Gitga'at First Nation - Gitga at ENGP Informed Decisions Report FINAL - A2K4X5

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐Gregory,Failing&Joseph.InformedDecisions:ENGPImpactsReviewreport.12‐15,2011.

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MakingInformedDecisionsabouttheEnbridgeNorthern

GatewayProject:EvaluatingtheAnticipatedCosts,Benefits,

andRisksofMarineOilTransportationontheGitga’atNation

andCanada’sPublicInterest

Dr.RobinGregory,ValueScopeResearch

(leadauthor)

LeeFailing,&ChrisJoseph,CompassResourceManagement

December15,2011


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TableofContents

ExecutiveSummary 3

1. Introduction 4

1.1 DecisionMakingContext 4

1.2 ScopeandPerspectiveofthisReport 5

2.StandardsofPracticeforMajorProjectAssessments 7

2.1InternationalStandardsandPractices 7

2.2Identifyingandevaluatingallrelevantprojectimpacts 8

2.3ExplicitAnalysisofUncertainty 11

2.4ComparisonofProjectAlternatives 13

2.5ExplicitIdentificationofTrade‐offs 15

2.6DistributionofCostsandBenefits 16

3. CriticalEvaluationIssues 17

3.1EstimatingtheProbabilityofMarineOilSpills 17

3.2IncorporatingPerceptionsofRisks 24

3.3AssessingNetBenefitsoftheENGP 28

3.4MitigationandCompensationEffectiveness 30

4. Conclusion 36

5. References 38


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ExecutiveSummary

ThisreviewoftheEnbridgeNorthernGatewayProject(ENGP)applicationfocusesonwhethertheinformationprovidedbyENGPprovidesabasisformakinginformeddecisionsabouttheproject,particularlywithrespecttopotentialeffectsstemmingfromthemarinetransportationofoilbytankersontheGitga’atNationandonthepublicinterest.TheconclusionisthattheENGPapplicationandsummarysupportingdocumentsfailtoaddressNEBandCEAAcriteriaandfailtomeetminimumstandardsofacceptabilityforanevaluationofthenetimpactsofamajorenergyproject.Specifically:

− Keypotentialconsequencesoftheproposedproject,importanttotheGitga’atNationandothercitizensofCanada,areomittedfromtheanalyses;theseincludeimpactsonmanynaturalresourcesandecosystemservicesnottradedineconomicmarketsthatareofcriticalimportancetotheGitga’ateconomy,culture,andsocietyaswellastheimpactsofincreasedperceptionsofriskoneconomicvaluesandcommunitywell‐being(pages8‐11).

− Informationandmethodsusedtocharacterizetheeconomicbenefitsoftheprojectaredeficientandincomplete.Becausetheapplicationincorrectlyidentifiesgrosseconomicimpactsaseconomicbenefitsandexcludessignificantcostsandrisksfromthepublicinterestassessment,incompleteandmisleadinginformationisprovidedaboutthecosts,risks,andoverallnetbenefitsoftheENGP(pages28‐30).

− MethodsusedtodeterminewhethertheprojectisinthepublicinterestfailtoconformtoCEAAandNEBmandatesortoacceptedstandardsforevaluatingtheenvironmental,socialandeconomiceffectsoflargeenergyprojects(pages9‐16,28‐30).

− Summarymeasuresofimpactsignificanceareoftenpresentedwithoutexplanation;thisisparticularlytrueofmanyriskestimates,whichfailtoreflectthestandarddefinitionofriskastheproductofprobabilityandconsequence,furtherinformedbythevaluesandriskperceptionsofpotentiallyaffectedgroups(pages24‐28).

− Theuncertaintyassociatedwiththeanticipatedbenefits,costsandrisksoftheprojectislargelyignoredaspartofquantitativeanalyses;thisistrueforsuchkeyprojectelementsasoilprices,environmentalimpacts,andboththefrequencyandanticipatedconsequencesofoilspills(pages11‐13,17‐23).

− Noevidenceispresentedastowhytheproposedprojectispreferredtootheralternatives,andnoevidenceispresentedthattheeconomic,social,cultural,healthorenvironmentaltrade‐offsbetweenconsequencesoftheproposedprojectanditsleadingalternativeshavebeenaddressedexplicitlyasrequiredbytheNEBActandstandardprojectevaluationpractices(pages13‐14).

− Importanttrade‐offsrelatedtothedistributionofconsequencesamongthedifferentinterests–includingtheGitga’atNation,otherNorthwestCoastFirstNations,Enbridgeanditscontractors,andthecitizensofBritishColumbiaorCanada–arenotacknowledged(pages15‐16).


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− Conclusionsabouttheprobabilityofanaccidentaloilorcondensatespillarebasedonlimitedanalysesthatignorekeydataandfailtofollowestablishedbestpracticesforincorporatingthejudgementsofexpertsconcerningspillfrequenciesofdifferentvolumes.Inlightofthesignificanceofthepotentialconsequencesofanoilspill,thislackofrigorousanalysisintheENGPapplicationconstitutesacriticalomission(pages17‐23).

− PerceptionsoftherisksoftheENGPandtheireffectsonlocalandnationaleconomicvalues

(bothmarketandnon‐use)andonthepsychologicalandphysicalhealthofindividualsarelargelyignored.Thisexclusionofpotentiallysignificantlosseshighlightstheneedforafarmorecomprehensive“weighing”ofallthebenefits,costs,andrisksoftheENGPtoarriveatasoundestimateoftheoverallnetbenefitsoftheproposal.(pages24‐28).

− AnalysesoftheexpectedpotentialforeffectivemitigationandcompensationoftheadverseeffectsofanoilspillignoremanyinitiativesundertakeninotherjurisdictionsaspartofoilpipelinedevelopmentsandignorethekeypointthatneithertheleadresponsibilitynorthefinancialburdenforspillcleanupwillbebornebyEnbridge,whichgreatlyreducesincentivesforexploringinnovativemitigationoptions(pages16‐17,30‐32).

− AnaïveanalysisispresentedoftheextenttowhichcompensationcanoffsetthelossesthatmaybeincurredbytheGitga’atNationandotherNorthwestCoastcommunities.ThisreportconcludesthatmanyofthepotentialharmsfacingtheGitga’atwillnotbeamenabletomonetarycompensation,andtheavailableinformationonthesuccessofsimilarcompensationprogramsdoesnotsupportaconclusionthatcompensationwillredresstheinequitabledistributionalimpactsoftheproject(pages33‐36).

1. Introduction

Thisreport,researchedandwrittenundercontracttotheHartleyBayBandCouncil(HBBC),examinestheadequacyoftheinformationprovidedbytheproponentwithrespecttotheEnbridgeNorthernGatewayProject(ENGP)applicationinlightofNEBandCEAArequirementsaswellasstandardprofessionalpractices.TheapplicationseekspermissiontoconstructtwinnedpipelinesfromAlbertatoKitimat,BritishColumbiaandtoshipcrudeoil(bitumen)andcondensatebymarinetankerstoandfromoffshoremarkets.OurreviewoftheEnbridgeapplicationfocusesonpotentialeffectsrelatedtothemarinetransportationofoilbytankersontheGitga’atNationandonselectedaspectsoftheproject’spotentialeffectsonprovincialornationalinterests,withanemphasisontheaccuracyandcompletenessofkeyinformationrequiredtomakeinformeddecisionsaboutthebenefits,costs,andrisksoftheENGP.

1.1 DecisionMakingContext

Deliberationsand,ultimately,decisionswithrespecttotheproposedENGPbytheJointReviewPanel(JRP)andotherresponsiblefederalandprovincialauthoritiesare,forthemostpart,guidedbythemandatessetoutintheCanadianEnvironmentalAssessmentAct(CEAA)andtheNationalEnergyBoardAct(NEBAct).


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UndertheCEAA,environmentaleffectsinclude“anychangethattheprojectmaycauseintheenvironment,includinganyeffectofanysuchchangeonhealthandsocioeconomicconditions,onphysicalandculturalheritage,onthecurrentuseoflandsandresourcesfortraditionalpurposesbyaboriginalpersons,oronanystructure,siteorthingthatisofhistorical,archaeological,paleontologicalorarchitecturalsignificance….”Judgementsconcerningwhatisandisnot“significant”areafunctionoftheanticipatedeffects’magnitude,durationandfrequency,geographicalextent,reversibility,andthecontextwithinwhichtheeffectswouldoccur(FEARO,1994).ProjectreviewsunderSection4oftheCEAAalsoareguidedbytherequirementto“encourageresponsibleauthoritiestotakeactionsthatpromotesustainabledevelopmentandtherebyachieveormaintainahealthyenvironmentandahealthyeconomy,”aspartoftheAct’semphasisonidentifyinganylikelysignificantresidualadverseeffectsofaproposedinitiative.

TheNEBActspecifiesthecriteriabywhichidentifiedfederalauthoritiesdeterminewhetheraprojectisinthebestinterestsoftheCanadianpublic,furtherdefinedintheNEBStrategicPlan2008‐2011asmeeting“…abalanceofeconomic,environmental,andsocialintereststhatchangeassociety’svaluesandpreferencesevolveovertime.”Federaldecision‐makersarerequiredto“…estimatetheoverallpublicgoodaprojectmaycreateanditspotentialnegativeimpacts,weighitsvariousimpacts,andmakeadecision.”Thisstatementemphasizesthreeofthemaincomponentsofanyevaluationofamajorenergyproject:theexistenceofmultipleobjectivesordimensionsofconcern,anemphasisonsocietalvaluesaswellasprivateconsequences,andtheneedtoweighthevariousimpactsofaproposedinitiativeaspartofinformeddecisionmaking.

Inlightofthisguidingpolicydirection,inmakingadecisiontheJRPandotherrelevantfederalauthoritiesthereforehaveamandatetoconsider–andthustheproponenthasaresponsibilitytoaddress–twoprimaryquestionsinitsreviewoftheanticipatedbenefits,costs,andrisksoftheENGP:

− towhatextentdoestheproposedprojecthavethepotentialtoresultinsignificantadverseeffects,includingimpactsthatcannotadequatelybemitigated?

− afterweighingitspotentialenvironmental,social,andeconomiccostsandbenefits,towhatextentistheproposedprojectinthepublicinterest?

ThisreportreviewstheextenttowhichtheENGPapplicationcontainsinformationsufficienttoanswerthesetwooverarchingimpactassessmentquestions.

1.2 ScopeandPerspectiveofthisReport

TheanalysisandargumentsinthisreviewoftheENGPapplicationdrawontwoprimarysourcesofinformation:(1)internationallyrecognizedpracticesandstandardsrelatedtotheevaluationofmajorenergyprojects,and(2)informationcontainedinreportsofsubjectmatterexpertscommissionedbytheHartleyBayBandCounciltoexaminetheimpactsoftheENGPonthenaturalenvironment,communityeconomy,healthanddiet,communitywell‐being,andthecultureoftheGitga’atapeople.Ourexperienceisasanalystswhohaveworkedinboththepublicandprivatesectoronnumerousevaluationsofotherlargeprojectssubjecttocarefulgovernmentreview.Theseincludeprojectsevaluatingnuclearwastestorageoptions(Gregory),hydroelectricfacilitydevelopmentandrelicensing(Gregory&Failing),oilsandsdevelopmentin


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Alberta(Gregory&Joseph),marineplanningandtheimpactsofindustrialdevelopmentoncoastalcommunitiesandcoastalenvironments(Gregory,Failing&Joseph),thedevelopmentandpricingofenergysupplycorridors(Gregory),andtheevaluationofoffshoreoilandgassupplyopportunities(Gregory&Joseph).

Section2ofthisreportfirstidentifiesacceptedframeworksforevaluatingthecosts,risksandbenefitsofmajorenergyprojectsandidentifiescommonelementswidelyacknowledgedasstandardpracticeintheirevaluation.WethenaddresswhethertheENGPapplicationsatisfactorilyaddressestheseelements,concludingthatessentialinformationrequiredformakinginformeddecisionsabouttheENGPisnotincludedaspartoftheproponent’sapplication.

Section3providesinformationthataddressesseveralofthekeygapsintheENGPanalyseswhichwebelievearecriticaltoafullunderstandingofthecostsandbenefitsoftheproject–specifically,whethertherewillbesignificantadverseeffectsontheGitga’atNationandwhethertheprojectisinthepublicinterest.Thesecriticalinformationgapsinclude:

− identificationofthefullrangeofpotentiallysignificantenvironmental,social,cultural,health,andeconomiceffectsoftheENGP;

− estimationoftheexpectednetbenefitsoftheprojecttoCanada,includingcostsaswellasbenefits,inlightofpossiblealternativestocomponentsoftheproposedENGP;

− incorporationoftheuncertaintyassociatedwitheffectsoftheENGP;inparticularestimationoftheprobabilityofmarineoilorcondensatespillsinCanadianwaters;

− riskperceptionsthataffectindividuals’psychologicalandsocio‐economichealth,includingbothmembersoftheGitga’atcommunityandotherresidentsofB.C.orCanada;

− effectivenessofcompensationasamechanismtomitigateandaddresstheresidualadverseeffectsanddistributionalimpactsoftheENGP;and

− thedegreetowhichtheproposedENGPenhancesenvironmental,economic,andsocialsustainabilityobjectives.

Section4brieflysummarizesourmainfindingsandconclusions,asdoestheExecutiveSummary.OurperspectivehighlightstheroleoftheJointReviewPanel(JRP)asaCrowndecision‐makingbody,whichinturnimpliesaresponsibilityonthepartoftheapplicantandintervenorstoprovideinformationthatwillassisttheJRPtomakeaninformedanddefensibledecisioninaccordwithitsmandateandexistinglawsandpractices.Thescopeofthisreportcoversonlyeffectsrelatedtoroutinetankeroperationsandpossiblespillsofbitumen/crudeoilorcondensatewithinthewatersandlandsconsideredtobepartoftheGitga’atNation’straditionalterritory.

Therearemanyotherissuesthatwarrantattentionbeyondthoseaddressedinthisreport.Inparticular,severalotherconsiderationsmaycriticallyaffectthepublicinterest.Theseinclude,butarenotlimitedto

• futurepricingscenariosforoil‐sandsproduction

• impactsonecosystemsandhumansfromtheproject’sadditionalgreenhousegasemissionsandassociatedeffectsonglobalclimatechange


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• alternativepipelineroutings,bitumenshipmentvolumes,ormarinetransportationoptions,and

• theneedforadditionalpipelinecapacity(i.e.,whetherENGPissurplustoCanadianrequirements).

2. StandardsofPracticeforMajorProjectAssessments

2.1 InternationalStandardsandPractices

Inthissection,webrieflysummarizerecognizedstandardsofpracticefortheevaluationofmajorenergydevelopmentsandreviewtheextenttowhichtheEnbridgeapplicationmeetsthesestandards.Ourconclusionisthatimportantelementsofarequiredprojectassessmenthavenotbeencompletedbytheproponent.

Approachesforevaluatingtheimpactsofmajorenergyprojectsarewellestablished,basedontheoryandpracticesdevelopedoverthepastseveraldecadesinthefieldsofenvironmentalandsocialimpactassessment,economicandpolicyanalysis,andmulti‐criteriaimpactassessment.Theserecognizedstandardsofpracticedrawonavarietyofanalyticalframeworksforevaluatingproposedlargeprojectinitiatives.Althoughtheyarerootedindifferentdisciplines,differentanalyticaltraditionsanddifferentconsultationrequirements,alloftheseframeworksseektoclarifyhowaproposedprojectwillaffecttheinterestsofpotentiallyaffectedpartiesacrossarangeofeconomic,environmental,socio‐cultural,andhealthdimensionsandwhether,onbalance,theestimatedgainsassociatedwiththeprojectareexpectedtooutweighitsestimatedlosses.

Eventhoughnosinglemethodisconsideredtobebestforalldecisioncontexts,thereareseveraluniversalandcommonlyacceptedprincipleswithwhichalldefensibleimpactassessmentsareexpectedtocomply.Tomeettheseminimumacceptableprofessionalstandards,thesesameprinciplesmustbeaddressedandmetintheexaminationoftheENGPapplication.Asdiscussedintheremainderofthissection,weemphasizethefollowingsubsetofstandardpracticesthatarerelevanttoassessingtheENGP:

− allkeyimpactsofconcernareidentified,includingenvironmental,economic,cultural,healthandsocialconsiderations;

− estimatesoftheconsequencesoftheproposedactionsincludeexplicitandtransparentrepresentationoftheassociateduncertainty;

− otherprojectalternativesareevaluated,inlightoftheirkeyimpactsovertime,andreasonsareprovidedwhytheyareinferiortotheproposedproject;

− thecriticaltrade‐offsthatareexpectedoverdifferentdimensionsofvalueandovertimearesummarizedclearly;and

− thedistributionalconsequencesoftheproposedprojectareassessedinlightofitsimpactsundervariousmitigationandcompensationstrategies.


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2.2Identifyingandevaluatingallrelevantprojectimpacts

Majorenergyprojectsaffectarangeofdifferentinterestsandconcerns(Keeney,1980;Vining&Boardman,2007)andanassessmentoftheirnetbenefitsmustincorporateaclearandcomprehensivedocumentationofallimportantbenefitandcostimpactcategories.TheCEAAspecificallyrequiresconsiderationofany“…changeonhealthandsocioeconomicconditions,onphysicalandculturalheritage”and“…onthecurrentuseoflandsandresourcesfortraditionalpurposesbyaboriginalpersons.”Inthisregard,thedeficienciesoftheENGPapplicationarefundamentalbecausemanyofthemostimportantprojectimpactsontheseconsiderations,bothfortheGitga’atNationandforallCanadians,areexcludedfromtheapplicant’ssummaryevaluationsofeffects.ForaFirstNationsuchastheGitga’at,manyoftheadverseimpactsoftheENGPstemfromitssignificanteffectsonecosystemservicesandresource‐basedactivitiesthatarenotpricedortradedinconventionaleconomicmarkets.Theseincludetraditionalharvests,theintergenerationaltransferofknowledgespecifictotheGitga’atculture,andthetradingoffoodbetweenfamiliesandwithmembersofotherFirstNations–allactivitiesthatconstitutecentralelementsoftheGitga’atwayoflife(Turneretal,2008;Gunton&Joseph,2010).AlthoughsomeoftheseeffectsarenotedinthereportspreparedbyEnbridge’sconsultants,theyarelargelyomittedfromoverallprojectevaluationsandthustheirimportancetotheprojectassessmentisobscured.Fromanationalperspective,theevaluationmethodologiesusedbytheproponentfailtoincludeimportantnon‐usevaluesassociatedwiththeexistenceofpristinenaturalareas.Withoutincorporatingtheseimportantnon‐marketelementsexplicitlyintoprojectanalyses,itiseasyforthemtobeleftoutofsummariesoftheanticipatedeffectsoftheENGPoneithertheGitga’atNationorallCanadians.

2.2.1FullyincludingprojectimpactsontheGitga’atNation

TheENGPapplicationandsupportingtechnicalinformationfallsfarshortofacknowledgedstandardswithrespecttoathoroughevaluationofeffectsontheGitga’atNation:itfailstoidentifycriticallyimportantimpacts,anditprematurelydismissesothersasinsignificantonthebasisofinadequateandinsomecasesinappropriateanalysisorconclusions.CriticalimpactareasthatwillbeaffectedbytheENGPincludefivekeyconcernsfundamentaltothewellbeingofmembersoftheGigtga’atNation:

− Economiceffects:includingbothusevalues(somevaluedinmarkets,suchascommercialfishingortourism,andothersnon‐market,suchastraditionalharvestsandecosystemservices)andnon‐usevalues(thevaluepeopleplaceon,forexample,theexistenceofspeciesorunusualecosystems);

− Environmentaleffects:includingtheabundanceanddistributionofanimalandplantspecies,alongwithmoregeneralecosystemcharacteristicsrelatingtothebiodiversityandresilienceofthenaturalenvironment;

− Socialeffects:includingmacroeffects(e.g,lossofjobs,diversionsofcommunityfocus),mid‐rangeeffects(e.g.,socialdisruptions),andmicroeffects(e.g.,increasedstresslevels,fearandworry,disruptionstodailylife);

− Culturaleffects:includingeffectsonculturalknowledge,assetsandinstitutionssuchasfoodsharing,impactsonspecificculturalsites,andeffectsonceremonies,language,knowledgetransfer,ortheconnectionofindividualsandthecommunitytothelandandocean;and


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− Healtheffects:includingdirectandindirecteffectsonhealth,dietandnutritionrelatedtotheabundanceorqualityoffoods,airorwaterpollution,ornoiseandvisualimpacts.

− AreviewofthefivereportspreparedbytheGigta’atFirstNationconsultantsdemonstratesthatEnbridgehasnotsuccessfullyidentifiedmanyofthepotentialadverseeffectsonsocial,cultural,economic,healthorecosystemvaluesthatmightbecausedbythemarinetransportationaspectsoftheENGP.Basedontheseindependentreviews,wesummarizethemajorimpactsassociatedwithbothroutineoperationsandaccidentalspillsinTable1belowandnotethatmanyoftheseimpactshavebeeneithermissedentirelyoronlypartiallyidentifiedaspartoftheENGPprojectevaluationsummaries.

Table1.MajorimpactsoftheENGP

RoutineOperations MajorSpill CommentsNaturalEnvironment

Low‐leveleffectsonsomemarinespecies

Moderatetosevereeffectsonabundanceanddistributionoffish,invertebrates,seaweed,&marinebirds

EcosystemeffectsanduncertaintyregardingimpactsareomittedfromENGPevaluations

EconomicActivity

Lossofincomeandemploymentintourismandcommercialfishingsectors,decreasesinnon‐useandecosystemservicevalues

Severelossesinmanycommercial&traditionalharvests;lossoflivelihood;highlossestonon‐market&nonuservalues

Adverseeffectsonmanynon‐market&non‐usegoodsandservicesarenotincludedinENGPevaluations

Health

Somelossofhealthduetodisruptionoftraditionalharvestpatterns

Moderatetoseverelossofhealthduetorestrictionsontraditionaldiet,fearsoffoodcontamination

ImpactsonhealthofGitga’atapeopleviachangesintraditionaldietarelargelyignoredinENGPanalysis

Society

Diversionofcommunityfocus,socialdisruption,increasedstress&worry

Highlevelsofsocialdisruption,strainsoncommunityrelationships,heightenedlevelsofstress&anxiety

Communitystress,lossofcommunityidentity,&resultsof“livinginfear”areomittedfromENGPevaluations

Culture

Someimpactsonfeasting,fooduseandsharing,andknowledgetransmission.

Highlevelsofimpactonfoodsharing&trading,damagetoculturallandscape,&lossesintraditionalharvestsadverselyaffectGitga’atlivelihood&culturalidentity

Impactsonkeyfood‐basedactivitiesandpractices,includingceremonies,foodsharing&knowledgetransmission,areomittedfromENGPanalyses

2.2.2FullyincludingprojectimpactsonallCanadians

Asecondcriticalomission,inlightofstandardprojectevaluationpractices,isthefailureoftheENGPapplicationtofullyidentifyandexaminethefullrangeofproject‐relatedcostsandrisksaswellasbenefitsfromanationalperspective(wediscussthistopicmorefullyinSection3.3).AlthoughEnbridgearguesthat,“fromaneconomicperspective,theprojectisclearlyintheCanadianpublicinterest”(Volume2,p1‐14),theirestimatesofthepublicinterestvalueare


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producedusingthemethodofEconomicImpactAnalysis(EconIA)ratherthanmethodsofCost‐BenefitAnalysisorMulti‐AttributeDecisionAnalysis.TheproblemisthatanEconIAmethodologyfocusesonthegrosseconomicbenefitsofaprojectandlargelyignoresbothitsneteconomicbenefits–thatis,thebenefitsnetoftheassociatedcosts–andthepotentialeffectsonsocial,environmental,health,orculturalconsiderations.Asaresult,theresultsofanEconIAprovideaverylimitedperspectiveontheoverallcostsandrisksassociatedwiththeproposedENGP.WithoutanunderstandingofthemechanicsandassumptionshiddenwithinanEconIAapproach,arevieweroftheENGPapplicationmayfailtoseethatmanyofthekeyaspectsofanassessment–includingitsoveralleffectsoneconomic,environmental,social,healthandculturalvalues‐‐areomittedfromthesummaryanalysesofprojecteffects.

Twoleadingevaluationmethodsforassessingmajorenergyprojects,widelyusedinCanadaandthroughoutNorthAmerica,arecost‐benefitanalysisandmulti‐attributeutilityanalysis.

Amultipleaccountcost‐benefitanalysis(CBA)framework(Boardmanetal,2006;Shaffer,2010)identifiestheanticipatedbenefitsandcosts(includingrisks)ofaproposeddevelopmentandseekstotranslateasmanyoftheseimpactsaspossibleintomonetaryterms.CBAhasastrongtheoreticalfoundationinwelfareeconomicsanditsusefordecadesintheevaluationofmajorproposedpublicandprivateresourcedevelopmentshasledtoitsadoptionasalegalrequirementforprojectapprovalandregulatoryimpactassessmentinmanyjurisdictions.

AcriticalelementofCBA–andeitherastrengthoraweakness,dependingonone’sperspective–isitsabilitytocompareawiderangeofimpactsbytrackingimpactsinthecommonunitofmoney.Itisnowwellestablishedthatafullassessmentofcostsandbenefitsmustincludeimpactsthatarenottradedinconventionalmarkets–outdoorrecreationisacommonexample,asispollutionormanyexamplesofecosystemservices(e.g.,carbonsequestrationbenefitsofforestsandintertidalplantcommunities).Non‐marketimpactstypicallyaremonetizedthroughvarioustechniquesthateithertrytoinferthevalueofanimpactbaseduponthepreferencesofindividualsasrevealedinmarkets,orbytheirstatedpreferencesasrevealedinsurveyresults.Table2displayshowsomeoftheimportanteconomiccostsandbenefitsoftheENGPmightbeexaminedthroughadoptionofaCBAapproach.

Table2.IllustrativeexampleofENGPimpactsthroughthelensofCost‐BenefitAnalysis

Benefits ENGP RevenuesfromshippingIncrementalemployment

Revenuestocompanies&government(local,provincial,federal) Oilsandsexpansion Revenuesfromoilsales Revenuesfromupgrading Revenuesfromrefining

IncrementalemploymentCosts ENGP Capitalcosts(companiesandgovernments) Operationalandmonitoringcosts(companiesandgovernments) Environmentalcosts,includingnon‐marketecosystemservices Social&healthcosts Costsofforgoneorpostponedeconomicopportunities Oilsandsexpansion Capital,Operational,EnvironmentalandSocialcosts GovernmentCosts Usercosts(fromconsumptionofnaturalcapital)


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Multi‐attributeDecisionAnalysis(DA)isanalternativeandalsowidely‐usedapproachtoevaluatingtheanticipatedcosts,benefits,andrisksofmajorenergyinitiatives(Keeney&Raiffa,1993;vonWinterfeldt&Edwards,1986).Underamulti‐attributeapproach,monetizedimpactsofaprojectareassessedusingindollarswhereasnon‐monetizedimpactsareassessedeitherquantitativelyorqualitatively,usingscalesandsupportingnarrativesthatareeasilyrelatedtotheimpactthatisunderconsideration.AcriticalelementofaDAprojectreviewisthuscomingupwithgoodmeasurestotracktheperformanceofdifferentactionsonallthefundamentalobjectivesthatmightbeaffectedbyaproject,includinganumberofimportantconcernsthatareomittedfromtheENGPanalysessuchasthedegreeofpublicsupport,theeffectsonaFirstNation’sculturalidentity,ortheimpactofperceivedrisksonthereputationofacountry(Keeney&Gregory,1994;Failing,Gregory&Harstone,2007).Aftertheseimpactcomponentshavebeenweighedorbalancedaspartofamulti‐attributeanalysis,itisthenpossibletodevelopandexaminetradeoffsacrossthefullrangeofpotentiallyaffectedprojectbenefitsandcosts.

BothCBAandDAmethodsprovidemoreusefulinsightstodecisionmakerswhentheyareusedtocompareseveralalternativeprojectplans.Ifapipelineforbitumenexportisdesired,forexample,thenexplicitanddetailedanalysesshouldcomparetheprosandconsofseveraldifferentpipelineprojects;ifmarinetransportforbitumenexportsisdesired,thenexplicitanddetailedanalysesshouldcomparetheprosandconsofseveraldifferentmarinetransportalternatives.AsdiscussedinSection2.5,thesetrade‐offsshouldreflectthevaluesofappropriatedecisionmakersratherthan(asinthecaseoftheENGPapplication)thoseoftheprojectproponent.

2.3ExplicitAnalysisofUncertainty

Foranymajorprojectinvolvinglargeinvestmentsandpotentiallysignificanteffectsonnaturalresourcesorcommunities,acceptedpracticewithrespecttothetreatmentofuncertaintyincludesthefollowingfourpoints:

• Presentingexplicitestimatesofuncertaintyinkeyprojectinputsandtheconsequencesofproposedactions.Aspartofarisk‐assessmentorimpact‐assessmentprocess(NationalResearchCouncil,2009),thisinvolvescharacterizingtherangeofuncertainoutcomesandtheassociatedprobabilities.

• Reportingkeyuncertaintiesinquantitativeprobabilisticterms,showingmean/medianandupperandlowervalues(Morgan&Henrion,1990).

• Usingbestpracticeswhenelicitingjudgementsfromexperts.Understandingconsequencesandcharacterizinguncertaintyformajorenergyprojectsinevitablyinvolvestheuseofexpertjudgmentbecausetherearegapsintheexistingknowledgebaseandtherelevanceofpriorexperience.Oftenexpertshaveconflictingviews,andproblemsemergewhenthejudgmentsofexpertscannotbefullyunderstoodorreconciled.Standardprotocolsforelicitingjudgmentsfrommultipleexpertshavebeen


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developed(Keeney&vonWinterfeldt,1991)andarenowinwideuse;thesehelptominimizebiasandimprovethetransparencyofjudgments.

• Makingclearandtransparentjudgementsabouttheacceptabilityofrisks.Judgmentsaboutwhetherandhowmuchriskisacceptablearevalue‐basedjudgmentsconcerningrisktoleranceandshouldbemadebythedecisionmaker,nottheproponent.

TheENGPapplicationisdeficientineachofthesefouressentialrequirementsrelatingtothetreatmentandpresentationofuncertainty.Despitetheinitialrecognition(seeVol2Appendix,Economics,CommercialandFinancing,p.30)that“Thereareconsiderableuncertainties,especiallywithrespecttovariousenergyandenvironmentalpolicies,shiftsinoilmarkets,futureoilprices,andoilproduction…”thereisnoincorporationofthisuncertaintyinthequantitativeevaluationsofwhatarereferredtothe“publicinterest”benefitsoftheproposedproject.Thisoversightisstriking,giventhelargebodyofliteratureandexperiencewithrespecttoacceptableandstandardmethodsofriskassessmentforlargeenergyprojects.

TwocriticalsourcesofuncertaintywillprofoundlyinfluencethedeterminationofwhethertheENGPisinthepublicinterest.

‐ Theprobabilityofanoilspill.Whenquestionedabouttheprobabilityofoilspills,EnbridgeconcludesintheresponsetoInformationRequestNo2(p.190)thateventhough“multipleadverseandsignificanteffectstothemarinebiophysicalenvironmentandhumanuse”wouldoccurintheeventofaspill,“WhatisimportantinassessingtheseadverseandsignificanteffectsisthelikelihoodorstatisticalprobabilitythataspillwilloccurduringthelifeoftheNGP.”Becausetheyconclude(p.188)that“…amajormarineoilspillisnotlikelytooccurduringthelifeoftheproject,”thereisnoreasontoevaluatespillimpactsincloserdetail.ThisapproachandEnbridge`sconclusionsaboutboththeuncertaintyandthemulti‐dimensionalriskconsequencesassociatedwithanoil1spillarebiasedandinconsistentwithacceptedanalyticalandregulatorypracticesandleadingpeer‐reviewedliterature(AndersonandLabelle,2000;NationalResearchCouncil,1996).

‐ Thepriceofoil.Theomissionofsensitivityanalysesonthefuturepriceofoilisastrikinggap

inEnbridge’s‘publicinterest’assessment.Forexample,theHBBCEconomicImpactsreportnotesthatthebenefitsoftheprojectaresensitivetotheassumedvalueforWestTexasIntermediate(WTI)oilpricesoverthenextseveraldecades.EnbridgeusesthelatestUSEnergyInformationAdministrationforecastforWTI,whichishigherthantheNEB`sown“ReferenceCaseScenario”forecastforWTI(NEB,2011).Thisdifferencealonecandramaticallyaffectestimatesoftheproject’sfinancialviabilityandassessmentsofprojectbenefits.

Manyotherimportantsourcesofuncertaintyunderlietheproponent`sassumptionsabouteconomicbenefits,anyofwhichmightsignificantlyaffectdeterminationsabouttheproject`snetbenefits.Theseinclude:worldwidedemandforenergy,shippingcosts(e.g.,fromBCto

1Thesamecanbesaidforacondensatespill.Inthisreportwelimitourselvestotheexaminationofthetreatmentofoilspills.


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ChinaorotherAsianmarkets),thepricesofcompetingenergyalternatives,andpossiblerestrictions(e.g.,intheUSorEurope)onexportsofoil‐sandsbitumen.Withoutanadequatereviewoftheuncertaintyassociatedwiththesekeyinputstothedecision,predictionsoftheproject’seffects–regardingrevenues,jobs,orenvironmentalandsocialimpacts–areincompleteandfailtoprovideadefensiblebasisforJRPdecisions.

2.4ComparisonofProjectAlternatives

Makinginformeddecisionsaboutaproposednaturalresourcedevelopmentrequiresthattheproponenthascarefullyexamineddirectprojectalternatives–alternativeroutes,terminalsites,seasonalconstraints,etc.–andclearlypresentsthisinformationforconsiderationbydecisionmakers.Attheleast,insofarastheENGPispresumedtohavethepotentialforsignificantbenefitsaswellassignificantcostsandrisks,EnbridgeisexpectedtoprovidedetailsonwhytheirchosenprojectdesignisbetterthanallotherreasonablealternativesfromthestandpointofCanada’snationalinterest.Intheabsenceofacomparisonwithalternatives,itisnotpossibletodeterminetheextenttowhichthebestpossible“…balanceofeconomic,environmentalandsocialinterests…”(accordingtotheNEBAct)hasbeenachievedbecausethereexiststheveryrealpossibilitythatadifferentprojectalternativemayeitheryieldsubstantiallyreducedeconomic,environmental,orsociallossesor,ontheotherhand,yieldsubstantiallylargereconomic,environmental,orsocialbenefits.

Thisperspectiveissupportedbystandardpracticeinprojectandpolicyanalysis(Stokey&Zeckhauser,1978)aswellasextensiveresearchinjudgementanddecisionmaking,whichhasshownthatpeople(actingasindividuals,judges,juries,orpanels)oftenmakedifferentjudgmentsaboutthevalueoracceptabilityofaproposedactionoritemwhentheyviewitinisolationratherthencompareitagainstalternatives(Bazerman2002;Hsee,1996).Forexample,alossof1,000hectaresofhabitatduetoconstructionofaprojectmightbeviewedasunacceptableifthereexistsanalternativethatdeliversthesamebenefitsbutwithno(orlower)lossofhabitat.Ontheotherhand,thissamehabitatlossmightbeviewedasacceptableifitcanbedemonstratedthatnobetteralternativeexists–insuchacase,thelossofhabitatistrulyunavoidableifonewishestogainthebenefitsoftheproposedaction.

ThatthepresenceofalternativesisimportantandwidelyrecognizedisdemonstratedbytheannouncementonNovember10,2011ofUSPresidentBarackObamatopostponehisdecisiontoapproveorrejectormodifytheKeystoneXLpipeline,alsodesignedtoexportbitumenfromtheoilsandstoaforeignmarket,duetoinsufficientinformationprovidedbytheproponentconcerningalternatives.Clearlythepresentationofaproposedprojectinrelationtoasetofrealisticalternativesconstitutesessentialinformationforresponsibledecisionmaking.

Fromtheperspectiveofcomparingtheproposedprojecttorealisticalternatives,theENGPapplicationisdeficientinfiveimportantways:

‐ Itfailstodemonstratethatrelevantalternativeshavebeenadequatelyinvestigated.TheENGPapplicationprovidesdetailed(althoughnotnecessarilycomprehensiveoraccurate)evaluationsofasingleproposedplanfortransportingbitumenbypipelinefromAlbertatoKitimatandthenbytankerstoandfromexternalports.Thisisonlyonepossiblealternativefortransportingoil,composedofalargenumberofsub‐componentsandalargenumberof


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underlyingassumptionsaboutwhyandinwhatwaysthesecomponentsmightbepreferabletootherreasonableoptionsthathavebeenconsidered.

‐ Theapplicationdismissesotheralternativesasinfeasiblewithoutpresentingadequatejustification.Enbridgereports(seeSection4ofVolume1:OverviewandGeneralInformationalsoVolume3,Section2)thatvariousotheralternativeshavebeenidentifiedandstudiedandthattheselectedalternatives,forbothpipelineconstructionandmarinetankertraffic,arepreferred.Theapplicationstatesthattherehasbeenareviewofsitingofroutealternativesfortheterminalsandpipelinealongwith“otherdesignconsiderations”(unstated);criteriapresentedasguidingthisreviewincludethe‘constructability”ofthepipelines(undefined),the“suitability”oftankerberthing(undefined),andthelikelihoodoftheprojecttoaffect“sensitiveenvironmentalandsocio‐economiccomponents”(withneitherthecomponentsnorsensitivitydefined).TheinformationthatEnbridgehasprovidedforreviewislargelyqualitativeandthedescriptionsofcriteriaaresufficientlyvaguethatitisnotpossibletodiscriminatethebasisforEnbridge’schosenproject.

‐ Enbridgehasfailedtodevelopagoodunderstandingoftheinterestsofaffected

communitiessuchastheGitga’atNation.Assuch,Enbridgehasmissedtheopportunitytogeneratealternativesthatcanmeaningfullyaddressstakeholderinterests–totrulyexaminethepossibilityforcreatingproject‐relatedbenefitsortoexploretrulyeffectivemitigationandcompensationoptionsthatmaydecreaseoravoiditsresidualadverseeffects.

‐ Enbridgehasfailedtoprovideessentialinformationrelatingtothestreamofanticipated

projectbenefitsandcostsoverthe30‐yearexpectedlifeoftheENGPandhasnotprovidedsufficientinformationabouthowthisstreamofbenefitsandcostshasbeenconverted(throughuseofanunspecifieddiscountrate)toanetpresentvalue(NPV)estimate.Thisomissionissignificant:becausetheENGPinvolvesbothexhaustibleandrenewablenaturalresources,explicitrecognitionofthefactthatthebenefitsandcostsoftheprojectwilloccuratdifferentpointsintimeunderliesbothprivateandsocialdeterminationsregardingwhethertheprojectaddressessustainabilitycriteria.

‐ Theapplicationfailstoprovideacomprehensiveanalysisofcumulativeeffects‐‐acrossthe

fullrangeofeconomic,environmental,social,cultural,andhealthdimensions‐‐stemmingfromtheENGP.ThisomissionisimportantbecauseofpossibleincreasesovertimeinthevolumeofbitumencrudebeingshippedbyENGPtankers(presumablywithassociatedincreasesintankernumbers)andbecauseotherexpectedincreasesinmarinevesseltraffic(e.g.,LNGshipmentsfromKitimat)willaddtoadverseeffectsexperiencedbytheGitga’atastheresultofroutineENGPoperations.

Withrespecttoamegaprojectofsuchnationalsignificance,itisexpectedthatamuchhigherassessmentstandardwithrespecttothepresentationoftheENGP’sprosandconsrelativetoalternativeswouldbeupheldbytheproponent.


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2.5ExplicitIdentificationofTrade‐offs

BecausetheENGPapplicationfailstoidentifyallrelevantimpactsandtocomparealternatives,itfollowsthatitfailstoreportimportanttrade‐offs.Yetanymajorenergydevelopmentprojectwillresultinmultipleimpactsand,importantly,theseimpactswillaffectdifferentstakeholdersandgovernments(includingFirstNations)indifferentways.Thismeansthatnooneprojectalternativewillbebestforallstakeholdersoverallaspectsofperformance‐–someprojectdesignswillbebetterforsomestakeholdersintermsofeconomicreturns,otherswillbebetterintermsofreducingormitigatingadversesocialandculturaleffects,andsoforth.

Twoimplicationsfollow.First,informationaboutanticipatedprojectconsequencesshouldbeorganizedinawaythatexposesandpromotesdialogueabouttrade‐offs.Second,thesedifficultvalue‐basedtradeoffswillneedtobeaddressedbydecisionmakersandbalancedappropriately.Proponentsofprojectsthataffectthepublicinterestshouldnotbetheoneswhomakethesekeyvalue‐basedtrade‐offs.Instead,valuebasedtrade‐offsshouldonlybemadebythosewithlegitimacytorepresentthepublicinterest–inthiscase,themembersoftheJRPcarrytheresponsibilitytounderstandalltherelevantperspectivesandtomakerecommendationsonthesekeyjudgments.

DecisionmakersneedtoweighthecostandbenefitsoftheENGPandmakeajudgmentthatreflectsprojecttrade‐offsacrossmultipledimensionsofvalue.Informeddecisionmakingrequiresthepresentationofappropriateinformation,reflectingtheviewsofpotentiallyaffectedcitizensaswellasdecisionmakers,onwhichtobasethisvalue‐basedweighingofcostsandbenefitsandrisks.YettheENGPapplicationfailstoprovidethisinformationortoexposetherelevanttrade‐offs.Keylimitationsinclude:

Enbridge`sapplicationfocusesonalimitedsetofbenefits,relying(asnotedearlier)oneconomicimpactassessmentmethodswhichhavemajordeficiencies,andignoresmanyimpactsonactivitiescentraltothewell‐beingoftheGitga’atNation.Fromtheperspectiveofeithercost‐benefitanalysisormulti‐attributedecisionanalysis,therepresentationoftrade‐offsintheENGPisinadequatebecauseimportantpotentialimpactsoftheprojectarenotincluded.

‐ EnbridgehashiddenmanyofthekeyNGPtrade‐offs.Forexample,Enbridgestatesthatithasconsideredprojectalternativesandrejectedthemonthebasisoffeasibility(e.g.,constructabilityorsuitabilityconcerns).Butonlyrarelyisfeasibilitysoclear;typicallyjudgmentsaboutfeasibilityinvolvesubjectivejudgmentsabouttheacceptabilityofcostincreases,timedelays(e.g.,toconductadditionalanalyses),orequipmentreliability.Again,thesearevalue‐basedjudgmentsthatshould,formajorprojectsaffectingthepublicinterest,bemadenotbytheproponentbutbystakeholdersandstatutorydecision‐makers(e.g.,membersoftheJRP)withlegitimacytolookafterthepublicinterest.

Asacaseinpoint,wenotetherecentre‐submissionbyTasekoMinesforitsgoldandcoppermineatFishLakeBC.Taseko’soriginalproposalwouldhaveusedFishLakeasatailingspondforwastefromthemine,anditarguedthatthiswastheonlyprofitablealternative.Thenewproposalusesasmallerlakefortailings.Theproponentsaysthatbecausethepriceofgoldissomuchhigheritnowcanaffordtheextra$300millionassociatedwiththisalternative.Thatthe


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companywasabletocomeupwiththisalternativesoquicklyaftertherejectionofthefirstapplicationsuggestseitherthatithadalreadyevaluateditorthatdoingsowasnotunreasonablyonerous–indeedforinvestmentsofthismagnitude,wecanassumethatanyprudentinvestorwouldcarefullyevaluatealternatives.Whilesomealternativesmaytrulybeeconomicallyunattractivetoinvestors,otherlower‐impactalternativesmaywellbeviable,withlowerbutstillattractiveprofitmargins.Anyprojectthathassignificantresidualimpactsinvolvestrade‐offs,andmakinginformedchoicesaboutthem–finding(accordingtotheNEBStrategicPlan,2008‐2011)thebest“…balanceofeconomic,environmental,andsocialinterests…”‐‐requiresanexplicitandtransparentevaluationofalternatives.

2.6DistributionofCostsandBenefits

Themagnitudeofprojecteffectsisonlyoneaspectofimpactassessment;italsomatterswhogainsorlosesfromaproject.Thisisespeciallytruewhenthosewhobearthecostsarenotthesameasthosewhowillbereceivingthebenefits,whichisanaccuratecharacteristicoftheENGPapplicationandpartiallyexplainsthepolarizationbetweenstrongsupportersoftheNGP(suchastheproponentandtheprovinceofAlberta)andstrongopponents(suchasmanylocalcommunities).

Astandardmethodforaddressingthedistributionalasymmetriesofalargeenergyprojectisforwinnerstocompensatelosers,andinthiscontextEnbridgehasofferedbothcashandownershipsharestocommunities(whichhavebeenrejectedbymanyFirstNations,includingtheGitga’atapeople).InthecaseofamegaprojectsuchasENGP,however,thispracticemaynotbesufficient,forthreefundamentalreasons:

First,manyofthelossestobesufferedbytheGitga’atpeoplemaynotbeamenabletocompensationofanyform;instead,thesenon‐mitigatablelossesmaybesoseverethattheythreatenthecontinuedexistenceandsurvivaloftheNation.

Second,manyofthelossestocoastalFirstNationssuchastheGitga’atpeople–includinglossestoactivities,ecosystemservices,andplacescentraltotheGitga’atcultureandtraditionaleconomythatcanonlybeidentifiedthroughdetailedinterviewswithcommunitymembers‐‐willbeextremelydifficulttoidentifyandtoquantifyintermsamenabletomitigationorcompensation(Turneretal,2008).

Third,fromapracticalperspective,eveniftheimpactswereadequatelyidentified,theadministrativedemandsandlegalburdensassociatedwiththecreationandimplementationofarevenueredistributionschememayprovetobeintractableorprohibitivelycostly.InthecaseofENGP,thisproblemisfundamentalbecauseitisnottheproponentwhowillbeartheburdenofimpactsimposedbyeitherroutinetankertrafficor,shouldanaccidentaloilspilloccur,contaminationofthemarineenvironment.Thisisbecausetheliabilityforspillswillrestwiththecarrier(s),notwiththeownerofthepipeline.ThisisanimportantgapintheENGPapplicationandinthereviewprocess.

ThesharedconcernoftheNEBActandCEAAwithrespecttothedistributionofproject‐relatedbenefitsandcostscanbecontrastedwithhowEnbridgeexaminedtheENGP’spotentialbenefitsandcostsWhileEnbridgeidentifiesmanyofthegroupsthatmaybeaffectednegativelybythe


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ENGP,thereisverylimitedassessmentastohoweachFirstNationmaybeaffectedandonlylimitedinformationisprovidedonthedistributionofimpacts(i.e.,effectsarepresentedintermsof“Canadianandregionalinvestment,labourincome,overallvalueadded(orGrossDomesticProduct),employmentandgovernmentrevenues;seeAppendix2ofVolume2).Asaresult,theidentificationofthosewhomayexperiencethepotentiallymostsignificantcostsandrisksisobscuredinEnbridge’sassessment.ThisomissioneffectivelypreventstheJRPandotherresponsiblefederalauthoritiesfrommakinganinformedassessmentabouttheproject`simpactoneithertheGitga’atNation,onotherFirstNations,oronthepublicinterest.

3. CriticalEvaluationIssues

Inthissection,weaddressseveralselectedevaluationissuesinmoredetail.TheintentistoidentifygapsintheinformationthathasbeensubmittedbyEnbridgeandoffersuggestionsaboutwhatreadilycanandshouldbedone–usingwidelyacceptedpractices–toimprovetheabilityoftheJRPandotherresponsibleCrownauthoritiestomakeaninformedchoice.

3.1EstimatingtheProbabilityofMarineOilSpills

Enbridgeacknowledgesthat“theoutcomeofanyassessmentoftheenvironmentaleffectsofamajorspill…wouldarriveatasimilarconclusionofmultipleadverseandsignificanteffectstothemarinebiophysicalenvironmentalandhumanuse”(EnbridgeresponsetoFederalIRNo2,p190).Thisresponsepointstotheimportanceofconsideringthelikelihoodorstatisticalprobabilitythataspillwilloccurduringthelifeoftheproject(reportedelsewhereasa30yeareconomiclife).Theproponenthasfurtheracknowledged(FederalIRNo2,p182)that“thereareaninfinitenumberofscenariosthatmighttranspireinrespectofspillevents”butconcludes(FederalIRNo2,p188)that“amajormarinespillisnotlikelytooccurduringthelifeoftheproject.”

Inthefollowingsub‐sectionsweprovideabriefreviewofthemarineoilspillprobabilitycalculationpresentedintheENGPapplication,contrastthatwithanalternatecalculation,andthendiscusstheliteratureandrecognizedstandardsofpracticeoncombiningexistingdatawiththejudgementsofexpertstoestimatethesignificanceofevents,suchasanoilspill,thatarecharacterizedbybothuncertaintyandhighconsequences.OurintentistohighlightthelimitationofthemethodsusedbyEnbridgetoestimatemarineoilspillprobabilitiesandtounderscoretheimportanceofusingwidelyacceptedmethodologiestoconductthesecalculationsinordertoensurethatdefensibleinformationisavailablefordecisionmakingaspartofGovernment’sreviewoftheENGPapplication.

3.1.1CompetingEstimatesofProbability

ThemarinetransportationcomponentoftheENGPapplicationincludestheuseoftankersofvarioussizestotransportoil(bitumen)outofKitimatandtobringcondensatebackintotheportofKitimat.Accordingtotheproposal,approximately220tankerswillvisitKitimateachyear,with1.2transitsperdayintheconfinedchannelassessmentarea.Approximately32%of


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project‐basedmarinetrafficwillbebycondensatetankersand68%willbebytankerscarryingbitumencrude.TheaveragesizeoftankersforENGPisexpectedtobeabout40%largerthanthecapacityoftheExxonValdez.

Vol8Coftheapplicationconcludesthatanoilspillofanysizehasthepotentialtooccuroncein350yearsandacondensatespillhasthepotentialtooccuroncein890years(i.e.,“amajormarinespillisnotlikelytooccur).”Vol8CoftheSection52application(RiskAssessmentandManagementofSpills,Section3)presentsreturnperiodsforspillsofvarioussizes,whereReturnPeriodisdefinedas“therecurrenceintervalinyearsbetweenincidents”andanoilspillisdefinedas“thebreachingofthetanker’scargocontainmentsystem.”ThesearesummarizedinTable3,basedonestimatedprojecttrafficof220tankersperyearandwiththeuseofmitigationthatisdefinedbytheproponentas“primarilytheuseofescorttugs.”Table3.SpillReturnPeriodsReportedintheENGPApplication.

SpillSize(bbls) SpillSize(m3) ReturnPeriod(years)

31,500 5000 550

126,000 20,000 2800

>252,000 >40,000 15,000

TheseconclusionsarebasedonaquantitativeriskassessmentcompletedfortheTERMPOLreviewprocess.Estimatesaresaidtobe“…basedonfrequencyassessmentofworldwidetankerdatawithappropriatescalingfactorsapplied(i.e.,wind,current,andmarinetrafficconditionsthatcouldbepresent)tocapturelocalconditions”andthat“TheQRAfollowsinternationalbestpracticefromtheIMOdefinitionofaformalsafetyassessment.”DespitetheimportanceoftheseestimatesandthesuggesteduseofastandardQRA,fewdetailsareprovidedintheENGPapplicationmaterialsregardingtherationaleforthemethodsusedbyEnbridgeortheuncertaintyassociatedwiththeestimatesofmarineoilspillfrequency.

TheseresultssuppliedbytheproponentdiffersubstantiallyfromthoseofProfessorL.ChanprovidedintheHBBCHealthImpactsreport,whichestimatesthereturnperiodforalargemarineoilspillfortheENGPatjustover11years(seeTable4).Thisdramaticallydifferentestimatedreturnperiodforamarineoilspillsuggeststhat,overthecourseoftheENGPproject’s30‐yearlifetime,atleastonemajoroilspillislikelytooccur.Chan’sestimates,whichuseastandardmethodforcalculatingspillsbasedonthevolumeofoiltransportedratherthana“pervoyage”methodologyasintroducedbytheproponent,reflectbothmethodsanddatabasesofmarineoilspillfrequencyusedtodevelopprobabilisticestimatesofthelikelihoodofoilspillsofdifferentmagnitudesbytheUSDepartmentofInteriorandtheanalysisofAndersonandLaBelle(2000).TheAndersonandLaBelleworkwasfirstdevelopedin1975andextensivelyrevisedin2000.ItconstitutesthestandardofpracticeadoptedbymanyNorthAmericanandinternationalorganizations(includingtheNationalOceanographicandAtmosphericAdministrationintheUS).


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AccordingtoAndersonandLaBelle(2000),therateofspillsfromoiltankersatseahasdecreasedoverthepast35years.Priortothisperiod(i.e.pre‐1974),thespillrateworldwide,intheU.S.andfortankerscarryingAlaskanNorthSlope(ANS)crudeoilhadremainedconstantatapproximately0.83,0.51and0.77significantspillsperbillionbarrels(Bbbl)handled,respectively;whereanyspillover1000bblisconsideredsignificantand1Bbbl=109bbl.Thesevaluesdroppedto0.67,0.36and0.56spillsperBbblhandled(1974‐1999data)and,later,to0.46,0.29and0.46spillsperBbblhandled(1985‐1999data).

GiventheclimaticandgeographicsimilaritiesbetweenAlaskanwaterwaysandthoseofthenarrowpassagewaysofthePacificNorthCoast,andinparticularthoseleadingupDouglasChannel,itisreasonabletoassumethattheriskofexperiencingamajorspillfromanoiltankerinthewatersofthePacificNorthCoastwillbesimilartothoseofAlaska;equatingto0.46spillsperBbblhandledovertheperiod1985‐1999.Intotal,11tankerspills≥1,000bblassociatedwiththetransportationofANScrudeoiloccurredbetween1977and1999.These11spillsaremadeupofthe240,000bblExxonValdezspill(1989)and10otherspillswhichwerelessthanorequalto15,000bblinsize.Overthis15yearperiod,threeANSspills(thatis,twootherspillsinadditiontotheExxonValdezspill)exceeded10,000bbl.AssumingthattheEnbridgepipelinewoulddeliverapproximately525,000barrelsofcrudeoilperdaytotankers2,thisequatesto31milliontonsofcrudeoilhandledeachyearor191.6millionbarrels.Atameanspillrateof0.46spillsperbillionbarrels(Bbbl)handled,thisequatesto0.09spillsperyear.UsingdataadaptedfromAndersonandLaBelle(2000),ChancalculatesthemeanspillsizeforTankers(AlaskaNorthSlopeCrude,atsea),of68,700bblsandconcludes(Table4)thatthereturnperiodforanaverageoilspillof68,700bblsis11.3years.Table4.OilSpillReturnPeriodsEstimatedontheBasisofAverageSpillVolumesandENGPTankerCapacity

AverageSpillSize

(bbls)

AverageSpillSize

(m3)

ReturnPeriod(years)

68,700 10,900 11.3

Weacknowledgethatthisspecificestimateofareturnperiodof11.3yearsforlargespillsisnotdefinitiveandisopentoreviewinthelightofnewinformation.Forexample,morerecent(post‐1999)averagespillratesgenerallycontinuetodecreaseandotherbasesfortheseestimates‐‐suchasusingtheworldwidespillratesratherthantheAlaskadata,mayprovideamorerelevantbasisforpredictingthefrequencyofENGPspills.Informationprovidedin2011byITOPF(theInternationalTankerOwners’OilPollutionFederation),forexample,showsthattheannualnumberofwhatarereferredtoas“major”oilspills(exceeding700tonnes)decreased

2Ourcalculationsreferenceonlythisinitialvolumeofbitumencrudeshipments,althoughtheENGPapplicationreferstoapossibleincreaseinvolumesshipped–from525,000bbls/dayto850,000bbls/day‐‐aspartofalaterexpansion.


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fromanaverageof7.8forthedecade1990‐99toanaverageof3.3forthedecade2000‐2009(source:ITOPFoiltankerspillstatistics,2010).YetevenifthisrevisedfactorwereintroducedintotheChanoil‐spillcalculation,itwouldstillbe“likely”thatamajoroilspillwilloccurduringthe30‐yearlifeoftheproject.Ontheotherhand,itmayalsobethat,withongoingglobalclimatechange,thefrequencyofextremeweathereventsmaybeescalatingandthatthiswillresultinincreasedestimatesoftheprobabilityoflargemarineoilspills.Inthisregard,ITOPFreportsthat,for2010,fourlargeoilspillswererecorded,which“isanincreaseonthefiguresfor2008and2009”,andthatfourmediummarineoilspillsalsowererecorded–resultinginatotalofeightmediumorlargeoilspillsfromtankersinthemostrecentyearforwhichinformationisavailable.Thecontrastbetweenthesereturnperiodsforlargespillsandthereturnperiodputforthbytheproponentisbothstrikingandhighlyconsequential.Bothestimatesareproducedbyreputableprofessionals,andbothpresumablyhavesomemerit.Althoughtheexpertiseoftheleadauthorisnotinthespecifictopicsofmarineoilspillsoroiltransportsafety,thedisparityraisedhererelatestomoregeneralissuesofacceptedpracticespertainingtothetreatmentofuncertaintyaspartofnaturalresourcedecisionmakingprocessesand,inparticular,thetreatmentofcompetingjudgmentsfromdifferentexpertsinwaysthateffectivelyavoidthemanyproblemsassociatedwiththephenomenonof“duellingexperts.”Inthenextsectionwethereforeintroduceasuggestedmethodologyforaddressingthequestionofspillfrequencythatmatchesthesignificanceofthetopicwithanappropriatelyrigorousanalyticalapproach.

3.1.2BestPracticesinElicitingJudgementsfromExpertsRegardingtheFrequencyandMagnitudeofMarineOilSpills

Bothoftheoilspillestimatesnotedaboveareproducedbyexperiencedprofessionals,usingacombinationofdataandexpertjudgment.Theyleadtostrikinglydifferentresults.Thisisnotsurprising;thereisalargeandwell‐citedbodyofresearchontheroleandfallibilityofexpertjudgmentinpredictingoutcomesunderconditionsofhighuncertainty(Burgman,2004).Whatissurprising,givenEnbridge`sacknowledgementthataspillwouldresultinmultipleadverseandsignificanteffectsandthenoveltyandlackofexperienceassociatedwithtransportingbitumen(orcondensate)inWrightSoundandotherareasneartotheBCcoast,isthefailuretosubmittheestimatesofspillprobabilitiestoamorerigorousassessmentandtobemoretransparentinthedescriptionsoftheiranalysis.

Acommonapproachusedtoestimateuncertainoutcomes,particularlywhenthepotentialconsequencesofroutineoraccidentaleventsaresevere,istocombineevidencefromexistingdatawithinsightsfromrelevantmodelsaspartofaformalprocesstoelicittheopinionsofindividuals3recognizedasexpertsonthetopic.Theexpertjudgmentprocessinvolvesaskingadiversegroupofexpertstoreviewandsynthesizethefullrangeofrelevanttheoryandevidenceandthenprovidejudgmentsabouttheuncertainoutcomesofconcernintheformofprobabilisticestimates(Morgan&Keith,1995).Formalpracticesfortheelicitationofexpertjudgmenthavebeenwidelyusedindecisionanalysisinarangeofapplicationsoverthepast

3Akeytothesuccessofanyexpertjudgmentprocessistheselectionofmultipleexpertsrepresentingdifferentaffiliations,perspectives,experiences,andknowledgesources.


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threedecades,includingarangeofbusinessapplicationsaswellasenergyandenvironmentalpolicyproblems(vonWinterfeldtandEdwards,1986;MorganandHenrion,1990;Budescu,Broomell&Por,2009).

Researchandpracticeinapplieddecisionanalysisandbehaviouraldecisiontheoryhaveresultedinthedevelopmentofwidely‐acceptedelicitationprotocolsdesignedtoimprovethequalityandtransparencyofjudgments.Theseprotocolsusearangeofbehaviouralandnumericalmethodstostructure,elicit,combineandcommunicatethejudgmentsofexperts.Theyimprovetheperformanceofexperts(accuracyoftheirjudgments)throughtraining,calibration,feedback,consistentcommunicationformats,awarenessofmotivationalandcognitivebiases,andthesequencingandframingofelicitationandverificationquestions.Whilethemethodsmostapplicabletoanygivensituationmayvary,thereiswideagreementonthefollowingcorecharacteristics:

‐ Awell‐designedquestionthatisunambiguousandfocusedonquestionsoffactratherthanvalues;

‐ Selectionofmultipleexpertsrepresentingdifferentdisciplines,affiliations,worldviews

andknowledgesources;‐ Carefulpreparationofexpertsincludingtraininginbiasawarenessandavoidance,

calibrationandexposuretorelevanttechnicalmaterials;

‐ Documentationofexperts’conceptualmodels–differentexpertshavedifferentconceptualmodelsabouthowsystemsworkandhowquantitiescanbeestimated.Byelicitingjudgmentsfromexpertswithdifferentmodels,amorecompleteunderstanding

oftherangeofpossibleoutcomesisachieved.Thedocumentationofthesemodelsimprovesthetransparencyandreplicabilityofjudgmentsandfacilitatespeerreview.

‐ Useofastructuredelicitationprotocolthatusesbestpracticesinthesequencingand

framingofquestionstominimizebias;‐ Theelicitationandreportingof(atminimum)quantitativeprobabilisticexpressionsof

impact,includingbotha“mostlikely”estimateandplausibleupperandlowerbounds,

sothattheexpertis90%confident(i.e.,9timesoutof10)thatthe“true”value–whichwillonlybecomeknowninthefuture–wouldfallwithinthespecifiedrange.

‐ Thedocumentationofconditionalizingassumptions–underwhatconditionstheupperandlowervaluesoftheelicitedrangemightoccur.

‐ Elicitationandaggregationmethodsthatusebothindividualelicitation(topromoteindependentthinking)andgroupdeliberation(topromotelearning).

Theelicitationanddocumentationofarangeofjudgmentsfromdifferentexpertsallowsdecisionmakerstogainafullunderstandingoftheuncertaintyassociatedwithaparticularquestion.Sometimesthiskindofexpertprocessleadstoareductioninuncertainty–asexpertsagreeonthebestdatasetstouseforexample,orlearnfromeachother,reducingtherangeofpossibleoutcomesintheirfinaljudgments.Attemptstoreachafalseconsensusamongexpertsshouldbeavoidedhowever;sometimesdecisionmakersneedtoacceptthatuncertaintyishighandmakeadecisionbasedontheirrisktolerance.


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GiventhemagnitudeofpotentiallossesassociatedwithamajoraccidentaloilspillandthelargediscrepancybetweenthesetwoestimatesofthefrequencyofENGPmarineoilspills,webelievethataformalexpertjudgmentprocessiswarranted.Wewouldexpectthatasuitableprocess,onethatwouldmeettheexpectationsofriskmanagementprofessionalsandutilizeadefensiblemethodologyappropriatetothesignificanceoftheissue,wouldinvolve:

‐ Identificationof3‐7expertswithadiversityofexperienceinmarineoilspills,spill

responseandmitigation,tankeroperationsandacombinationoflocalandglobalknowledge;

‐ Structuringoftheelicitationbyadecisionanalysisprofessionalwithexpertisein

technicalelicitationandintegration;‐ Individualinterviewstorecordmentalmodelsandelicitprobabilisticjudgmentsabout

thefrequencyorreturnperiodofoilspillsofvaryingsizesundervariousconditionalizing

assumptions;‐ Aggregationofresultsbyatrainedanalystsothattheycanbemeaningfullycompared;‐ Aworkshopofexpertstoexploreareasofagreementanddifference,openlydiscussthe

rationaleandbasisforjudgments,synthesizeresultsandagreeonkeymessagestodecisionmakers.

Giventheavailabilityofwell‐establishedandbestpracticeswithrespecttoexpertjudgment,therelativeeasewithwhichtheycanbeelicited,andthesignificanceofconsequencesintheeventofalargemarineoilspill,inouropinion–andbasedonstandardsandpracticesusedinmanysimilartypesofdecisioncontextsinCanadaandintheUS‐‐thedevelopmentofamorecompleteunderstandingofspillprobabilitiesofdifferentmagnitudesisreadilyachievableandwouldaddsignificantlytothequalityofinformationavailabletoCrowndecision‐makers.

3.1.3Thebottomline:Whatisanacceptablelevelofmarineoilspillrisk?

Riskestimatesarealwaysacombinationofestimatedprobabilitiesandconsequences,bothsubjecttouncertainty.Howprobabilitiesareinterpretedvarieswiththeexpectedconsequencesofactionorinaction:a15%probabilitythatitwillraintodaymaybethoughtlowenoughthatanindividualwouldgoofftoworkwithoutarainjacketorumbrella,buta15%probabilitythateatingaforagedmushroomwillresultindeathissufficientlyhighthatthissameindividualwouldnoteatthemushroom.Fortheseriskmanagementissues,thebottomlineis“atwhatprobabilitydoestheriskbecomeunacceptable”andthisquestioncannotbeansweredwithoutreferencetotheexpectedconsequences:inonecasewegetwet,intheothercasewedie.

ThebottomlineriskmanagementquestionforENGPremains“atwhatprobabilitydoestheriskofanoilspillofaspecificsizeorrangebecomeunacceptable?”Enbridgehasacknowledgedthattheconsequencesofamajormarineoilspillwillbe“significantandadverse”,butfailtoconducttheminimumrequiredanalysesbecausetheyclaimthattheprobabilityissolowastoconcludethataspill“isnotlikelytooccurduringthelifeoftheproject”(ENGresponsetoFederalIR2,page188).InmakingthisclaimweassumeEnbridgeisrelyingontheCEAArequirementthatthedeterminationofsignificantadverseeffectshingesonaconclusionthatadverseeffectsare“likely,”whichisopentointerpretationbecausetheCEAAdoesnotprovideaquantitative


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probabilityrangeforwhatconstitutes“likely”and,therefore,whatwouldresultinanimpactbeingdeemedsignificant.4Nevertheless,fromthestandpointofbothcommonsenseandacceptedpracticesthroughouttheworldwhenmakingdecisionsaboutlargeenergydevelopments(andreferencingexamplessuchastherainjacket/mushroomexampleabove),itisclearthateveneventsthatareeitherformally“unlikely”or“notlikely”–onesthatwilloccurlessthan1/3ofthetime,accordingtostandardpractice–maystillbehighlysignificantfromthestandpointofmakinginformedriskmanagementdecisions.

SupposethatafteramorethoroughreviewofthemarineoilspillhistoryandthesafeguardsproposedbyENGPformarineoiltransportation,anexpertpanel(assuggestedintheprecedingsection)usingstandardandwell‐documentedmethodologiesagreesthatthe“bestestimate”ofreturnperiodforalargespillis150years‐‐anumberintermediatetothetwoestimates(byEnbridgeandbyDr.Chan)discussedabove–witha90%confidencerangeofbetween75and210years.Withaplanned30‐yearlifeoftheproject,thiswouldmeanthattheestimatedprobabilityofalargeoilspillduringthelifeoftheprojectisabout20%,with90%confidencethatthetrueprojectlifetimeprobabilityofalargespillisbetweenabout15%and40%.Noneoftheseestimateswouldsettheprobabilityofalargespillashighas50%,whichmeansthat(usingtheapplicant’slogic)aspillwouldnotbelikely–thatis,it’sprobabilityofoccurrence<.5.However,giventhemagnitudeoftheconsequencesofanoilspill–longtermandpotentiallyirreversibleimpactsonvaluedmarinespecies,thewell‐beingandperhapscontinuedexistenceoftheGitga’atNationandothercoastalFirstNation,andthereputationofBritishColumbia(discussedinthenextsection)–itisnotobviousthatan“unlikely”oreven“veryunlikely”(p,.1,accordingtocommonpractice)largespillfrequencyissufficientlyimprobablethattheENGPshouldreceivepermissiontoproceed.

Asananalogy,supposethatanexpertanalysisshowedthatthereservoirbehindalargedambeingproposedforthehillsaboveamedium‐sizedcity(oraglobally‐recognizedheritagesite)wouldexperienceacatastrophicfailureshouldamajorearthquakeoccur,andreliabledatashoweda20%probabilitythatanearthquakeofthismagnitudewouldoccuroverthenext30years.Itishardtoconceiveofanyscenariowherebytheresponsiblepublicofficialswouldconcludethatconstructionofthereservoirshouldproceed.

Insummary:Oncetheconsequencesandprobabilityofanoilspillhavebeenexaminedusingmethodsconsistentwithprofessionalstandards,thereremainsthequestionofwhetherornottheresultingriskisacceptable.Theanswertothisquestionisavaluejudgmentthatwillbeinformedby,butnotansweredby,science;instead,theacceptablelevelofriskwilldependontheestimatesoftheassociatedbenefitsandjudgementsbydecisionmakersofriskacceptabilitybasedontheirweighingofthesecostsandbenefitsandtheirsubjectiverisktolerances.

4Wenotethatthereexistsarichtheoreticalandappliedliteratureonthequantitativeinterpretationofverbalprobabilities(e.g.,Budescu,Broomell&Por,2009),whichunfortunatelyisignoredinboththeCEAAcriteriaandtheENGPapplicationmaterials.


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3.2IncorporatingPerceptionsofRisks

Thissectionexaminesthreeeffectsrelatedtoperceptionsofprojectrisks,noneofwhichhasbeenaddressedadequatelyaspartoftheENGPapplicationmaterials.Theseare

− PsychologicalandrelatedhealthriskstomembersoftheGitga’atNationandothergroupsasaresultoftheirperceptionsoftheproject’sroutineoperationandpossibleaccidentaloilspills,includinglivinginfearandotherriskfactorsrelatingtothecharacteristicsoftheENGP;

− Economicriskstothelocalandregionaleconomiesasaresultofstigmaeffectsonlocalproductsandresources,forexampleadverseeffectsoneco‐tourismrevenuesandsalesofproductsfromtheNorthandCentralCoasts,includingsalmonandhalibutandothermarineresources;

− ReputationalriskstotheProvinceofB.C.ortoCanadaasaresultofchangesinperceptionsintheaftermathofaprojectapprovalortheoccurrenceofoilspillsinthemarineenvironment.Thisincludespossibledramaticreductionsinthenon‐usevaluesassociatedwithretentionofapristineenvironmentinthenorthwestBCcoast.

3.2.1Psychologicalandrelatedhealtheffectsofriskperceptions

PerceptionsofrisksassociatedwiththeENGPprojectwillaffectmembersoftheGitga’atcommunitythroughavarietyofpsychologicalandphysicalchannels,asdiscussedintheaccompanyingHBBCreportsonculturalimpacts,socialimpacts,andhealthimpacts.ThreeENGPcharacteristicsareexpectedtoresultinunusuallyhighlevelsofperceivedrisk.

First,thecombinationofmaterials(oilandcondensate)andthemodeoftransit(largemarinetankers)advancedbytheENGPcreatesatextbook‐perfectexampleofanunusuallyhigh‐riskperceptionssituation.Ascarefullydescribedinworkdevelopedoverthepastseveraldecades(Slovic,1995),andwithmanyofthekeystudieshavingtakenplaceinthecontextofenergyinitiatives,themagnitudeofperceivedrisksiscloselycorrelatedwiththeoccurrenceofasmallsetofriskfactors.AlthoughnodetailedstudiesofriskperceptionshavebeenconductedintheGitga’atcommunity,thissetoffactorsincludestheextenttowhichaproject,activityortechnologyisviewedasresultingin:

− involuntaryexposuretoimpacts;− risksthatmayprovecatastrophictolocalpopulations;− contaminationorillnessesthataredreaded(e.g.,cancers);− effectsthatarenotwellknowntoscience(e.g.,persistenceofcontamination);− effectsthataredelayedoroccurovertime;− risksthatarelong‐lastingandmaybeimposedonfuturegenerations.

Importantly,thesecharacteristicsalsomayaffecttheperceptions(andthereforethewell‐being)ofmanyotherpeoplelivingontheNorthwestCoastofBCand,tosomedegree,peoplelivinginotherpartsofcoastalBC(includingVancouverandVictoria)aswellasotherpartsofCanadato


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theextentthattheirperceptionsofBC’snorthwestcoastasapristineenvironmentarealteredbyapprovalandstart‐upoftheENGPproject.

Second,andparticularlyforresidentsofHartleyBayorvisitorstotheGitga’atTerritory,thepresenceoftankerswillbehighlyvisible.Incontrasttotherelativelylow‐keyvisualandperceptualimpactsofthepipelineitselfformanyoftheinteriorBCandAlbertacommunitiesthroughwhichoilwillbeshipped,thetankervesseltrafficcarryingbitumentoAsianmarketsandreturningwithcondensatewillimpactthedailylifeandperceptionsforpeoplelivingatorvisitingmarineareasneartotheentranceoftheDouglasChannel.Thisdailyproximitytotankersmeansthat,atleastforsomeindividuals,therewillbelittleescapefromwhathasbeendescribedas“livinginfear”–thetankertrafficandanyassociatednoiseorwakeswillserveasaconstantreminderthatformerlypristinecoastalareashavebeenalteredandthat,atanymoment(asaconsequenceofanaccidentalspill),lifeasitalwayshasbeenmaysuddenlychange.

Third,itisexpected(andsupportedbyresultsoftheGitga’atsurvey,asreportedintheHBBCSocialandCulturereports)thatresidentsofthenorthwestBCcoastingeneral,andmembersoftheGitga’atNationlivinginPrinceRupertinparticular,areunusuallysensitivetorisksassociatedwithbothroutinetankertrafficandpossibleaccidentalmarinespillsofbitumencrudebecauseoftheirrecenthistorywiththesinkingoftheBCferryvesseltheQueenoftheNorth,whichranagroundonGilIslandinWrightSoundinlateMarch,2006.Thevessel‐‐loadedwith225,000litresofdieselfuel,15,000litresoflightoil,3,000litresofhydraulicfluid,and3,200litresofsterntubeoil–sankwithinonehourofrunningagroundand,overthepast4.5years,hascontinuedtodischargefuelproductsintothemarineenvironment.FromthestandpointoftheGitga’atpeople,andasnotedinthesurveyresultssummarizedintheaccompanyingHBBCreportonSocialimpacts,thesinkingoftheQueenoftheNorthremainsahighlysalientandsignificantevent.Inthelanguageofriskperceptions,thesinkingishighlyavailable–aneasilyrecalled,close‐at‐handadverseexperiencethathascontributedtoastateof“livinginfear”becauseitinvolvesalowprobabilityyethigh‐consequenceeventthat,despiteofficialassurancestothecontrary,actuallydidoccurandwithseriouseffectsontheenvironment,health,andwell‐beingoftheGitga’atcommunity.Ifa“safe”BCFerryrunsagroundonawell‐documentedisland,thenwhynotalsoafarlarger“safe”tankercarryingbitumencrudefromtheEnbridgepipeline.

3.2.2Economiceffectsofriskperceptions

Adverseperceptionsofriskcanresultinsharpdeclinesinthevalueofeconomicactivitiesandproductsasaresultofthembeingmarkedasstigmatizedandthereforeconsideredtobeinferioror,attheextreme,tobealtogetheravoided.Stigmaeffectsareparticularlydevastatingtotheextentthatsomethingwhichoriginallywasconsideredtobepositiveandgood–aproduct,anarea,oratechnology–isshunnedoravoidedbecausethesepositiveperceptionshavebeenoverturnedandwhatwasonceconsideredtobegoodordesirableisnowcontaminated.Well‐knownexamplesincludetechnologiessuchasnuclearenergy,oncethoughttobeahighlypromisingsourceofcheapandsafepowerbutnowseverelystigmatized;placessuchasportionsofthecoastlinesinsouthernFrance,Alaska,andLouisianaintheaftermathoftheAmacoCadiz,ExxonValdezandDeepwaterHorizonoilspills,orproductssuchasapplesformanyyearsafterscaresassociatedwithuseofthegrowthregulatorAlar(Gregory,


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Slovic&Flynn,1995).Ineachofthesecases,publicperceptionsofriskinitiatedbyaneventthatcapturedtheimaginationofthepublic–aradiationleak,anoilspillintothemarineenvironment,orreportsofsicknessamongconsumers–resultedinlossesofhundredsofmillionsorbillionsofdollarstoindustryandtotheaffectedworkersandtheircommunities.Stigmathus“remindsusthattechnology,liketheRomangodJanus,offerstwofaces:oneshowsthepotentialforbenefit,theothershowsthepotentialforrisk”(Gregoryetal.,1995).

AnobviouspotentialvictimofstigmatizationfromtheENGPisthetourismindustryintheGitga’atTerritory.Asnotedintheaccompanyingeconomicimpactsreport,touristsaredrawntotheGitga’atTerritorybyitswildnatureandbecauseitishometomanyrareandinternationallyrecognizedanimalsandplantssuchascougars,wolves,salmon,humpbackwhales,Steller’ssealions,grizzlybears,Kermode(“Spirit”)bears,andgiantwesternredcedar,andSitkaspruceinwhathasbecomeknownastheGreatBearRainforest.MuchofthetourismintheGitga’atTerritoryreliesuponthemaintenanceoftheseperceptionsandtheintegrityofthesenaturalfeaturesandwildlifepopulations.ThisreputationandtheassociatedrevenuesfromtourismwouldbeatriskfromtheENGPundereitherroutinetankeroperationsor,toaevengreaterdegree,followinganaccidentalspill.

3.2.3Reputationalandnon‐useeffectsofriskperceptions

Non‐usevaluesincludealtruistic,bequest,existence,andassociatedoptionvalues(Pearce,Atkinson&Mourato,2006).Thesevaluesaretypicallyestimatedbyeconomistsusingcontingentvaluationsurveysandsimilarinterview‐basedmethodologies(seeHBBCEconomyreport).Theunderlyingconceptisthatpeoplearewillingtopayforgoodsorservicesthatarenotpricedorsoldthroughconventionaleconomicmarkets–suchasthesecurityofknowledgethatapristineecosystemremainsintact,orthesatisfactionderivedfromseeingphotosoftheSpiritbear(asperthewidelyreadAugust,2011NationalGeographicarticles)–andthat,correspondingly,peoplewoulddemandcompensationforthediminishmentorlossofthesesamegoodsandservices.

Theexistenceofnon‐usevaluesissignificantinthecontextoftheENGPapplicationbecauseofthepotentialfordamage,eitherduetoroutinetankertraffic(whichcoulddiminishthepristinenatureofthearea)ortheaccidentalreleaseoflargeamountsofoilorcondensateintothemarineenvironment,totheGreatBearRainforest‐‐awildernessareaofglobalsignificancethatcontributestothereputationofCanadaasanationwithdiverseandprotectednaturalenvironments.FollowingoveradecadeofactivismbyenvironmentalgroupsandpartnerstheBCgovernmentdesignatedthearea(14,000km2oftheNorthandCentralCoasts)the“GreatBearRainforest”in2006.Thefinalagreement,negotiatedbetweenenvironmentalgroups,FirstNations,loggingcompanies,andtheBCgovernment,creatednewprotectedareas,establishedcollaborativeagreementsforlandmanagementandresourcedecisionmakingbetweenFirstNationsandtheB.C.government,andsecuredadditionalconservationfundingtosupportenhancedstewardshipandeconomicdiversification.

Whatdoesthismeanintermsofpossibleproject‐relatedcostsassociatedwithreductionsinnon‐usevalues?Althoughnoempiricalstudiesofthenon‐usevalueoftheGreatBearRainforesthaveyetbeenconducted(seeSection4.3oftheHBBCeconomicimpactsreportforadiscussionofnon‐usevaluechangesfollowingtheExxonValdezoilspill),twoillustrative


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estimateshelptodemonstratethesignificanceofpotentiallossesinnon‐usevalueduetotheENGP.

Afirstestimate,basedonothernon‐usevaluestudyresults,helpstoillustratethelikelymagnitudeofthepotentiallossesinnon‐usevalueiftheENGPapplicationwereapproved.Manystudiesofnon‐usevaluesinothercontextshaveestimatedannualhouseholdnon‐usevaluesof$25‐$85associatedwiththecontinuedprotectionofspecialnaturalresourceareas.Forexample,Loomis(1987)usedcontingentvaluationmethods(CVM)toestimatehouseholdnon‐usevaluesforarecreationallakeinCaliforniaof$42.71perhousehold,andSandersetal.(1990)estimatednon‐usevaluesof$81.96perhouseholdforpreserving15wildandscenicriversinColorado.ACVMstudybyCarsonetal(2003),basedonnon‐usedamagesoftheEVOSinPrinceWilliamSound,estimatedthenon‐usedamagesofEVOStobebetween$4.9and$7.2billion(in1991USD).Thesestudiesallusedwillingnesstopay(WTP)estimatesofvalue,whichmanyeconomists(Knetsch,2007)believeresultsinasignificantundervaluationoflossesascomparedtothetheoreticallymoreappropriatewillingness‐to‐accept(WTA)measureofvalue(typicallyexceedingWTPmeasuresbyafactorof3–10)5.TheEconomyreportestimatesthevalueofnon‐usedamagesfollowingamajoroilspillintheGitga’atTerritoryatbetween$1.1and$1.7billion(in2010$CDN)usingWTPmeasuresandbetween$3.3and$17.2billionusingaWTAmeasure(afterconversion).AlthoughcriticsquestiontheassumptionsofaCVMapproachandtheassumedprecisionofthesedollar‐basedquantitativeestimates(Kahneman&Knetsch,1992),itiswidelyacknowledgedthatmanypeoplewouldbewillingtopayapositiveamountinordertogainthegoodfeelingthatcomeswithsupportinga“goodcause”suchaspreservingapristinenaturalenvironmentor,morespecificallyinthiscase,helpingtoensureprotectionforthehomeoftheSpiritBear.

Asecondestimateassumesthatamajoroilspillwill‐‐atleastforseveralyears‐‐reducenon‐usevaluesassociatedwiththeareatozero.Assumingaconservativevalueof$25(basedonthestudyresultsnotedabove)forannualhouseholdnon‐usevaluesassociatedwithretentionofapristine(i.e.,noENGPtankertraffic)Gitga’atTerritory,thenthefollowingillustrativeestimatesofpotentialnon‐uselossescanbemade.

• AssumingonlyaCanadianmarketfornon‐usebenefitsassociatedwiththeGitga’atTerritory,thenbasedonapproximately15millionCanadianhouseholdstheestimatedannualnon‐usevaluecostsoftheprojectfollowingamajorspillwouldbe:15millionhouseholdsx$25/household=$375million(overtheaffectedperiodoftime).

• AssumingaUSaswellasCanadianmarketfornon‐usevalues,giventhatmanyAmericanstraveltothearea,thenbasedonapproximately165millionUSandCanadian

5UseoftheconceptuallycorrectWTAmeasurewouldestimatetheminimumdollarvalueindividuals’wouldacceptascompensationinreturnforrelinquishingtheirnon‐usevaluesoveraspecifiedperiodoftimeduetotankertrafficortheprobabilisticlossesassociatedwithamarineoilspill,ratherthanameasureofthesesameindividuals’willingnesstopaytopreventtheselosses.AdoptionofaWTAmeasurethereforeraisestheissueofhowtotreatthoserespondentswhorefusetoanswerthecompensationquestion,duetotheirunwillingnesstoacceptanyamountofmoneyinreturnforopeningthedoortoroutineENGPtankertrafficorpotentialoilspilllosses.


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householdstheestimatedannualnon‐usevaluecostsoftheprojectriseto$4.1billion(165millionhouseholdsx$25/household)overtheaffectedperiod.

• Eventhislattercalculationisconservative,inthatnon‐usevaluesassociatedwiththeGreatBearRainforestandtheGitga’atTerritorynowtapintoaworld‐widemarket.Thismeansthattheestimatedannualnon‐usevaluecostsofENGPwouldbehigher,beyondthisestimateof$4.1billion,totheextentthatthelossesexperiencedbypeopleoutsideofCanadaandtheUnitedStateswereincluded.

Thesevariousestimatesofnon‐usevaluecostsassociatedwithapprovaloftheENGPapplicationareillustrativebuttheyrefertoacomponentoftheproject’sevaluationthatisboth“real,”inthatitwouldcontributetoatruelossofwelfare6,andsignificant,inthatlossesareexpectedtototalmanybillionsofdollars.Inlinewithprovidinginformationforinformeddecisionmaking,furtherworkshouldbedonetodevelopamorerigorousestimateofthesevalues.Atminimum,theinclusionoflossestonon‐usevaluesduetoincreasedperceptionsofriskagainhighlightsimportantgapsintheENGPapplicationmaterialsandtheneedforacomprehensive“weighing”ofallthebenefits,costs,andrisksoftheENGPtoarriveatasoundestimateoftheoverallnetbenefitsoftheENGPproposal.

3.3AssessingNetBenefitsoftheENGP

TheENGPispromotedbyEnbridgeasprovidingverylargeeconomicbenefitstoCanada.AspartofVolume2ofitsApplication,EnbridgeestimatesthattheENGPprojectwillprovide:

‐ againof$270billioninCanadianGDP,oranaverageannualgainof$7.9billion;‐ anincreaseof$48billioninCanadianlabourincome,oranaverageincreaseof$1.4

billion;‐ againof$81billioningovernmentrevenues;‐ anincreaseof558,000person‐years(PY)ofemploymentinCanada,oranannual

averageincreaseofover16,000PY;and‐ “importantdiversification,optionandinsurancevalues”(Volume2,p1‐14).

Enbridgearguesthat,“fromaneconomicperspective,theProjectisclearlyintheCanadianpublicinterest”(Volume2,p1‐14).

Enbridge’sfiguresareimpressive,butastheyareproducedusingamethodwhichincorrectlyassumesthateconomicimpactsarethesameastheeconomicbenefitsoftheproject,theyprovideverylimitedperspectiveonthepublicinterestvalueoftheproject.Asnotedearlier,EconIAusestechniquessuchasinput‐outputmodelling,economicbaseanalysis,andmultiplierstoestimatedirect,indirect,andinducedeffects.WithoutanunderstandingofthemechanicsandassumptionshiddenwithinEconIA,areaderoftheENGPapplicationmaybemisledintoacceptingtheimpressiveresultscomingfromEconIAandfailtoseethat(a)EconIAmethodstendonlytoprovideanindicationofaproject’sgrosseconomicimpactsinsteadofitsneteconomicimpacts,andthat(b)manykeyimpacts,includingtheproject’sneteffectsonawiderangeofeconomic,environmental,social,healthandculturalvalues,areomittedfromthe

6Wenotethattheassessmentofdamagestonon‐usevaluesforlargeoilspillsisrequiredundertheU.S.DepartmentofInteriorregulationspromulgatedundertheOilPollutionPreventionActof1990.


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ENGPanalyses.ThreedeficienciesofEconIAmethods(discussedinmoredetailintheHBBCEconomicImpactsreport)highlighttheseprojectassessmentproblems.

AfirstproblemisthatinEconIAitisassumedthattherearenoconstraintsonprojectinputssuchalabourandcapitalforprojectdevelopment(ArmstrongandTaylor,2000ViningandBoardman2007).Whenusedforthepurposeofinformingdecisionmakersabouttheneteconomicimpactsofaproject,EconIAincorrectlyassumesthattherearenoopportunitycostsassociatedwithprojectexpendituresbecauseprojectresources(suchasinvestmentcapitalandlabour)areidleandotherwisewillnotbeused.ThusinEconIAprojectexpendituresareeffectivelyconsideredbenefitsandalljobslinkedtotheprojectareassumedtobeincrementalandnew.Inotherwords,inEconIAnoconsiderationisgiventocurrentusesoflabourandcapital(eventhoughmostlabourandinvestmentcapitalinCanadaisemployed)ortotheiralternativeuses.Althoughlargeprojectsundeniablyhaveeconomiceffectsextendingoutintothebroadereconomy,EconIAalsoincorrectlypresentsindirectandinducedimpactsasincrementaleconomicbenefitswhereasmostoftheseeffectsaremerelypaymentsforsuppliers’opportunitycosts.Forexample,purchasesbypipemanufacturersofsteel(anindirecteffectofEnbridgebuyingpipe)reflecttheopportunitycostsofsteel–thissteelcannolongerbeusedforsomethingelseandthustheimpactisacosttosociety,notabenefit.

AsecondissueisthatEconIAisfocusedonanarrowsetofeconomicindicatorsofprojectssuchasGDP,labourincome,governmentrevenue,andemployment.Althoughtheseindicatorscanbeassociatedwithsocialwell‐being,theyarenotnecessarilyso.AclassicexampleisGDP:oilspillsareexcellentwaystoboostGDP,asarewars.GDPmeasureseconomicactivitybutitdoesnotdistinguishbetweendesirableactivityandnon‐desirableactivity.EconIAalsoignoresenvironmental,cultural,social,andotherimpacts,eventhosethathaveobviouseconomicmanifestations,suchasthepublichealthcarecostsofalcoholisminducedbyunemploymentandthepublichealthcarecostsofairpollution‐inducedasthma.Theomissionofthesenon‐economicimpactsisparticularlyalarmingfromtheperspectiveofaneconomysuchasthatoftheGitga’atNation(andmanyotherFirstNationsinCanada),forwhomnon‐marketandnon‐monetizedproductionandtradingmechanismsarehighlyimportant(Nadasdy,1999).Afarwidervarietyofprojectimpacttypescanbeconsideredthroughthelensofcost‐benefitanalysisandothermulti‐accounteconomicimpactassessmentmethods{Pearce,2006)andastillwidervarietyofprojectimpactsthroughtheuseofqualitativeandquantitativedecisionanalysismethods(Turneretal.,2008;Gregory,Failing&Harstone,2008).

AnexampleofthistypeofomissioninEconIAisthedamagecostsofgreenhousegasemissions(GHGs)associatedwiththeENGPproject.SincetheENGPhasarguedthatoneofitsimportantbenefitsistoenableincreasedbitumenproductionconsistentwithgrowingglobaldemandforrefinedpetroleumproducts,itislogicaltoattributetheGHGemissionsassociatedwiththeincrementalbitumenproductionoftheproject,throughtoandincludingconsumption,inGHGdamagecostcalculationsasanenvironmentalexternalityoftheproject.UsingalifecycleGHGemissionfactorof500kgCO2eperbarrel(IHSCERA,2010)andaGHGdamagecostfactorof$50(2005USD;Tol.2005),theGHGdamagesoftheprojectareestimatedtobe$6.3billionayear$2010CDN).AlthoughtherearedebatesinGHGdamagecosting,concerningthemagnitudeofthedamagecostfactorandwhetherlifecycleemissionsshouldbeusedoronlyproductionemissions,anannualcostofthismagnitudecannotdefensiblybeomittedfromjudgementsconcerningthepublicinterestnetbenefitsoftheproposedENGPdevelopment.


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AthirdandrelateddeficiencyofEconIAisthatittendstoonlyexamineonesideofthebalancesheet.Positiveeconomiceffectsareexamined,butthenegativeeconomiceffectsofprojectstendtobeignored.Aclassicexampleisgovernmentrevenue.AsshowninTable2(Section2.2.2),pipelineprojectsmayleadtoincreasedsales,property,personal,andcorporateincometaxrevenueflowingtogovernments,butpipelinesalsocreateincrementalburdensongovernmentservicesandactivitiessuchasinfrastructuredemandsandenvironmentalmonitoring.

Insummary:Enbridge’suseofEconIAmethodstoconductitseconomicimpactassessmentresultsinapoorcharacterizationoftheENGP’seconomicimpactsandprovidesverylimitedinformationontheproject’seconomicbenefitsandpublicinterestvalue.Surprisingly,EnbridgeemploystheirEconIAresultsinisolationtoarguethepublicinterestvalueoftheproject,eventhoughthisdefinitionofpublicinterestisverydifferentfromthatintroducedbyeitherCEAAortheNEB.Underthesemandates,itisclearthatanyassessmentoftheENGP’spublicinterestbenefitsrequiresasystematicandcomprehensiveappraisalofthefullrangeofexpectedprojectimpacts,bothpositiveandnegative,acrossthemanydimensionsofenvironmental,cultural,social,health,andeconomicvalue.TheproblemswiththeENGPapplicationinthisregardstembothfromintentandinappropriatemethodology,inthatstandardassessmentmethods‐‐suchascost‐benefitanalysisormulti‐attributedecisionanalysis,ratherthanEconIA‐‐wouldneedtobeusedasaidstothisimportantdecision‐informingprocess.

3.4MitigationandCompensationEffectiveness

Intheeventofaspill,theproponentstates(seeNGresponsetoGitga’atIRNo1,p.49)that“…fairandpromptreimbursementofcompensationclaims..wouldsubstantiallymitigatebotheconomicandsocialcostsassociatedwithaspill.”TheENGPapplicationdescribestheproposedmitigationandcompensationapproachasincluding:

‐ thattankerswillbeaccompaniedbyescorts‐ thatharmsmustbedemonstratedquantitatively(Volume8C,p9‐26),‐ thatcompensationtocommercialfisherswillbebasedupontheirdemonstrationof

“directeconomicloss”(Volume8B,p13‐54),‐ thatcompensationtocommercialfishers,aboriginals,andcommercial‐recreational

lodgesandcharterswillbebaseduponpreviousyears’landings,harvests,andactivity(Volume8C,p8‐37);and

‐ thatcompensationwillbetimely(Volume8C,p9‐27).Yettheapplicationprovidesfewdetailsregardingwhatimpactswillbeeligibleformitigationorhowcompensationpaymentswillbedeterminedandignoresmanysuccessfulmitigationinitiativesundertakeninotherjurisdictions.ItalsofailstoaddressthekeypointthatneithertheleadresponsibilitynorthefinancialburdenforspillcleanupwillbebornebyEnbridge,whichgreatlyreducesincentivesforexploringmitigationoptions

Overall,theENGPmitigationstrategyreliesontheuseofescortsinallconfinedchannels(notfurtherdiscussedinthisreport)andtwogeneralmitigationmeasures,afisheriesliaisoncommittee(FLC)andmonetarycompensationpayments.Althoughbothstakeholdercommitteesandmonetarypaymentshaveahistoryofuseelsewhere,theirappropriatenessandlegitimacy


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asmeanstomitigatetheENGP’spotentialimpactsonmembersoftheGitga’atNationisopentoquestion.

3.4.1GeneraldeficienciesinENGPmitigationstrategies

WeacknowledgethatunderstandingthecomplexchangesandimplicationsoflossexperiencedbyAboriginalpeopleischallenging,forbothnativeandnon‐nativesocieties.YettheapproachtothemitigationofadverseprojecteffectsthatisoutlinedbyEnbridgefailstomeaningfullyaddresstherangeofanticipatedlossesandthusfailstomeetthemandatesofeithertheNEBorCEAAtoavoidsignificantadverseresidualharms.

AfirstgeneralcriticismisthattherangeofeligiblepotentiallossesisincompleteandfailstoincludemanyofthemostseriouspotentialimpactsoftheENGPontheGitga’atNation.AsoutlinedinmoredetailinotherHBBCimpactreviews,theseomissionsaresignificantinbothquantityandscope,cumulativelyincludingmanyofthemoreimportantcultural,social,health,andeconomicimplicationsoftheENGPfortheGitga’atNation.Theseomittedoronlypartiallydiscussedimpactsincludethreetypesofeffectsoftheproject:

− impactsthatalreadyareoccurring(e.g.,stressandworry,diversionoftimeandeffortawayfromotheractivitiestodealwithproject‐relatedconcerns),

− impactsthatarecertaintooccurshoulditbeapproved(e.g.,theadversehealthandsocialeffectsassociatedwithtankertrafficinterferingwithtraditionalharvestsorresultinginHartleyBayresidentslivinginfear,asrelatedtoseeingtankersnearbythatatanytimecouldrunagroundoraccidentallyspillcrudeoilintothemarineenvironment.

− impactsthatwouldoccuriftherewereanaccidentalmoderateorlargespillofoilorcondensate,whichwoulddamagemarineandterrestrialresourcesandadverselyimpactordestroyatleastportionsofthenormaldiet,culturalactivities,economiclivelihood,andsocialdynamicsoftheGitga’atNation.

AsecondgeneralcriticismisthattheENGPanalysesfailtofollowacceptedpracticesinthatthereisnoacknowledgementthatpotentialproject‐relatedgainsandlossesdonotaffectthewelfareorutilityofindividualstothesamedegree.AsfirstshownbyKahnemanandTversky(1979)‐‐workforwhichKahnemanlaterwasawardedthe2002NobelPrize‐‐lossesfromareferencepoint(inthiscase,thepre‐projectstatus)arefeltmorestronglyandhaveagreatereffect,byasmuchastwoorthreetimes,thandothesupposedlycomplementarygainsassociatedwiththesameinitiative.Thispointisneitheracademicnoresoteric:itmeansthatthesimultaneousexperienceofgainsandlossesconventionallythoughttobeequivalent(e.g.,alossofsomethingworth$100andthegainof$100)doesnotbringtheindividualbacktotheirstartingpointbut,instead,leavestheindividual(orcommunity)experiencinganetand,insomecases,highlysignificantloss.EconomistsincludingKnetsch(2007;p688)haveemphasizedthepracticalimportanceofthispointbetween“whatpeopleperceiveasagainwhattheythinkofaspreventingormitigatingadeteriorationinenvironmentalquality”inthecontextofdevelopingappropriatemeansforcompensatingenvironmentaldamages;lawyersincludingSunstein(2000)haveemphasizedtheimportanceofthisdistinctioninthecontextofcourt‐sanctioneddamageawards.


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Third,wenotethatinrecentyearsprojectmitigationproposalshaveshiftedtowardsensuringthatlargenaturalresourcedevelopmentsdon’tonlyminimizenegativeimpactsthroughdesignchangesandpaymentsbut,instead,seektoaddressunderlyingissuesoftrust(e.g.,throughmeaningfulconsultationprocesses)andtopropelsocietypositivelytowardseconomic,environmental,andsocialsustainability.Thistrendinprojectassessmentsandmitigationproposals–inlinewiththeCEAAmandateto“promotesustainabledevelopment”‐‐ispartofaglobalshiftinprojectreviewtowardswhatisbeinglabelled‘sustainabilityassessment’(Gibsonet.al,2005).Inagrowingnumberofcases(suchasthereviewofthenickelmineproposedforVoiseyBay,Newfoundland)decision‐makershaverequiredthattheproponentsdemonstratehowaprojectwouldcontributepositivelytotheenvironmental,economic,andsocialsustainabilityofalocalorregionalareaoverthelongterm,asopposedtosimplydeterminingifnegativeimpactsareacceptable.

Aspracticalexamples,insteadofofferingtopaylocalfishersandtourismoperatorsforspecifiedlossesintheeventofadverseeffectsfromroutineoperationsoraccidentaloilspills,theproponentmightbuildintotheprojectbudgeteconomicactivitiesthatwouldbenefitcoastalFirstNations.Alternatively,theproponentmightfollowtheleadofAlyeska(aftertheExxonValdezspill)whichsince1990hassoughttobuildtrustandcapacityinlocalcommunitiesbyfundingthePrinceWilliamSoundRegionalCitizenAdvisoryCouncil(PWSRCAC).TheCounciljointlyparticipatesinmonitoringtankeroperations,providinginputtothedesignofmitigationmeasures,initiatingstudiesrelatingtospillprevention,andotheroversightactivities.SimplestatementsbyENGPthatthecompanyis“willingtoworkwithFirstNations”arenotsufficient:tobesuccessful,mitigationorcompensationinitiativeswouldneedtobedevelopedthroughstructureddialogueswiththeGitga’atNationandotherNorthwestCoastresidents,recognizingthatoffersofcompensationormitigationwhichappeareminentlyreasonablefromthestandpointofEnbridgemayreasonablyberefusedandconsideredunacceptablebythosetowhomtheyareoffered‐‐becauseoftheperceivedincompensabilityofsomeimpacts,becauseofthediscrepancybetweenperceivedgainsandlosses,orbecauseofissuesstemmingfromalackoftrust.

3.4.2FisheriesLiaisonCommittee

Theproponentnotesthattheprojectmaycauseavarietyofnegativeeffectsoncommercial,FSC,andrecreationalfishers,includingdisruptiontoaccessanddamagetogear,andproposesestablishmentofaFLCtoaddresstheseimpacts.AkeyproblemwithENGP’srelianceontheFLCasameansofmitigationisthelackofdetailonwhatitwoulddoandhowitwouldresolveissuesbetweenfishersandtheproject.Asaresult,stakeholdersandFirstNationresourceusersaresimplyrequestedtohavefaith,andtohavefaithinanunnamedentity–theproponent?theshipper?thefederalgovernment?.Forexample,onp9‐21inVolume8CwearetoldthatENGPwillestablishaFLCandtheFLCwillsolveproblemsby“providingaforum”fordiscussionofmeasurestobetaken.Asanotherexample,ENGPwritesonp12‐34ofVolume8Bthat

AssumingthatappropriatemeasurescanbedevelopedwiththeFLCtoschedulefishingactivitiesinspecificlocationstolimitconflictswithtankers,itisreasonabletoconcludethatcumulativeeffectsonmarinefisheriescanbelimitedandwillbenotsignificant.


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TheassumptionthatdiscussionswithinaFLCcanresolveschedulingissuesfortraditionalandcommercialmarineharvestersappearsoptimisticandisnotsupportedbyENGP’sadmission,elsewhereintheapplication,thatithasnotclearlyidentifiedwherefishingnowoccursandalsodoesnotknowthevolumeoffuturenon‐projectshippingtrafficortheroutesitwillfollow.ThusthroughouttheapplicationENGPprovideslittleconcreteindicationofhowtheFLCwillsolveanyproblemsthatENGPitselfexpectswillarise.

Addingtothisinformationgapisalackofinformationontheextentofuseofthismeasureelsewhereandtheeffectivenessofthismeasurewhereithasbeenused.Theapplicationlacksthisinformation,andinresponsestostakeholders’InformationRequestsENGP,respondedinasuperficialmannerlackinggroundinginsolidevidence(e.g.,seeIRUndated#3172,p185}.Forexample,tobuilditscasethattheFLCisaviablemitigationmeasure,ENGPstatedthattheOneOceanfisheriesliaisoncommitteeinNewfoundlandisa“success.”WithoutfurtherdetailsconcerningthetypesofclaimsthatOneOceanhashandledorhow“success”isdefined,thisassertionisinsufficientevidenceforthecapabilitiesofthismitigationmeasure.

3.4.3SpecificshortcomingsinENGPcompensationstrategies

TheprimarymitigationmeasureproposedbyENGPiscompensation.ENGPrepeatedlyindicatesthatintheeventofeconomicorsocialdamagesduetotheprojectitwillcompensateharmedparties(e.g.,Volume1,p11‐32;Volume7C,p8‐11;Volume8B,p13‐54;Volume8C,p9‐21,p9‐27),raisingcompensationmeasuresinitsdiscussionofpotentialimpactsontraditionalharvests,commercialfishing,andtourism,andintermsofbothroutineprojectimpactsandintheeventofamajoraccidentalspill.FromthisblanketcoverageitwouldappearthatENGPconsidersimpactstobothmarket(e.g.,reducedcommercialfishingrevenue)andnon‐market(e.g.,reducedtraditionalharvestsofseaweed)impactsascompensable.Theoverallmessage,therefore,isthattherewillbenosignificantadverseeffectsfromtheprojectevenintheeventofadverseimpacts,whetheronmembersoftheGitga’atNationorotheraffectedparties.

WedoubtthatthiswillbethecaseandfindtheEnbridgestatementshighlymisleading.Overall,wefindthedeficienciesinthecompensationalternativesproposedbyENGPtobeunacceptablefromthestandpointofeitherrecentoil‐spillexperiencesorinformeddecisionmaking,particularlyinlightofthewiderolethatENGPexpectsthismitigationmeasuretoplay.Sixpointsarekeytothisconclusion.

First,itisnotclearwhatexactlyconstitutescompensableeconomicharms.Dodirecteconomiclossesincludelostbusinesssuchascancelledtouristvisitsuponnewsofthespill?Howwilluncertaintywithrespecttothedeterminationofharmsbetreated?7Doeconomiclossesincludelostinvestmentopportunities(e.g.,inshellfishaquaculture)becauseofthelackofbusinesscertaintyassociatedwiththeproject‐relatedriseintankertraffic?TheGitga’atandtheirpartnershaveinvestedsignificantresourcesinplanningasustainablefutureeconomy(inlinewiththemandateprovidedunderSection4oftheCEAAto“…promotesustainable

7Wenotethat,intheaftermathoftheExxonValdezoilspill,plaintiffswereunabletorecovereconomicharmsarisingfromthespillforwhichtheextentoftheharmwasunknownatthetimeoftrial(in1994).Thisplacesasubstantialburdenonthosesufferingharms,particularlyincaseswhereakeyspeciesmightstillberecovering‐‐oftenwithuncertainsuccess‐‐severalyearsafteranoilspill.


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development”),includingdevelopingavarietyofneweconomicopportunities(includingaquacultureandculturallysupportedecotourism)andavarietyofnewculturalandsocialinitiatives(e.g.,participationofGitga’atyouthintheprovincialGuardianWatchmenprogram).Howwilllostfutureopportunitiesbeaddressedthroughtheproposedcompensationschemes?TolimitcompensationtoconsiderationonlyofcurrentorpasteconomicactivitiesviolatestheindividualandcommunityrightsoftheGitga’attomoveforwardwithneweconomicandsocialopportunities,whichasdiscussedintheaccompanyingEconomyreportreflectanumberofhistoricalenvironmentalchangesandquotaorlicensingarrangementsthattheGitga’atconsidertobeunfairandtowhichtheGitga’atNationisintheprocessofseekingchanges.

Inthiscontext,itissignificantthat,inrecenthearingsbeforetheUSSupremeCourttoaddresscompensationnearly20yearsaftertheExxonValdezoilspill(SupremeCourtoftheUnitedSates,ExxonShippingCompanyv.GrantBakeretal;January29,2008,No.07‐219),“…maritimelawprecludedrespondentsfromrecoveringcompensatorydamagesforsome[other]economicharmsthattheysuffered,suchaslossesinthevalueoffishingpermitsandfishingvessels,losttaxrevenues,anddamagetoareatourism.Maritimelawalsoprecludedrespondentsfromrecoveringanycompensatorydamagesfortheirnon‐economicharms.”Thesenon‐economicharmsconsideredtonotbeeligibleforcompensationincluded(No.07‐219,p.2)“highratesofanxiety,depressing,andpost‐traumaticstressdisorderamongarearesidentsexposedtothespill”aswellas(No.07=219,p.4)“harmscausedbythespilltothetouristindustry,asconcernsaboutthespill’seffectsdiscouragedothertouristsfromtravelingtotheregion.”Thus,asconcludedintheSupremeCourtrecord(No.07‐219,p.2):“Specifically,asaresultoftherestrictiveconceptionofdamagesundermaritimelaw,compensatorydamageswereavailableforonlyasubsetoftheactualeconomicharmsinflictedbythespill,andfornoneofthenon‐economicharms.”

Second,itisnotclearwhoexactlywouldbeeligibleforcompensationorwhatmethodsforestimatingcompensationwouldbeconsideredappropriate?DoGitga’atfishingvesselownersgetallthecompensationforlostrevenues?Whataboutvesselcrewsthatmightloseemployment,andthoseemployedintheseafoodprocessingindustryorothersectorslinkedtothecommercialfishingindustry?WhataboutGitga’atpersonswhonolongercanengageintraditionalharvestsbecauseofdecreasesintheabundanceorqualityoftheirfoods(seeaccompanyingHealthreport)orbecauseofrestrictionsonaccesstotheresourcerelatedtoincreasesintankertrafficandtheassociatedsecurityzones?

ArelatedpointconcernscompensationforotherresidentsoftheNorthwestCoastofBC,otherpartsoftheprovinceofBC,orotherprovincesinCanadawhosewelfarehasbeendiminishedasadirectresultoftheapprovaloftheENGPprojectandtheassociatedincreasesintankertrafficandprobabilisticfearofanoilspill.AsdiscussedearlierinthisreportandintheEconomyreport,suchlossesarereal,potentiallyverylarge–amountingtobillionsofdollarsinpotentiallossesperyear–andwouldincludebothdirectuselossessuchasplannedvacationstotheBCcoastthatnolongertakeplac(andinsteadalesshighlyvaluedalternativelocationischosen)andnon‐uselossessuchasthelossinoptionvaluesassociatedwithnolongersimplyknowingthatthisportionofthepristineBCcoast,alongwithafunctionalandintactGitga’atFirstNationthatisabletomaintainatraditionalandsustainablewayoflife,isprotectedfornowandforthebenefitoffuturegenerations.AsstatedinthewidelydistributedmagazineResources(Boyd,


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2011;34),“Ingeneral,thelargerandmorepotentiallyirreversiblepotentialecologicaldamagesare…thehighertheoptionvalue.”

Third,littleinformationisprovidedintheapplicationabouttheexperienceofimpactedindividualswithexistingcompensationschemesinotherjurisdictions.Whatofotheroil‐spillcompensationschemesthatmightexistontheEastCoastofCanada,inAlaskaortheNorthSea,intheGulfofMexico,andinotherareasaroundtheworldinwhichamajorspillhasoccurredorinwhichthereexiststhethreatofmajoroilspills?Howwellhavetheseschemestendedtowork,ordotheytendtofailthoseharmedbyspills?

Recentexperienceswithcompensationschemesrelatingtodamagesfromoilspillsdonotsupporttheconclusionthattheywillbeeffectiveinredressinginequitiesinthedistributionofprojectbenefits.Forexample,Thebaudet.al.(2004;p5)compare“compensationclaimed”to“compensationpaid”followingsixmajoroilspillsthatoccurredinEuropeduring2001andreportadifferenceofnearly6:1intheratioof“totalcompensationclaimed”ascomparedto“totalcompensationpaid.”Onereasongivenforthislargediscrepancyisthat,aspartofinternationalinstitutionsgoverningcompensationclaimsandpayments,“…claimsrelatedtoecologicaldamageareacceptediftheycanbemeasuredintermsoffinancialcostsincurredinassociationwith(reasonable)measuresofre‐instatementoftheenvironmentfollowingaspill”andtheyconcludethat,asaresult,manywidely‐acceptedevaluationmethods(includingcontingentvaluation,travelcosts,andbenefit‐transfertechniques)“cannotbeaccepted”(Thebaudetal,2004,p.9).LargedifferencesbetweencompensationclaimsandpaymentsalsooccurredinbothAlaska(followingtheExxonValdezoilspill)andintheGulfofMexico(followingtheBPDeepwaterHorizonoilspill).BecausetheENGPapplicationmaterialsfailtoclearlystatethebasisonwhichcompensationclaimsshouldbemadeandthestandingofdifferentassessmentmethods,theassumptionisthatsimilarproblemswouldbeencounteredbythoseseekingdamagesintheeventofamarineoilspillinWrightSound.

Fourth,theproposedlimitstocompensationofdifferenttypesarenotclearand,significantly,italsoisnotclearwhethertheseamountswillbesufficienttocoveranticipatedclaims.AsBoulton(2010)finds,therearelimitstothecompensationfundsavailableinCanada,andtheavailablefundsaresubstantiallybelowwhatwaspaidoutfortheExxonValdezspill.IsENGPcommittingtotakeonresponsibilityforaccidentalspillsonbehalfoftheshippersithirestotransportbitumenandcondensate,andthustogobeyondwhatcurrentCanadianmarineoil‐spilllawrequiresorwhatcurrentCanadianandinternationalcompensationmechanismsprovideinthecaseofaccidentaloilspills?

Fifth–andthisisveryimportantfromthestandpointoftheGitga’atNation–itisnotclearwhatmethodswillbeusedtocalculateharmstotraditional(non‐market)harvests.WillENGPusetheadmittedlyflawed(intermsofprovidingpartialandminimumlossestimates)replacementcostapproach,describedbothhereand(morefully)intheEconomyreport,orwilltheyinsteaduseanothermethod?Ifso,whatmethodswillbeselected?Whowillbemakingthesecalculations–willtheybedonebyanindependentboardorbytheproponentanditscontractors?AndhowwillENGPestimatethemonetarycompensationforgoodsthatarenotsoldinanymarket?Theonlyreplacementcoststhatwewereabletocalculatestemfromthefactthatsomeofthepotentiallyimpactedgoods(suchassalmon)arealsotradedinmarkets,butfortheGitga’atNationmanyofthemostsignificantenvironmentalresources–fromthestandpointofdiet,


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health,culture,trade,andsociety–arenotsoldinmarketsandhavenomarket‐basedequivalent.Thisissueisfundamentaltothecontinuedhealth–and,intheeventofprojectapproval,tothecontinuedexistence–oftheGitga’atNation.

Finally,atnopointintheapplicationmaterialsdoestheproponentclearlyidentifywhichpotentialimpactsoftheprojecttheyacknowledgetobelossesthatcannotbecompensated.TheimpactanalysesprovidedinthefiveaccompanyingHBBCreportsunderscoretheimplicationsofthislackofinformationtoinformeddecision‐making.Thebottomlineisthat,intheeventofamajoroilspillintheGitga’atNation’sterritory,theproponentfailstoaddressthevalidityofcompensatinganationofindigenouspeopleforasignificantlossintheirabilitytomaintainandtopracticetheircultureandtheirwayoflife.Compensationmaybevalidintheeyesoftheharmedpersonwhenthereexistsubstitutesfortheitembeingcompensatedorwhenreplacementscanbeboughtfromexistingmarkets.However,whentheitemslostordamagedarenotconceivedofinmonetarytermsandwhenthelossisviewedasirreplaceable,then(a)compensationcannotbemade“inkind”becausethereisnomeaningfulsubstitutefortheloss,(b)monetarycompensationmaybeseenasaninvalidmeansofmitigationtothevictimand,further,(c)monetarycompensationwillbeviewedasemotionallyoffensiveanddegrading.Thislatterpointintroducesimportantissuesintothediscussionofcompensationapproaches,issuesthatcanonlybeaddressedthroughdeliberationsthatmeaningfullyinvolvetheGitga’atcommunityandotherpotentiallyinjuredparties.

4. Conclusion

Intoday’sregulatoryenvironment,governmentandprivate‐sectorentitiesregularlydemandsubstantiallymoreinformation,ofsubstantiallyhigherquality,formakingevenminordecisionsthanwhathasbeenprovidedtotheJRPbytheapplicant.InthecontextofadecisionofthesignificanceoftheproposedENGPproject,themagnitudeofthemethodological,information,andpresentationgapsanddeficienciesisalarmingandrendersimpossibleaninformeddecisiononthequestionofwhetherandtowhatdegreetheprojectcontributestoordetractsfromthepublicinterest.

TheENGPapplicationfailstoaddresskeyCEAAandNEBcriteria,andfailstomeetacceptedstandardsofassessmentformajorenergyprojects,intermsofprovidingtheminimumlevelsofinformationrequiredtomakeinformeddecisionsaboutthebalanceofimpactsacrossthefullrangeofexpectedprojectbenefits,costs,andrisks.Specifically:

− Keypotentialconsequencesoftheproposedproject,importanttotheGitga’atNationandothercitizensofCanada,areomittedfromtheanalyses.TheseomissionsincludemanynaturalresourcesandecosystemservicesnottradedineconomicmarketsthatareofcriticalimportancetotheGitga’ateconomy,culture,andsocietyaswellasincreasedperceptionsofriskthatresultinlossestoeconomicvaluesandcommunitywell‐being.

− Aspartofitseconomicbenefitsandpublicinterestdiscussions,theapplicationincorrectlyassumesthateconomicimpactsarethesameaseconomicbenefitsandignoresmanycostsandrisksoftheproject.ThesedeficienciesininformationandmethodsusedtocharacterizetheoverallvalueoftheENGPresultinincompleteandmisleadinginformation.


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− MethodsusedtodeterminewhethertheprojectisinthepublicinterestfailtoconformtoeitherCEAAandNEBmandatesortoacceptedstandardsforevaluatingtheenvironmental,socialandeconomiceffectsoflargeenergyprojects.

− Summarymeasuresofimpactsignificanceareoftenpresentedwithoutexplanation;thisisparticularlytrueofmanyriskestimates,whichfailtoreflectthestandarddefinitionofriskastheproductofprobabilityandconsequence,furtherinformedbythevaluesandriskperceptionsofpotentiallyaffectedgroups.

− Theuncertaintyassociatedwiththeanticipatedbenefits,costsandrisksoftheprojectislargelyignoredaspartofquantitativeanalyses;thisistrueforsuchkeyprojectelementsasoilprices,environmentalimpacts,andboththefrequencyandanticipatedconsequencesofoilspills.

− Noevidenceispresentedastowhytheproposedprojectispreferredtootheralternatives,andnoevidenceispresentedthattheeconomic,social,cultural,healthorenvironmentaltrade‐offsbetweenconsequencesoftheproposedprojectanditsleadingalternativeshavebeenaddressedexplicitlyasrequiredbytheNEBActandstandardprojectevaluationpractices.

− Importanttrade‐offsrelatedtothedistributionofconsequencesamongthedifferentinterests–includingtheGitga’atNation,otherNorthwestCoastFirstNations,Enbridgeanditscontractors,andthecitizensofBritishColumbiaorCanada–arenotacknowledged.

− Conclusionsabouttheprobabilityofanaccidentaloilorcondensatespillarebasedonlimitedanalysesthatignorekeydataandfailtofollowestablishedbestpracticesforincorporatingthejudgementsofexpertsconcerningspillfrequenciesofdifferentvolumes.Inlightofthesignificanceofthepotentialconsequencesofanoilspill,thislackofrigorousanalysisintheENGPapplicationconstitutesacriticalomission.

− PerceptionsoftherisksoftheENGPandtheireffectsonlocalandnationaleconomicvalues

(bothmarketandnon‐use)andthepsychologicalandphysicalhealthofindividualsarelargelyignored.

− AnalysesoftheexpectedpotentialforeffectivemitigationandcompensationoftheadverseeffectsofanoilspillignoremanyinitiativesundertakeninotherjurisdictionsaspartofoilpipelinedevelopmentsandignorethekeypointthatneithertheleadresponsibilitynorthefinancialburdenforspillcleanupwillbebornebyEnbridge,whichgreatlyreducesincentivesforexploringinnovativemitigationoptions.

− AnaïveandoverlyoptimisticanalysisispresentedoftheextenttowhichcompensationcanoffsetthelossesthatmaybeincurredbytheGitga’atNationandotherNorthwestCoastcommunities.Availableinformationonthesuccessofsimilarcompensationprogramsdoesnotsupportaconclusionthatcompensationwillredresstheinequitabledistributionalimpactsoftheproject.


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