July 28, 2010

Pine beetle spurs infrastructure construction in British Columbia

RICHARD GILBERT

staff writer

The spread of the mountain pine beetle epidemic in B.C. and the decline of the forest industry is stimulating investment in the construction of infrastructure to support the expansion of the mining, energy and transportation industries.

A report released by the Central 1 Credit Union concludes the mountain pine beetle epidemic that spread through the B.C. Interior over the past decade will reduce the province’s available timber supply over the next 20 years.

In the long term, the epidemic will result in the loss of employment in the forest industry and change the distribution of the population.

“Continued growth in the provincial economy and the movement of workers into alternative growth industries such as mining, energy, and transportation will mitigate much of the declines in employment and population in the interior,” said economist Bryan Yu, the author of the report.

“However, the extent to which individual regions and municipalities experience population declines will depend on the availability of alternative local employment.”

The mining sector will play a major role in the transformation of the provincial economy, by mitigating the impacts of the infestation.

The Major Project Inventory for March 2010 reports that numerous mines are proposed in the interior and northwest, with estimated capital costs exceeding $8 billion.

“These mines have the potential to inject significant economic stimulus into local economies over their life span, which will partially offset the long-term negative impacts from the beetle-infestation,” said Yu.

“In particular, the proposed Chu Molybdenum Mine near Vanderhoof, the Prosperity Gold/Copper Mine near Williams Lake, and the Mt. Milligan Copper/Gold mine near Mackenzie have the potential to create long-term jobs and provide a second base industry to alleviate pressure on significantly impacted areas.”

B.C.’s natural gas sector is also expected to expand over the coming decades, as demand for gas grows as it increasingly replaces coal and other fossil fuels. B.C. will benefit from this trend by developing natural gas in the northeast region.

As a result, growth in this sector over the next decade is expected to generate a shift in the population towards the northeast at the expense of areas with fewer economic alternatives.

“Transportation related investments in the B.C. Interior will also contribute to job creation over the long term as the region capitalizes on its proximity to Asia and its natural resource endowments,” said Yu.

Highway expansions that are part of the Asia Pacific Gateway and Corridors Initiative near Prince George are underway and a major port expansion is proposed for Kitimat, which includes crude oil pipelines and a liquified natural gas terminal.

Yu said these types of energy investments point to increasing trade related to rail, trucking, and packaging activities in the interior, which will allow the provincial economy to diversify and grow in the long term.

It is estimated that more than 50 per cent of the province’s mature lodge pole pine has already been killed by the mountain pine beetle.

By 2020, a cumulative total representing 67 per cent will have been killed.

As a result, Central 1 forecasts that net forestry-supported harvesting, silviculture, and processing jobs will decline by 11,250 person-years from the pre-infestation period through to 2028.

In turn, that could lead to the loss of a further 9,500 indirect and induced person-years of work, unless there are opportunities in alternative industries for displaced workers.

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