Thank you very much for inviting me to come here. It's always a pleasure for us in the universities to come and share some of the ideas and the research outcomes with high-level leaders like you. Thank you for that.
I am a professor of ocean and fisheries economics at the University of British Columbia, so a lot of what I will say will be to give you some information about this area of research, not only from me and my group, but from colleagues around the world.
What I thought I should start with is why it is important that we keep Canada's seas safe. I don't think I have to belabour this. You guys know this, and that's why this whole effort is put in place. I thought I would talk about the Salish Sea on our west coast just to emphasize how important the seas are to Canadians in terms of economics, ecology, culture, and even spiritual values. These are really central to Canadians, so protecting the seas is crucial, both for us and for future generations.
The Salish Sea is a valuable body of water made up of the Strait of Georgia in B.C., Puget Sound in Washington state, and even some cross-border waters straddling the U.S. and Canada. Hundreds of rivers flow into this sea creating biologically and ecologically rich areas. It includes several estuaries, islands, inlets, and several kilometres of valuable shoreline. This sea is home to many marine mammals, including the southern resident killer whales, at least 200 species of fish, including our famous sockeye salmon, 1,500 species of invertebrates, 100 species of marine birds, and hundreds of species of marine plants. This is just one sea. You can expand this all over the country. It's very valuable stuff.
Importantly, the region is home to about seven million people whose livelihoods are supported in various ways by this sea through fishing, recreation, tourism, and all sorts of things. In fact, it's estimated that in 2011, $7 billion was contributed to the GDP just from tourism alone connected to this sea, supporting 130,000 jobs. These are very important parts of Canadian property, if you like.
Now on the risk of an oil spill, this is always a question: how risky is it? Generally, a formal definition of risk is the chances of something happening and the consequences of that happening. Those two are the elements of risk. If you look at the data, surprisingly the chances are quite high. Between 1996 and 2006, there were 205 tanker-related oil spills of over 51 barrels in size totalling 2.7 million barrels of oil spilled into the world’s oceans in that decade alone. These are considered large spills.
Closer to home, we already heard about the Exxon Valdez, where 275,000 barrels were pumped out of there. There are reports that some of the consequences are still being faced there, even though a lot of effort has been done to clean it up. This is huge when it happens.
According to the research we have, the coast of southern British Columbia and the Gulf of St. Lawrence are the most vulnerable in Canada in terms of large oil spills. These two parts of the country need to be watched very closely.
The cost of response can be very high. ExxonMobil paid about $3.8 billion, in 1990 U.S. dollars. Today, that’s about $6.5 billion just to try to clean things up and make things like they were before. The cost can be very high.
The question of who pays for this was touched on by previous speakers. There are a number of layers. There are four tiers of ways to have coverage in case of an oil spill. When I look at the numbers, roughly the total amount available from all these four tiers is about $1.35 billion Canadian. There’s a conversion to be made because usually quite a number of them are through special drawing rights. You have to do the conversion, but roughly about $1.35 billion to $1.5 billion is the total available after we have problems.
Who pays for this? We have mechanisms to cover up to $1.35 billion, but as I gave you in the example from the ExxonMobil incident, about $6.5 billion was needed to do the cleanup. We're not even talking about what happened in the Gulf of Mexico. In fact, I and my colleagues estimated that if there were to be a large spill in B.C. from the northern gateway pipeline, the cost of the cleanup and the losses could be up to $9.6 billion. We're talking about large numbers. If you look at what we have available, it's quite low compared to the potential costs that will come. If these coverages are not able to cover it, who will bear the cost? It's usually the taxpayers and also citizens who are directly impacted. We need to check that in terms of the new bill.
To conclude, after all the reading I have done, it seems to me that currently our response capacity is limited and insufficient, and most of the time they are not tested. We don't even know what'll happen, really, if something happens, so some simulations need to be done to try to understand. I know that in B.C. the City of Vancouver is trying to do this, to simulate this kind of thing to see what is likely to happen.
There is the big example from the Kalamazoo River tar sands spill of 2010. They thought they could clean it up in two months, but it took them two years to actually do something significant. Their cost estimates were overrun, straight through. We need to watch that. In high-risk, high-value areas, I don't think it is acceptable to simply meet the minimum levels of compliance with the international agreements, and I think that's why we have this effort here, because Canada needs to look at this from the Canadian perspective and try to protect our oceans.
Finally, the U.S. and other countries are actually watching us to see what we are doing. Recently, President Obama ordered the U.S. Coast Guard to conduct a study to look at the potential risk to the U.S. from oil spills in southern B.C. We do this for ourselves, but also because others are watching us, and we need to put in measures that really will put us on top, so nobody can go after us for whatever reason.
Essentially, these are my comments to give you information, hopefully. You see that I avoided all the loyalist stuff because I'm an economist and I stick with the research.
Thank you very much for giving me this opportunity.