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Executive Summary

In 2007, the gross domestic product (GDP) for Alberta was $256.9 billion. This represents the value of all final goods and services produced within Alberta for that year and are generally considered to be a basic measure of the province’s overall economic output and well-being. However, there is increasing recognition that the well-being of a society is based on more than just economic output. Recent studies have demonstrated that society also benefits from various ecological functions or ecosystem services (air, water and land, among others) that are not normally factored into GDP estimates. Furthermore, the ability of ecosystems to provide the full range of goods and services can actually be impaired by economic activities. Thus, there is growing recognition that sustainable development requires balancing the impacts of economic activity with the environment’s ability to continue to provide ecosystem services that benefit people.

As part of the process of developing a watershed management plan for the North Saskatchewan River Basin (NSRB), the North Saskatchewan Watershed Alliance (NSWA) has expressed interest in determining the economic importance of both economic activity and ecosystem services within the basin. The objective of this study was to provide preliminary estimates of the value of services being provided by ecosystems and the value of economic activity for each of the sub-basins in the NRSB.  The intent of this report is to provide some initial background information on the relative importance and values of economic activity and ecosystem services in each sub-basin. It is expected that, as the requirements for additional economic studies become apparent, this analysis will provide the foundations for future studies.

Economic Activity

In 2007 the value of economic activity (GDP) in the NSRB was estimated to be $79.1 billion, or 31% of the Alberta total. Historically, estimates of GDP at a sub-provincial level have been difficult to estimate because the requisite economic information is not collected or analyzed at a regional or local level. However, through use of a new methodology that estimates GDP based on industrial employment profiles and average GDP per job coefficients for the various industries, it was possible to estimate GDP for individual communities or regions. GDP estimates for the various sub-basins were then estimated using the industry employment profiles for the communities and rural areas within each sub-basin at the time of the 2006 census. 

The resulting estimates are provided in the following table. It shows that the bulk of economic output is located in the central part of the NSRB, with 86% occurring in the Strawberry, Sturgeon, and Beaverhill sub-basins; these sub-basins also account for 89% of the population. Further assessment of the information shows that the City of Edmonton, which straddles all three of these sub-basins, accounts for 58% of GDP in the entire NSRB, followed by Strathcona County at 8%, St. Albert at 5% and Lloydminster at 2%. None of the other communities or rural areas contributed more than 1.9% of GDP in the basin. In total, economic activity in the five sub-basins upstream from Edmonton accounted for 6.3% of basin GDP while the sub-basins between Edmonton and the Saskatchewan border accounted for 7.8%. 

Value of Economic Activity and Ecosystem Services in the NSRB ($ millions)

Ecosystem Services

The value of ecosystem services in the NSRB is conservatively estimated to be $17.7 billion, or about $3,652 per hectare of ecological land (i.e. land that is not built-up or developed, or consists of rock or ice). This estimate was based on the mix of land cover types in the basin and in each of the sub-basins combined with estimates of the value of ecosystem services produced by each land cover type. As there are no studies that have specifically examined the functioning and value of services being produced by ecosystems in the NSRB, the study relied on value estimates drawn from similar studies undertaken elsewhere in Canada, particularly recent studies undertaken in Ontario. The study considered 10 types of ecosystem services for 14 land cover types, and found quantifiable values for 74 of the possible combinations. The resulting estimates of the total value of ecosystem services within each sub-basin are also found in the summary table.

The highest values of ecological services were attributed to coniferous forests, rivers and wetlands. The most valuable ecosystem service functions were found to be water regulation (by rivers, streams, and wetlands), water supply (by wetlands and urban rivers), disturbance avoidance (by wetlands), and

recreation benefits (from a host of land cover types). Accordingly, the sub-basins at the upper end of the NSRB (the Ram and Brazeau) generated the highest value of ecosystem services. Some of the lowest values were found in the Strawberry and Sturgeon sub-basins, which are highly populated and have a high percentage of disturbed lands, although the Monnery sub-basin, which has little forest and few lakes and wetlands, also generated low levels of ecosystem services.

Summary

Based on this assessment, it is concluded the overall well-being of residents of the NSRB as measured in economic terms is on the order of $96.8 billion. This represents the value of economic activity ($79.1 billion) generated by residents of the NSRB in combination with the value of ecosystem services generated by the landscape ($17.7 billion). In six of the 12 sub-basins the value of economic activity exceeded the value of ecosystem services. These include the Strawberry, Sturgeon and Beaverhill sub-basins, which accommodated 89% of the population of the NSRB in 2006, as well as the Modeste, Vermilion and Monnery sub-basins. In the other six sub-basins, which only accounted for 4.5% of the NSRB population, the value of ecosystem services being generated by the landscape exceeded the value of economic activity. For the five sub-basins upstream of the City of Edmonton, the value of ecosystem services ($10.2 billion) was actually double the value of economic activity ($5.0 billion). Downstream from the City of Edmonton, the value of ecosystem services ($4.9 billion) was 80% of the value of economic activity ($6.0 billion). 

Overall, the results of the analysis demonstrate the relative importance of ecosystem services in the upper parts of the NSRB and that, in the less populated parts of the basin, the value of ecosystem services and economic activity were reasonably similar. Only in the most populated parts of the NSRB was the value of economic activity considerably larger that the value of ecological services being generated.