Megaprojects—including those in energy—can have big impacts on local economies

August 28, 2014 Mark Shrimpton

Newfoundland and Labrador’s offshore petroleum industry has helped raise personal income and lower unemployment


The well-documented opposition to liquid natural gas (LNG) pipelines and most natural resource development megaprojects seems to indicate that they are much more of a threat than an opportunity. Even some economic development practitioners argue against them, advocating instead for small-scale and “bottom-up” initiatives that they view as more compatible with the economic and social interests of host communities. And in many places, including British Columbia, the environmental assessment process has a strong focus on the potential adverse effect – biophysical, economic and social – with a narrowly-defined discussion of economic benefits exiled to the introduction.

The Canadian Academy of Engineering, which has as its membership many of the country’s most accomplished engineers, is seeking to do something about this attitude. Its “Energy Pathways Task Force” believes that energy projects have been, and will continue to be, one of the main drivers of the Canadian economy and a source of prosperity and employment. The organization’s newly-published volume, Canada: Becoming a Sustainable Energy Powerhouse (Richard J. Marceau and Clement W. Bowman, Eds.), contains essays that discuss how a number of possible hydro, nuclear, district energy, power transmission and bitumen projects can deliver future growth of our economy. (The report is also covered here in The Telegram.)

It also contains a case study example of the ways in which energy megaprojects can benefit a province. Based on a series of reports prepared by Stantec and precursor companies, this case study (“The Case of the Dramatic Emergence of Newfoundland & Labrador’s Petroleum Industry”) describes the dramatic emergence of that province’s offshore petroleum industry, illustrating the impact of provincial megaprojects not only on Newfoundland and Labrador, but the country as a whole. As of 2010, this still relatively new industry was responsible for approximately 33 percent of provincial Real GDP and resulted in the average personal income being 6.5 percent higher, the unemployment rate being 1.8 percent lower, and the province’s population being 16,400 larger, than they would have been without the industry.

The result has been the creation of a new economic sector serving local, national and international markets, increased business confidence, a highly entrepreneurial environment, new industrial investment, and significantly enhanced government revenues. The province is now one of Canada’s (and Atlantic Canada’s only) “have” provinces, and local companies are increasingly competitive in other markets and sectors.

This is a clear 21st-century example of the emergence of a high value-added, innovative business environment arising from “big projects.” It has resulted in the transformation of both the economy and the social structure of Newfoundland and Labrador. As examples like this demonstrate, Canada’s nation-building “big project innovation strategy” is as relevant today as it was at the birth of the nation, when megaprojects and natural resource development (like the rail lines, logging and fishing) created the business environment that has allowed Canada to thrive.

About the Author

Mark Shrimpton

Mark Shrimpton has more than 35 years of experience assessing, planning, monitoring, and managing the socio-economic impacts of infrastructure and resource development projects. An international expert on industrial benefits planning, Mark has published and presented widely on his work at conferences and workshops across the globe.

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