Provincial impacts of Alaska Highway Pipeline Project : Working Paper No. 7.1.1

The impact that the construction and operation of the proposed Alaska Highway Pipeline Project will have on the Canadian economy was examined. Part 2 of this report presents a series of assumptions where the changes to the economy were explained with reference to the cost of developing facilities, revenues earned by their operations and other determinants that affect jurisdictional and sectorial impacts. The third part of the report presents the implications for the Northwest Territories/Yukon, British Columbia and Alberta since they are the regions that will be directly impacted by the AHPP. The significance of the development that extend beyond the immediately impacted regions was also assessed. For the impact analysis procedure, a base case forecast of the economy was prepared, assuming the project does not go ahead. This was followed by an impact case forecast of the economy in which the pipeline is developed and operated. Direct, indirect and induced effects were described. Two impact cases were considered for both national and regional studies. For the first case, all changes in government balances from increased revenues were assumed to go directly into debt reduction or acquisition of financial assets. For the second case, the governments recycle the increased revenue using a lower employment insurance contribution rate, and keeping federal business tax revenue and federal personal income tax revenue equal to the base case. The general effect of the second scenario is to increase the induced effects by increasing disposable income through lower tax rates. The report examined assumptions in the construction phase with reference to capital costs and construction employment. It also examined assumptions in the operational phase with reference to transportation services and operations employment. 7 tabs., 12 figs