Consequences of the recent deal between the U.S. and Canada over trade in lumber are beginning to show.

This week, West Fraser Timber used a refund in duties it had paid on exports to the U.S. to buy 13 sawmills in the U.S. South. The purchase turns the Vancouver firm into the continent’s second-biggest lumber producer after Weyerhaeuser, and potentially positions the company to take advantage of a cyclical upturn in the industry.

Meanwhile changes in British Columbia resulting from the trade dispute are squeezing smaller firms and rural towns across the region. For example, a Quesnel mill that focuses on niche products is threatened by less supply from government-owned forests. Similar pressures now face towns across the province, where the main industry’s future is in doubt.

An investment group plans to build a $75 million biodiesel plant in eastern Washington, the latest such announcement since voters this month approved a mandate for new renewable energy in the state.

More than a dozen projects in Washington are in the works, including several in eastern Washington, according to recent reports. Two projects near Spokane recently adjusted plans to take advantage of tax incentives while another in Aberdeen aims to fill an economic void on the coast. The latest refinery, near Pasco, eventually would produce about 63 million gallons annually of biodiesel from soy, palm and canola oils which would be sold in Seattle, Portland and other markets.

The sudden closure of a coal mine in rural southwest Washington this week struck a blow to the area’s economy and raised questions about the region’s power supply just as a new emphasis on renewable energy begins to take hold.

Calgary-based energy company TransAlta blamed the closure of its 30-year-old Centralia mine on rising safety costs and regulatory delays that prevented expansion. The closure means the loss of about 600 jobs that paid an average of $65,000, according to The Associated Press. The area, located midway between Seattle and Portland, has already been hard hit by the long decline in the timber industry. Now officials estimate the lost taxes will cost up to 30 percent of the area’s school budget.

The closure late Monday is another sign of Cascadia’s transition from an oil and hydro-fueled economy where industry and consumers counted on inexpensive energy. Earlier this month Washington voters mandated that utilities source 15 percent of their electricity from new renewable sources by 2020. While backers of the measure predict a flood of investment into new energy industry, the measure itself didn’t consider siting, regulatory or cost issues.

TransAlta’s mine reportedly accounts for about 8 percent of Washington’s electricity, which the company said it would replace by bringing coal by train from the Powder River basin of Wyoming to an electric plant it plans to continue operating in Centralia. Apparently high supher and mercury readings in the Washington mine added to costs. Still unanswered questions include how the trains will get there, considering existing freight bottlenecks, and how costly the shift will be for regional business.

Local officials were surprised by the closure because the mine had political connections. A Republican leader of the Washington legislature helped push through a tax break for TransAlta in 2004 while he worked for the company and chaired the state House’s energy committee. At the time he told the Seattle Post-Intelligencer the deal would keep the company sourcing its coal nearby.

In the wake of this week’s announcement, area politicians scrambled to make plans to compensate. TransAlta said it set aside C$5 million to cover retraining expenses and the congressman who represents the area pledged to work for economic development programs. A local paper quoted an economist who noted that the air around Centralia would likely now be cleaner.

Where’s the line between ruthless competition and unfair business practices? That’s the basic question before the U.S. Supreme Court today as it considers an earlier verdict against Weyerhaeuser for violating antitrust laws.

As detailed in Hal Bernton’s excellent overview in The Seattle Times, Weyerhaeuser allegedly bid up the price of alder logs across the region in order to drive rivals out of business. The Fortune 100 company argues that it developed the market for alder products through innovation and marketing.

The case is another sign that the wood-products industry that largely built Cascadia is a global business. The small mills that sued Weyerhaeuser still harvest logs from nearby forests and say the ability of local firms to prosper is at stake. The wood market in question amounts to a rounding error for Weyerhaeuser, which is under pressure from Wall Street as it competes for global markets.

Victoria’s key tourism industry is suffering from the city’s image as a place for little more than English gardens and high tea. Not to mention raw sewage.

The total number of visitors to the British Columbia capital has been flat for about a decade and revenues aren’t keeping up with inflation, according to BC Business magazine (registration required). The city recently launched a C$160,000 effort to rebrand itself as a destination for dining, shopping and outdoor sports. But hurdles include dowdy shops downtown, an old ferry terminal and a relatively small C$3 million marketing budget.

The city’s image has also been hurt by its continued dumping of millions of gallons of raw sewage into the ocean, though the government recently announced plans to build a treatment system. Delta Air Lines is launching seasonal nonstop flights to Salt Lake City next summer, which could reverse the 8 percent drop in visitors from the U.S. earlier this year. That’s important because visitors from the U.S. generally spend more than those from elsewhere in Canada. But Victoria has a way to go before it can capitalize on the exposure of the 2010 Olympics.

As home sales across Cascadia continue to cool, there’s increasing evidence of how rising prices are directing development to new areas.

In British Columbia the number of home sales slid 11 percent in October, the fourth straight decline, yet average home price rose 20 percent to C$410,728. In Washington the number of sales during the latest quarter slid 16 percent as the median sale price topped $300,000. Across the region the number of sales dropped as prices became less affordable.

What’s remarkable is how the slowdown is changing development. In B.C., rural areas are being transformed as retirees and newcomers seek affordable real estate. Similarly, development of new condos is transforming Washington coast communities such as Ocean Shores, Westport and Long Beach.