New-home buyers and those planning major remodeling projects can expect to pay more in the coming months, due to increased lumber prices.

Even before the terrorist attacks in September cast an uncertain future for the North American economy, British Columbia lumber producers were facing two major problems -- one political, and one environmental.

The political problem is the long-running softwood lumber dispute between Canada and the United States.

In August, the U.S. Department of Commerce placed a 19.3 per cent countervailing duty on Canadian lumber shipments to the U.S. The National Association of Home Builders in the U.S. says this decision could add up to $1,000 to the cost of a new home in the U.S. In Canada, the decision has resulted in the shutdown of several sawmills and the layoff of thousands of workers.

Canadian Trade Minister Pierre Pettigrew calls the duty a "tax" that U.S. home buyers are being asked to pay to support U.S. lumber producers. In three previous countervailing duty cases, dating back to 1983, similar charges that the Canadian lumber industry was being unfairly subsidized did not stick.

The Canadian industry was planning a public relations campaign aimed at U.S. consumers to explain its side of the issue, but the campaign was called off following the terrorist attacks. Negotiations to end the dispute continued in September, but the Canadian government has already challenged the ruling with the World Trade Organization, and pledged to take whatever legal action is necessary to overturn the ruling.

The environmental problem facing B.C. lumber producers is beetles -- not the kind that sing, but the ones that have infested $4.2 billion worth of timber in the B.C. Interior.

The mountain pine beetle infestation is the largest in the history of the province. The beetle attacks lodgepole pine, which is more than half of all the forests in B.C. The Ministry of Forests says the area infested is twice the size of the entire Vancouver Island -- more than 500,000 hectares of trees.

Hot, dry summers and mild winters are being blamed for the infestation, which also includes two other kinds of insects -- spruce beetles and Douglas-fir beetles. They attack and kill mature trees by boring through the bark and laying eggs in thee phloem area beneath the bark. When the eggs hatch, they mine the phloem area and cut off the tree's supply of nutrients and water. The beetles also carry a fungus that causes dehydration and inhibits a tree's natural defences against beetle attacks, says the Ministry of Forests.

Logs that have been infested are still structurally sound and can be used for general construction, but they have a blue stain that cuts their value. There are also concerns that harvested infected wood, if not properly handled, can infect healthy trees after being transported.

Treatment of the problem is controversial. Some environmentalists believe nature should be allowed to take its course, and that nothing should be done. Others in the industry favour massive clear-cutting operations in infected areas to eliminate the problem.

To date the B.C. government has adopted a compromise approach, which includes limited clear cutting. But it says that for every infested tree removed, between 10 and 100 trees will be saved from attack the following year, so doing nothing is not an option. It has also used pheromone baiting, which lures beetles into trees where they can be contained and destroyed, removing single infested trees, and falling and burning infested trees to prevent the spread of beetles to other areas.

The government also struck a task force to address the problem. A final action plan is to be presented to the ministry this month.

Meanwhile, with the trade dispute, the beetle infestation and economic uncertainty, Canada's lumber prices continue to fluctuate. If demand stays strong, as many experts predict it will, expect prices to start climbing.

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