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UBC study: a major spill in Burrard Inlet could cost the Vancouver economy $1.2 billion

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As the National Energy Board process gets further along for the Trans Mountain Expansion review, conversations are growing and research is building about the risks of the project. Since CRED first published the report ‘Assessing the risks of Kinder Morgan’s proposed new Trans Mountain Pipeline’ in 2013, more and more research has come to light about risks associated with this project. Reports around environmental, health, economic and reputational impacts have all shone a light on risks that weren’t immediately clear.

One of the latest reports comes from UBC Fisheries and Oceans and was led by CRED Advisor, Rashid Sumaila. The report ‘Potential economic impact of a tanker spill on ocean-dependent activities in Vancouver, British Columbia’ found that a major spill in Burrard Inlet could cost the Vancouver economy $1.2 billion. This estimate is alarming, and doesn’t include the cost of clean-up, response, or recovery. The report looked at the potential impact of an oil spill in Burrard Inlet on five key industries:

  1. Commercial fishing
  2. Port activities (shipping and cruises)
  3. Inner harbour transportation
  4. Tourism (on-water recreation, ocean-based and waterfront events, visiting beaches and seawall)
  5. Local use of the waterfront

Through the analyses of three potential spill scenarios: no spill, a spill in May and a spill in October, the study found that a 16,000 m3 oil spill in October would cost Vancouver’s economy just over $1 billion. If that same spill happened in May (when there is more ocean-dependent economic activity occuring) the economic cost goes up to over $1.2 billion.

The report concluded that an oil spill would result in closures of commercial fishing, floatplane activity and closure of the Vancouver port, and it could continue to impact ocean-dependent tourism for 8 years. Those are just some examples of the impact a spill would have on businesses and jobs dependent on a healthy marine environment. We’ve already seen that it doesn’t take much to close industries down. Crab and prawn fishing were shut down by the department of Fisheries and Oceans and the Musqueam Band in April after an oil spill leaked from a grain carrier in Burrard Inlet, and that was a minor spill in comparison to the potential scenario that this study is based on.

Kinder Morgan Canada’s spokesperson Ali Hounsell is quick to remind the public that “the Trans Mountain pipeline and oil tankers have been safely operating in this community and through this harbour for the past 60 years”. Even if this is the case, will this hold true when the number of tankers have increased fourfold?

This UBC study focuses on impacts to ocean-dependent economic activities within the City of Vancouver; however, several other communities such as the Tsleil-Waututh, Musqueam and Squamish First Nations peoples, who depend on the Burrard Inlet for food as well as social and ceremonial purposes would also be impacted. Those impacts need consideration, as do the other issues such as stranded assets, spills on land, and the impact on BC’s brand.

 

image courtesy of Jan Zescheky

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

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?

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

Environment | Tagged ,

Barge leaking oil after colliding with railroad bridge on the Mississippi river

Eli Baylis, Vicksburg Post / Associated Press / January 27, 2013

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On early Sunday morning, a barge being towed up the Mississippi river by a tugboat hit a railroad bridge and started leaking oil. The river is closed to boat traffic and cleanup operations are underway. From the LA Times:

At least 21 vessels were backed up along the Mississippi River as authorities worked on Monday to clean up an oil spill from a barge that hit a railroad bridge near Vicksburg, Miss.

Officials have placed more than 2,500 feet of boom to contain the spill, Petty Officer Jonathan Lally told the Los Angeles Times by telephone. There was no estimate when the spill will be completely cleaned up, he said.

At most, the spill could reach 80,000 gallons of crude oil from one of the damaged barges in Sunday’s accident, Lally said. It was unclear how much oil had leaked out or how much had been recovered.

River traffic has been blocked in the area around Vicksburg with at least 11 northbound vessels and 10 southbound vessels — including tugboats and barges – delayed, he said.

Read the full article for more information