A proposed arrangement that could provide the Kaska Nation with hundreds of thousands of dollars in timber royalties was signed Wednesday between the Kaska and the Yukon government.

The agreement-in-principle calls for the creation of a new body responsible for managing timber allocated for harvest in the traditional territory of the Kaska.

It also provides the Kaska with the first right of refusal on 50 per cent of any management contracts issued by the new authority, provided their price is competitive.

It further gives the Kaska all stumpage fees or royalties collected on the harvested timber, as a means of helping build their capacity in forest management. The arrangement could potentially generate hundreds of thousands of dollars annually for the Kaska.

The agree-in-principle was signed in Watson Lake Wednesday between Chief Liard McMillan of the Liard First Nation and Energy, Mines and Resources Minister Archie Lang.

'This is a good example of what can be accomplished when first nation and public governments work together,' McMillan said during a telephone press conference. 'I think it was a right step in establishing a sustainable industry in Watson Lake.'

Lang, a former Watson Lake resident of 23 years, emphasized it was not the Yukon government that was bringing the timber resources to the table to negotiate an agreement, but was the Kaska Nation putting its resources on the table for negotiation.

The Kaska have not signed a final land claim agreement and broke off negotiations with Ottawa and the Yukon government two years ago.

Any suggestion the government was giving away the farm by providing the Kaska with the stumpage fees is simply not the case, he said.

The Kaska, the minister insisted, have 100 per cent of the resources in their traditional territory.

Lang said yesterday's agreement is a major stepping stone to reviving a logging industry and creating jobs in southeast Yukon. It's also a requirement of the 2002 agreement between the Kaska, the Yukon government and Ottawa to revamp forest management practices in the southeast with an aim of developing a comprehensive forest management plan, the minister explained.

The 2002 agreement arose out of a federal audit of forest management in the southeast by the federal Department of Northern Affairs.

The audit by George Tough concluded Ottawa had mismanaged the resource to such an extent that the management structure would have to be rebuilt from the ground up.

To that end, the Tough report recommended the creation of the Kaska Forest Stewardship Council, a body of Kaska and government representatives charged with developing the comprehensive management plan.

The council's mandate runs out next year. While awaiting completion of the management plan, the council has approved an interim harvest allocation expected to be 120,000 cu. m this year, in keeping with another of Tough's recommendations. The industry has been dead in Watson Lake and across the southeast for five years.

'This agreement-in-principle, coupled with the planning being conducted by the Kaska Forest Stewardship Council, lays a solid foundation for a healthy forest industry in the Yukon,' Dave Porter, chair of the Kaska Dena Council of northern B.C., said in a press release.

'(It's) one that will produce economic activity and also one that will ensure that best forest practices are brought forward to develop the resource.'

There has, however, been suggestions from some in the logging industry that even with an identified wood supply for this year, there won't be any significant harvest because of current market conditions, and allocated volumes that are too small to attract large-scale investment.

Don Hutton, Lang's assistant deputy minister of resource development, said by phone from Watson Lake the intent is to let the stewardship council complete its work developing a master management plan. The plan will identify the annual allowable harvest, he said.

The new forest authority, Hutton added, will be responsible for allocating and managing the annual harvest.

Hutton said the amount of stumpage fees paid to the Kaska will depend entirely on the level of harvest.

For example, he explained, if 120,000 cu. m were harvested at a stumpage fee of $4 per cu. m, the stumpage fee paid to the Kaska would be about $480,000.

Hutton explained the stumpage fee for the Yukon does not include other fees like reforestation fees that are also levied on harvest rights, but are rather a straight royalty for the wood.

The provision to transfer the stumpage fees to the Kaska will only come into effect when a final agreement is signed off, cabinet spokesman Peter Carr pointed out.

Lang declined to say whether the provision to provide the Kaska with the stumpage fees from all wood cut on their traditional territory would set a precedent for timber harvesting arrangements with other first nations.

The minister said each harvest agreement with the different first nations will be a product of individual government-to-government negotiations. He did add the other first nations were aware of what was being negotiated in Watson Lake.

Both the press release and the Liard First Nation chief referred to the development of a 'small, sustainable' industry for the southeast. McMillan said it's premature to state the size of the annual allowable harvest the stewardship council will recommend.

Lang said the word 'small' was to distinguish the eventual size of the Yukon harvest from what's typical in B.C. and Alberta.

A recent evaluation of the forest resources in the Yukon, accounting for different scenarios and values, has suggested the annual sustainable harvest could fall somewhere between 50,000 cu. m to 1.6 million depending on which variables and values are plugged into the equation.

The 120,000 cu. m earmarked for an interim wood supply this year is equivalent to approximately 3,400 logging truck loads.