Economy
The economy and the environment are linked in complex ways. Lessons learned from around the world demonstrate that a healthy and sustainable environment is key to a healthy sustainable economy.
Changes in the economy can become a driving force for changes in the environment. These economic indicators provide information about overall changes in the NWT economy, and specific changes in the oil and gas and mineral sectors, sectors that have direct impacts on the NWT environment. These indicators can be compared to similar indicators in other jurisdictions. Comparisons can provide new perspectives and offer data to analyse links between economic decisions and the present and future state of the NWT’s environment.
5.1 Trends in Gross Domestic Product
This indicator measures trends in the Gross Domestic Product (GDP) of the NWT.
GDP is a measure of the total market value of all goods and services produced in the NWT in a given year. This includes total consumer, investment and government spending, plus exports, minus imports. GDP includes all goods and services produced within NWT, regardless of the producer's nationality.
GDP values for the Northwest Territories are obtained from the GWNT Bureau of Statistics (5). Values of the GDP for Canada and Yukon are obtained from Statistics Canada(6).
NWT Focus
The NWT economy is largely based on the extraction of non-renewable resources. Activities related to this type of economy have environmental costs that are not necessarily measured at the time of extraction, but may have to be paid in the future. Tracking how well our economy is doing and which industries or activities are contributing the most to our economic productivity is important to understanding how economic decisions made in the past influence the state of the environment today. Similarly, today’s long-term economic decisions will affect the environment of future generations.
Current view: status and trend
The GDP of the NWT increased from $2.2 billion in 1999 to $4.2 billion in 2007. The sectors that experienced the largest growth were mining, mainly diamonds, and oil and gas. Construction, a sector related to the growth of non-renewable industries, has also grown. Renewable resource sectors, such as fishing and hunting, have remained stable.
Overall, the NWT economy is less diversified now than 10 years ago.
- “While GDP has increased by 67% since 1999, mining, and oil and gas accounted for almost 50%. Other sectors have not kept pace.”
Quote from NWT Economic Review and Outlook 2007.
In the NWT, corporate profits form about 25% of income-based GDP in the NWT. This is almost twice the national average. Resident income constitutes a smaller share (42%) of the GDP in the NWT than in the rest of Canada (51%) or the Yukon (55%). This reflects one of the peculiarities of the NWTeconomy; there is a fair degree of “income leakage”. Incomes from both value-added products and migrant workers are leaking out of the NWT.
Source: Gross Domestic Product per industry in 1999 -2007. "Other" includes health, service industry, wholesale trade, and renewable resources industries (0.4 % of the GDP in 2007). Source: NWT Bureau of Statistics, Statistic Quarterly - September 2008 (indexed for 2002). Pie charts updated from NWT Economic Review and Outlook 2007.
Looking forward
At least in the near future, the NWT’s economy is expected to remain largely based on non-renewable resources.
- “With new mining developments, GDP could increase by three quarters of a billion dollars over the next five years. Development of the Mackenzie Gas Project could increase GDP by a further 1-2.5 billion (depending on production). “
Quote from NWT Economic Review and Outlook 2007.
The NWT’s economy, as measured by the GDP is influenced by the global economy. Current and future global economic uncertainties are directly reflected in short-term financial decisions made by resource industries, which in turn result in a NWT economy that follows a “boom and bust” pattern. To meet future large-scale resource development needs, the NWT will see an increase in other related infrastructure such as roads, ports, airport upgrades, as well as more exploration and an increase in housing or camp facilities. Some of these will be in previously remote areas.
Looking around
In 2007, the NWT experienced the largest annual increase in GDP (13.1%) in Canada. This increase was due to an increase in diamond production and the construction of a third diamond mine. During the past year, GDP increased 2.7% nationally, 13.0% in Nunavut, 3.8% in Yukon, and 3.3% in Alberta.(4).
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Other focal points
Technical Notes
- Industry-based GDP is calculated using statistics on consumer expenditures, investment, exports, imports, production and output using volume measures adjusted for price variations.
- Income-based GDP is calculated using statistics on personal incomes, labour income, and corporate profits using normal values not adjusted for price variations.
Updated: 1 May 2009
5.2 Trends in oil-gas and mineral production by ecozone
This indicator measures trends in the production of two of the main past and present drivers of the economy in the NWT: oil-gas and minerals such as gold, silver, tungsten, uranium, lead/zinc, and diamonds.
Production is reported in volume produced for oil and gas, and volume of shipments for minerals. The ecozone in which production occurred is noted.
Production volumes for minerals other than diamonds are obtained from Natural Resources Canada. Production volumes for diamonds are obtained from Statistics Canada, for oil and gas, from NWT Bureau of Statistics. The dollar values of production shipments can be obtained from these sources.
NWT Focus
Today, the NWT economy is driven mostly by the diamond mining industry. In the past, mining of other minerals had a huge impact on the NWT’s economy and environment. Oil and gas production is predicted to have a greater impact on the economy in the future. Tracking production of these non-renewable resources provides insight into the overall direction of these economic drivers, and helps our understanding of present pressures on the environment. This information helps predict future demands for exploration and construction. For example, to simply maintain current production of minerals and oil and gas, industry needs more exploration, new mines and wells, and upgrades or construction of transportation corridors. These activities all have an impact on the state of the environment. These impacts, in turn, can be tracked as changes in revenues and expenditures related to environmental assessments, mitigation measures, and environmental remediation.
Current view: status and trend
Oil and Gas
Most oil and gas production has been in decline for 6-7 years in the south and central Taiga Plains. The small volume of gas produced in the Southern Arctic has been increasing, and is used mostly by the town of Inuvik for electricity production and heat. Oil production in the Cameron Hills is slightly increasing, but total production is many orders of magnitude smaller than in Norman Wells, the major producer of oil and gas in the NWT since the Second World War.
Graph: Gas (in thousands of cubic metre) production for NWT (Taiga Plains and Southern Arctic). Source courtesy of NWT Bureau of Statistics, with data from NEB.
Graph: Oil (in cubic metre) production for NWT (Taiga Plains). Source courtesy of NWT Bureau of Statistics, with data from NEB.
The number of oil-gas wells drilled in the NWT increased to 36 in 2003, and has rapidly declined since then. The number of new gas wells drilled in Alberta also has declined from 7000 in 2003 to about 4000 in the past two years.
Graph: Number of wells drilled in the NWT from 1983 to current. Source: NWT Bureau of Statistics, with data from NEB
The number of oil-gas wells drilled in the NWT increased to 36 in 2003, and has rapidly declined since then. The number of new gas wells drilled in Alberta also declined from 7000 in 2003 to about 4000 in the past two years.
Minerals
In the past, NWT mines produced gold (16 mines, 1938 to 2004), silver (5 mines, 1966 to 1984), and uranium (2 mines, 1933 to 1982) in the Taiga Shield ecozone, and tungsten (1 mine from 1962 until 2007) in the Taiga Cordillera. Lead/zinc (1 mine, 1966 to 1988) was produced in the southern part of the Taiga Plains.
Diamonds are now the main minerals produced: 2 mines (opened in 1998 and 2002) are in the Southern Arctic ecozone, and 1 mine (opened in 2007) is in the Taiga Shield ecozone. Diamond production has been increasing rapidly for the past 10 years.
Shipments of gold, tungsten and silver in NWT (included Nunavut prior to 1999) Source courtesy of NRCAN
Production of diamonds in the NWT. Source courtesy of Statistics Canada – also reported by NWT Bureau of Statistics.
The average length of production for mines in the NWT depends on the mineral mined and the location. Mines in remote sites tend to close or shut down temporarily when prices are low. Gold mines in the Southern Arctic produced for only 2-4 years (n = 2), whereas those in the Taiga Shield produced on average for 12 years (range: 1-57 years, n = 14). Mines with all-season road access remained active longer than mines with no road access: 27 compared to 6 years on average (n = 8 and 16, respectively). All diamond mines have winter road access and their individual lifespans are expected to be 15-25 years.
Looking forward
If no new producing wells are drilled, the NWT is predicted to run out of oil and gas production by 2020.
Exploration activities for oil and gas and for minerals are continuing. There are increasing demands for more all-season roads and better infrastructure to transport NWT’s oil, gas and minerals to market. However, it is not expected that any new mining or oil-gas project, even a very large one, would require the creation of a new community in the NWT. For the past 2 decades, no new single-employer community associated with a remote mine or large oil-gas project has been created in Canada. The industry has now shifted to relying on a system of fly-in rotational shifts to remote sites.
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Other focal points
- For more information on landscape changes related to oil-gas and mineral production, including exploration activities, go the LANDSCAPE CHANGES focal point.
- For more information on short-term activity levels related to industry, to go the HUMAN ACTIVITIES focal point.
Technical Notes
- Mineral production prior to 1999 includes Nunavut: gold production occurred from 1982 to 2003, lead/zinc production occurred from 1976 to 2001. Nunavut was also a nickel producer from 1957 to 1962.
- Diamond production in Nunavut occurred from 2005 to 2007. Details on mine lifespan and locations were obtained from NWT & Nunavut Chamber of Mines. Detailed information is available upon request.
References
- Archibald R.M.Ritter, 2001, Canada: From Fly-In, Fly-Out to Mining Metropolis, http://www.idrc.ca/en/ev-9432-201-1-DO_TOPIC.html
- Investment and Economic Analysis, 2008, Economic Review and Outlook 2007, Government of the Northwest Territories; Industry,Tourism and Investment. http://www.iti.gov.nt.ca/Publications/
- Jim Davidson, 2007, Energy Gas supplies - Southern Alberta,
- Ministry of Industry, Statistics Canada, 2008, Provincial and Territorial Economic Accounts Review, 2007 Preliminary Estimates, Ottawa:Statistics Canada. http://www.statcan.ca/english/freepub/13-016-XIE/13-016- XIE2008001.pdf
- NWT Bureau of Statistics, 2007, Statistics Quarterly, GNWT. http://www.stats.gov.nt.ca.
- Statistics Canada, 2007, Canada's Mineral Production, Preliminary Estimates.
Updated: 1 May 2009