Summary of the Cost-Benefit Analysis for the Proposed Tuvaijuittuq Marine Protected Area

Policy and Economics
Fisheries and Oceans Canada
Central and Arctic Region
June 2019

Map of proposed Tuvaijuittuq Marine Protected Area, Central and Arctic Region

Context

The proposed Tuvaijuittuq Marine Protected Area (MPA) is considered globally, nationally and regionally unique due to the presence of the multi-year pack ice and is believed to be a critically important habitat for Arctic under-ice communities (such as zooplankton, jellyfish, ctenophores and Arctic cod). It may also play an important role for ice-dependent species (such as beluga, narwhal, walrus, seals, and polar bears). This area represents a portion of the Canadian High Arctic projected to retain multi-year ice in the long term and will likely become an important refuge for ice-associated biota as sea ice loss continues throughout the Arctic due to climate change.

Three Ecologically and Biologically Significant Areas were identified by the Department of Fisheries and Oceans (DFO) in the proposed MPA in 2011. Part of this area has also been selected by the Parks Canada Agency (PCA) as a candidate site for their system of national marine conservation areas.

The cost benefit analysis (CBA) provides an analysis of the potential socio-economic impacts associated with the proposed MPA Ministerial Order regulations, and is guided by Fisheries and Oceans Canada (DFO) framework and Treasury Board guidance on CBAs.

Baseline Economic and Policy Profile

The economic activities that are currently on-going in the area were identified based on information from 2018, that is one year prior to the proposed establishment of the MPA, as well as any future activities that are already planned to take place in the area.

The baseline takes into account existing federal, provincial and territorial management measures in force in the area. The current status of current ongoing current human activities, and the expansion/growth of activities. Currently:

• There are no active commercial fisheries in the proposed MPA. Information on subsistence harvesting activities were not available for the proposed MPA. However, there is likely limited (if any) subsistence harvesting from communities closest to the proposed MPA due to its distance from nearby communities.
• There are no active recreational fisheries or aquaculture activities within the proposed MPA.
• According to the Nunavut, Mineral Exploration, Mining, and Geoscience Overview 2018 report mining activity, such as mineral exploration or mine production within the proposed MPA boundary are not taking place.
• Natural Resources Canada (NRCan 2019) reported that “…the in-place petroleum resource potential of the proposed Tuvaijuittuq MPA is estimated in a low to high range of 10 million barrels oil equivalent (MMBOE) in-place to 43 billion barrels oil equivalent (BBOE) in-place, respectively.” The report further adds that due to “…the geographic remoteness and sea ice cover, no offshore wells have ever been drilled in the Study Area”. In addition, a moratorium on new oil and gas exploration licencing already applies to the area in which the proposed MPA is located, which further limits the potential for oil and gas exploration and production.
• Vessel traffic to and through the proposed MPA is limited, if at all, as there are no communities in or near this area. A data analysis conducted by Maerospace in 2019 concluded that satellite automatic identification system (AIS) data provided no indication of vessel traffic in the area between March 2017 to November 2018.
• There are few known tourist or recreational activities taking place within the proposed MPA. The one tourism site adjacent to the area is Quttinirpaaq National Park, on the northern tip of Ellesmere Island, which would not be affected by the proposed MPA.
• There is some scientific research, National Defence, and Canadian Coast Guard vessel activity within the proposed MPA.

Regulatory Scenario

The regulatory scenario for the proposed MPA by way of Ministerial Order engages the concept of “Freezing the Footprint” which means not increasing the impact of human activities beyond currently ongoing activities in a marine area identified in the proposed Ministerial Order as the proposed MPA. That is:

• ongoing activities that have occurred over the 12 months prior to the designation would be allowed to continue;
• new or additional human activities would be prohibited;
• food, social and ceremonial (FSC) harvesting (fishing) is exempted; and,
• scientific research, safety, security and emergency activities, as well as certain activities carried out by a foreign national, entity, ship or state, would be permitted in the proposed MPA

The establishment of a conservation area triggers rights and obligations under the Nunavut Agreement to establish an Inuit Impact Benefit Agreement (IIBA). An IIBA is required under the Nunavut Agreement before any federal marine protection measures can be designated in the Nunavut Settlement Area including an interim MPA designation.

Thus, the proposed MPA would serve as a stop-gap measure by prohibiting new activities to take place and will be in place for a period five years. This period would allow for further research and consultations to inform the decision to either establish an Oceans Act MPA or implement other management measures that provide long-term protection.

Costs of Establishing the Proposed MPA

The analyses in the CBA report evaluates scenarios both “with” (regulatory), and “without” (baseline) the proposed MPA Ministerial Order for this area, holding other variables constant. The CBA report estimates the incremental costs and benefits to Canadians that result from establishing the proposed MPA in this area.

As noted above, negligible current and potential activities have been identified. As such the establishment of the proposed MPA is unlikely to impose any costs to the Canadians or industry in the form of foregone revenue or higher costs of operation. Due to limited (if any) subsistence harvesting and the exemption for FSC harvesting, there would be no incremental impacts on Indigenous communities.

Fisheries and Oceans Canada estimates that the total federal government costs related to monitoring, enforcement, administration and scientific research related to the proposed MPA is estimated to be $2.56 million per year, over the five year period. Assuming 2019 as the base year and a discount rate of 7%, the study calculated that the total present value of these costs would be $11.23 million.

Benefits of establishing the proposed MPA

It is believed that the proposed MPA provides invaluable direct and indirect services to society by supporting Arctic marine and ice-associated ecosystems and biodiversity. Measuring these ecosystem services is difficult. As preservation (i.e. maintaining current levels) and increases in ecosystem services benefits occur over longer term periods, it is quite unlikely these values will change over the five year time period for the proposed MPA. However conducting more marine scientific research in the area will provide invaluable information to help maintain and possibly improve ecosystem services benefits in the long term.

The communities nearest to the proposed MPA, and people residing elsewhere in Canada, are expected to derive non-use value from the services provided by the area. Preservation and increases in non-use values occur over a period longer than five years. However it is likely that non-use values may increase slightly once people are aware of the fact that steps are being taken through the proposed MPA to conserve fish and marine mammals and seabirds within the five year time period. Moreover, conducting more marine scientific research in the area may provide valuable information that increases non-use values in the future.

The efforts taken to protect the proposed MPA may also help to preserve the archaeological, historical and cultural heritage within the proposed area. Preserving natural and cultural resources would benefit Canadians as they learn about the cultural values that exist within the proposed MPA.

Should the area be established, there will be benefits accrued from the IIBA and general management of the area. However these are currently undefined, but are expected to include topics such as governance and management structures, Inuit led research and monitoring, Inuit harvesting rights, protection of cultural and archeological sites.

Conclusion

Despite the fact that the CBA could not fully quantify the potential benefits and compare the present values of costs and benefits quantitatively, it is very likely that any ecological, economic, social and cultural benefits of the proposed MPA would outweigh the costs.

Contact Us

Fisheries and Oceans Canada
Economic Analysis and Statistics Directorate
Economic Policy and Research
InfoECON (DFO/MPO): DFO.InfoECON.MPO@dfo-mpo.gc.ca