Earlier this week, an independent study?released by the SFU Centre for Public Policy?Research, in collaboration with California-based consultancy the Goodman Group, found that Kinder Morgan has substantively over-stated the benefits of its proposed Trans Mountain Pipeline Expansion in its submission to the National Energy Board.
The report echoes past research from CRED which has found that BC’s provincial and municipal coffers will only get a tiny benefit from the Trans Mountain expansion. Instead, oil sands producers, Alberta and, of course, Kinder Morgan will be the main beneficiaries.
Municipal benefits from the Trans Mountain pipeline expansion
According to our research, Kinder Morgan’s stated tax benefits (which, as this report highlights, maybe also be overblown) would only fund a small fraction of provincial and municipal services – 0.3% of the costs of running the province’s schools, for example, or just 1% of the Coquitlam police department. Even the biggest municipal beneficiary, the City of Burnaby, could fund less than 9% of its Parks, Recreation and Cultural budget with tax revenues from the Trans Mountain Expansion. And this is a best case scenario, assuming no increased costs for servicing the pipeline right-of-way or any incidents to respond to.
BC provincial benefits from the Trans Mountain expansion
The SFU report also found that Kinder Morgan has significantly over-estimated the number of jobs the pipeline would create, and downplayed the cost of a major oil spill because the company failed to take into account the high population density of the Lower Mainland, underestimating the costs of a catastrophic oil spill by potentially billions of dollars.
Download the full report here, and read CRED’s reaction here.
A new report from CRED, How do pipeline spills impact property values?, reveals that an oil spill in?Burrard Inlet or along BC’s south coast has the potential to negatively impact property values and cost jobs in real estate and property development, in areas both adjacent to spill sites as well as the surrounding region.
DOWNLOAD THE REPORT
The research concludes that oil spills have direct and lasting impacts on property values. In particular, the report finds that: ?
- In eight documented cases, properties directly impacted by spills were significantly devalued
- Nearby properties lost up to 8% of their value
- Where homes relied on well water and the groundwater was contaminated, the value loss was permanent
The goal of the report is to increase access to information and support a transparent conversation around the economic risks and rewards of Kinder Morgan’s proposed new Trans Mountain pipeline.?CRED is calling for an independent study of the economic risks of the proposal.
Downloadable image highlighting the report’s main conclusion:
Business leaders react to the report’s findings
“This report brings up important information and concerns. As planners, it’s our job to be aware of all potential risks to housing and land values. We hope that the government will take action to protect Vancouver’s market from the impacts of an oil spill.” – Blaire Chisholm, Planning Manager at Brook Pooni Associates
“Vancouver is famous the world over for its natural beauty and pristine environment. This is the driving force behind all of our real estate-related industries. As a realtor, it is my responsibility to let my clients know about the risks they could face by buying a property near pipeline infrastructures.” – North Shore realtor and CRED advisor Dallas la Porta
“As a realtor I have noticed that with the huge amount of negative publicity surrounding the expansion of this pipeline, people are on red alert and are very aware of the potential impacts of the pipeline on their properties. As a result, buyers will typically avoid a?property anywhere near a pipeline and this does have a negative impact on values.” – Langley realtor Annabel Young
Read the full report here?
The following is an excerpt from CRED’s upcoming report. To be notified when the report is launched and available for download, please contact us or join our mailing list.
British Columbia’s property development sector is a significant driver of economic growth and an important source of employment. According to the Urban Development Institute, the sector is directly and indirectly responsible for over 220,000 jobs across the province, in areas from planning and construction to secondary supplier purchases. It makes a bigger contribution to provincial GDP than any other sector – more than natural gas, tourism, mining, forestry or film and television.
In the real estate sector, a sub-section of the property development industry, there are over 14,000 people working as realtors in Greater Vancouver, Vancouver Island and the Gulf Islands alone. The coastal real estate market is also important to private homeowners who gain value not only from a physical property but from its viewscape, proximity to waterfront and wilderness, and location in one of the world’s most liveable regions.
CRED is seeking to better understand the risks of an oil spill as part of an ongoing dialogue about the economic future of the region. Where are the best places to invest for future growth and prosperity? How can we safeguard our quality of life and support industries that will ensure long-term responsible development?
Real World Examples
To begin assessing risk, we gathered information on eight separate oil spills in the US and Canada. In three of the cases, the spills directly impacted properties and in two further cases, the proximity and perceived impact of the incidents devalued properties. In the final three cases, residents have claimed values losses but they have not yet been independently confirmed.?
Case study: Pepco Pipeline, Maryland, 2000
Loss in value: 11-12% in the 1st year
In 2000, a 3,800-barrel (120,000-gallon) oil spill in a suburb of Washington DC affected property near the Patuxent River. A study published in The Appraisal Journal in 2001 concluded that waterfront and beach-access homes were significantly and negatively affected by the spill.
In the year following the incident, home values within a 10-mile study area fell 11%. In addition, waterfront properties experienced reduced sales volume. According to real estate listing data, only three waterfront homes sold in the first sale season after the spill, a 40% decrease from the previous year. Because there was no substantial variation in regional markets, the study concluded that this decline was likely due to the spill.
This is a small excerpt from an upcoming CRED report on the link between oil spills and local property values. If you would like to read the whole report, please contact us or join our mailing list.
Our first Credible Conversations forum was held on May 29th at the Creekside Community Centre in Vancouver. Over 100 business leaders, entrepreneurs, politicians, First Nations representatives and BC residents came together to discuss the economic risks of pipeline expansion and explore how to build a more diversified economy here on the west coast. Over the next few days, we will be posting videos, photos and presentations from the forum here on our blog.
What does responsible economic development look like in BC?
The second experts’ panel explored economic alternatives: if we don’t built new oil pipelines, then what will our economy be based on instead? What industries should we nurture and support? Where will jobs, innovation and growth come from?
Moderated by Tara Mahoney from GenWhy Media, panelists included Linda Solomon from the Vancouver Observer, Bradley Shende from M2O Digital Agency and Rueben George from the Tsleil-Waututh Nation and TWN Wind Power.
Watch the full discussion here:
Our first Credible Conversations forum was held May 29th in Vancouver. Over 100 business leaders, entrepreneurs, politicians, First Nations representatives and BC residents came together to discuss the economic risks of pipeline expansion and explore how to build a more diversified economy on the west coast.?
*These are rough notes from the break-out sessions and are not meant to convey the opinions of all CRED members, or even all participants in the break-out group.
What does cross-sectoral mean?
- Interdisciplinary, multifaceted, coming from different perspectives
- Inclusivity and diversity, bridge between cultures
- How sectors can work together
- Shared interests, big picture
- Directing forces and ideas
- Common / shared interests, collaboration
- Includes unions
How might a new oil pipeline affect the west coast’s economy?
- Increased reliance on foreign investment
- Risk of skills drain
- Free trade deals (contradictions)
- No local energy security plan
- Chevron jobs at risk?
- Climate change risks
- Costs of oil spills – insufficient insurance, tourism/cruise ships, attracting talent
- Kills innovation in alternative energies
- Impacts the region’s livability
- No long-term benefits locally
- Lower taxes, more funds for health care & education
- Jobs: construction, oil sands jobs
- Strength of Canadian economy – global position as resource leader
- Strengthen trade relationships with the US, China
- Increased global oil supply
- Pipelines are cheaper and safer than rail or road transportation
- Return on RRSPs / equity market will benefit
- What does a transition away from oil dependence look like as opposed to a crash?
- Where else could tax revenues come from? (Carbon tax?)
- More conversations on the oil economy vs the green economy
- Need to break through the spin
- Are people intimidated to speak up against real or perceived business interests?
Kinder Morgan announced today that, due to demand from shippers who want to move products from the oil sands to the coast, they are proposing to expand their Trans Mountain route by 20% more than previously stated. Instead of increasing the pipeline’s capacity to 750,000 barrels per day (current capacity is 300,000) they are now proposing to expand it to at least 890,000 barrels per day. Correspondingly, tanker traffic in Burrard Inlet would rise from 60 tankers per year to over 400 under this new proposal. Although Kinder Morgan has stated that they do not require this scale of export to go ahead with their expansion, some economists, including former head of ICBC Robyn Allen, have claimed that an expanded Trans Mountain route could accommodate up to 1.1 million barrels per day.
More information about the announcement