Chapter 22 - Local, Regional, and Provincial Economies

22.2 Environmental Effects Assessment

The following environmental effects assessment is largely derived from the financial information presented in Chapter 21. Significant benefits to local and regional economies and that of the province as a whole will result from Project employment and purchase of goods and services. Potential environmental effects are summarized in Table 22.5.

Table 22.5 Potential Environmental Effects

Potential Environmental Effects	Project Phase	Project Activities
subsistence economy (due to increased harvesting and equipment expenditures resulting from employment and business income)	operation, construction	- employment - purchase of goods and services
economic diversification (due to new economic opportunities)	operation, construction	- employment - purchase of goods and services
consumer spending (due to increased employee and business incomes)	operation, construction	- employment - purchase of goods and services
government revenue and expenditures	operation, construction	- tax payments - community contributions
standard of living	operation, construction	- employment - purchase of goods and services
inflation and the cost of living	operation, construction	- employment - purchase of goods and services
decommissioning (decreased employment/business income; consumer spending; government revenue and expenditures and standard of living)	decommissioning	- lower employment relative to operations - lower purchase of goods and services relative to operations

22.2.1 Federal Revenues

The environmental effects that the Project will have on the federal treasury are immense. Table 22.6 illustrates the flow of revenues to the federal treasury by source and phase of operation. The federal treasury can expect to receive approximately $3.7 billion in increased tax revenues over the life of the Project and a further $370 million in savings on employment insurance payments. Direct corporate income taxes of more than $1 billion are anticipated to be the largest source of revenue gains for the federal treasury. Total direct taxes including corporate, personal, sales and other sources are estimated at $1.5 billion. Indirect taxes accruing to the federal government are estimated at $960 million and induced taxes are expected to generate close to $1.3 billion primarily from induced personal taxes and sales taxes.

Table 22.6 Federal Revenues, Voisey's Bay Project

Total		Construction	Open Pit Operations	Underground Operation	Decommissioning
Direct Taxes	$1,498	$59.9	$515.3	$919.9	$2.6
Indirect Taxes	$959	$85.3	$268.5	$600.5	$4.6
Induced Taxes	$1,283	$127	$354	$795	$7
Total Taxes	$3,740	$272.3	$1,138.3	$2,315.4	$13.7

22.2.2 Provincial Gross Domestic Product

The provincial GDP is expected to increase by $11.6 billion. GDP increases are associated with direct, indirect and induced components. The direct component is tied to the incomes earned by Newfoundland factors of production in constructing and operating the Project and from the value of the concentrate produced at the site. The indirect component is generated by companies that supply goods and services to the Project, during both the construction and operating phases. Induced GDP is generated by provincial factors of production, e.g., business and workers spending their direct and indirect incomes within the Province.

Total direct GDP generated within the Province is estimated at $9.4 billion. Adding to this direct figure is $1.4 billion in indirect GDP and $765 million in induced GDP.

22.2.3 Employment and Incomes

Employment and income environmental effects can be separated into their direct, indirect, and induced components (Chapter 21).

In summary, the Project is expected to generate about 28,500 direct person-years of employment and $1.5 billion in direct employment income. Indirect and induced effects will create an additional 34,000 person years of employment and an additional $2.7 billion in indirect and induced income. Total direct, indirect and induced employment will reach about 80,000 person-years of employment and $4.2 billion in total income (Table 22.7).

Table 22.7 Total Project Summary of Employment and Income Effects

Employment and Income	Construction	Open Pit Operation	Underground Operation	Decommissioning	Total Project
Employment (person-years)
Direct	3,651	7,534	17,137	171	28,493
Indirect	1,900	6,981	22,907	160	31,948
Induced	1,819	4,635	12,564	106	19,123
Other	3	196	298		497
Total Employment	7,372	19,345	52,907	437	80,062
Income ($ M)
Direct	$194	$399	$902	$9	$1,504
Indirect	86	314	1,032	7	1,438
Induced	73	185	503	4	765
Other	2	198	269		469
Total Income	$355	$1,097	$2,704	$20	$4,176

22.2.4 Provincial Revenues

Table 22.8 illustrates the environmental effects of the Project on the provincial treasury. Over the life of the Project, the provincial treasury is estimated to receive approximately $1.5 billion in increased tax revenues. Direct taxes account for $1.2 billion, indirect taxes come in at $125 million and induced tax revenue equals $130 million. During the underground mining phase, $797 million is received. During the open-pit operation, it is projected that the provincial treasury will receive $649 million in tax revenue. Another $48 million will accrue to the provincial treasury during construction and the decommissioning phase is projected to account for $2.6 million in taxes flowing to the provincial treasury.

Table 22.8 Environmental Effects of the Project on the Provincial Treasury ($M)

	Construction	Open Pit Operation	Underground Operation	Decommissioning	Total Project
Direct Taxes	28.4	589.9	622.4	1.3	1242.1
Indirect Taxes	7.4	27.2	89.2	0.6	124.5
Induced Taxes	12.3	31.4	85.2	0.7	129.7
Total Taxes	48.2	648.6	796.9	2.6	1496.3
Other Revenue	17.0	41.7	110.7	0.9	170.3

In addition to the taxation revenue, the provincial government will receive other Project-related revenues, such as worker compensation premiums. Over the life of the Project, this is expected to total $170 million.

Because revenues flowing to the treasury increase provincial fiscal capacity, equalization entitlements from the federal government will be affected. The dependency upon the federal government will thereby be reduced.

Taking all of these factors into account, the net revenue to the provincial government from the Project over its life is expected to be $417 million.

22.2.5 Spatial Distribution of Environmental Effects on Economies

The spatial distribution of economic effects that result from the Project are determined by two factors. The first factor is the state of development and industrial composition of the provincial, regional and local economies into which the Project's activities are being injected. The second factor is the Project itself. The characteristics of the Project determine the type, composition and level of goods and services required. These, in turn, influence the pattern of income flows generated in each of the economies under consideration. Changes in the composition of employment and business opportunities that flow from the Project through the provincial, regional and local economies affect the well-being of the residents of these areas. These changes in well-being get manifested as increases in participation rates, employment and income, through reductions in unemployment and transfer dependency, via income, through reduction in employment and transfer dependency, via improvements in the availability and quality of public services and by increases in the cost of living as a result of inflation. The magnitude of these spatial effects and their distribution within and between the provincial, regional and local economies will be directly related to the amount of labour and goods and services supplied locally relative to the size of the economy.

It is the intention of VBNC to encourage local, regional and provincial involvement in the Project through direct employment, the purchase of goods and services consistent with the VBNC Employment and Procurement Principles and the IBAs currently being negotiated. However, the ability to capitalize on opportunities offered by the Project will depend, to a large degree, on the willingness and efforts of individuals and businesses. More specifically, the share of Project employment captured from within a particular area will depend on: the demonstrated interest of the people from that area to work on the Project; their willingness to train or retrain for specific jobs; and the closeness of the match of their skill set and experience to those required by the Project. On the business side, the size of the effects will depend on the enthusiasm and initiative of local entrepreneurs in seeking out and forming joint ventures and strategic alliances with companies that have the requisite expertise in the supply of goods and services to the mining industry.

The environmental effects on economies described in Chapter 21 represent opportunities. The magnitude of the effects that transpire over time will depend on the efforts of individuals to obtain employment and businesses to supply goods and services. Direct Project employment and related incomes will be influenced by the willingness of workers to acquire skills required to successfully compete for jobs. The attitude adopted by local businesses will be the prime determinant in obtaining supply contracts with the Project and the generator of indirect employment and incomes. The relative environmental effect of any enhanced capitalization of opportunities will be most dramatically felt at the community level. In some instances, repair and supply based companies may seek to be located close to the mine site. This will bode well for communities such as Nain should they pursue a proactive approach and actively seek out and encourage these companies to establish in their communities. In other cases, existing businesses may be required to expand to meet the demands of the local economy as incomes grow. To the extent that local entrepreneurs take advantage of these opportunities, the induced environmental effects at the community level and economy-wide will be higher than otherwise. Therefore, over time, as the demands of the Project and related opportunities become more clearly understood at the community level, the positive Project-related environmental effects that will be felt in these communities may even exceed those considered in Chapter 21.

Labrador

The economy of Labrador as a whole will benefit from the construction and operations of the Project. Substantial benefits to local workers and businesses have already been realized through the exploration and pre-construction phases of the Project, and these benefits are expected to grow rapidly throughout the course of the Project. Average annual employment during construction and operations is expected to exceed current levels by 11%, while the cumulative income in Labrador will increase by nearly $2.0 billion for an annual average of $64 million. Increased employment and incomes in Labrador should act as an impetus to further economic development, resulting in the expansion of a dynamic and vibrant economy for some time to come. Although Chapter 21 considered limited employment and income opportunities during decommissioning phase, it is the company's intention to continue its exploration efforts. To the extent that these efforts are successful in finding new ore bodies, the life of the Project may be prolonged beyond that considered in Chapter 21.

Labrador North Coast

The communities on the North Coast will receive considerable economic benefit from the Project during the construction and operation phases. For example, employment levels in these communities are expected to be elevated by an average of 40% during the construction and operational phases of the Project. This translates into approximately 270 person-years of employment per annum. Corresponding to this employment is an annual average income flow of $13 million per annum for a total of $400 million over the life of the Project. To accommodate the projected increase in employment and incomes, some in-migration and new business startups may be necessary on the North Coast, particularly in Nain. Increases in the existing municipal and business services and infrastructure may also be required in Nain to satisfy the anticipated increased demands brought on by the Project and increased earned incomes (Chapter 23).

Upper Lake Melville

Happy Valley-Goose Bay has a larger population, a relatively well-developed business and service centre and is both a designated pick-up point for employees and a supply/service source for the Project. Project-related activities that benefit the local economy are increased employment and income and the purchase of goods and services.

In total, Upper Lake Melville can anticipate nearly 11,000 person years of employment being created over the life of the Project. This works out to more than 350 person years of employment per annum for an increment of 8.3% over current employment levels. As well, regional income is expected to rise by $17 million per annum or in excess of $500 million over the life of the Project.

Western Labrador

Western Labrador, particularly Labrador City and Wabush, will also gain considerable economic benefits. They represent a major urban area with high levels of servicing and traditional involvement with the mining industry. Wabush is a designated pick-up point and it and Labrador City will be the location of some companies providing goods and services to the Project. Given its history with servicing the mining industry, Western Labrador is well positioned to capture a substantial portion of the economic benefits that are anticipated to occur within Labrador.

The communities of Labrador City and Wabush are expected to receive in excess of $450 million income throughout the duration of the Project. This represents an annual average of $15 million. Employment levels in these two communities are expected to increase by approximately 6% over current levels. That is, more than 300 person-years per annum is estimated to occur for a total employment of approximately 9,400 person-years during the construction and operation of the Project.

Eastern Labrador and Labrador Straits

Eastern Labrador and the Labrador Straits have neither a pick-up point nor a significant urban center that is likely to provide goods and services to the Project. Nevertheless, more than 1,000 person-years of total employment or 35 person-years per annum are estimated for these regions over the life of the Project. The corresponding incomes are $50 million or $2 million per annum. These estimated effects could be greater, depending on levels of local interest and initiative.

St. John's and Other Areas of Newfoundland

During the construction and operation phases of the Project, other areas of the Province and St. John's in particular, will benefit from a wide range of primarily business effects, as well as from the contributions the Project will make to the economy as a whole, including taxes, royalties, and reductions in social assistance and other payments.

22.2.6 Stronger Local Economies

The employment and business activity generated by the Project is expected to inject money into local economies. Employment income and business revenues will increase the standard of living (i.e., real incomes relative to the cost of living) for some individuals. The increases in employment resulting from Project employment and business expenditures will also lead to a substantial decrease in dependence by individuals on government transfer payments.

22.2.7 The Subsistence Economy

"Several studies have shown that instead of having an adverse effect on traditional hunting and trapping activities, substantial levels of rotation employment in native villages tend to result in increasingly effective traditional resource harvesting." (Hobart 1982)

As has been described in Chapters 20 and 21, the Project will have a positive environmental effect on subsistence activity. Increased participation in the wage economy is complementary to the subsistence economy, given the commute work schedule. This schedule allows for time off and continued access to customary resource areas. Furthermore, it appears that cash from the wage economy is often injected into subsistence activities resulting in an overall increased, rather than decreased, participation in subsistence activities. This will contribute to both their economic and cultural importance.

22.2.8 Economic Diversification

The Project is expected to contribute substantially toward the diversification of the local economies. This will be realized mainly as a result of the substantial expenditures in the form of wages and business contracts, combined with the anticipated increase in the local population base that is expected, particularly in Happy Valley-Goose Bay and Nain. The increased employment and business opportunities that flow from the demands created by the Project will have a dual effect within these economies. Firstly, there is a more effective utilization of the resources of these communities as more of the labour force is gainfully employed and businesses are exploiting more of their potential. Secondly, the business opportunities created to service the Project and the demands created by its workers have the result of diversifying the economic base in the affected communities. This, in turn, causes the structure of these economies to be more stable, mitigating the consequences that result in a downturn in activity in a more narrowly-based economy.

The mining sector in the Province has already received a substantial boost associated with recent exploration activity. As a supply centre for the Project, the Upper Lake Melville region in particular will be in a strong position to build upon its expertise in providing mining services. The increasing role of the mining sector within this region may also lead to the establishment of other developers in the area who seek a supply base for similar developments in Labrador.

22.2.9 Consumer Spending

Increased wages and income levels of area residents will lead to higher levels of disposable income and, consequently, a rise in the level of consumer spending in the study area. This will lead to economic benefits as local businesses should experience increased revenues associated with this higher level of consumer spending.

22.2.10 Standard of Living

The combined effect of increased direct, indirect and induced employment and the corresponding incomes that are generated will elevate the standard of living in the affected communities. In generating more jobs which last for longer periods of time and injecting substantial income flows into these communities, the Project is expected to improve the average standard of living within Labrador. As well, there will be increased disposable incomes going to families, enhanced saving, increased financial ability to consume high quality goods and services for their households and an increased self-esteem that goes along with reduced transfer dependency.

22.2.11 Inflation and the Cost of Living

Population growth resulting from the Project and related activities will stimulate demand for items such as building lots, building materials, rental housing, and furniture. As discussed in Chapter 21, such growth is likely to occur in Happy Valley-Goose Bay and Nain in particular, and could result in inflation. For example, there could be an escalation of housing costs in Happy Valley-Goose Bay and Nain (Chapter 23). The extent to which this is likely to occur will depend on the inventory of available land in these communities, the ease with which it can be brought into production and the willingness of its owners to exploit the economic opportunities created in their communities. These environmental effects will tend to mitigate inflationary pressures in the housing market. As discussed in Chapter 21, the commute option being utilized by the Project will further constrain inflationary pressure.

High salaries in the mining industry may lead to some wage inflation, especially for employers of individuals with skills in demand at the Project. Again, the commute option being exercised by the company, allowing workers to participate from all over the Province, will tend to have a constraining impact on wage inflation in those firms outside of the Project. As well, migration into the area, increased participation rates and the availability of unemployed workers, combined with the expansion of a more competitive business sector, will further constrain local cost inflation. Even so, there might be slight changes in local cost-of-living that can be traced to the environmental effects of the Project.

22.2.12 Local Government Finances

Additional municipal and provincial expenditures on municipal infrastructure and services may be required as the level of business activity increases, in conjunction with an increase in the local population. It is anticipated that population growth in Happy Valley-Goose Bay and Nain will result in an increased demand for community services and infrastructure (Chapter 23).

To the degree that economic growth increases the tax base and users pay the cost of new requirements, the net effect may be reduced, neutral, or positive. Overall, it is anticipated that additional municipal, residential and industrial taxation revenue will finance the increased level of service and infrastructure requirements. The Town of Happy Valley-Goose Bay will likely be the prime beneficiary of business taxation revenue from businesses that provide goods and services to the Project.

VBNC will pay applicable municipal taxes to all communities in which it has offices.

22.2.13 Decommissioning Effects

The economic importance of the Project to the Labrador North Coast, Upper Lake Melville, Western Labrador, Labrador and provincial economies may result in an increased dependence on mining revenues. Decommissioning of the Project will result in a reduction in overall direct employment and business income, as well as corresponding reductions in indirect and induced income benefits. Therefore, decommissioning will likely result in a reduction in the overall standard of living, consumer spending, and government taxation revenue with respect to these areas. The extent of these adverse environmental effects will depend on the success of VBNC, government, LIA and Innu Nation initiatives to manage the environmental effects of decommissioning, and diversify the North Coast and regional economies.

22.2.14 Accidental Events

As in all mining operations, there is a risk of accidental events that may affect the overall economy. The most likely of these events would pertain to operational malfunction that may lead to temporary production shut down. In the unlikely event that such an accident should occur, possible economic environmental effects would be minor and largely limited to a short-term drop in business incomes, and a reduction in company revenue and government taxation revenue associated with lower levels of production.

22.2.15 Cumulative Environmental Effects

Those projects that will have cumulative environmental effects with respect to the economy are the same as those outlined in Chapter 21 (Employment and Business).

22.2.15.1 Labrador North Coast

Overall, the Labrador North Coast will experience mostly positive cumulative environmental effects associated with the operation of the Project in conjunction with other projects operating in the region.

Substantial and positive cumulative environmental effects on the Labrador North Coast will stem from higher income levels associated with increased participation in the wage economy. Also deriving from these higher income levels will be a number of indirect and induced cumulative environmental effects. Such effects may not be strong due to the relatively small size of the business sector, but also due to the fact that, with the possible exception of Nain, no in-migration is expected. Of course, should local entrepreneurs seize the opportunities created by the Project, there can be an increase of the positive cumulative economic effects felt in these communities. Again, this is contingent on their ability, willingness and success in seeking out joint ventures and strategic alliances with other firms that have the appropriate combination of expertise and experience. Each of the direct and indirect cumulative environmental effects will, to some degree, improve the standard of living and diversify the local economy.

Nain may experience higher indirect and induced cumulative environmental effects resulting from expanded employment opportunities, higher average wages and some in-migration. These higher incomes and increased population should translate into higher demand for goods and services within the local area. Local entrepreneurs should be quick to seize on these opportunities and the expanded retail sector should result in an improved selection of goods and services within the community. A further positive cumulative environmental effect will come from improved municipal services, infrastructure and tax bases.

22.2.15.2 Upper Lake Melville

The Project will make a major contribution to the Upper Lake Melville economy and as a result of the activity of several other large projects in the area, the region will benefit from positive cumulative environmental effects in a relatively short period of time. The construction phase of the Project is likely to run concurrently with a number of other activities including: continuing exploration activity in Labrador; the Utshimassits relocation; construction of the new hospital in Happy Valley-Goose Bay; and upgrading and extension of the Trans-Labrador Highway.

These activities will contribute jointly to economic growth in the Upper Lake Melville area over the next several years. There will be an increase in the local population, resulting in an increase in the municipal tax base. Increased employment will mean that people have more disposable income, leading to higher consumer spending. However, the increased income and business activity from all these projects may contribute to a higher level of price and wage inflation than would be experienced with a single project. If so, this would cause difficulties for people living on low fixed incomes, including the unemployed and seniors.

During the operations phase, the level of cumulative environmental effects will be larger and more widespread than in the construction phase. Given that the operations phase is longer, local businesses will have a greater period to adapt and take advantage of business opportunities, which should increase the overall benefits to the economy.

22.2.15.3 Western Labrador

The Project will make a major contribution to the economy of Western Labrador and, as a result of the activity of several other large projects in Labrador, there will be positive cumulative environmental effects. The construction phase of the Project is likely to run concurrently with the upgrading and extension of the Trans-Labrador Highway, and Western Labrador will also be involved in other projects such as continued exploration.

These activities will jointly contribute to economic growth in Western Labrador over the next several years. There will be an increase in the local population, resulting in an increase in the municipal tax base. Increased employment will mean that people will have more disposal income, leading to higher consumer spending. However, given the capacity of infrastructure, services and the economy as a whole, the cumulative environmental effect on prices and wages will be small.

During the operations phase of the Project, the level of cumulative environmental effects will be larger and more widespread as compared to the construction phase. Given that the operations phase is longer, local businesses will have a greater period to adapt and take advantage of business opportunities, which should increase the overall benefits to the local economy.

22.2.15.4 Eastern Labrador and Labrador Straits

The Project's positive cumulative environmental effects in this area will be a small contribution to the effect of the proposed construction of a highway linking Upper Lake Melville with the Labrador Straits.

22.2.15.5 St. John's

The cumulative environmental effects of the Voisey's Bay Project and other planned and potential projects (e.g., Hibernia, Terra Nova and the Newfoundland Transshipment Terminal) will be positive on the St. John's area. Collectively these projects will make an important contribution to the state of the region's economy and no negative consequences are anticipated.

22.2.15.6 Newfoundland and Labrador

As discussed in Section 22.2.9, a number of other projects will occur in Newfoundland and Labrador during the same period as the construction of the Project. The Labrador economy will experience the positive cumulative environmental effects of possible expansion of the iron mines in Western Labrador, transportation construction projects, and continued mineral exploration activity.

On the Island, the Hibernia oilfield will start production, work is expected to begin on the Terra Nova project, and mineral exploration activity and a number of small mining operations will continue. These activities will have a positive cumulative environmental effect on the overall provincial economy.

Positive cumulative environmental effects on the Island will be strongest during the construction phases of those projects and will for the most part be limited to the first several years of the Project. The cumulative environmental effects of the operations phases of these projects will also be greatest during the first several years of operation. Decommissioning of the mine and mill is currently estimated to occur at about the same time as the end of production at the Hibernia oil field. The Terra Nova project may also be nearing the end of production at that time. Overall, decommissioning will have an adverse cumulative environmental effect on the provincial economy.

22.2.16 Optimization of Socioeconomic Environmental Effects

VBNC has established a set of benefits principles that will enhance the overall economic value of the Project to the Province. These principles are outlined in Chapter 3 and include such elements as adjacency, full and fair opportunity, and the procurement commitment.

Throughout the duration of the Project, companies and communities will have the opportunity to diversify their activities and capture new economic benefits. Local organizations such as the Economic Zone Boards and government agencies such as Atlantic Canada Opportunities Agency (ACOA) and the Department of Industry Trade and Technology may be able to provide assistance in this regard. VBNC will monitor Project expenditures and provide information to appropriate government departments and agencies to assist them in their economic planning.

The Impact Benefits Agreements between VBNC, Innu Nation and LIA will incorporate a range of economic benefits items. VBNC will be in regular contact with Innu Nation and LIA to discuss, among other things, ongoing construction, operation and decommissioning issues. Decommissioning will be discussed with local communities and the two Aboriginal organizations to reduce any adverse economic effects.

22.3 Residual Environmental Effects

The definitions for the rating of residual environmental effects significance for the purpose of this chapter are as follows:

A major (significant) residual environmental effect is one which affects an entire definable group of people in such a way as to cause disturbance of long established activity patterns that would not return to pre-Project patterns within several generations.

A moderate (significant) residual environmental effect is one which affects a moderate portion of the population for one or two generations without affecting the integrity of the population as a whole.

A minor (not significant) residual environmental effect is one of a short-term duration and affecting a specific group of people in a localized area, but not necessarily affecting the integrity of the entire group.

A negligible (not significant) residual environmental effect is one which occurs in a localized area in a manner similar to small random changes due to natural irregularities, but having no measurable effect on the population as a whole.

Social and economic residual environmental effects may be either positive or negative. They may be both when specific groups are differentially affected. Residual environmental effects are those which remain after mitigation. The anticipated residual environmental effects from the Project are summarized in Table 22.9. With the exception of the adverse residual environmental effects associated with decommissioning, each of the residual environmental effects listed in Table 22.9 are substantially offset by positive effects. For example, Section 22.2.3 indicates that the Project is expected to generate $4.2 billion in direct, indirect and induced employment and business income of provincial content. This is liable to create a degree of inflation; however, the consequences of this adverse residual environmental effect are negligible in comparison to the benefits generated by increases in incomes of this magnitude. Adverse residual environmental effects associated with decommissioning, on the other hand, can be reduced if the economies in which the adverse residual environmental effects are likely to occur are able to diversify during the life of the Project, thereby reducing their dependence on incomes generated by it.

22.3.1 Construction

The residual environmental effects of the Project on the provincial economy during the construction phase will generally be very positive, contributing to a large extent toward economic diversification. In addition, employment and business opportunities will be enhanced.

Inflation and Cost of Living

It is possible that with the influx of workers and businesses, particularly to Upper Lake Melville area and to a lesser degree Nain, an increase in prices and wages will result. For example, the influx of people will stimulate demand for building lots and rental accommodations. This may result in an escalation of prices creating a disadvantage for those entering the housing market. Also, the high salaries commanded in the mining industry may lead to wage inflation, as discussed in Section 21.3.1. In any event, the residual environmental effects of price inflation will be offset to a substantial degree by the increase in wage and business income. However, this will not be the case for those who depend either on low or fixed sources of income. There will be increases in the cost of living for these particular groups, resulting in a possible increased dependence on government transfers and social assistance. The residual environmental effect of inflation on the Province will be minor (not significant) since it will be primarily limited to the initial construction period.

Table 22.9 Summary of Residual Environmental Effects

Project Phase	Residual Environmental Effect	Region Affected	Significance	Likelihood (Probability)^a	Sustainable (Capacity) Use of Renewable Resources^{a, c}
construction	inflation	LNC ULM WL Other¹	minor (not significant)	n/a	n/a
construction	cost of living	ULM	minor (not significant)	n/a	n/a
operation	inflation	LNC ULM WL Other	minor (not significant)	n/a	n/a
operation	cost of living	ULM	minor (not significant)	n/a	n/a
decommissioning and post-decommissioning	unemployment	LNC ULM WL Other	major (significant)	high	n/a
	decreased business income,	ULM WL	major (significant)	high	n/a
	lower government revenue,	LNC ULM	moderate (significant)	high	n/a
	decreased consumer spending,	LNC ULM WL	major (significant)	high
	lower standard of living	LNC ULM WL	moderate (significant)	high	n/a
accidental events	accident leading to temporary mine shutdown	LNC ULM WL Other	minor (not significant)	n/a	n/a
¹. LNC = Labrador North Coast; ULM = Upper Lake Melville; WL = Western Labrador Other = Other areas of Newfoundland and Labrador ^a Likelihood and sustainable use of renewable resources are only defined for environmental effects that are significant (moderate or major) (CEAA 1994:84,187) ^c Local, regional and provincial economies residual environmental effects are not applicable in the evaluation of renewable resources.

22.3.2 Operation

The residual environmental effects of the Project on the economy of the Province during the operations phase will generally be very positive, although there is the possibility of adverse ones occurring similar to those identified in the construction phase, but to a lesser extent.

The residual environmental effect of inflation and the related increase in the cost of living during the operations phase will be similar to that during construction, and is considered to be minor (not significant). The residual environmental effect will be limited to a period of up to one year at the beginning of open pit and of underground operations. After this, the economic environment is expected to adjust, and the effect will decrease considerably.

22.3.3 Decommissioning and Post-Decommissioning

It is difficult to anticipate the residual environmental effects of decommissioning on the economy, given that closure will not be for over 25 years. However, there are certain effects that can be identified through examination of previous mine closures such as unemployment, decreased business income, lower government revenue, and lower standard of living.

Unemployment

Decommissioning for the Project will result in the termination of operations employment. All areas of the Province will be affected by the decommissioning, in particular the Labrador North Coast and Upper Lake Melville. Given the size of the Project, it is anticipated that unemployment in these areas will be dramatically affected. The residual environmental effect will therefore be major (significant) and the likelihood high. However, given the substantial amount of expenditures made in the Labrador North Coast and Upper Lake Melville regions, there will be many opportunities for economic diversification developed during the period of construction and operations. Decommissioning residual environmental effects therefore will vary according to the degree of economic diversification that is achieved during these periods.

Decreased Business Income

The decommissioning stage will also result in the termination of all capital and operating expenditures, and as a result, there will be a corresponding decrease in business income and the possibility of business out- migration or closure. Given the potential magnitude of this decrease in business income, the corresponding residual environmental effect will likely be major (significant) and the likelihood high. As with unemployment effects, the degree to which the local economies are able to diversify during the construction and operations phases of the Project will also affect the levels of business income will be influenced by decommissioning.

Lower Government Revenue

The municipalities of Labrador North Coast and Upper Lake Melville will see a decrease in taxation revenue from the Project and Project-related business activities during decommissioning and post-decommissioning. The residual environmental effect of lower government revenue is expected to be moderate (significant), but the actual outcome will depend on the amount of economic diversification that has been achieved by the time of decommissioning.

Decreased Consumer Spending

Reductions in the level of consumer spending are also likely to occur as a result of the absence of direct, indirect and induced wage and salary income that was created by the Project. Given the gross level of income outlined in Section 22.2.2, it is expected that corresponding reductions in consumer spending represent a major (significant) residual environmental effect.

Lower Standard of Living

Given that employment with the Project will result in competitive wages, there will be substantial improvement in the standard of living in the Labrador North Coast area and Upper Lake Melville. During decommissioning and post-decommissioning, these areas will likely experience a lowering in their standard of living. Disposable income will also likely decrease and the dependence on government assistance/transfers may increase. The residual environmental effect of a lower standard of living will be moderate (significant) to major (significant), with a high likelihood. The actual residual environmental effect will depend in part on the amount of economic diversification by the time of decommissioning and post-decommissioning.

22.3.4 Accidental Events

In the event that the Project is forced to shut down temporarily at an unscheduled time, the residual environmental effect will likely be minor (not significant) and short-term. Negative economic residual environmental effects may occur as a result of decreased Project-related supply and service expenditures as well as a reduction in VBNC revenue and in government tax revenues associated with lower levels of production. The likelihood of this occurring, however, is low.

22.3.5 Follow-up Program

There will be comprehensive monitoring of the economic effects of the Project, both for Project planning purposes and to confirm that all commitments are being met. The monitoring of general economic indicators pertaining to the provincial, regional and local economies is the responsibility of federal and provincial institutions.

22.4 References

Literature Cited

Alton Mackey M. 1988. The Impact of Imported Foods on the Traditional Inuit Diet. Circumpolar Health, 1987. Proceedings of the 7^th International Congress on Circumpolar Health.

Alton Mackey M. and R.D. Orr 1984. An Evaluation of Household Country Food Use in Makkovik, Labrador, July 1980-June 1981.

Brice-Bennett C, 1986. Renewable Resource Use and Wage Employment in the Economy of Northern Labrador. Royal Commission on Employment and Unemployment, Newfoundland and Labrador. Background Report.

Canning and Pitt (1996). Commercial Fishery Assessment. Report to Voisey's Bay Nickel Company Limited, Mine/Mill Project.

CEAA (Canadian Environmental Assessment Agency). 1994. Responsible Authority's Guide.

Chafe, D. 1997. The Infrastructure that Hibernia Built. Atlantic Lifestyle Business 8(3).

Department of Development and Rural Renewal 1996.

Department of Finance 1997. The Economy 1997. Government of Newfoundland and Labrador, St. John's, NF.

Department of National Defence 1994a. EIS: Military Flight training. Technical Report 14: Economic Baseline. Department of National Defence, Ottawa, ON.

Department of National Defence 1994. EIS: Military Flight Training. Main Report V-1. Ottawa, ON.

Newfoundland and Labrador. 1997. 1997 Budget. Government of Newfoundland and Labrador, St. John's, NF.

Statistics Canada 1994. Profile of Census Divisions and Subdivisions in Newfoundland - Part B. Ministry of Supply and Services Canada, Ottawa, ON. Cat. #95-302.

Tanner, A., J.C. Kennedy, G. Inglis and S. McCorquodale. 1994. �Aboriginal Peoples and Governments in Newfoundland and Labrador' in: Royal Commission on Aboriginal Peoples, "For Seven Generations: An Information Legacy of the Royal Commission on Aboriginal Peoples". Ottawa, Libraxus Inc. [CD-ROM] (Also submitted for publication by the University of Toronto Press).

Town of Labrador City 1994. Labrador City: Your Labrador Connection. Labrador City, Labrador.

Usher, P.J. 1982. Renewable Resources in the Future of Northern Labrador. Report to the Labrador Inuit Association, Nain, Labrador.

Personal Communications

Best, E. Industry Development Officer, Department of Tourism, Culture and Recreation, Government of Newfoundland and Labrador. Wabush, Labrador.

Best, H. Director of Regional Services, Labrador Region. Department of Fisheries and Aquaculture, Government of Newfoundland and Labrador. Telephone conversation, September 17, 1997.

Personnel Communications

Brenton, D. Mayor, Town of Labrador City. Telephone conversation, September 9, 1997.

Flynn, S. President, Labrador Straits Chamber of Commerce, Forteau, Labrador. Telephone conversation, September 15, 1997.

Goudie, B. Manager, Northern Light Inn, L'Anse au Clair, Labrador. Telephone conversation, September 9, 1997.

Hancock, R. Regional Consultant, Department of Development and Rural Renewal, Government of Newfoundland and Labrador. Forteau, Labrador. Telephone conversation, September 8, 1997.

Hinchey, J. Mineral Claims Recorder, Mineral Lands Division, Government of Newfoundland and Labrador, St. John's, NF. Telephone conversation, October, 1997.

Malik, R. President, Labrador West Chamber of Commerce. Telephone conversation September 9, 1997

Appendix 22A Environmental Effects Assessment Synthesis
Valued Environmental Component: Local, Regional and Provincial Economies

Environmental Effects Assessment Synthesis

Section 22.2 of this report indicated the estimated effects on provincial GDP, employment and incomes. These effects are substantial and will have very significant positive effects on the provincial economy and on many of its residents.

There will, inevitably, be some 'cost' associated with these benefits. These are mainly associated with price and wage inflation in those communities which experience the major effects. In all cases these adverse effects are expected to be minor in comparison to the benefits of the Project.

Ultimately reserve levels will become exhausted or no longer economic and decommissioning will occur. After an estimated 25 or more years of activity this will represent a significant loss to the economy as a whole, and Labrador in particular.

The residual environmental effects of the Project on local, regional, and provincial economies are summarized in Appendix 22A.

Environmental Effects Assessment Synthesis: Local, Regional and Provincial Economies
scanned table

Environmental Effects Assessment Synthesis: Local, Regional and Provincial Economies