of WFC builders, developed through Canada Wood efforts, are building WFC projects, some of them showcases for WFC buildings. However, this capacity is small and not yet self-sustaining

In China and South Korea, developing sufficient capacity of builders and specifiers is considered a long-term goal given they are an emerging market, with no recent history of building with wood. Knowledge transfer, training and education efforts in these countries have supported the development of a small group of WFC builders and architects, focused on single family homes, many of which are villa or resort homes.

Both China and South Korea’s capacity building efforts have contributed to the development of wood champions. In China for example, most of the WFC projects, some of them showcases for WFC buildings have been built by builders (and specifiers) trained through the efforts of Canada Wood College. The TEDA group built a demonstration project: two four-storey apartment buildings – noted to be a first in China.^{Footnote 46} This project culminated from an agreement signed with Ministry of Housing and Urban Rural Development, Natural Resources Canada and the Province of BC in 2010 to work collaboratively to promote wood-frame building technology in Canada. Canada and BC provided quality assurance and training support for this project.

In South Korea, use of wood in non-traditional applications has also been assisted by wood champions who have been supported by CWG training and knowledge transfer activities. For example, a leading architect pioneered the Tankong or “Peanut” house design which has resulted in significant attention in Korea. These homes can be created in any row house formation and are not as costly as traditional single family homes. Along with Tankong units, WFC can also be used for small multifamily buildings under specific limited conditions, providing an opportunity to encourage wood housing in different demographic groups.^{Footnote 47}

In 2012 a Memorandum of Understanding (MOU) between Canada and China’s Ministry of Housing and Urban Rural Development entailed cooperation of the development of “Eco-cities” technology across China. The MOU focuses on the use of wood in multi-storey buildings, green building evaluation systems, renewable and alternative energy systems, and energy-efficient building systems. As well, this highly visible project has the potential to address some of the noted barriers to wood use (particularly in emerging markets) related to public and government concerns about the structural use of wood.

A survey^{Footnote 48} of current and past university, vocational and Canada Wood College participants suggests that training and education activities have an influence on interests and behaviour regarding the use of wood in construction. Ninety-one percent (91%) indicated that the training or university course influenced them to participate in other courses or seminars in wood design or wood in construction. Of those who had completed their education or training, 69% indicated that they had experience designing or building with wood subsequent to training.

It appears that one of the key motivators in China for timber design^{Footnote 49} is the esthetic appeal of visible wood products (as opposed to wood frame construction which is typically hidden). The university support program^{Footnote 50} funded through CWG has seen an increase in the number of universities and students involved in this program – from 5 universities in 2010-11 to 15 in 2014-15 and from 678 students to 1,864 in that time period. In a survey^{Footnote 51} of university students, the majority of indicated that, after graduation, they intend to design using structural wood products. For those university students that had graduated, 70% indicated they had experience designing with wood.

Currently, in both Korea and China, there is a noted lack of a critical mass of stakeholders in the WFC industry to be self-sustaining.^{Footnote 52} In both countries there is a lack of qualified architects, structural engineers, and designers. Similarly it is difficult to interest established developers, accustomed to large concrete projects, in seeing a financial advantage, particularly given the insufficient skill sets for WFC in the overall work force. In addition, in both countries there is no formal system of inspection for WFC projects. There is also a lack of capacity for maintenance and associated service contractors for these types of buildings. In China, to carry out large projects, many need the cooperation of accredited design institutes. Unfortunately, official design institutes regard WFC projects as small scale and time consuming compared to the standardized concrete projects. The strategy in both countries has been to use single family home construction as an entry point to developing capacity.

Evidence from documents, interviews with builders, and surveys of architects, builders and university students are of the view that the largest impediment is the lack of public awareness and negative perceptions of WFC related to fire protection, moisture resistance, decay, durability, and termite resistance. Builders consulted suggested that larger developers or clusters of smaller developers require financial incentives, at least initially, to increase their commitment and capacity.

A key internal facilitating factor for strengthening capacity is strong relationships and collaborations. For example, in China strong relationships between the University of British Columbia and leading universities (supported through EMO and BC Forestry Innovation Investment) have contributed to increased capacity and interest of various professors and universities. In addition, there are strong linkages between some leading universities and Canada Wood College. A survey of university students indicates that the majority of those surveyed have also participated in numerous CWG training and knowledge transfer activities. Regarding Canada Wood College a strong relationship with the Wood Frame Alliance^{Footnote 53} has contributed to developing a niche capacity in WFC.

Significantly, strong relationships between the CWG and the Ministry of Housing and Urban Rural Development (MOHURD) through the efforts of the Joint Working Committee^{Footnote 54} have strongly influenced the establishment of the vocational school WFC program (2012-13) in 22 schools in numerous provinces across China. The vocational schools are closely linked with MOHURD and Ministry of Education (MOE) at the provincial and municipal levels. Their offices authorize funding and facilities, and make regional policy decisions on behalf of the schools. External stakeholder respondents note that Canada Wood is the main player in China regarding WFC knowledge transfer activities and as such has played an instrumental role in building existing capacity.

There has been a positive interactive effect of programming. The university training support program has increased knowledge of university professors in China regarding timber structure and design. This, in turn, has enabled their participation in Timber Design codes and standards committees. As well, university professors that have increased their capacity primarily through interactions with the University of British Columbia have submitted a proposal to the Chinese Government for restoring applications of wood structures in building construction.

Protecting Canada’s Environmental Reputation

There was a general consensus among stakeholders consulted, that protecting and enhancing environmental reputation of the Canadian forest industry has grown significantly in importance, particularly given increasing non-tariff trade barriers and domestic protectionism. Many countries are sensitive to environmental concerns, but a number of negative perceptions continue to exist related to the sustainability of our forest practices., Interviewees note that Canada needs to advance Canada’s image as a credible, sustainable supplier of wood products and to protect itself against misinformation about forest management practices.

Canada fares very well in comparison to other countries regarding sustainable forest management practices and is considered to be a leader in this area. A Conference Board of Canada report (2013) noted that Canada receives a top ranking because the amount of trees it harvests is well below its large volume of forested land. Moreover, Canada has more forest land certified to third party forest certification systems than any other country, and the amount of forest land certified has steadily increased in recent years.^{Footnote 55} A study conducted by the Forest Stewardship Certification found that “only Canada, Japan, South Africa and the U.S. were found to be low risk for all categories of applicable legislation making them low risk in terms of timber illegality.^{Footnote 56}

CFS involvement (Secretariat role) in Canadian Council of Forest Ministers Forest in Mind^{Footnote 57} program was viewed as effective. While some provincial respondents noted NRCan funding would strengthen the Department’s role and influence, NRCan involvement was viewed by those provincial stakeholders consulted as value-added. Respondents attributed this to the well-established relations between CFS and provincial/territorial stakeholders and to the experience and expertise of current CFS representatives.

Documents indicate that CFS representatives, working within the FPMAD Sub-program, regularly communicate to national and international entities about sustainable forest management practices. Industry members consulted viewed CFS as effective in performing these activities.

To address trade irritants resulting from the European Union Timber Regulation (EUTR)^{Footnote 58}, CFS in cooperation with provinces and territories develops and publishes information about Canada’s forest governance framework. CFS is regularly involved in providing input to drafting processes /or raising concerns regarding international trade regulations and directives such as the EUTR and the EU Renewable Energy Directive.

The evaluation could not comprehensively assess the extent of impact of CBFA on domestic and international stakeholders in terms of environmental reputation. The following should be considered:

• In past two years CBFA has been involved in increased domestic and international outreach activities
• CBFA regularly shares information with the Boreal Business Forum
• The Canadian Council of Forest Ministries does not play a role in communication and outreach activities pertaining to CBFA given that provinces are not part of the Agreement
• A web media search of CBFA frequently yielded media articles about the Resolute – Greenpeace dispute

Case study evidence indicates that although there have been gains made in obtaining input from indigenous peoples and in engaging provinces, there are continuing challenges in this respect. There were mixed views as to whether provinces should be more involved in CBFA planning processes (e.g. formulating recommendations to provinces). As well, ENGO capacity for sustained and long-term involvement required to achieve objectives was questioned by a number of respondents. Greenpeace an initial signatory to the Agreement withdrew from the CBFA amid conflicts with Resolute. Later Canopy, an ENGO, also withdrew citing a significant lack of progress as the reason.

CBFA Regional Working Groups have made some inroads in engaging provinces, such as Alberta, Saskatchewan, Manitoba, and Newfoundland. Some provinces have been receptive to CBFA and have used the input into their planning processes or indicated that they intend to use CBFA inputs. CBFA’s Newfoundland Working Group has provided input into the Newfoundland Sustainable Forest Management Strategy (2014-2024), which creates a substantial zone for protection of large intact landscapes – approximately 4 million hectares (35% of the island) which is off-limits to industrial scale forestry activities.^{Footnote 59}

Negotiations have been suspended in parts of Ontario and Quebec as a whole as a result of the Resolute – Greenpeace conflict. As well, in some cases CBFA planning was not aligned with provincial planning processes which made it difficult to gain provincial commitment in those instances.

3.2.3 Canadian Forest Product Sales

Macro level trade data shows that sales of wood products from Canada have both increased and diversified in location over the past five years. Sales have been strongest for dimensional lumber

There have been increased sales of Canadian wood products in international and domestic markets. Consider the following highlights.

• Steady Increased offshore sales in recent years with a tapering off in 2014: According to World Trade Atlas there has been a positive trend in sales of Canadian wood products in most product categories for both the evaluation period (2010-2015) and compared to ten years ago (2005). Table 2 shows that total exports of Canadian wood products have increased steadily to the world as well as to the USA over the evaluation period, and over the last decade. Note as well that in 2014 the United States comprised approximately 72% of Canadian wood products exports and this has been relatively consistent since 2010 (71%). As of 2014 exports to the U.S had increased significantly and worldwide exports had decreased slightly.

Table 2: Exports of Canadian Wood Products USA vs the World ($ millions CAD)

Year	2005	2010	2011	2012	2013	2014
Total Exports	23237	9963	10296	11272	14059	15513
Exports to World	2442	2905	3647	3471	4315	4280
Exports to USA	20795	7058	6650	7800	9743	11233
% exports to USA	89	71	65	69	69	72

Source: World Trade Atlas

• Increased volume of lumber shipped to China: In 2014, over 7.5 million m³ of Canadian softwood lumber was shipped to China, more than 1.5 times the volume of 2010. However, the volume of lumber exported to China declined in 2015. The total shipments of Spruce-pine-fir (SPF) by volume have increased by more than 2,000% since 2006. China has overtaken Japan as Canada’s second most important market – albeit the average prices paid for wood in Japan remain higher. The largest proportion of Canadian wood exports in the past 10 years has gone to non-structural applications^{Footnote 60}.
• Greater use of wood in Canada: CWC estimates over $400 Million in directly influenced incremental wood sales in Canada and $400 Million more in indirectly influenced sales from 2009-10 to 2014-15. Note that these estimates are based on a formula applied to wood projects identified by CWC as having been influenced by the program. While indicative of program progress, it is not an easily verified figure due to the subjective nature of the formula for rating program influence.

Canada wood products exports are up 1.5 times from 2010, with greatest gains in Saskatchewan, Quebec, and BC Interviews suggest that the structure of the program serves better the export needs of dimensional lumber companies and provinces with complementary programs

Progress in wood products sales has been good at a national level across most categories of wood products with sales up 1.56 times from 2010 (shown in Table 3), it is worth noting that increases in wood products sales have been most pronounced in Saskatchewan^{Footnote 61}, Quebec and British Columbia. According to interviews, a considerable amount of regional difference can be attributed to the availability of particular species, and proximity to overseas markets (i.e., easy access to shipping ports for Quebec and BC). Forest products associations in BC and Quebec also tend to be larger, key players in EMO already, and have access to provincial government market assistance funds.

Table 3: Exports of Products to the World by Province ($ millions CAD)

Year	2010	2011	2012	2013	2014	change 2010-2014
Canada	9963	10296	11272	14059	15513	x 1.56
Saskatchewan	54	72	175	236	224	x 4.14
Quebec	1,935	1,881	2,055	2,590	3,086	x 2.59
BC	5,048	5,650	6,120	7,680	8,090	x 1.60
Manitoba	144	144	173	209	215	x 1.49
Alberta	660	507	558	723	967	x 1.46
Ontario	1,578	1,556	1,682	2,003	2,231	x 1.41
Atlantic Canada	545	486	508	617	700	x 1.28

Source: World Trade Atlas

Evidence indicates EMO activities in target markets have had impacts on acceptance and sales of Canadian forest products for some target markets. However, in some market areas the impacts of EMO work is less clear/strong

Overall evidence from interviews, cases and document reviews shows significant positive contributions to acceptance of Canadian wood products from EMO interventions in both offshore and North American marketplaces. A survey of international specifiers indicated that those familiar with EMO Programs show higher preference ratings for Canadian wood products.^{Footnote 62} As well, 45% of survey respondents that received information about Canadian wood products indicated an increased likelihood of using or specifying wood in their next building project. According to this survey of international and North American specifiers, key drivers for specifying wood products for building materials are costs (21%); the type of structure (17%); and environmental sustainability (15%) (This latter factor was the most important driver for European professionals).^{Footnote 63}

Offshore:

Increase in acceptance of and use of wood in Korea: In Korea, there has been an increase of Canadian softwood lumber exports by more than 163% since 2002 to $73.2 in 2014^{Footnote 64} million. Data provided in Table 4, shows a steady increase in wood frame housing starts and number of permits. According to CWG and external interviewees most of this could be attributed in some way to CWG efforts (including trade shows) as they are the only ones providing wood frame construction information in that market. It was also noted that most Korean wood frame construction builders use Spruce-pine-fir (SPF) from Canada. Evidence from interviews and the Trade Shows case study suggests that CWG Korea is the main source of information on wood use in Korea, influencing architects, tradespeople, and designers through its program.

Table 4: Wood Frame Construction Housing Starts and Permits in Korea^{Footnote 65}

Wood Building	2005	2010	2011	2012	2013	2014	Jan.-Feb.	Jan.- Feb.	(%)
							2014 YTD	2015 YTD
Number of Permits	2,326	10,922	11,686	11,826	11,710	13,062	1,502	1,869	24.4
Number of Starts	1,993	9,585	10,037	10,369	10,339	11,493	1,188	1,345	13.2

There have been increases in Canadian wood imported to China from 2010 to 2014, with the largest portion going to non-structural applications. While acceptance of wood use in construction is improving it continues to be a challenge

In China, there has been an increase of Canadian wood exports by 360% since 2002 to $1.48 billion.^{Footnote 66} The largest proportion of Canadian wood exports in the past 10 years has gone to non-structural applications and reflects a ‘fit’ between the availability of Mountain Pine Beetle afflicted wood and the price driven Chinese marketplace^{Footnote 67}. However, industry and some expert respondents estimate that FPMAD and BCFII support for infrastructure and market access activities positively influenced these sales to some extent because industry was able to respond more quickly to the opportunity with infrastructure and networks already in place. As well, market access issues related to phytosanitary concerns were reported to be readily addressed.

A key expected result for the CWG in China has been to increase the use of wood in construction and to increase the quality of wood exported to China. However, most Canadian lumber exports to China are estimated to be lower grades^{Footnote 68} and as mentioned only a small portion is used in construction. A China market study ^{Footnote 69} shows 35% of Canadian wood exports to China are used in concrete forming, followed by 28% in furniture, and 10% in interior decorating. By contrast, 7% of exports are used in other applications, including wood frame construction. Canadian softwood lumber is being sold at the “front end” of the supply chain. This suggests that Western Canadian lumber exporters are not yet well positioned across the supply chain in China and are focused on selling commodities to large supply chain buyers. This sales strategy works for commodities but is not conducive to creating value as compared to selling directly to companies and end users further along the supply chain.^{Footnote 70}

Given the difficulty of estimating the end-uses of Canadian lumber, it is challenging to ascertain whether the use of lumber in structural applications has improved since 2010. A comparison of estimations of wood use for structural applications in the previous evaluation of NRCan’s market development programs (2010) to current estimations conducted through market research (2015) would suggest that the portion of Canadian lumber exports being used for structural applications has not increased.

Table 5 illustrates the significant increase in lumber exports to China from 2008 to 2014. It also shows log exports from Canada have increased substantially. Log exports are a key component of the economics of the BC coastal forest sector; many low-value stands would not be economical to harvest without the ability to export some of the logs from those stands.^{Footnote 71} However harvesting of high value stands has negative implications for Canadian employment. The extent to which log exports are from low-value stands is not known. Chinese distributors and wholesalers can purchase large volumes of lumber processed at domestic Chinese sawmills using imported logs from BC and other countries.^{Footnote 72}

However, Canada may have significant challenges in maintaining its share of China’s softwood lumber imports. Its share of China’s softwood lumber imports fell from 27.8% in September 2014 to 22.5% in September 2015. This decrease was driven both by a weak Russian ruble coupled by increased lumber exports from Europe.^{Footnote 73} In addition, there are significant challenges regarding fibre as supply constraints from damage caused by the Mountain Pine Beetle are a key impediment for the BC forest sector.^{Footnote 74}

Table 5: Canadian Exports to China by Product Type ($ Millions) 2008 to 2014

	2008	2009	2010	2011	2012	2013	2014
Logs	23	39	121	311	286	431	418
Lumber	200	338	702	1,135	1,108	1,450	1,487
Veneer Sheets	3	2	1	1	2	2	3
Wood Continuously Shaped	2	0	1	1	1	0	0
Particleboard & OSB	2	2	4	5	3	2	13
Fibreboard & MDF	1	2	1	0	0	0	0
Plywood	0	0	0	2	0	0	1
Builders' Joinery	0	0	3	2	0	3	2
Other Wood Products	2	0	2	0	0	1	0
Wooden Furniture	1	3	4	5	5	4	1
Total	235	388	839	1,462	1,405	1,894	1,925

Source: Statistics Canada, compiled by FPInnovations

Wood Construction in China

Among existing wood structures, light wood frame accounted for 67%, heavy timber for 16%, and other kinds of wood structures (mainly wood-concrete hybrids) accounted for 17%. Builders surveyed indicated that heavy timber was frequently specified by owners even though they tend to have higher construction costs because of its perceived better performance and aesthetics.^{Footnote 75}

Canada Wood estimates the volume of WFC activity based on surveys of various projects that are in the planning stage or already under construction. These estimates should be treated with some caution as respondents may overstate the volume of activity. As well, there is unknown activity across the country.^{Footnote 76} In 2012, it was estimated^{Footnote 77} that 15,500 WFC units were in the planning stages or under construction. Ninety-one percent of these were single family units.

With reference to wood in construction, according to CWG China, based on a review of the financial information for companies known to be primarily involved in wood construction, sales of wood frame construction buildings have grown from less than $10 million in 2007 when there were few companies involved in wood construction, to $350 million in 2014. Evidence from interviews and both the case studies on CWG knowledge transfer and training efforts have contributed to these sales by improving acceptance of wood in construction among a smaller niche of players.

EMO in conjunction with other coordinated initiatives have made considerable contributions to rebound of Oriented Strand Board (OSB) sales in Japan

OSB was a Canadian success story in past decades – and Canada at one time dominated international (including Japanese) markets. Fierce competition reduced Canada’s share in the early 2000s, along with other economic factors and non-tariff barriers restricting OSB use in certain applications such as use in shear walls. The Japan Case study showed that over the course of 2010-2015 various initiatives – some funded by EMO, some coordinated using EMO’s support of CWG and some conducted by multiple agencies on government to government level appears to have helped to reverse a downward trend in Canadian OSB sales assisting them to rise by roughly 60% from 2010-2014 or more than $20 million per year.

The share of exported wood products from value added industry is relatively unchanged from 2010. A review of the export national data, summarized in Table 6, shows that lumber and particleboard & OSB exports (*) continue to make up the bulk of Canadian exports, while other more value added products have shown slower or no gains at all.

Table 6: Share of Exports to Japan by Product Type (%)

	2010	2011	2012	2013	2014
Wood Fuel	3.77	3.59	3.00	2.51	2.50
Logs	4.66	6.59	6.08	6.49	5.85
Lumber*	50.69	52.18	52.54	54.48	55.90
Veneer Sheets	2.00	1.79	1.93	1.81	1.82
Wood Continuously Shaped	1.13	1.03	1.00	0.91	1.02
Particleboard & OSB*	9.03	7.72	9.62	10.75	9.22
Fibreboard & MDF	2.45	2.19	2.08	1.74	1.90
Plywood	1.89	1.71	1.52	1.63	1.79
Builders' Joinery	7.74	7.03	6.90	6.60	6.94
Other Wood Products	4.40	4.26	4.11	3.44	3.28
Wooden Furniture	12.24	11.89	11.23	9.64	9.77
Total	100.00	100.00	100.00	100.00	100.00

Source: Statistics Canada, compiled by FPInnovations

There is no precise data on total BC value-added wood products exported to Japan, it was estimated that 2007 exports were about 6-8% of the total estimated value of shipments ($4.85 billion) for that year. That equals approximately $300 million, covering a broad array of products, excluding wood structural products. Due to economic conditions, current exports are considerably lower, with conservative estimates of $100-150 million dollars for 2012. Considering that Japan pays well for many specialty products this still represents a significant contribution to the BC sector and economy.^{Footnote 78}

North America

North American non-residential and mid-rise construction continues to show improvement as building codes become more conducive to wood frame construction in mid-rise buildings: CFS respondents report that through the support of the Wood Works Program, it has influenced nearly 2000 construction projects, for incremental wood sales of up to $875 million since 2007. It has done so employing tailored strategies which fit specific contexts. For example, in Ontario and Quebec WoodWorks a ‘Wood equal’ approach was used as opposed to ‘Wood First’ strategy such as that used in BC, in working with user groups related to the construction industry and housing. This approach was described by various stakeholders as effective way to influence provincial building code acceptance of multi-storey wood frame buildings.

It is expected that the recent building code changes in Ontario, Quebec, Alberta, may bring similar results to those seen in British Columbia. Since 2009, when their building code came into force, BC has seen 35% growth in the new market segment created with the Province. According to EMO, in April 2015, there were 396 buildings using wood in up to six stories in height in all stages of the building continuum (e.g., contemplated, under construction and completed). In addition, there are mid-rise projects (some including more than one building) being built outside of BC in Edmonton (2), Calgary (2), Hamilton (1), and Ottawa (1).

Over the period of 2010-11 to 2014-15 Canadian use of wood in mid-rise construction rose considerably. As Table 7 shows the number of non-residential mid-rise projects involving wood, proportion of wood used and overall sales have increased, though not by as much as forecast and planned. Direct sales impact, from 2009-10 to 2014-15 are estimated at $414 million. While economic and marketplace factors have played an important role, evidence from the Wood WORKS! case study shows that Canadian Wood WORKS! played an important role in specific regions to promote non-residential and mid-rise wood use – along with significant provincial and national building code changes.

Table 7: Wood WORKS! as a Driver for Market Growth^{Footnote 79}

Number of Projects and Influenced Wood Sales

Year	Panel (Number of projects)	Lumber and EWP (Number of projects)	Sales (Millions de dollars)
2007/2008	35	65	$25
2008/2009	40	74	$28
2009/2010	61	134	$58
2010/2011	70	140	$59
2011/2012	65	165	$68
2012/2013	69	173	$71
2013/2014	72	152	$70
2014/2015	88	181	$88
2015/2016 (Forecast)	120 Actual volume generated in Panels in millions of sq.ft 3/8”	225 Actual volume generated in Lumber and EWP in millions of BF	$128

Direct sales only. Indirect sales from Wood Works! Activities are estimated at 1:1 to direct
2012-2017 Five year Plan Goal: 65 Projects (135 per year)
550 million in sales ($110 million per year)

It should be noted however, that reported wood sales figures related to certain kinds of interventions are difficult to interpret, and are prone to both overestimating and perhaps underestimating the impacts of EMO funding efforts. Interviews and documents suggest that the Return on Investment estimates provided for Wood WORKS! need to be considered carefully and should not be taken at face value. Firstly, the value of wood used is not the net ‘return’ on an investment but rather a level of gross sales before estimates of cost of goods sold. Secondly, while the methods for calculating the incremental value of wood used have improved, interviews and documents reviewed suggest that the estimates are highly subjective and likely prone to inflation. It should be noted that new metrics to improve accuracy of these measurements have been developed and are expected to be implemented in 2016.

Market Access activities have contributed to maintenance of or enhanced sales

According to the document review, market studies and evaluation interviews, EMO has made considerable contributions in aspects of market access and market development known to be challenges for diversifying exports of Canadian wood products overseas.

For example, the Value Added case study shows that Canadian wood pellets producers have been facing non-tariff barriers since at least 2011-12 – the time of their first assistance application to the EMO. Consultation evidence suggests that this work would not have been conducted without EMO assistance. The sales volume at risk totalled an estimated $600 million over the past four years. Additional certifications of Canadian producers are expected to add capacity such that it is expected that this will facilitate $251 million in sales to European markets in 2016 – up from the average of approximately $150 million per annum over the past four years.

In South Korea, proposed sawn lumber standards and labelling requirements were introduced in 2014 and are part of Korea’s continuing effort to revise its Act on the Sustainable Use of Timber. There was concern expressed by industry members that the proposed new standards could create market access issues for Canadian forest product exporters. Through collaborative and advocacy efforts of the federal government (GAC and CFS) and other industry stakeholders, postponement of these new standards from Korea’s original target date of late 2014 is estimated to be at least 2 years. As a result, Canada has been able to continue to export softwood lumber to Korea, with the value of annual lumber exports totalling $85.4M in 2015 and with the continued postponement will be able to continue exporting in 2016.

Trade Show Contribution to Wood Product Sales

Interviews with CWG, industry association reps, and Canadian companies noted that there is a difference between the need for in-market trade shows between value added products producers – that tend to be SMEs – and the larger commodity producing companies. The larger companies are multinationals, have the capacity to do their own relationship building. For the smaller companies, such as those represented by BC Wood or Quebec Wood Export Bureau (QWEB), trade shows provide a focal point and give them an in-market office for a few days or a week where they can meet the overseas builders and specifiers and build those relationships.

For both small and medium sized companies, the real value in trade shows is in the direct interaction with the market and sales contacts gathered. As noted by value-added respondents, these contacts, if managed, do result in increased sales, but there is generally a lag time anywhere from six months to two years. Most Trade Shows case study target group survey respondents reported having purchased Canadian wood products as a result of the trade shows they attended, while half purchased a higher grade of Canadian wood products than they had before.

There are a number of difficulties in estimating overall sales resulting from trade show activities. Reviewed performance reports from trade shows showed sales figures ranged from $500 thousand to $4.05 million. An assessment of Global Buyers Mission sales forecasts compared to actual sales concluded that the forecasts were unreliable as a means of determining sales. They also noted that variances go in both directions (i.e., greatly underestimated forecasts as well as greatly overestimated forecasts).^{Footnote 80} As noted earlier, evidence from interviews suggests that attribution to trade show activities is mixed as results in sales are likely part of a continuum of activities often over a period of years that includes trade shows.

3.2.4 Net benefits to Canadian forest product companies and Canadian communities

A number of benefits to Canadian forest products companies and communities have been observed from increased sales of Canadian wood products within North America and off-shore.

Following the economic downturn in 2008-09, mills have been reopening across Canada due to the rising demand for Canadian forest products. Employment in the forest products sector has risen to 288,660, compared to 214,140 in 2010. Industry members attributed much of this increase to increased lumber exports to China during that time period. In the words of one company “our ability to ship to China in the past 5 to 7 years has saved several of our mills and probably 600 jobs in BC alone”. As previously mentioned, there are external market factors that have strongly influenced increased exports to China. However, there is some evidence to suggest that EMO has made some contribution to these exports and therefore one could plausibly argue it has made some contribution to employment levels.

Regarding Japan, given that OSB involves manufacturing – the employment effects of increased sales may be considered significant. At a conservative multiplier of 4-5 person years of direct and indirect employment per millions of sales, an increase of $20 million in sales volume represents over 100 FTEs per year in Canadian communities with a high unemployment rate. Should these shear wall applications spread more widely – given Japan is a market leader – the broader OSB production and therefore employment effects could be even larger.

The benefits to increased wood use for non-residential and mid-rise buildings include building cost efficiencies and net GHG reductions. Regarding the impacts of the national and provincial building codes, while it is premature to note significant commercial results, early indications are promising. Cost savings, likely shared between suppliers and users, have been significant, estimated as between 11% and 15% per volume in early trials in British Columbia. Although the savings per building will vary considerably by size and type of structure, the well-known REMY development in B. C., a 190,000 square foot, six-storey complex) resulted in savings of 12% or $4.8 million, according to sources consulted for the NBC case study. Using more conservative estimates^{Footnote 81} of the market applications and the timeframe for benefits, this has the potential to amount to hundreds of millions of dollars of benefits to Canada.

UNINTENDED OUTCOMES

Offshore market diversification is increasing the need for federal resources to deal with market access issues such as phytosanitary issues.

Various spinoff commercial effects of multi-level buildings/large wooden structures include a positive impact on engineered wood products such as Cross Laminated Timber (CLT) panel use.

3.3 Efficiency and Economy

Performance Issue 5: Efficiency and Economy

The design of the Sub-program facilitates coordination across programs and engagement of numerous association and key producer groups, but it appears to be less appropriate for engaging smaller/ value-added groups and reach is uneven across provinces

Documents show that EMO has a governance structure much like the Canada Wood Export Program before it, which increase the opportunities for coordination across the programs. The committee structures involve representatives from NRCan senior management, other government departments, provinces (BC through BCFII and Quebec through Quebec Ministry of Forests, Wildlife and Parks, Ontario through the Ontario Ministry of Natural Resources) and industry.

Documents and evidence of correspondence and projects suggest that the programs have effectively engaged stakeholders in the planning and delivery of program activities in Canada and internationally. These include the CWG, the Canadian Wood Council, and the Quebec Wood Export Bureau. These relationships help to leverage funding, reduce program overlap and duplication, and present a coordinated, Canadian image in international markets.

This strategy appears to risk assistance unduly favouring larger enterprises and those Associations that receive larger portions of provincial funding.^{Footnote 82} Program design is more challenging for engaging smaller / value-added players or for those receiving less provincial funding. The program’s leveraging requirements are geared more towards Association representing larger, established stakeholders.

Evidence suggests that FPMAD has generally been delivered efficiently and economically

The FPMAD has over the past five years encouraged the consolidation of association initiatives which has in the view of many respondents improved economy, efficiency and effectiveness. The consolidation of the market access and development initiatives under CWG offshore and under CWC domestically has reduced duplications and in key areas streamlined delivery. There was some duplication with CWG and BCFII in China, but this is being addressed through streamlining of offices. FPMAD combines activities previously delivered under three previous separate forest sector–related programs^{Footnote 83} under one program – EMO.

CFS and BCFII coordination was noted by government and industry respondents to be an excellent example of efficiency. Proponents submit a single proposal to both EMO and BCFII through an internet-based online system. Each reporting period, they also submit online one status report that is used by both funding organizations. Finally, NRCan and FII often audit the joint recipients together, so that they are audited once only, to satisfy the two funders.
 

Over the five year period of the evaluation, NRCan expended $74.88M on contribution funding and $8.15 on O&M and salaries. However, FPMAD is more than a contribution program with CFS staff providing expertise, analysis, leadership, and market access activities and so comparisons with other contribution programs would be misleading.

A review of proposals and interim reports and interviews show that coordination between associations (The Engineered Wood Association (APA), BC Wood, CWG and QWEB) has been reasonably good. Interim reports examined showed that industry associations had collaborated on trade shows (e.g., in 2011/12 BC Wood members took part in the Japan Home Show with associations such as APA, Canada Tsuga and FPAC) leading BC Wood to “cut out” the common/industry branding space in the pavilion and as a result reduce the floorspace to half of what was used in previous years. This represents both an efficiency as well as improved focus. Some respondents noted that there could be some enhancements to BCFII and CW Korea coordination.

Document and case study evidence suggests that market access and development projects are generally completed on time and within budgets. However the short-term time frame (annual) is problematic. The application of dedicated, highly collaborative, and experienced NRCan-CFS staff over decades has similarly had a positive effect on trust and applied expertise.

Offshore training activities

In accordance with best practice literature on training, to be effective training has to be considered in conjunction with other strategies to better effect change. While training is viewed within the context of other interventions such as codes and standards, there is a need for more complementary strategies to reinforce training efforts. For example, interviewees / documents suggested that more tools and guides are needed to support education initiatives. There is a shortage of wood specific design software which results in special structural design computations. As well, training would likely benefit from more comprehensive training needs assessments. The China case study on training and education activities shows that while training was developed in response to CW’s strategic plan as well as market research, comprehensive needs assessments may yield more responsive training efforts by more fully considering the needs of the end-users.

The Case Study on training and education activities shows that these activities have become more efficient (decreased CWG costs of training per student) as the reach of training has increased and the Chinese government is delivering the vocational training program with the CWG providing expertise and support with the view to making training self-sustaining.

A more integrated approach to capacity building and training could consider a broader range of wood products. As noted in Korea’s market strategy (2014), if architects, engineers, and developers are shown the potential of a variety of wood building applications including post and beam and use of Engineered Wood Product (EWP)/glulam, in addition to providing education on the benefits to WFC, this could help to further build interest and professional wood champions.

Connections to some user communities are insufficient

On the North American front, increased effort to include various user communities such as housing corporations and associations representing commercial and / or institutional builders appears to show promise. An increased user focus could also apply to the energy and bio-chemical sectors which might increase Wood WORKS! value. Such an effort would be accompanied by a more strategic approach to planning and investment considering all the actors in building systems and beyond.

For the Offshore component, some respondents note that increased linkages to the Canadian construction industry would be helpful for capacity building. This used to happen through Canada Mortgage and Housing Corporation (CMHC), but has ended as a result of CMHC budget reductions.

The application and reporting processes are burdensome, particularly for those less experienced with the system

Online filing and the combination of applications with the BC and federal system was recognized as efficient but there was no mention of this efficiency for those outside of BC. Those with an established history noted that processes of the EMO Program were efficient. Others found the annual funding process and detailed activity reporting burdensome. It was also seen to create uncertainty, since most market access and many market development activities are multi-year in terms of requirements, requiring multiple year commitments.

By involving many if not all public sector parties (Federal, Provincial) interested in supporting the market development of forest products, EMO has avoided duplication for the Canadian Wood WORKS! program. On the other hand, the planning and reporting burden for Wood WORKS! is viewed as being high. Notwithstanding recent online sharing initiatives by NRCan-CFS and BC FII, there are still many incompatibilities in information requirements and reporting (including timeframes) among Wood WORKS! funders. Some effort would appear appropriate to render planning and reporting more consistent – especially given the fact that Wood WORKS initiatives are often long term and multifaceted – factors suggesting the need for more integrated and strategic approaches by all concerned.

Multiple funding sources and funders create opportunity and costs. For example, oversight is increased as multiple funders / stakeholders provide investment and require reports on Return on Investment. On the other hand, multiple investors increase reporting burden and because of uncoordinated financial / funding cycles, cause frequent uncertainty in program sustainability. According to some respondents, this uncertainty can impact Wood WORKS!’s ability to take on a more strategic approach to program delivery.

Performance reporting is detailed and therefore it is difficult to assess results at a strategic level

While performance measurement has improved, it is very detailed and difficult to decipher the overall performance story. On a positive note, exit surveys of architects, engineers, contractors and builders identify tactics the Program can initiate to increase wood use in construction. Past surveys have also attempted to capture the degree to which the activities of the program have improved perception or attitude that ultimately influenced wood use.

There were a number of issues noted with respect to the proponent reporting requirements:

1. The performance measurement system is detailed with many indicators making it difficult to assess how well the programs have done according to expectations and key results.
2. Performance measurement regarding feedback on the use of various information products (e.g. guides, information sheets etc.) was not evident in the periodic and annual reports reviewed. Performance metrics tend to measure production and distribution rather than users’ reactions and influence on use. Similarly performance information is lacking on users’ reactions and influence on use regarding manuals, guides or technical information.
3. Performance reports did not sufficiently include how data such as increased sales was estimated making it difficult to judge its validity.  There is a cautionary note about the use of the “conversions” focus being used by U.S. Wood WORKS! – Interview evidence suggests that the credibility of the data is suspect and may distract from a more strategic focus.

The implementation of CBFA requires significant human resource capacity

Overall, implementation of many key CBFA milestones has been delayed^{Footnote 84}, with progress somewhat accelerated in 2013-14 and 2014-15 subsequent to a “reset” process in 2012 as well as support from NRCan for science and planning. However, in 2014-15, the Steering Committee renewed discussions toward identifying major efficiencies in implementation to address the human resource burdens that the pace of activity was placing on all parties^{Footnote 85}. ENGOs in particular likely do not have sustained capacity for the high level of effort required in consultative work and the lengthy time horizons required to achieve this type of work.

There were some issues arising from the CBFA Case Study:

• There are significant challenges implementing and delivering CBFA – it requires significant human resource capacity, extensive consultation, and long timelines to achieve provincial policy impacts.
• Science support for the implementation of the Agreement has augmented some of the boreal forest related science work at CFIA, although some respondents suggest enhanced collaboration/funding for provinces and CFS on boreal forest science would be a better alternative.

Leveraging

Industry contributions have increased over the past five years from $4.84M in 2010-11 to $11.26M in 2014-15. The leveraging ratio is 1:3.5 (NRCan to other sources of funds). NRCan’s cost sharing agreement stipulates, with some exceptions that for both offshore and North American markets NRCan can provide up to 50% of the funding. NRCan expenditures have decreased from $19.3M in 2010-11 to $14M in 2014-15. NRCan has required increased minimum industry contributions. The minimum industry contribution in 2014-15 was 20%, and increases each year thereafter (25% in 15/16 and 27% in 16/17) to approach a contribution of one-third of the total expenditures by each of industry, EMO and provincial funding (note that the EMO Program may adjust its contribution as appropriate, within the 50% maximum, for projects in regions with less available provincial funding sources). Evidence suggests that industry stakeholders would not be able to deliver the program to the same extent. For many market access activities, government support and involvement is considered to be critical.

BCFII provides significantly more funding to the EMO Program proponents activities than any other province (i.e. they often contribute toward EMO funded projects). Some industry association member respondents indicate this may lead to a bias within EMO towards investment in activities that support BC industry over other provinces because associations in that province contribute more money, hence leveraging larger sums of funding. The significant BCFII contributions available to project proponents may make it easier for BC associations to propose projects for EMO funding, leaving less for the private sector to fund. This design efficiently coordinates EMO and BCFII efforts, but it may have an impact on the regional distribution of EMO funding as a significant amount of eligible applicants are based in BC. EMO does operate a separate evaluation committee to evaluate projects prosed by Eastern wood products association for funding. However, fewer of these are proposed because of greater resources required from industry in that region compared to BC.

Table 8: Expenditures for the Forest Products Market Access and Development Sub-Program from 2010-11 to 2014-15 by Sources ($ millions)

Levels of funding by Component and Sources	Fiscal Year					Total
	2010-11Footnote 86	2011-12	2012-13	2013-14	2014-15
Offshore Markets
NRCan	10.4	8.3	11.4	9.1	8.9	48.02
Other Federal Departments	0.08	0.08	0.0	0.0	0.0	0.16
Forest Industry Associations	1.03	1.83	2.28	2.82	3.58	11.54
British Columbia’s Forest Innovation Investment (FII)	5.66	4.61	4.89	4.03	4.22	23.40
Provinces	0.86	0.70	0.61	0.54	0.65	3.35
Accommodations to PWGSC	0.07	0.07	0.10	0.10	0.10	0.44
Others	0.00	0.02	0.00	0.00	0.01	0.04
Sub-total	18.10	15.56	19.25	16.60	17.44	86.95
North American (incl. CBFA)
NRCan	8.9	5.9	6.6	6.2	5.1	35.02
Other Federal Departments	27.42	0.42	0.50	0.37	0.45	29.17
Forest Industry Associations	3.54	3.52	4.19	5.28	7.68	24.21
BC FII	1.22	1.32	1.47	1.39	1.47	6.85
Provinces	36.23	1.74	1.46	1.39	1.51	42.34
Accommodations to PWGSC	0.00	0.01	0.00	0.00	0.00	0.01
Others	69.13Footnote 87	0.06	0.50	0.0	0.0	69.69
Sub-total	146.43	12.96	14.64	14.77	16.17	204.97
Total	164.53	28.52	33.89	31.37	33.61	291.92

4.0 Conclusions

The EMO Program is relevant and continuing funding is needed for forest products to address market access issues in both mature and emerging markets. Support for market development activities in emerging markets or to support new wood products or systems is appropriate and important to achieving long-term objectives in these markets. The EMO Program has contributed to increased use of wood in both North American and offshore markets. In offshore markets, progress is being made in terms of capacity-building, and codes and standards development to further enable the design and development of mid-rise wood structures.

EMO Program reach needs to be enhanced to associations representing the value-added sectors and to associations in provinces outside British Columbia and Quebec. Value-added sector respondents and the Case study on the value-added sector noted two primary barriers to accessing the EMO Program for the value-added sector 1) their market is primarily North America (whereas EMO’s focus in North America is to expand wood use in non-residential and mid-rise construction markets), and 2) associations representing the value-added sector may not have the financial resources to meet the minimum industry contribution. This latter barrier is exacerbated by the Program’s requirement for annual increased minimum industry contributions.

Similar findings were noted in previous evaluation of CFS Market Development Programs (2010-11). In the past five years CFS has attempted to address this issue through increased provision of funding to industry associations representing the value-added sector. However, the majority of value-added sector respondents indicated that these issues persist. This suggests that there are structural program issues, in addition to other factors, contributing to insufficient access to EMO funding through associations.

The evaluation found that market access activities under FPMAD, conducted by the CFS in collaboration with other government departments were highly effective. Moreover CFS is a critical source of technical information and plays an important coordinating and integrating role in various market access and development initiatives. The success of the overall Sub-Program owes much to these activities and to the combined effects of these activities with market development activities.

Currently CBFA faces human resource capacity issues. Achievement of outcomes requires considerable human resources for planning and consultation. Moreover, achievement of these outcomes would have to occur within the provincial planning cycles, which are typically of long duration. The evaluation raises questions as to the capacity of various stakeholders, particularly environmental groups, to sustain this type of involvement. As well, while there has been some success engaging Indigenous groups, provinces and other sectors (e.g. oil and gas), overall these relationships need to be strengthened for the Agreement to achieve its goals.