Wildfires a growing threat to Canadian forestry sector – QBE
Wildfires a growing threat to Canadian forestry sector – QBE | Insurance Business Canada
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Wildfires a growing threat to Canadian forestry sector – QBE
Report names top challenges
Insurance News
By
Mika Pangilinan
Canada’s forestry sector is facing a “persistent and growing risk” from wildfires, resulting in the destruction of timber resources, the closure of sawmills, and disruptions to supply chains, according to a recent report by QBE.
Although the frequency of wildfires has decreased over the past 25 years, their impact has intensified, with the burned area nearly tripling during that same period.
But even before the 2023 wildfires, Canadian wood product output was already projected to decline by 5% in 2023 due to the sector’s heavy reliance on the housebuilding industry and the US market.
This indicates the vulnerability of wood manufacturing to tightening monetary policies, according to QBE, as higher interest rates increase mortgage costs and slows housebuilding activity.
Moreover, the report revealed that two-thirds of Canada’s softwood lumber production is exported, with the United States accounting for 89% of its manufactured wood products.
Consequently, any depreciation of the US dollar against the Canadian dollar or increased US protectionism would have dire consequences for the industry.
QBE also drew attention to the ongoing trade disputes between the two countries regarding softwood lumber.
Addressing risks facing the forestry sector
The report proposed several strategies to mitigate risks to the forestry sector. One key recommendation is diversifying customer bases beyond the US by exploring emerging markets such as India, where interest in wood as a construction material is growing.
Furthermore, wood manufacturing businesses could extract more value from trees by adopting innovative technologies and venturing into higher-value markets that produce premium industrial and consumer products.
The report also suggested the conversion of “waste” wood products into heat, plastics, and non-toxic chemicals.
“As a renewable resource, wood offers great business prospects over the long term,” said Ben Hunter, director of QBE Canada. “If the forestry sector manages to enhance its resilience, it will benefit both the economy and the environment.”
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