of Coastal and Ocean Resources:
The Case of Nova Scotia
FEBRUARY 1998
SYNOPSIS OF THE REPORT
The principal aims of this project were to estimate how important coastal- and oceans-related industries are to Nova Scotia's economy, and to develop a methodology by which this could be done more easily in future, whether for Nova Scotia or for other jurisdictions.
The economic importance of oceans industries can be shown in several ways, such as their direct and indirect contributions to Gross Domestic Product (GDP); how many people they employ; how much these people take home in wages and salaries; and where the output of coastal industries is sold. The net impact of coastal industries for a benchmark year (1994) by each of these measures is summarized.
The direct impact is as follows:
GDP - $1.5 billion (9.6% of total)
Household Income - $1.3 billion (12.2 % of total)
Employment - 34,800 jobs (9.4% of total)
Exports - $2.7 billion (37.8%)
The total impact (direct + indirect + induced) as calculated by means of the Nova Scotia Input-Output tables is as follows:
GDP - $2.8 billion (17.5% of total)
Household Income - $2.6 billion (24.8% of total)
Employment - 93,507 jobs (24.8% of total)
The list of industries and agencies does not include all coastal-related activities. It contains only those for which data could be readily obtained or estimated, but which allowed a demonstration of their impacts. Even within this list, the research team estimated conservatively, so the calculated impacts should be regarded as on the low side.
The impact data summarized earlier were obtained by netting out double-counting from the gross data (the purchases of intermediate inputs by one industry from another). Running these data through the IO tables allows an assessment of the total (direct + indirect + induced) impact, or how much a dollar earned in any of the oceans industries means as it is spent and respent throughout the economy of Nova Scotia.
Gross direct data for private and public sector ocean industries were collected or estimated. Private sector industries are dominated by fish processing, primary fishing, ports, and tourism, but oil and gas, shipbuilding, boatbuilding, aquaculture, and ocean technologies were also important. Public sector oceans-related activity is dominated by the Department of National Defence, with important contributions also from the Department of Fisheries and Oceans; Environment Canada; and the Nova Scotia departments of Fisheries and Aquaculture, and the Environment; and the Canada-Nova Scotia Offshore Petroleum Board.
Although at first blush, the 9.6% of Nova Scotia's GDP directly attributable to coastal industries appears modest, once indirect and induced effects are calculated this almost doubles to 17.5%. As a comparison in Nova Scotia, the combined primary output of agriculture, fishing, logging and mining is equivalent to 4.4% of GDP, manufacturing (including food processing) is about 10.5%, and the biggest grouping of service sectors (community, business and personal services) is about 11%.
Coastal industries also account for 12.2% of direct wages and salaries (household incomes) in Nova Scotia, and 24.8% of total wages and salaries. This makes ocean industries important contributors to family spending and retail sales.
The employment impacts of coastal industries are 9.4% of all jobs directly, and 24.6% of all jobs in total. This means that almost one out of every four jobs in Nova Scotia can trace its existence to economic activities involving the ocean. This proportion rises to a much higher value in the many coastal communities that ring the province.
The export impact is particularly important as it shows how coastal and ocean industries earn money for Nova Scotia outside the province. Ocean industries brought in $2.7 billion in export earnings to Nova Scotia in 1994 (both from other parts of Canada, and from around the world), and these export industries alone contributed $2.3 billion to household incomes. Fish products have consistently been the biggest single source of private sector export earnings for the province.
Defence is the most important coastal industry in Nova Scotia, closely followed by fish processing. Taken together these two account for 63% of the GDP impact of all the ocean industries analyzed, 66% of household income, 63% of employment, and 73% of oceans-related exports. (For a note of what comprises an "export" see the Appendix on sources and methods.) Private sector activities account for about 60% of oceans-related total GDP, with public sector departments and agencies taking up about 40% and indicating how important the role of government remains in conserving, regulating, and managing the oceans and their uses.
Primary fishing is important as a supplier to fish processing plants, and as an exporter in its own right. Ports and tourism rank highly both as sources of employment, incomes, and export earnings. Ports activity should expand as global trade increases, and as more and more products are shipped by container. Oceans-related tourism is a key component of the emerging ecotourism or nature tourism niche.
Apart from the Department of National Defence, the biggest public sector presence in the coastal sector is the Department of Fisheries and Oceans, whose work is complemented by other federal and provincial departments.
Traditional oceans-related manufacturing, like shipbuilding and boatbuilding, remain significant industries. Shipbuilding should improve in line with increased offshore oil and gas production. Boatbuilding needs to get away from its traditional dependence on the fishery and align itself with the burgeoning worldwide demand for workboats and pleasure craft.
New ocean-related industries include oil and gas production, aquaculture, and ocean technologies. The first of these will increase in importance once the Sable Offshore Energy Project begins. The second has increased in terms of output from $3 million to $13 million since 1989, but could hold much more potential for growth.
Ocean technologies have already shown healthy signs of growth. It is a mix of high value-added manufacturing (instrumentation, navigation aids) and professional services (consulting especially) that has evolved from proximity to the ocean around Nova Scotia, and the particular conditions and opportunities this proximity represents. It is knowledge-based, and pays well. Much of its output is exported.
As much as this has been a project to gauge how important oceans industries are to Nova Scotia, it has also been a pilot, to test methods and estimation procedures to measure the impact of these industries as accurately as possible. The methods outlined are only as good as the data that underpin them. Further refinement of methods will improve the validity of the results, and will bring in industries that are currently omitted for reasons of lack of data.
The template developed in this work also should be tested in other jurisdictions, like Atlantic Canada or the Gulf of Maine. Ocean industries are significant in the economies of Nova Scotia's Atlantic neighbours. A precise measurement of this importance will help policy formulation that not only aids economic development, but also management of the ocean environment. On a very practical level, analysis of ocean industries for all of Canada would avoid many data collection and apportionment problems that attend a consideration of only one part of the country.
At some stage, consideration of ocean industries should move beyond an economic accounting exercise, to begin investigating policy-related issues such as a potential industrial cluster centred on these industries. This would not only involve the different private sector activities, but would also engage universities, governments, and research institutions.
Any future work should also give extensive consideration of the costs of economic growth, that are usually expressed in terms of depleted resources, pollution, and environmental degradation. Ultimately, the coastal environment involves management both for environmental as well as market-oriented uses, with due consideration for the welfare of a larger economic unit (like a province or nation) and for the many communities that are located on the coast of a place like Nova Scotia. Reconciling environment and economy effectively will require special skills to ensure that industries that depend on the oceans continue to contribute to Nova Scotia's economic progress. This kind of management could also be a significant economic opportunity for the province.
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