05/11/2012 12:07 EDT | Updated 07/11/2012 05:12 EDT

Federal and New Brunswick governments announce $4.2 million for forestry

EDMUNDSTON, N.B. - The federal and New Brunswick governments have announced $4.2 million in funding for new research into innovation and markets for the province's forestry industry.

The money is going towards research and development at the new Northern Hardwood Research Institute at the University of Moncton's campus in Edmundston.

Both levels of government are providing $1.58 million each, and the university and private sector are each giving $529,000.

"Money doesn't grow on trees, but trees can create prosperity," Prime Minister Stephen Harper said while making the announcement Friday.

"We can work together and make the right investments to build a sustainable forestry industry right here in New Brunswick."

Harper said forestry is the third largest contributor to the national economy after energy and minerals, but he added that the industry has faced its share of troubles, citing the housing collapse in the United States and an historic drop in demand for newsprint as examples.

New Brunswick Premier David Alward said that's why such funding aimed at boosting research in forestry is important.

"Research and innovation are vital to ensuring our forestry industry will be even more important to the future of New Brunswick's economy than it has been to its past," Alward said.

The money is intended to boost the value-added wood industry, which is one of the priority sectors under the provincial government's economic development plan.

That sector of the forestry industry directly employs 9,600 people in New Brunswick.