Category Archives
Economy



Tech jobs trump resources

Screen Shot 2014-03-19 at 6.29.58 PM

Posted by

Job creation is often touted as a primary reason to go ahead with energy projects like the Trans Mountain Pipeline.  But in fact, energy takes a back seat to many other sectors.

For example, the tech sector is significant in job creation – it employs 84,000 people in BC, which is more than oil, mining, gas, and forestry combined.  If this number surprises you, take a look at some other surprising stats on where BC’s wealth comes from. We find that the energy sector is small potatoes when it comes to job creation, funding social programs and generating wealth for our province.

Tech sector jobs

Fuelling BC’s economy: where does our wealth come from?

4673569561_4301081b80_o-resized

Posted by

Why does this conversation matter?

In order to decide whether energy development projects should go forward, it’s essential to have a good understanding of where the sector fits into the bigger economic picture. Of course we know that energy is important to Canada, but how important? In what ways? And is it more or less important than other sectors?

Where does our wealth come from?

It’s often said that British Columbia is a resource-based province. In actual fact, the reality is a lot more complex. While it’s true that much of BC was built on natural resources, and that even today sectors like technology and construction have a certain amount of inter-relationships with the resource sector, the basis of our economy has overwhelmingly shifted to service-based industries. More than 4/5 of us work in services and over 76% of our GDP comes from those sectors.

It’s also important to note that a significant part of our economy is based on small businesses. Small businesses make up 98% of all businesses here in BC, more than any other province.

Although economics can be complex and numbers can tell different stories depending on how they’re interpreted, some data speaks for itself. Here’s a chart breaking down the main sources of GDP in British Columbia:

BC GDP by industrySource: The 2012 British Columbia Economic Accounts, BC Stats

Oil, gas and support services make up just 3% of our GDP, compared to 15% for manufacturing and construction and over 23% for financial and real estate services. When secondary energy services are added into the equation, the total contribution to GDP is still only 11%. While this number is significant, it’s certainly not where most provincial economic activity is coming from.

Continue reading

How reputation matters: oil spills and property values

Screen Shot 2013-12-10 at 11.27.14 AM

Posted by

When an oil pipeline or tanker spills, how many homes are impacted and what do those impacts look like?

Our recently released report How do pipeline spills impact property values? concludes that, although direct contamination certainly hurts a home’s value, even neighbouring areas can expect to lose some value in the aftermath of a spill or other incident.

This is because public perception extends beyond the homes that are directly impacted. Especially if it’s not the first spill or leak along a particular pipeline, the surrounding area’s reputation will suffer.

Three cases of reputational damage highlighted in the report show an average value loss of 5-8% for homes up to a kilometre away from the incident. In Vancouver, where the average price of a home is just over $600,000, this could amount to a loss of $30-40,000.

Continue reading

CRED releases new report

Screen Shot 2013-12-09 at 9.27.17 AM

Posted by

A new report from CRED, How do pipeline spills impact property values?, reveals that an oil spill in Burrard Inlet or along BC’s south coast has the potential to negatively impact property values and cost jobs in real estate and property development, in areas both adjacent to spill sites as well as the surrounding region.

DOWNLOAD THE REPORT
Screen Shot 2013-12-09 at 12.31.55 PM

The research concludes that oil spills have direct and lasting impacts on property values. In particular, the report finds that:  

  • In eight documented cases, properties directly impacted by spills were significantly devalued
  • Nearby properties lost up to 8% of their value
  • Where homes relied on well water and the groundwater was contaminated, the value loss was permanent

The goal of the report is to increase access to information and support a transparent conversation around the economic risks and rewards of Kinder Morgan’s proposed new Trans Mountain pipeline. CRED is calling for an independent study of the economic risks of the proposal.

Downloadable image highlighting the report’s main conclusion:

CRED-PropValues-LG

Business leaders react to the report’s findings

This report brings up important information and concerns. As planners, it’s our job to be aware of all potential risks to housing and land values. We hope that the government will take action to protect Vancouver’s market from the impacts of an oil spill.” – Blaire Chisholm, Planning Manager at Brook Pooni Associates

Vancouver is famous the world over for its natural beauty and pristine environment. This is the driving force behind all of our real estate-related industries. As a realtor, it is my responsibility to let my clients know about the risks they could face by buying a property near pipeline infrastructures.” – North Shore realtor and CRED advisor Dallas la Porta

As a realtor I have noticed that with the huge amount of negative publicity surrounding the expansion of this pipeline, people are on red alert and are very aware of the potential impacts of the pipeline on their properties. As a result, buyers will typically avoid a property anywhere near a pipeline and this does have a negative impact on values.” – Langley realtor Annabel Young

Read the full report here 

How do oil spills impact property values?

Photo credit: John Lehmann/The Globe and Mail

Posted by

The following is an excerpt from CRED’s upcoming report. To be notified when the report is launched and available for download, please contact us or join our mailing list.

Introduction

British Columbia’s property development sector is a significant driver of economic growth and an important source of employment. According to the Urban Development Institute, the sector is directly and indirectly responsible for over 220,000 jobs across the province, in areas from planning and construction to secondary supplier purchases. It makes a bigger contribution to provincial GDP than any other sector – more than natural gas, tourism, mining, forestry or film and television.

In the real estate sector, a sub-section of the property development industry, there are over 14,000 people working as realtors in Greater Vancouver, Vancouver Island and the Gulf Islands alone. The coastal real estate market is also important to private homeowners who gain value not only from a physical property but from its viewscape, proximity to waterfront and wilderness, and location in one of the world’s most liveable regions.

CRED is seeking to better understand the risks of an oil spill as part of an ongoing dialogue about the economic future of the region. Where are the best places to invest for future growth and prosperity? How can we safeguard our quality of life and support industries that will ensure long-term responsible development?

Real World Examples

To begin assessing risk, we gathered information on eight separate oil spills in the US and Canada. In three of the cases, the spills directly impacted properties and in two further cases, the proximity and perceived impact of the incidents devalued properties. In the final three cases, residents have claimed values losses but they have not yet been independently confirmed. 

Case study: Pepco Pipeline, Maryland, 2000

Loss in value: 11-12% in the 1st year

In 2000, a 3,800-barrel (120,000-gallon) oil spill in a suburb of Washington DC affected property near the Patuxent River. A study published in The Appraisal Journal in 2001 concluded that waterfront and beach-access homes were significantly and negatively affected by the spill.

In the year following the incident, home values within a 10-mile study area fell 11%. In addition, waterfront properties experienced reduced sales volume. According to real estate listing data, only three waterfront homes sold in the first sale season after the spill, a 40% decrease from the previous year. Because there was no substantial variation in regional markets, the study concluded that this decline was likely due to the spill.

This is a small excerpt from an upcoming CRED report on the link between oil spills and local property values. If you would like to read the whole report, please contact us or join our mailing list.

CRED reacts: must see real economic assessment before federal “pipeline push”

4445205796_1963fdc3a3_o.resized

Posted by

On September 12th the federal government announced a new strategy to garner support in BC for the development of new oil pipelines.

In response, CRED is calling on the federal government to do a full assessment into the economic risks of new oil pipelines before pushing for their approval.

If the government is serious about protecting the long-term prosperity of Canadians, there needs to be a real consideration of whether new oil pipelines could hurt more jobs than they create. Over 80% of British Columbians work in the service sector – they need to know that their jobs aren’t at risk of similar impacts as seen after oil spills in the Gulf of Mexico and elsewhere across North America.

Meeru Dhalwala, co-owner of celebrated local restaurants Vij’s, Rangoli and Shanik and CRED advisor, says:

Tourism is a key source of income for our BC economy, particularly in Vancouver. I’ve read much on both sides of the argument and I am not at all convinced that the relatively few permanent jobs created by new oil pipelines are worth the massive risks–the most important risk being a major and expensive oil spill that would devastate our waters, wildlife and economy.”

UBC economist and CRED advisor Dr Rashid Sumaila echoes the need for a robust, independent cost-benefit analysis:

Any decision about whether to approve a new pipeline in BC needs to weigh economic costs against the benefits, especially for those of us who live and work along the pipeline and tanker routes.

How might a new pipeline impact the brand of Vancouver? How would it affect the price of gas in the lower mainland? If a significant spill were to occur, how many jobs would be lost? How much would an oil spill cost to clean up and who would pay? All of these questions need to be carefully considered before sending delegates to BC to campaign for approval.

Tourism industry impacts: the Deepwater Horizon spill

http://media.npr.org/assets/news/2010/07/01/tourism2-20b35fceb8e9f0cd6372e304d0b9ad995add2d8c-s6-c10.jpg

Posted by

CRED is currently undertaking research to assess the risks to the tourism industry of an oil spill along BC’s west coast. Although it is far too early in our research to draw conclusions, here are some initial thoughts on the ways that the Deepwater Horizon spill affected tourism in the Gulf states.

In April 2010, the largest accidental marine oil spill in history occurred in the Gulf of Mexico, when the Deepwater Horizon oil rig exploded and approximately 4.9 billion barrels of oil poured into the Gulf of Mexico over the three months that followed.

Although this is certainly a worst-case scenario, the experience of the Gulf states can be instructive when trying to get a picture of the costs and benefits of expanded tanker traffic in BC’s coastal waters. Both the Gulf states and southern BC have highly populated coastal areas and a thriving tourism industry that is a significant regional job creator (127,000 people are employed in tourism in BC, the vast majority in and around Vancouver).

Tourism: vulnerable to public perception

When an oil spill occurs, not only are tourist destinations directly affected in areas where the spill has flooded land, washed up on beaches, or permeated the air with a strong odour, but the tourism industry also faces serious reputational impacts. Public perception strongly influences people’s decisions whether to visit and spend time in a particular community. In the Gulf of Mexico, sections of coastline that never saw oil wash up on shore were nonetheless affected by public perceptions of the Gulf states as contaminated.

A study commissioned for the Louisiana Office of Tourism two months after the Deepwater Horizon explosion had the following key findings:

  • The spill had a negative impact on people’s intentions to visit Louisiana: 26% of people who had previously intended to visit the state had postponed or cancelled their trips.
  • Perception overshadowed actual impacts: a quarter of people thought that leisure activities (swamp tours, boating and hiking) were closed because of the spill when in fact this was not the case.
  • The seafood industry was particularly impacted by perceptions: for example, over half of people surveyed thought that Louisiana oysters were unsafe to eat although evidence demonstrated otherwise.
  • 44% of respondents thought the oil spill impacts were the same or worse as the 2005 hurricanes (including Hurricane Katrina).

Net negative impact on hospitality

In August 2010 the Knowland Group carried out a survey of the spill’s impacts on the hospitality industry across Louisiana, Alabama, Mississippi and Florida. They found that although hotels experienced a short-term upward surge in bookings from oil cleanup crews, the net impact in the two months following the spill was negative. Their key findings:

  • By June 3rd, 60% of hotels surveyed had experienced cancellations
  • In the same time frame, 42% of hotels began to experience difficulty booking future events.
  • Transient business associated with the spill cleanup made up for rooms typically booked by tourists or meeting attendees. However these rooms were often booked at a discount.
  • Overall, lower room revenue coupled with unoccupied meeting space and empty restaurants, meant lower revenue than if the rooms had been booked by typical visitors.

Small businesses faced the biggest long-term impacts

A survey of over 200 million small businesses carried out in 2011 by Dun & Bradstreet found that small businesses are particularly vulnerable to natural disasters. Their findings indicated that:

  • The oil spill in the Gulf of Mexico had the potential to impact 7.3 million businesses throughout Alabama, Florida, Louisiana, Mississippi, and Texas, affecting 34.4 million employees and $5.2 trillion in sales volume.
  • According to the Institute for Business and Home Safety, “an estimated 25% of businesses do not re-open following a major disaster”.

Although the long-term impacts are still unfolding, at least one researcher has found small businesses to be most strongly impacted. Two years after the spill Mark Bonn, a tourism industry expert and researcher at Florida State University, commented that “both the resorts and the budget hotels in Northwest Florida have rebounded and are doing well, but the support industries are still struggling. Some of the mom and pop restaurants, gift shops, and the charter boat and watercraft rental businesses have really struggled, and many of them just didn’t make it.”

Questions CRED is hoping to answer

As we continue with our research, we plan to move beyond looking at what’s happened elsewhere to modelling what might happen in Vancouver.

Here is our working list of questions to address. We warmly welcome additions, clarifications and challenges to our thinking- if there are other relevant questions you’d like us to investigate or if you wish to suggest modifications to the list below, please post in the comments to this blog.

  • If there was a large oil spill in or around Vancouver’s waters, what impact on tourism could be expected? What about if there was a medium-sized spill?
  • What kind of government spending would be needed to help counter negative public perception and bring tourists back?
  • How long-lasting would the impact likely be?
  • How many jobs would be likely to be affected?
  • Which industries within the tourism sector would be most vulnerable?
  • Are there any actions that would significantly reduce risk for the sector?

Photo courtesy of the NPR website

CRED releases independent report highlighting Trans Mountain concerns

IanMeissnerChilliwackFarm

Posted by

On Tuesday February 26, CRED released a report highlighting the risks of Kinder Morgan’s proposed Trans Mountain pipeline. In addition to pulling together the most important data about the project’s background, Kinder Morgan’s safety record, and potential impacts of a spill, our group uncovered some of the project’s main economic risks. Some of our key findings:

Jobs: The proposal would create 35 permanent jobs. And oil spill would put at risk industries that together employ over 200,000 people locally including tourism, film and TV, real estate, high tech, agriculture and coastal industries.

Tax revenues: The expansion would not make a significant contribution to provincial tax revenues.

Liability: In the case of a major spill, taxpayers would likely be responsible for the burden of costs, as a company’s liability is limited to $1.3 billion and a major spill could easily cost ten times this amount.

Some of CRED’s advisors highlight the most concerning elements of the report here:

Read or download the full report to learn more about the risks we uncovered.

Thanks to chilliwack360 for the image we used in the banner