Could local economies be the answer for the Sahtu region?

David Thompson and Diana Gibson of PolicyLink
From left to right: David Thompson and Diana Gibson of PolicyLink, beside former MLA Bob Bromley.
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Alternatives North has released a report identifying what could lie in store for the NWT’s Sahtu region as oil prices continue to drop across North America.

The region is one of several across the continent to be have experienced the boom and subsequent bust of the oil and gas sector.

When oil crashed in 2014, the Sahtu suffered job losses and saw companies pull out of the area. Those issues are made worse by outdated infrastructure in the region, an aging population, elevated levels of unemployment and a high cost of living.

The report, entitled Economic Futures in the Sahtu Region: A Discussion Paper on Building a Balanced Economy (pdf), was prepared for Alternatives North by PolicyLink Research and Consulting based out of Victoria.

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While the report isn’t a be-all, end-all solution, it identifies “policy and investment opportunities for the GNWT that could provide meaningful support to all families and communities of the Sahtu.”

The report contends that local economies, rooted in local employment, are the key to sustainable communities across the Northwest Territories.

The diversification and localization of economies was a major talking point during last fall’s territorial election, with industries like tourism and fishing being highlighted as avenues for the NWT to pursue further.

Diana Gibson, researcher with PolicyLink, says it’s far too risky for jurisdictions to rely so heavily on resource extraction.

“The recent plummeting oil prices have just really illustrated once again the vulnerability of hitching your wagon to resource extraction as an economic driver,” she said.

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“Expecting long-term development to be driven by extracting a commodity is always going to make you vulnerable.”

Gibson says negative impacts associated with the oil and gas sector include cycles of recessions and depressions, increased crime rates and higher demands on social services.

According to an economic multiplier cited in the report, the sector also does very little in terms of generating jobs per dollar spent.

Oil and gas finished dead last in the multiplier, employing 0.5 people per million dollars invested. At the top of the chart, forestry and logging employ 23.4 people per million invested.

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At the start of PolicyLink’s study, fracking was on the uptick in North America, according to Gibson.

When prices plummeted, resource-reliant jurisdictions suffered immensely and in some cases, communities were in worse condition after the boom than they were before it.

So what does this mean for the Sahtu?

According to Gibson, the potential for increasing local sustainable businesses exists in several sectors in the region, including forestry, agriculture, tourism, arts and crafts and trapping.

“There is an amazing diversity of economic activity on the ground in the Sahtu and in the NWT already,” she said.

“If you want to build quality jobs in a local economy, you do it through supporting local entrepreneurship, not attracting foreign investors.

“You do it through building your local infrastructure – social and physical – and that’s how you get the best bang for your buck in terms of local economic development.

“If you build a local economy that’s diverse and supported with local businesses, you’ll have a secure and stable economy.”

The report also argues that communities supported by local economies have smaller environmental footprints, since local businesses are more rooted in their communities.

Are these sectors viable in the region?

According to the report, government policy is impeding the growth of smaller economies in the Sahtu while massive subsidies to the resource extraction sector are making it harder for local production to thrive.

Policies to grow local economies include capacity building initiatives, job training and growing economic development plans among others.

There must also be a clear shift from away from recruiting large-scale outside investment.

“We’re not starting from scratch here,” said Gibson. “This is about building on and fostering the economic gardening that’s already happening and providing a climate where people can actually succeed.

“The government’s policy instruments and infrastructure – social and physical – needs to be set up to support these economies.

“This is not meant to be the be-all, end-all and it’s not a formula for success in each of these sectors.

“This is meant to stimulate dialogue on the ground in communities and for the government to engage more in understanding and building sustainable economies.”

Regional leaders have been consulted on the findings of the report. The analysis will also be provided to MLAs.

Conflicting reports released days apart

The day after academics with PolicyLink released their findings, a report from the National Aboriginal Economic Development Board called for something quite different: more resource development.

The report, entitled Recommendations on Northern Infrastructure to Support Economic Development (pdf), says Canada’s three territories are suffering from an infrastructure deficit.

It suggests that investments in infrastructure would make the region more attractive to the resource development industry and provided seven recommendations to get the ball rolling.

Among them, offering tax credits for companies looking to operate in the North and creating a Northern infrastructure investment fund.

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