Economic Impact of Marine Related Activities in Canada

Economic Impact - Public Sector

1. Department of National Defence/Canadian Forces

Structure and scope of activities

The Department of National Defence (DND) and Canadian Forces (CF) carry out three main roles under Canadian defence policy: protect Canadians at home; defend North America in cooperation with the United States; and defend Canadian interests abroad. Canadian Forces have three branches, operating under a unified command: Navy (Maritime Command), Air Force (Air Command) and Army (Land Command).

This study is concerned with the economic impact of activities conducted to deliver the Maritime Command (MARCOM) mission:

• Generate and maintain combat-capable, multi-purpose maritime forces to meet Canada's defence capability requirements;
• Provide security by safeguarding Canada's maritime approaches;
• Contribute to international and domestic security.

MARCOM, with headquarters in Ottawa, controls three maritime formations:

• Maritime Forces Atlantic (MARLANT) comprises the Canadian Fleet Atlantic, and has responsibility for Canada's Atlantic Area of Responsibility including the eastern Arctic. The fleet consists of 19 vessels, operating from CFB Halifax in Halifax, Nova Scotia. CFB Halifax includes HMC Dockyard, CFB Stadacona and the CF station in St. John's, NL. CFB Halifax also includes 12 Wing Shearwater (a lodger unit), home of the Sea King helicopter units and Fleet Diving Unit Atlantic. Two squadrons from 14 Wing Greenwood (Maritime Patrol and Transport and Rescue) provide air support to deliver the MARCOM mission.
• Maritime Forces Pacific (MARPAC) comprises the Canadian Fleet Pacific and has responsibility for Canada's Pacific Area of Responsibility. The fleet consists of 14 vessels, operating from CFB Esquimalt near Victoria, British Columbia. MARPAC is supported by 19 Wing Comox (Maritime Patrol and Transport and Rescue) and 443 Maritime Helicopter Squadron in Patricia Bay.
• Naval Reserve Headquarters located in Quebec City. Includes a CF Fleet School with responsibility for training reservists for active duty. The Naval Reserve is assigned specific maritime defence responsibilities including coastal patrol operations (serving as crews for 10 of Canada's Maritime Coastal Defence Vessels).

Table 4.1: MARCOM resources, 2006 (personnel includes those at MARCOM HQ, Ottawa)

Bases	Vessels	Personnel Reg/civ	Personnel Reserves
6	33	20,840	4,600

Source: DND

Expenditures

DND allocates about $2.3 billion in direct expenditures annually to deliver the MARCOM mission. Human resources (regular, civilian and reservists) accounts for about 55% of the MARCOM budget, with operation and maintenance (O&M) accounting for 40% and capital 5%. O&M covers base, vessel and aircraft operations and maintenance including procurement of spare parts and equipment. Capital figures include only facility construction and upgrades, but exclude vessel construction and replacement (there have been no major vessel procurements during the 2002-2006 period). A breakdown is provided in Table 4.2.

Table 4.2: DND MARCOM employment and expenditures, 2002-2006

	Employment (#) Personnel	Employment (#) Reserves	Gross income	Spending ($000s) O&M	Spending ($000s) Capital	Total
2002	19,940	4,000	1,068,991	868,610	69,153	2,006,754
2003	20,140	4,050	1,130,952	883,153	67,900	2,082,005
2004	20,140	4,050	1,101,169	887,215	69,458	2,057,842
2005	20,640	4,750	1,128,181	915,981	97,119	2,141,280
2006	20,840	4,600	1,230,929	962,416	96,639	2,289,984

Source: DND, Estimated Expenditures by Electoral District and Province, annual reports;
DND, Cdr. Charles MacKinnon, pers. comm.

Data issues and adjustments

• The DND accounting system stores expenditures by program activity and object, and not by element or geography. Program activities and objects cut across CF elements (maritime, air and land). Consequently, compiling the data in Table 4.2 requires estimation and judgment on the part of DND staff and is subject to some uncertainty.
• DND publishes an annual report, "DND Estimated Expenditures by Electoral District and Province" that allows expenditure by Canadian Forces Base to be approximated. While this report provides useful aggregate employment and expenditure data, the document alerts the reader to potential limitations. Expenditures are assigned geographically by the postal codes to which the payments are sent. This works well for personnel, but can lead to underestimates where suppliers' head offices are not in the locations where goods and services are actually supplied. Estimates by base/province are set out in Appendix F.
• The O&M data in Table 4.2 are provided in aggregate form and need a further breakdown to the commodity level in order to drive the Statistics Canada Input-Output Model. This was accomplished with the assistance of accounting personnel at CFB Halifax.
• Capital reflects routine expenditures to maintain base facilities. These figures do not include capital for major vessel replacement. Such funding would be provided through the Cabinet and Treasury Board submissions process.

Economic impact

The maritime element of DND generated just under $2.0 billion in GDP overall (Table 4.3) on total expenditures of $2.2 billion (excluding capital) in 2006 (Table 4.2). It created over 20,400 direct jobs (regular and civilian personnel, excluding reservists) and another 14,600 in spin-off activities. The employment resulted in about $2.0 billion in household income.

Table 4.3: Economic impact of public sector activities in Canada, 2006

GDP and Income in $000s Employment in full-time equivalent	National Defence	Fisheries & Oceans	Other federal departments	Provincial departments	Universities	ENGOs	Total Sector public
Direct impact
GDP	1,225,623	586,354	65,095	82,255	75,810	35,622	2,070,758
Employment	20,413	8,500	650	596	1,061	674	31,894
Income	1,225,623	586,354	65,095	82,255	59,629	31,373	2,050,329
Indirect impact
GDP	282,225	294,719	14,595	17,932	15,836	4,819	630,125
Employment	6,724	1,498	291	749	221	71	9,555
Income	262,778	85,116	10,855	23,884	6,080	2,288	391,000
Induced impact
GDP	451,821	265,526	21,552	28,214	25,557	13,078	805,748
Employment	7,910	2,987	277	373	338	219	12,103
Income	471,145	216,288	18,372	15,790	19,539	11,161	752,295
Total impact
GDP	1,959,668	1,146,599	101,242	128,400	117,203	53,519	3,506,631
Employment	35,046	12,985	1,218	1,719	1,620	964	53,552
Income	1,959,545	887,757	94,322	121,929	85,248	44,823	3,193,624

Source: Statistics Canada Interprovincial Input-Output Model, 2005 version.

2. Department of Fisheries and Oceans

Structure and scope of activities

The Department of Fisheries and Oceans (DFO) and its special operating agency, the Canadian Coast Guard, are responsible for developing and implementing policies and programs in support of Canada's scientific, ecological, social and economic interests in oceans and fresh waters. The Department's guiding legislation includes the Oceans Act, which charges the Minister with leading oceans management and providing coast guard and hydrographic services on behalf of the Government of Canada, and the Fisheries Act, which confers responsibility to the Minister for the management of fisheries, habitat and aquaculture. The Department is also one of the three responsible authorities under the Species at Risk Act.

DFO's mission is to deliver three main outcomes:

• Safe and Accessible Waterways;
• Healthy and Productive Aquatic Ecosystems; and
• Sustainable Fisheries and Aquaculture.

To achieve this mission, DFO through its five main program activities provides a range of services including:

• Fisheries and Aquaculture Management: Working in collaboration to manage the commercial, recreational and Aboriginal fisheries; providing services to fishermen such as issuing licences and developing regulations; creating the conditions to support a vibrant and sustainable aquaculture industry; and ensuring compliance with environmental standards and regulations in support of economic development and other activities.
• Coast Guard: Working with security forces to ensure the safe and secure use of Canada's waterways, and helping with ship-to-shore communication, navigation, and clear passageways for safe water travel.
• Oceans and Habitat: Studying, conserving and protecting aquatic ecosystems, and conducting scientific research and related activities vital to the understanding and sustainable management of Canada's oceans and aquatic resources.
• Science: Providing high-quality environmental, stock assessment and hydrographic data, products and services, and developing and promote the wise use of technology to ensure the long-term health of Canada's waters.
• Small Craft Harbours: Maintaining a network of fishing harbours.

Table 4.4: DFO resources 2006 (marine only)

Fisheries and Oceans Regions	Fisheries and Oceans Personnel	Coast Guard Vessels	Coast Guard Personnel	Total Personnel
6	5,126	114	4,200	9,326

Source: DFO special tabulation

Expenditures

DFO spends about $1.6 billion annually to deliver its mission, of which marine programs account for about 85% of expenditures and freshwater programs for 15%. Coast Guard accounts for about 40% of the budget, with 60% divided amongst DFO's other main program activities (Fisheries and Aquaculture Management, Science, Oceans and Habitat and Small Craft Harbours). Human resources accounts for about 40% of the DFO budget, with operation and maintenance (O&M) accounting for 50% and capital 10%. Expenditures for fiscal 2003-2007 (marine programs only) are provided in Table 4.5. Further detail on expenditures may be found in Appendix F.

Table 4.5: DFO expenditures (marine plus total), 2003-2007 ($000s)

Years	Salaries	O&M	Capital	Total	Freshwater	Total DFO Budget
2003	548,166	676,173	173,120	1,397,459	246,610	1,644,069
2004	560,184	540,964	151,250	1,252,399	221,011	1,473,410
2005	586,197	556,069	142,192	1,284,458	226,669	1,511,127
2006	588,728	646,559	171,935	1,407,222	248,333	1,655,555
2007	513,617	711,919	143,913	1,369,449	241,667	1,611,116

Source: DFO special tabulation

Data issues and adjustments

• DFO estimates that 85% of its budget is marine related. This is based on a broad overview of departmental activities, not a program-by-program review. Consequently, the estimate may lead to a slight overstatement or understatement of the impacts. But since freshwater activities are known to represent a small part of the overall DFO budget, the cost of refining the estimate was deemed uneconomic.
• Capital reflects major capital expenditures mainly by Small Craft Harbours (for wharf construction) and Coast Guard (for vessel refits and smaller vessel acquisitions). These figures do not include capital for major vessel replacement. Such funding would be provided through the Cabinet and Treasury Board submissions process.

Economic impact

DFO generated $1.1 billion in GDP on total marine expenditures of $1.3 billion in 2006 (Table 4.3). It created over 8,300 direct jobs and another 4,400 in spin-off activities. Total employment resulted in over $870 million in household income.

3. Other federal departments

Structure and scope of activities

Of the 25 or so other federal departments who undertake marine related activities, seven are included in this study:

• Transport Canada (TC): The TC mission is to promote safe, secure and efficient transportation systems. TC promotes marine safety by regulating safety requirements of pleasure craft and commercial vessels; monitoring pleasure craft, commercial vessels, foreign-registered vessels entering Canadian waters and offshore drilling rigs to verify that they meet safety standards; and helping promote the safe operation of commercial shipping by certifying officers and crews on Canadian ships. TC develops and enforces security regulations, and works with national and international partners to prevent and manage security risks in marine and other transportation modes.
  
  Marine related spending of $231.3 million in 2006 accounted for 16% of total TC expenditures of $1,426 million. Of this total, $168.8 million takes the form of subsidies or statutory grants, leaving $65.5 million as departmental service expenditures (Appendix F).
  
  
• Natural Resources Canada (NRCan): Ocean-related responsibilities are threefold: geosciences for ocean management, delineation of Canada's continental shelf, and a mix of ocean-related activities crossing energy and mineral resource development, northern resources and development, and climate change impacts and adaptation. Geosciences for ocean management involves research and mapping to identify sensitive marine habitats in the Queen Charlotte Basin, Beaufort Sea and Placentia Bay, as well as support for planning in the five Large Ocean Management Areas. Delineation of Canada's Continental Shelf involves bathymetric surveys on the Grand Bank and in the Arctic to establish the outer limit according to the United Nations Convention on the Law of the Sea.
  
  Marine related spending of $25.7 million in 2006 accounted for 1.7% of total NRCan expenditures of $1,470 million.
  
  
• Natural Sciences and Engineering Research Council (NSERC): Funding from NSERC supports marine-related research by Canadian university students, professors, and some research and development companies. Considering the national aggregate for NSERC spending, the top marine research areas are: oceans, seas, and estuaries, environment, earth sciences, life sciences including biotechnology, and aquaculture. Although there are approximately 45 marine-related research areas in total, the aforementioned account for nearly 60% of the allocated funding in 2006.
  
  Marine related spending of $24.3 million in 2006 accounted for 2.8% of total NSERC expenditures of $859 million.
  
  
• Canadian Food Inspection Agency (CFIA): The CFIA mission is to protect human health by safeguarding Canadians from preventable health risks related to the food supply, as well as those associated with animal diseases transmissible to humans. These goals are accomplished through regulatory oversight of the agriculture and agri-food industries, using science as a basis for designing and delivering programs applied to food safety, animal health and plant protection, stewardship of the animal and plant resource base, and timely and effective response to potential threats to human health. The CFIA role in marine related activities is to inspect domestic and international fish processing plants (including those on factory vessels) and approve and monitor quality assurance programs.
  
  Marine related spending of $10.9 million in 2006 accounted for 1.7% of total CFIA expenditures of $637.6 million.
  
  
• Environment Canada (EC): The mandate is to preserve and enhance the quality of the natural environment; conserve Canada's renewable resources; conserve and protect Canada's water resources; forecast weather and environmental change; enforce rules relating to boundary waters; and coordinate environmental policies and programs for the federal government. Specific marine related activities include expenditures on coastal action programs, Canadian Wildlife Service and environmental protection.
  
  Marine related spending of $9.8 million in 2006 accounted for 1.2% of total EC expenditures of $838.4 million.
  
  
• Parks Canada Agency (PCA): The Agency is developing a network of marine conservation areas (MCAs) to represent 29 marine natural regions found in Canada's Atlantic, Arctic and Pacific oceans, and the Great Lakes. Three MCAs have been designated, one of which is in a saltwater ecosystem: the Saguenay-St. Lawrence Marine Park. Work is underway to explore priority areas of interest and two proposed marine conservation areas in the Pacific including: Gwaii Haanas, and the Southern Strait of Georgia.
  
  Marine related spending of less than $5 million in 2006 accounted for less than 0.9% of total expenditures of $534.7 million.
  
  
• Indian and Northern Affairs Canada (INAC): The natural resources branch of INAC is at the intersection of the organization's marine-related activities including: offshore energy and minerals development, international polar year, contaminants research, climate change and adaptation research, and other circumpolar marine-based environmental research. The McKenzie Gas development has led to the organization's involvement in a wide range of research, some of which is related to marine resources, as part of the requirements under the Canadian Environmental Assessment Act. Many of the important food sources for northern residents are derived from the ocean including whales, seals, and various fish species.
  
  Marine related spending of about $1.0 million in 2006 accounted for about 0.1% of total INAC expenditures of $906 million.

Expenditures

These other federal departments spent an estimated $307.9 million on marine related programs and activities in 2006 (Table 4.6). Transport Canada accounts for 75% of the total. About 60% of TC spending takes the form of subsidies for various ferry services and the St. Lawrence Seaway Management Corporation.

Table 4.6: Marine related expenditures by federal departments, 2006

Department	Marine activities	Department total	Oceans as % of total
Transport Canada	231,270	1,426,000	16.2%
Natural Resources Canada	25,670	1,470,000	1.7%
Natural Sciences and Engineering Research Council	24,300	859,000	2.8%
Canadian Food Inspection Agency	10,855	637,600	1.7%
Environment Canada	9,800	834,400	1.2%
Parks Canada	5,000	534,700	0.9%
Indian and Northern Affairs Canada	1,000	906,000	0.1%
Total	307,895	6,667,700	4.6%

Source: Departments/Agency, special tabulations

Data issues and adjustments

• Transport Canada expenditures include subsidies and transfers to public and private enterprises in the marine transportation industry. These transfers enter the calculation of impacts of the marine transportation industry. Accordingly, to avoid double counting, these transfers are excluded in determining the impact of TC expenditures. Further detail may be found in Appendix F.

Economic impact

Through $142.2 million in expenditures (net of transfers) on marine activities, the seven federal departments and agency generated $110 million in overall GDP in 2006 (Table 4.3) and just under 1,500 jobs, generating about $100 million in total labour income. Indirect impacts tend to be low for these government departments because most of the expenditures are made on personnel salaries.

4. Provincial/territorial departments/boards

Structure and scope of activities

Though the provinces and territories have limited jurisdiction over marine issues, they tend to be active in four main areas:

• Fisheries and aquaculture: each of the coastal provinces and territories has a separate department, or a branch of a department of natural resources, dedicated to fisheries and aquaculture. Though they have no direct role in managing commercial fisheries, the departments play a major role in managing aquaculture and share responsibility with the federal government for licensing and overseeing the fish processing industry.
  
  The provinces spent $40.3 million on fisheries and aquaculture programs and activities in 2006.
  
  
• Transportation: intra-provincial ferries are operated by private companies, Crown corporations, or by provincial departments of transportation. In all cases, a substantial share of the provincial transportation budgets is directed towards ferry operating subsidies.
  
  The provinces spent $136.3 million to support marine transportation in 2006.
  
  
• Offshore oil and gas: federal-provincial boards regulate offshore oil & gas activity in the waters off Nova Scotia and Newfoundland and Labrador. Provincial departments of energy provide advice on geological matters and royalties, and on local industry participation in procurement for offshore projects.
  
  The boards and provinces spent $27.8 million to regulate and manage offshore activities in 2006.
  
  
• Tourism: coastal provinces allocate significant resources promoting marine tourism.
  
  The provinces spent an estimated $35.9 million to support marine tourism in 2006.

Expenditures

Provincial departments and boards spent an estimated $260 million on marine related programs and activities in 2006 (Table 4.7). Transportation accounted for just over 50% of the total, with most of this used to support various intra-provincial ferry services.

Table 4.7: Provincial/territorial marine related expenditures, 2006 ($ millions)

	Fisheries & aquaculture	Transportation	Offshore oil & gas	Tourism	Other	Total
2006	40,250	136,250	27,750	35,925	19,500	259,675

Source: provinces, territiories; CNSOPB, CNLOPB

Data issues and adjustments

• Provincial expenditures include support for coastal ferries. These transfers enter the calculation of impacts of the marine transportation industry. Accordingly, to avoid double counting, these transfers are excluded in determining the impact of provincial expenditures.

Economic impact

To estimate the economic impact, $130 million is deducted from total expenditures to account for the direct financial support for coastal ferries ($6 million is included to reflect administration). The remaining $130 million in expenditures on marine activities generated $125 million in overall GDP in 2006 (Table 4.3). Almost 1,700 were employed in delivering departmental services, generating $119.0 million in total labour income. Indirect impacts tend to be low for provincial government departments because most of the expenditures are made on personnel salaries.

5. Universities and ENGOs

Structure and scope of activities

Universities Many Canadian universities offer programs and conduct research in the marine area, though unfortunately, data on program and research expenditures are not compiled in any systematic fashion.¹ Universities obtain research funding from several federally-funded sources including the Natural Sciences and Engineering Research Council (NSERC), Social Sciences and Humanities Research Council (SSHRC) and the Atlantic Innovation Fund (AIF), as well as the private sector. Again, while it is possible to (roughly) identify research funding that may be marine-related from grant titles, such data are not systematically compiled.

Another approach is to compile marine research and program expenditure data directly from universities. Such a study was completed in 2007, focusing on Canadian universities with the largest marine research programs and course offerings.² The Canadian universities selected for this study report expenditures exceeding $105 million (Table 4.8) to support major oceans programs or host marine research institutes covering such areas as oceanography (physical, chemical), marine biology, naval architecture, marine environmental law, ocean sciences, hydrodynamic testing facilities, fisheries and aquaculture:

• Dalhousie University
• Memorial University
• McGill University
• Université de Québec a Rimouski
• University of British Columbia
• University of Victoria

This $100 million plus expenditure estimate is considered conservative mainly because not all universities were covered in the survey, and also because even for the universities surveyed, not all marine related expenditures are necessarily captured. University accounts are not set up to be responsive to this kind of enquiry. The expenditure data had to be pieced together from numerous sources within each university including interviews with heads of department and research institutes, and administration staff.

ENGOs

Several national and regional environmental non-governmental organizations (ENGOs) have oceans campaigns addressing such issues as the marine environment and fisheries. Expenditures on marine-related programs are estimated at $46.4 million. Including the value of volunteer time would increase the value of output to over $100 million.

These organizations are primarily engaged in research, education, advocacy, and sometimes nonprofit service or product delivery such as eco-certification. These activities may focus on marine species, habitats, capture and culture fisheries practices, coastal or offshore resource management issues. Most of the expenditures are for labour, some for equipment including boats, fuel, and supplies.

The expenditure estimates are based on data obtained for the following organizations:

• GreenPeace
• World Wildlife Fund
• David Suzuki Foundation
• Sierra Club of Canada
• Conservation Council
• Ecology Action Centre
• Living Oceans Society
• Nature Canada
• SeaChoice
• Canadian Parks & Wilderness Society
• EcoPEI
• Nature Québec
• Clean Nova Scotia
• EcoTrust Canada

ENGO marine expenditures are estimated through three sources: the annual reports of several organizations, and the Statistics Canada Non-Profit Satellite Account and a report on the British Columbia ocean sector.³ The direct expenditures from the two sources correspond closely, accounting for about 40% of the total. The balance of the value is accounted for by volunteer time as estimated by Statistics Canada.

The estimate is considered conservative since not all organizations with a marine interest are represented and not all expenditures are necessarily captured. Impact estimates are based on expenditures only; they exclude the value of volunteer time. Expenditures Total expenditures for universities and ENGOs exceeded $153 million in 2006 (Table 4.8).

Table 4.8: University and ENGO ocean-related expenditures, 2006

Universities	ENGOs $ millions	Total
105.4	46.4	151.8

Source: Gardner Pinfold, Ocean expenditures by Universities in Canada, 2006; Statistics Canada, Non-Profit Satellite Account ENGOs annual reports (various). GSGislason & Associates, Economic Contribution of the Oceans Sector in British Columbia, 2007

Economic impact

Through the $105.4 million in expenditures on marine programs and activities, universities generated $117.2 million in overall GDP in 2006 (Table 4.3). Over 1,600 were employed, generating $85 million in total household income.

Through the $46.4 million in expenditures on marine programs and activities, ENGOs generated $53.5 million in overall GDP in 2006 (Table 4.3). Over 960 were employed, generating $44.8 million in total household income.

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¹ Estimates provided for marine related research expenditures are considered conservative due to the challenge of fully capturing the activities of researchers. The Oceans Management Research Network (OMRN) maintains a database of university programs with marine components. It lists 57 Canadian universities and colleges offering 344 programs with at least some marine content. The database is descriptive of programs; it contains no expenditure data associated with these programs.
² Gardner Pinfold, Ocean Expenditures by Universities in Canada, 2006; prepared for Fisheries and Oceans Canada.
³ GSGislason, Economic Contribution of the Oceans Sector in British Columbia, 2007. The estimate for BC ENGOs contained in this report is some $9.0 million higher than in GSGislason (2005 base year) because some organizations reported higher expenditures in 2006 and also because this report includes some ENGOs not captured by Gislason.