Economic Impact of Marine Related Activities in Canada

Summary

About the report

Activities dependent on the oceans make a substantial contribution to the Canadian economy and the economies of its coastal regions. This report provides estimates of these economic impacts for 2006, using conventional indicators: GDP, employment and labour income.

The analysis covers all major private sector activities with a direct dependence on the oceans. These include extractive uses such as fisheries, oil & gas and aquaculture, as well as nonextractive uses such as shipbuilding, marine transportation, tourism and construction. The analysis also captures the activities of public sector organizations with responsibilities for safety, managing ocean activities and research.

Not all ocean activities could be covered in this study due to limitations on resources. These include professional services and high tech manufacturing, both of which contribute to the value derived from ocean resources.

Also, the report acknowledges that the oceans generate economic value in ways not easily quantified. These include ocean processes that influence climate and biodiversity, and that also provide valuable services including carbon sequestration, waste recycling and storing. The oceans also hold great potential as sources of renewable energy.

In light of what is excluded from consideration in the analysis, the estimates of economic impact should be regarded as minimum values.

National economic impact

Ocean sector activities generated an estimated $17.7 billion in direct GDP in Canada in 2006, creating over 171,340 direct jobs. The ocean sector accounted for 1.2% of the Canadian GDP in 2006 and for 1.1% of total Canadian employment (Table S-1).

When the scope of ocean sector activities is broadened to include spin-off impacts (indirect and induced activities), the relative importance of the ocean sector increases to 1.9% of national GDP and 2.0% of total employment.

Table S-1: Economic impact of ocean activities in the Canadian economy, 2006

	Ocean sector impact	Canadian total	Ocean as % of total
GDP ($ millions)
Direct	17,685	1,450,490	1.2%
Direct plus spinoff	27,653	1,450,490	1.9%
Employment (FTE)
Direct	171,365	16,021,180	1.1%
Direct plus spinoff	316,119	16,021,180	2.0%

Source: Table 5.3; Canada totals from Statistics Canada, Cat. No. 384-0002; 2006 Census.

Ocean activities vary widely in their comparative GDP, employment and income impacts (see Figures S-1 to S-3). Among the factors helping to explain these differences:

• Offshore Oil & Gas: this sector leads the next most important industry (transportation) by more than 100% in terms of contribution to direct GDP, but occupies a significantly lower position in terms of its employment and labour income impacts. The strong GDP result is due to the high returns to and of capital flowing from high petroleum prices, while the relatively low employment reflects the capital intensiveness of the industry.
• Marine Transportation: ranks second in contribution to GDP and employment and ranks first in labour income. The relatively high overall employment impact is attributable largely to the strong backward linkages to road and rail transportation and warehousing.
• Tourism and Recreation: the strong showing in employment creation is because this activity is essentially a service and tends to be labour intensive. Also, this study systematically quantifies all main segments of the tourism and recreation industry and so provides a comprehensive assessment that has been missing in past studies. The relatively low GDP impact is due mainly to the generally low wages and returns in the industry.
• Seafood: ranks a distant fourth in contribution to GDP and third in contribution to employment. The relatively low GDP is attributable to generally low returns on capital. The high direct employment figure is due to the labour intensiveness of the industry; a small-boat fishery, particularly on the east coast, supports numerous small processing plants. Few plants are mechanized, with most relying on labour to give them the flexibility they need to adjust to changing resource and market conditions.
• Manufacturing and Construction: There is relative balance among GDP, employment and income in the goods producing sector. This is not a large sector, generating less than $1 billion in GDP, but the impacts shown in Figures S.1-S.3 tell only part of the story. Missing from the impacts are marine products manufacturers whose activities are not distinguishable in the official statistics.
• National Defence: The contribution to GDP is through labour income only (governments do not generate profits), and consequently National Defence ranks below its relative position as measured by employment and income.
• Public Sector and Research: the federal and provincial government departments, universities and ENGOs comprising this sector occupy a relatively large presence in the marine economy as managers, stewards and researchers. With upwards of 70% of expenditures accruing as personnel salaries, most of the impact occurs at the direct stage; there is limited expenditure available to trigger significant indirect impacts.

Figure S-1 Ocean GDP by sector, Canada, 2006 ($millions)

Figure S-2 Ocean employment by activity, Canada, 2006 (FTE)

Figure S-3 Ocean labour income by activity, Canada, 2005 ($millions)

Regional economic impact – Atlantic Coast

Ocean sector activities generated an estimated $12.9 billion in direct GDP in the Atlantic region in 2006, accounting for 3.5% of regional GDP¹ . Ocean activities created over 97,600 direct jobs, contributing 2.0% of total Atlantic Canadian employment (Table S-2).

When the scope of ocean sector activities is broadened to include spin-off impacts, the relative importance of the ocean sector increases to 5.0% of regional GDP and 3.7% of total employment.

Table S-2: Economic impact of ocean activities in the Atlantic economy, 2006

	Ocean sector impact	Atlantic Canadian total	Ocean as % of total
GDP ($ millions)
Direct	12,923	369,398	3.50%
Direct plus spinoff	18,430	369,398	5.00%
Employment (FTE)
Direct	97,619	4,782,245	2.00%
Direct plus spinoff	175,790	4,782,245	3.70%

Source: Totals from Statistics Canada, Cat. No. 384-0002; 2006 Census.

The Atlantic region accounts for about two-thirds of the overall national GDP impact and just over half the overall employment impact. Among the highlights of regional marine impacts:

• The high relative contribution to GDP at the national level is accounted for largely by offshore oil & gas activity, which is responsible for about 50% the Atlantic regional impact. But this capital-intensive industry accounts for just 4-5% of employment and labour income impacts in the Atlantic region.
• The seafood sector ranks second in overall GDP impact in the region, and leads in employment and labour income impacts. The impacts are felt throughout the region given the wide distribution of fishing, aquaculture and processing activities.
• Marine transportation ranks third in contribution to GDP and employment. The sector includes shipping and ferries as well as various port support activities. Impacts are concentrated in and around major ports in the region.
• Tourism ranks fourth in overall in contribution to regional GDP and second in its employment impact. The income impact tends to be relatively low, given the low wages paid in much of the industry.
• Two federal departments, National Defence and Fisheries and Oceans Canada, dominate public sector activities. Combined, they account for about 12% of GDP, just under 20% of regional employment and 25% of labour income.

Regional economic impact – Pacific Coast

Ocean sector activities generated an estimated $4.8 billion in direct GDP in British Columbia in 2006, accounting for 2.6% of provincial GDP. Ocean activities created over 73,600 direct jobs, contributing 3.5% of total British Columbia employment (Table S-3).

When the scope of ocean sector activities is broadened to include spin-off impacts, the relative importance of the ocean sector increases to 5.0% of regional GDP and 6.7% of total employment.

Table S-3: Economic impact of ocean activities in the Pacific economy, 2006

	Ocean sector impact	British Columbia total	Ocean as % of total
GDP ($ millions)
Direct	4 761	182 743	2.60%
Direct plus spinoff	9 221	182 743	5.00%
Employment (FTE)
Direct	73 646	2 092 765	3.50%
Direct plus spinoff	140 204	2 092 765	6.70%

Source: Totals from Statistics Canada, Cat. No. 384-0002; 2006 Census.

The Pacific region accounts for about one-third of the overall national GDP impact and just over half the overall employment impact. Much of the difference between the Pacific and Atlantic in the respective contributions to the national impact is accounted for by the Atlantic offshore oil & gas industry. The marine resources in the Atlantic region also support a larger seafood industry.

Among the highlights of the Pacific region marine impacts:

• Marine transportation ranks as the leading marine activity in terms of contribution to GDP, employment and labour income. This reflects the importance of the west coast as a gateway to North American markets for Asian manufacturers, and also as a point of departure for Canada's raw material exports.
• The west coast supports a major marine tourism and coastal recreation industry, with this sector ranking second overall in its impact on GDP, employment and income.
• The seafood sector ranks third in overall impacts, with its relative importance declining substantially over the past decade following the collapse of salmon stocks. The impact has been offset to some extent by Atlantic salmon farming, which has quadrupled in value since the early 1900s.
• Two federal departments, National Defence and Fisheries and Oceans Canada, dominate public sector activities on the west coast. Combined, they account for about 10% of GDP and regional employment, and about 14% of labour income impacts.

Regional economic impact – Arctic Coast

Economic impacts for the Arctic are most meaningfully described and quantified using direct measures such as output value and expenditures. This is because the absence of a developed industrial/service economy and weak linkages among sectors limits the applicability of inputoutput modeling to estimate impacts.

The overall value of output from marine activities in the Arctic is estimated to have been $87 million in 2006, with $27 million accounted for by commercial activities and $60 million by public sector activities.

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¹ The Atlantic region includes the four Atlantic Provinces and Québec. Marine expenditures made by federal departments and agencies with headquarters in Ottawa are included in the Atlantic region total.