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Indirect impacts of the oil spill in English Bay

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While sitting at my computer in Gastown, I do a Google search for ‘Vancouver’ and the first result that comes up is a headline from CBC: ‘Feds’ oil spill response blasted by BC premier, Vancouver mayor’. There are four other links about the oil spill, nestled amongst links to Destination BC, Vancouver hotels, and other tourist sites, all of which are diminished by the oil spill headlines.

Reports say that about 2,800 litres were spilled into the waters of English Bay, but the amount is not necessarily the most important fact, nor is how much has been recovered. It’s the fact that regardless of quantity, this spill impacts the branding of Vancouver as a tourist destination, and could devalue every dollar invested in promoting BC as Super, Natural British Columbia. That’s important.

In addition to any direct effects, we need to be conscious of the indirect effects like the effects on perception. A study commissioned for the Louisiana Office of Tourism two months after the Deepwater Horizon explosion, found that 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. This recent spill in Vancouver is nowhere near the catastrophe of the Deepwater Horizon spill in the Gulf of Mexico, but it still makes headlines.

What do tourists hear about this spill? Will this impact their decision to visit later this summer? We can’t quantify the people who are contemplating a trip to BC, who then decide not to visit.

Moving commodities through the port of Vancouver brings both risks and benefits, but this spill is a reminder to question who benefits and who takes on the risks, and are those equal?

CRED events and news, Kinder Morgan news | Tagged , , , , , , , , , , , , , , ,

Kinder Morgan holds few benefits

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by Liz McDowell, December 16, 2014

It’s been a whirlwind couple of weeks up on Burnaby Mountain. In a high-stakes stand-off late last month, hundreds of protestors clashed daily with Kinder Morgan surveyors over the company’s right to test drill in a city park. The Burnaby RCMP arrested over 100 grandmothers, First Nations leaders, Clayoquot Sound veterans and other local residents for stepping over what turned out to be a fictitious line (somebody needs to check their darn GPS), and local politicians in Burnaby declared war on the proposed expansion of the Trans Mountain oil pipeline.

Now that Kinder Morgan surveyors have packed up their machinery and the hubbub has died down, it’s time to step back and look at the bigger picture. What, exactly, would this pipeline bring us that is worth all the controversy and conflict? As British Columbians, what are we really getting out of the project?

Earlier this month, a report from economists at the SFU Centre for Public Policy Research and the Goodman Group found that Kinder Morgan had over-estimated the number of jobs created by the project by threefold. This means that during the project’s construction, at most 4,000 short-term jobs would be created.

Compare this to the tens of thousands of jobs in tourism, retail and other marine-based sectors that would be impacted if there was a major oil spill in Burrard Inlet, and the project starts to feel like a real risk for our local economy. The same report also found that only 2 per cent of the project’s benefits would flow to BC, whereas tar sands operators would retain a whopping 68 per cent of revenues. The rest of the revenues would flow to Alberta and other provinces.

CRED’s own research has found that tax benefits would also be tiny. Burnaby, the municipality that stands to benefit the most, would be able to fund at most 1/12th of its parks and recreation budget from additional tax benefits. And that’s assuming no repeats of the 2007 spill on Inlet Drive, since a mishap like that could immediately wipe out all the municipal gains.

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Provincially, the amount of benefit Kinder Morgan claims this project would bring would fund, at most, two-thirds of the running costs of just one of BC’s 99 hospitals. Now, that’s hardly a nation-building project. You can bet that Kinder Morgan’s announcement in late November that the company has quietly sold all its assets to its American counterpart certainly won’t increase the benefits to British Columbians, either.

A recent report came out claiming that there are now more Canadian jobs in clean energy than in the oil sands. Our own research has found that there are more jobs in the brewing and beer economy than in the whole of the oil sands. So why it is assumed that finding export markets for oil is a national priority but building clean energy jobs and, more importantly (sorry solar panels but a nice microbrew beats you any day), beer jobs isn’t?

Maybe what we really need is a beer pipeline.

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CRED events and news, Economy | Tagged , , , , , ,

How big is BC’s energy sector?

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CREDBC_bceconomy_infographic(click on image to expand)

How important is the energy sector to BC?

And is it more or less important than other sectors?  We’ve compiled this report to find out where the jobs, GDP and growth are coming from in order to determine BC’s main economic drivers.

DOWNLOAD “What’s fuelling BC’s economy?”

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

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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.”

CRED events and news | Tagged , , , , , , , , , ,

Credible Conversations presentation: BC economic snapshot + pipeline risks

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Our first Credible Conversations forum was held yesterday at the Creekside Community Centre in Vancouver. Over 100 business leaders, entrepreneurs, politicians, First Nations representatives and BC residents came together to discuss the economic risks of pipeline expansion and explore how to build a more diversified economy here on the west coast. Over the next few days, we will be posting videos, photos and presentations from the forum here on our blog.

To kick things off, here’s Liz McDowell giving a snapshot of BC’s economy and sharing some of CRED’s research to date:

And here is her presentation:

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Download the presentation slides

CRED events and news, Uncategorized | Tagged , , , , , , ,

Notes from the tourism & hospitality stream

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Our first Credible Conversations forum was held May 29th in Vancouver. Over 100 business leaders, entrepreneurs, politicians, First Nations representatives and BC residents came together to discuss the economic risks of pipeline expansion and explore how to build a more diversified economy on the west coast. 

*These are rough notes from the break-out sessions and are not meant to convey the opinions of all CRED members, or even all participants in the break-out group. 

What are the impacts of new pipelines on the tourism and hospitality industry?

Costs / risks:

Risks of increased tanker traffic

  • Marine life impacts
  • Visual pollution
  • Impact on kayaking and canoe tours
  • Impact on the brand of Vancouver

Risks of an oil spill along the coast

  • Could decimate fishing and coastal tourism
  • Decrease in fish stocks can be irreversible – example of Saskatchewan vs Alberta management of recreational fishing and fish stocks
  • Would hurt BC’s reputation as a pristine visitor destination
  • Impact on cruise ship traffic

Benefits:

  • Increased funding for arts and cultural activities from resource company marketing budgets
  • Potential to develop industrial tourism around the Westridge Marine Terminal

Information needed:

  • With the new pipelines, what does a business as usual scenario (i.e. increased tankers, no spills) look like?
  • What is the cumulative risk of small spills over time?
  • How will increased tankers impact salmon, orcas and other marine life?
  • Need common industry definitions of small, medium, large sized spills that are used consistently
  • Can tiers of impact be created in advance so that it’s clear what’s happening in the case of a spill and what the response should be?
  • Do funds need to be set aside for a big marking campaign promoting Vancouver as a destination in the case of a spill?
  • In the case of a spill, what would be recoverable and what would be the recovery time? (i.e. on small businesses)
  • What is the tourism industry’s exposure to transportation risk, considering the methods of transportation visitors use to get to the area?

What are the practical opportunities to support a more diversified economy?

First Nations-led tourism:

  • Popular with visitors looking to learn about indigenous culture
  • Can promote economic justice and increase tourism revenues at the same time
  • Opportunity for First Nations to reconnect with their culture
  • Eg Meares Island tree walk in Tofino, managed by the Tla-o-qui-aht First Nations

Promote nature-based tourism in an urban setting:

  • Very few places in the world have the same juxtaposition as BC’s south coast
  • Half of the province’s tourism jobs are in the Lower Mainland
  • In the future, job shortages in tourism are predicted
  • Can learn from others: i.e. New Zealand’s eco tourism-centered strategy that involves many stakeholders from local governments to Maori groups

Make sure not to become overly reliant on tourism – places like Tofino, for example, are already very dependent and wouldn’t benefit from a stronger reliance on just one industry for their economic growth

Economy | Tagged , , , , ,

Tourism industry impacts: the Deepwater Horizon spill

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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