Credible Conversations ForumMay 29, 2013

#credconvo@CredBC

Will new oil pipelines benefit BC businesses?

BC economic snapshot:Where’s the wealth? GDP breakdown

Goods24%

Services76%

Source: The British Columbia Economic Accounts, BC Stats

BC economic snapshot:Where’s the wealth? GDP breakdown

Agriculture, forestry, fishing + hunting

Mining, oil, gas + energy serv

Utilities

Construction

Manufacturing

Trade

Transportation Technology, cultural + ICT

Financial + real estate

Public administration

Other services

Source: The British Columbia Economic Accounts, BC Stats

BC economic snapshot:Where are the jobs?

Source: 2012 British Columbia Financial and Economic Review

Agriculture, forestry, fishing + hunting Mining, oil + gas

Manu-factur-

ing

Construction Utili-ties

Transportation

Trade

Financial + real estatePublic administration

Other services

BC economic snapshot:Where is the investment?

Source: 2012 British Columbia Financial and Economic Review

Agriculture, forestry, fishing + hunting

Mining, quarrying + oil wells

Manufacturing

Construction

Utilities

Transporta-tion +

warehous-ing

Trade

Financial + real estate

Public admin-istration

Other services

Housing

BC economic snapshot:Future trends

Source: KPMG 2012 BC Technology Report Card

Where will future growth come from?

• Emerging tech sector

• The green economy

• LNG plans for northern BC – provincial priority

BC economic snapshot:Technology

Source: KPMG 2012 BC Technology Report Card

The technology and digital sector:

• Employs 80,000+ people– more than forestry, mining, and oil & gas combined

• Is the second fastest creator of new private sector jobs

• Contributes more to BC’s GDP than any resource-based sector

• Grew 5.7% annually from 2001-2009 & now represents 10% of BC’s exports

• Is underperforming compared to other provinces

• Tremendous opportunity for growth

BC economic snapshot:Technology

Source: KPMG 2012 BC Technology Report Card

BC economic snapshot:Green economy

Source: Globe Advisors BC’s Clean Economy reports

Green jobs:

• Clean energy supply & storage, clean transportation, green building and energy efficiency

• Together responsible for 123,000 jobs and $15b GDP in 2011

• Public policies and programs have supported recent growth

• The sector is still new and vulnerable to risk – barriers include trouble finding skilled workers and investment capital

Assessing the risks of new pipelines

Why focus on economic risk?

How would this project impact the west coast’s economy?

• How many jobs would the pipeline create?

• How many jobs would be risked in the case of an oil spill?

• What would the indirect employment benefits be?

• Would the pipeline help BC fund new social programs?

• How much would an oil spill or leak cost to clean up?

Assessing the risks of new pipelines

Sources: UBC Fisheries Economics Research Unity, Washington State Department of Ecology

Impact on jobs

• Major tanker spill on BC’s north coast could lead to 43% job losses in coastal industries (UBC study)

• A major spill along the Washington State coast could adversely affect 165,000 jobs (Gov’t study)

• Need for modeling the impact of a south coast spill on jobs here – direct impacts on industries like tourism and real estate, but also indirect effects to sectors benefitting from Vancouver’s brand

Assessing the risks of new pipelines

Source: Canadian Journal of Fisheries and Aquatic Sciences, CRED real estate impacts fact sheet (forthcoming)

Impact on tourism – Gulf of Mexico case study

• Deepwater Horizon spill could mean 22,000 job losses and $8.7b economic impact

• Perception overshadowed direct impacts

• Seafood industry particularly impacted by perceptions

• Net negative impact on hospitality industry

• Small businesses were hardest hit

Assessing the risks of new pipelines

Source: CRED real estate impacts fact sheet (forthcoming)

Impact on real estate

• Impacts of pipelines on property values are well established: CRED’s review of 8 separate North American spills confirms this

• Following an oil spill, values of nearby properties affected on average 5-8% for around 1-2 years

• Directly affected properties usually see 10-45% loss in value

• Reputation alone is enough to have a noticeable impact

• More information is needed on the impact of Burnaby 2007 spill

Assessing the risks of new pipelines

Sources: UVic Environmental Law Centre, BC Government Technical Analysis on Conditions Required to Support Heavy Oil Pipelines

How much would an oil spill cost?

• Historical spills• Exxon Valdez $6.3b • Deepwater Horizon $41.6b and counting

• Liability capped at $1.34b for spill at in Burrard Inlet or at sea

• High risk that costs above $1.34b will fall to taxpayers

• Need more info on who pays for a spill along the pipeline route

Questions for BC residents

• What can impacts in other places tell us about the risks for the west coast?

• What is the likelihood of a major spill at sea or along the route?

• Do the risks outweigh the benefits?

• If they do, should we accept the risks anyway for the benefit of the Canadian economy as a whole?

• If we don’t want to accept the risks, what are the economic alternatives?

Credible Conversations ForumMay 29, 2013

#credconvo@CredBC

Will new oil pipelines benefit BC businesses?