Conservation, the Economy and the Community:

Conservation, the Economy and the Community: Finding Balance Invermere, BC March 2 & 3, 2012 John Thompson AMEC Environment & Infrastructure

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

1. Baseline Economic Conditions Focus on East Kootenay Regional District Based on information from • Statistics Canada (2006 census, 2011 census) • 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 – 2nd 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? • Concepts • 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

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....

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

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 • 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: • Knowing that resources exist even if they don’t use them (Existence value) • Knowing that have the option to use resources (Option value) • 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) • Atmospheric regulation (carbon sequestration) • Disturbance regulation (protection from storms) • Water supply (water for economic use) • Waste treatment (wetlands) • Refugia (habitat for endangered/migratory species) • Genetic resources (source of medicine) • 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

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 • Don’t 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 • Expenditures • Non-market values for users • Non-use benefits (existence values) • EG&S values Where do you go from here?

Tourism Expenditures Visitor Entries to British Columbia, 2005 to 2010 • 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

TourismExpenditures Monthly Tourism Room Revenues 2009 • 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 Don’t 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?

Conservation, the Economy and the Community: