finding balance invermere, bc march 2 & 3, 2012 john thompson amec environment & infrastructure

Finding Balance Invermere, BC March 2 & 3, 2012 John Thompson AMEC Environment & Infrastructure

Introduction Presentation follows approach used in economic impact studies 1. Describe baseline economic conditions 2. Describe the project conservation and protected areas 3. Describe the effects conservation and the economy: finding the balance

1. Baseline Economic Conditions Focus on East Kootenay Regional District Based on information from 1. Statistics Canada (2006 census, 2011 census) 2. BC Stats Main focus on indicators to describe economic health and well-being

Population 2006 Results of 2006 Census 55,482 people Population decreased by 1.4% from 2001 Loss of 810 people BC population increased by 5.3% Population losses in southern areas

Population 2011 Results of 2011 Census 56,685 people Population increased by 2.2% from 2006 +1,200 people BC population increased by 7.0% Population losses in northern areas

Labour Force Participation 2006 Higher than the BC average Higher than other southern BC regions

Unemployment 2006 Lower than the BC average Lower than Greater Vancouver

Unemployment Since 2006 Has risen Consistent with BC trend Economic Development Region includes parts of Kootenays with higher unemployment rates.

Employed Full Time Year Round 2006 Nearly identical to BC average More part time and seasonal work in the Okanagan

Employment in Agriculture/Resource Industries Much higher than the BC average Much higher than other southern BC regions

Percent of People with Low Income 2006 Much lower than the BC average Lower than all but one southern BC region

Median Per Capita Earnings 2005 Nearly identical to BC average Higher than other southern BC interior regions

Median Family Income 2005 Slightly higher than the BC average Higher than all southern BC interior regions

Percent of Income from Transfer Payments 2006 Nearly identical to BC average Less than all other southern BC interior regions

Average Value of Housing 2006 Less than the BC average Less than Okanagan

Percent without a High School Education 2006 Slightly less educated than the BC average Better than most other southern BC interior regions

Income Dependencies Percent of 2006 After Tax Income Fernie High dependency on mining Cranbook-Kimberley High dependency on public sector Invermere Balanced ; highest dependency on tourism in region

Income Dependencies - Mining Percent of 2006 After Tax Income Fernie Highest in BC Invermere 7th highest in BC

Income Dependencies - Tourism Percent of 2006 After Tax Income Invermere 2 nd highest in BC Fernie Higher than Kelowna Cranbook- Kimberley Same as Kelowna

Overall Regional Socio-Economic Index Ranked 5th best out of 26 regions in BC Well above average for three of six components Only below average for one component - education

Summary of Current Economic Conditions Regional economy in good condition: + High labour force participation + Low unemployment + High full time work + High incomes + Low incidence of low incomes Economic Concerns - Lower educational attainment - Very high reliance on employment in resource-based industries - Dependence on single industry in some communities

2. Economic Value of Conservation How do economists put a value on conservation? 1. Concepts 2. Case studies What do results of studies mean?

In the beginning.......... Value of something is what people pay for it Problem: conservation is not bought and sold so no price So economists focussed on aspects of conservation that they could measure Recreation activities by local residents Tourism activities by visitors Value based on expenditures related to recreation and tourism

Expenditure studies First studies focussed on hunting and fishing No separate accounts for spending by tourists Used licences to identify users Used surveys to collect information on expenditures Examples in BC 1966 Big Game Hunting in the East Kootenay 1969 The Value of the Kootenay Lake Sport Fishery Resident fishing $246,000 Non- Resident fishing $32,000

Expenditure studies More recently 1985 Value and characteristics of resident and non- resident hunting in BC Results How do you allocate animals among residents and non- residents? Spending by non-residents is an economic gain for BC Resident spending is an impact but not a benefit This metric favours allocations to non-residents Spending/KillResidentNon-Resident Grizzly Bear$9,650$6,635 Mountain Sheep$7,535$6,245

Expenditure studies - a twist Alberta Parks and Protected Areas Study 1996 Compared parks to other economic sectors Results Parks of less economic importance than other industries However.... IndicatorAgri- culture EnergyForestryProv. Parks Nat. Parks All Parks GDP (millions) $2009$11,851$1,325$69$427$496 Employment87,92069,05015,1602,32512,75015,075

Expenditure studies - a twist What if we look at value per area of land? Results Economic contributions of parks comparable to or higher than others sector per unit of land Similar results for BC and Saskatchewan IndicatorAgri- culture EnergyForestryProv. Parks Nat. Parks All Parks GDP (millions) $2009$11,851$1,325$69$427$496 Employment87,92069,05015,1602,32512,75015,075 Land (millions ha )19.528.913.30.15.45.5 GDP/ha$103$410$100$479$79$89 Employment/ha4524111612327

Value is More than Expenditures Non-market benefits (consumers surplus) Typically measured in terms of willingness to pay Accepted for use in benefit/cost analysis These values are not included in economic accounts.

Conservation Values Non-Market Benefits Environment Canada Importance of Nature to Canadians (1996) Measured expenditures and willingness to pay Results for BCActivities in Natural Areas Wildlife Viewing FishingHunting Percent of Adults47.5%20.8%17.5%3.2% Days/Adult20.124.018.820.3 Expenditures/day$45.00$18.00$29.00$50.00 Consumer Surplus$8.20$7.60$12.20$17.80 CS/Expenditure18%42% 36% Expenditure data underestimates value of protected areas by 20% or more These values are not included in economic accounts

Conservation Non-Use Values People derive benefits from: 1. Knowing that resources exist even if they dont use them (Existence value) 2. Knowing that have the option to use resources (Option value) 3. Knowing that resources will be available for future generations (Bequest value) Also measured in terms of willingness to pay These values are also not included in economic accounts. Relatively few studies have quantified non-use values

Conservation Non-Use Values Bow River Recreation Study 111 km of river valley valued at $11.6 million (1986) Includes expenditures, non- market benefits for users and non-use benefits Non-market (use) benefits accounted for 38% of total Non-use benefits accounted for 6% of total

Conservation Non-Use Values Existence Values for Northern National Parks Survey of Canadian households Willingness to pay to create additional parks in the NWT 4 parks - $235.18, 10 parks - $261.51 High willingness to pay to create 10 new parks All Canadian households - $3,252 million However, not all parks have the same values first park - $1,260 million 10th park - $40 million

Conservation Average vs. Marginal Values What is the value of a new park? Old studies assumed each new park would create new user days Each user day assumed to have same value Inconsistent with measurement of consumer surplus Diminishing marginal value (beer example) Inconsistent with non-use values Willingness to pay for new parks example

Conservation Average vs. Marginal Values Highwood/Little Bow Study in 1994 Measured household use of 24 sites around Calgary Developed predictive model that based use estimates on 10 attributes for each site (revealed preference method) What are effects of a new site or change in attributes People switch to closest sites with preferred attributes No new recreation Economic benefits measured in terms of Reduced cost of travel (expenditures - $1.21/trip) Time of travel savings (non-market-benefit - $0.76/trip) Results confirmed by survey of same households Stated preference approach

Conservation Values EG&S Protected Areas Provide More than Recreation and Tourism Ecological Goods and Services (EGS) 1. Atmospheric regulation (carbon sequestration) 2. Disturbance regulation (protection from storms) 3. Water supply (water for economic use) 4. Waste treatment (wetlands) 5. Refugia (habitat for endangered/migratory species) 6. Genetic resources (source of medicine) 7. Recreation and Tourism First assessment by Costanza (1997) Most of these values are also not included in economic accounts.

Conservation Values EG&S Proposed Ramparts National Wildlife Area (NWT) 15,000 square kilometres Near Fort Good Hope (557 people) Protect area from oil, gas and mineral development Study to examine potential boundary options Economic benefits and costs from development Economic benefits and costs from EG&S Boundary option that allowed development only in areas with highest potential was concluded to be best option

Current Annual Value of Ramparts Area Type of BenefitHighLow Traditional Resource Use Consumption of fish $8,200 Consumption of wildlife $115,600 Wood for fuel $51,700 Recreation expenditures $24,800$48,900 Recreation non-market benefits $5,700$11,300 Commercial Resource Use Trapping $26,600 Outfitting and guided hunting $500,000 Tourism $39,300 Arts and crafts $19,000 Ecological Goods and Services Drinking water Unknown Climate regulation $2,675,000 Migratory waterfowl hunting $21,300 Migratory waterfowl bird watching $354,600 TOTAL$3,676,000

Conservation Values EG&S Proposed Ramparts National Wildlife Area Study showed that EG&S benefits can be significant 83% of current annual benefits Observations Challenging to calculate EG&S values Dont have information on ecological functionality Available economic values not applicable Need to focus on EG&S values that we can quantify

Conservation Values Summary Types of Benefits Recreation and tourism expenditures Non-market values for users Non-use benefits (existence values) EG&S values Observations Only one benefit include in provincial accounts (GDP) All four affect community and regional well-being Decisions require trade-offs between different values More tourism can reduce non-market benefits (crowding) More use can cause reductions in EG&S

3. Conservation and the Economy Current Situation in the East Kootenays 1. Expenditures 2. Non-market values for users 3. Non-use benefits (existence values) 4. EG&S values Where do you go from here?

Visitor Entries to British Columbia, 2005 to 2010 Tourism Expenditures Mostly from US 22% decline from 2005 to 2009 4% recovery in 2010

Tourism Expenditures Annual Room Revenues 2000 to 2009 Some information on tourism (only accommodation) 3.1% of provincial market Regional trend different from the provincial trend

Monthly Tourism Room Revenues 2009 Tourism Expenditures Summer and winter tourism Not just tied to one season

Other Conservation Values Expenditures by regional residents No information Non-market values for resident users No information Non-use benefits (existence values) No information EG&S values No information

Is More Conservation a Good Thing? Tourist Spending May increase tourism and spending Depends on many external factors Canadian dollar Fuel prices World security What the competitors are doing High employment per tourist dollar spent Service sector workers paid less Demands on municipal infrastructure Residents pay costs Regional economy is already highly dependent on tourism Too many eggs in one basket?

Too Much Reliance on Tourism Non-basic/Basic Employment Ratio A high ratio shows: Economic diversity in large areas Economic vulnerability in small communities Dont want ratio to become top heavy Too many service sector employment

Is More Conservation a Good Thing? Resident Spending Unlikely to change but may be redistributed Spending related to income Non-market values for resident users Unlikely to increase May actually decline Increased tourism may drive residents to use other areas

Is More Conservation a Good Thing? Non-use benefits (existence values) Could be significant increase Formal designation creates values Could improve Canadian well-being But does not affect provincial balance sheet EG&S Values Would be maintained or increased Increased in existence values Does not affect provincial balance sheet But could preclude resource development Could adversely affect provincial balance sheet

Is More Conservation a Good Thing? Involves trade-offs Real dollars (GDP) vs. Non-Market Benefits Tourism vs. Resident recreation High paying resource jobs vs. Low paying service sector jobs Uncertainty in tourism markets vs. Uncertainty in commodity markets Protecting natural values vs. precluding economic development NO CLEAR ANSWER EACH COMMUNITY MUST MAKE INFORMED DECISION WHICH DECISIONS ARE REVERSIBLE?

finding balance invermere, bc march 2 & 3, 2012 john thompson amec environment & infrastructure

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