Wendy Stueck, Globe & Mail,  February 2, 2007

VANCOUVER -- With the removal of some of its privately owned lands from provincial tree-farm licences, Duncan-based Western Forest Products Inc. now has the right to subdivide and sell wooded properties that in some cases are within an hour's drive of Victoria.

And although those parcels account for a small portion of the lands freed up under an agreement with the province this week, they represent by far the greatest value, the head of the company said yesterday.

"Any value in this [removal from the tree-farm licences] would be in the higher and better-use properties," Western Forest chief executive officer Reynold Hert said yesterday. "Where the land, and the combination of land and timber on it, is now of much more value than just the timber on it going through our mills."

Tree-farm licences are agreements between landholders and the province that govern such factors as how much timber can be cut and what measures must be taken to protect the environment.

The notion of removing some private land from those licences has angered environmental group Western Canada Wilderness Committee, which argues that the agreement will weaken environmental protection for logging operations and result in forest being sold for subdivisions.

"It means that the company is now able to do real-estate development and sell it off for housing," group spokesman Ken Wu said.

Mr. Hert said Western Forest is not a property developer and believes the best use for most of its lands is still logging. But, he said, the company asked the province for the exclusion so it would have the flexibility to generate greater value for some of its land, raising cash that it would use to pay down debt and invest in operations.

The province on Wednesday said it had approved the removal of 28,000 hectares (about 70,000 acres) of private land from three tree-farm licences, all operated by Western Forest. More than half of the land in question is on northern Vancouver Island. About 12,000 hectares will come from a tree-farm licence near Jordan River on southern Vancouver Island.

The area between Sooke and Jordan River has been sought by property developers and would-be recreational landholders, said Rudy Nielsen, who sells recreational property through his Niho Land and Cattle Co. and runs a related consulting company, Landcor Data Corp.

"I have never seen the kind of demand for large tracts of land as I have seen in the past year," Mr. Neilsen said.

According to Landcor data, prices for raw land in the Sooke area have soared to an average of $113,000 an acre last year from $17,000 an acre in 1996.

In years past, Mr. Neilsen used to log land for timber value before selling it; now he doesn't bother.

"There is tremendous value in the land that has an ocean or lake view with the trees standing on it," he said. "People are paying top dollar for it."

Private lands were brought under the umbrella of tree-farm licences in the 1950s. In exchange for putting their property into tree-farm licences, land owners typically received rights to Crown-owned timber.

Under the agreement with the province, Western Forest has agreed to a three-year ban on log exports and to several other conditions.

The exclusion from tree-farm licences will give the company more flexibility to build a profitable, sustainable business, Forests Minister Rich Coleman said yesterday.