The State of the Forest Economy panel opened Day 2 of the 2026 COFI Convention with a data-driven examination of trade diversification, housing demand, investment attractiveness, and BC’s declining competitive position relative to other Canadian and North American jurisdictions. The session was moderated by Kurt Niquidet, COFI’s Vice President and Chief Economist, who noted that COFI’s latest economic impact study — released earlier in the week — underscores that even during a period of contraction, forestry remains an indispensable pillar of the BC economy. Panelists were Hamir Patel, Executive Director and Paper & Forest Products Analyst at CIBC; Claire Huxtable, Senior Analyst at ERA Forest Products Research; and Jason Krips, President and CEO of the Alberta Forest Products Association.

Niquidet opened by noting that 55% of BC’s forest product exports currently go to the US, with softwood lumber’s dependence even higher at approximately 75%, framing the central challenge: how much of that exposure can realistically be redirected to other markets. Patel said he is skeptical that the current US export mix will look materially different a decade from now, pointing to different grading standards and the reality that Canadian producers have less low-grade fibre to offer China than they once did. Krips said Alberta’s exposure to the US is even more acute — approximately 95% of the province’s lumber exports not consumed domestically go to the US, with Texas alone absorbing more product than Japan, China, and Korea combined — underscoring that nothing will come close to replacing the US market and making stability in that trading relationship the priority.

Huxtable put numbers to the scale of the diversification challenge. Canadian lumber exports to the US in 2024 were approximately 12 billion board feet, and with exports down roughly 25% since, about 3 billion board feet needs to find a new home. Asia-Pacific markets combined — China, Japan, and other Asian markets — currently absorb about 1.1 billion board feet of Canadian lumber annually, against a backdrop of China’s residential housing starts having fallen roughly 75% since 2020 and Japan’s population projected to decline from 125 million today to approximately 100 million by 2050. She said doubling Asian volumes over the next decade is possible but still falls well short of the gap, and that new products, higher customer engagement, and significant investment will be required.

On US housing demand, both Patel and Huxtable projected starts in the range of 1.3 million this year, rising modestly toward 1.4 million next year. Patel said the lock-in effect is a significant constraint: approximately 70% of outstanding US mortgages carry rates below 5%, while prevailing rates for new purchases are around 6.4%, leaving consumers unable or unwilling to move. He said repair and renovation demand is also soft, with a meaningful recovery likely awaiting 2027 at the earliest and depending heavily on mortgage rates moving toward 5.5% or below. Huxtable added that the frequently cited underbuilt thesis has not proven to be a reliable indicator of timing, and that in parts of the US South, new home inventory is actually higher in absolute terms than it was during the global financial crisis.

On BC’s declining competitive position, Patel said the challenge comes down to fibre access, a difficult regulatory environment, and cost structure — noting that lumber break-even costs in BC with duties are roughly $100 higher than in Alberta. He said he cannot currently identify any of the companies he covers with substantial new investment plans in BC, contrasting that with Alberta where those same companies describe it as their preferred jurisdiction. Huxtable said capital follows returns and avoids uncertainty, providing numbers that make the dynamic real: over a roughly decade-long period spanning recent years and projected capacity changes, Western Canada saw approximately 700 million board feet of lumber capacity added but 6.7 billion board feet of closures, while the US South saw 9.5 billion board feet of capacity added over the same period. She said BC does have inherent advantages including timber quality, experienced workers, and efficient mill operations, and that challenges emerging in other jurisdictions may help reorder the competitive picture over time.

On the outlook for BC, Patel said he does not see a recovery without a major policy change, projecting one to two additional pulp mill closures and another billion board feet of lumber production decline over the next three years. Huxtable noted the striking fact that New Zealand is currently delivering comparable timber volumes to BC, and said the path forward depends on both improved fibre availability and end market development. Krips said Alberta’s relative stability comes down to a consistent policy environment with few stacked policy changes, a responsive provincial government, and an investment climate with the certainty needed to reinvest in mill efficiency. He also pointed to Alberta’s seven-year public engagement campaign, Love Alberta Forests, as evidence that sustained public communications work — noting that forest sector approval ratings in Alberta now rank second only to agriculture, ahead of oil and gas — and encouraged BC to build on the Forestry is a Solution campaign in the same way.

On other product and market opportunities, panelists pointed to niche lumber opportunities in Japan’s growing tourism sector and seniors housing market as areas where premium pricing is available for Canadian product, with Krips giving a shoutout to Canada Wood Group’s work developing those markets and specifically the demand for J-grade lumber. On the pulp side, Krips noted early-stage conversations in Alberta around bioenergy, carbon capture, and carbon storage as potential additional revenue streams, while Huxtable said bioproducts, pellets, and sustainable aviation fuel represent genuine opportunities but require significant investment and proof of concept before they can be considered low-hanging fruit.

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