Vancouver is biggest winner when forests, farms and mines do well – by Don Cayo (Vancouver Sun – April 9, 2014)

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A lot of city slickers underestimate the value of resources to the B.C. economy, but a new think-tank makes the case that it is Metro Vancouver that benefits most when traditional hinterland industries prosper and grow.

“An initial boost to natural resources in B.C. spreads to other industries through demand for inputs or more spending induced by higher incomes,” writes Philip Cross, formerly StatsCan’s chief economic analyst, in a paper released today by Resource Works, a newly minted, Vancouver-based think-tank that intends to specialize in resource-related issues.

“The income and jobs this generates enriches all of B.C., especially the Lower Mainland,” Cross writes. “It is the cities that provide the wide range of financial, business and even transportation services used by the resource sector. It is also in the cities where the higher incomes in the resource sector and its spinoffs are spent on a wide range of retail and personal services.”

Cross bases his conclusions on sophisticated forecasting techniques developed by StatsCan — a combination of labour market analysis and a detailed analysis of tax records that document purchases by resource firms from suppliers. This not only provided “a precise accounting of all the inter-relationships among industries needed to produce all goods and services in Canada,” but also allowed him to look at how the benefits are shared among regions and provinces.

Then he calculated where the benefits would go if the output of B.C. resource industries increased by a uniform 10 per cent.

The contribution of these industries — agriculture, forestry, fishing, hunting and trapping, mining, oil and natural gas, pipelines, utilities, and manufacturers of wood, pulp and paper, and primary metals — was $21.371 billion, or 11.2 per cent of GDP, in 2010. So a 10-per-cent increase would add $2.137 billion.

Then, Cross argues, a substantial multiplier would kick in, thanks to the boost in consumer spending and the tendency of resource companies to outsource work, especially services, to other companies. The total impact would be $4.5 billion in Canada, $3.8 billion of it in B.C., as well as a $909-million boost in imports.

Measured another way, the result would be 37,177 new jobs in Canada, 29,561 of them in B.C.

Cross has worked extensively with resource statistics for years, but he told a Vancouver Sun editorial board on Wednesday that he was still surprised, not by how much money the sector generates but by how much remains in B.C.

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