If it Matters, Measure it: Unpacking Diversification in Canada

Will greater diversification benefit our economy? While many think it will, few are explicit about what they mean by diversification or what an “ideal” level would be. Even fewer recognize that favoured policies to promote diversification could actually do more harm than good. There are many ways to measure diversification in Canada, and each measure tells a different story. Canada’s GDP and employment, for example, are more diverse than many other countries, including the U.S.  Employment is also more diversified today than at any point in its recent history, even in resource-rich provinces. Perhaps surprisingly, Alberta and Saskatchewan lead the country in employment diversity. Even accounting for non-resource jobs that are indirectly linked to resources does not reveal resource-rich provinces to be less diverse than others. To be sure, by other measures they are less diverse and more volatile, so we gather and analyze a wealth of data to paint a full, nuanced, and sometimes surprising picture of diversification in Canada. But does diversification even matter? Economists, for centuries, have found gains from specializing in areas where we have a comparative advantage. Subsidizing certain selected industries therefore risks causing economic damage by distorting activity and displacing workers and investment from more valuable uses. Policy-makers should therefore focus on neutral policies: create a favorable investment climate, facilitate adjustment and re-training, encourage savings (including by government), and so on. We discuss the pros and cons of various options. At the end of the day, responsible governments must define their objectives clearly, and recognize the costs of policies meant to achieve those objectives. We cannot hope to have a sensible debate on economic policy without full and complete information. If it matters, measure it

Canadian Competitiveness for Infrastructure Investment

This paper provides a broad overview of the infrastructure investment landscape in Canada and our reputation as a competitive destination for such investment. We compare the Canadian infrastructure investment environment and recent outcomes with those of a set of peer nations (G7 countries plus Australia). Canada has serious reputational issues relative to our peer group when it comes to attracting investment in infrastructure, and these issues correspond to declining rates of foreign direct investment inflows. Federal government spending on infrastructure is also declining, implying an overall lack of investment in infrastructure. This lack of investment is, in turn, manifesting as an increase in Canada’s infrastructure deficit and an overall decline in the reputation of the quality of existing infrastructure. Estimates of Canada’s infrastructure deficit range up to $600 billion, and the investment shortfalls contributing to this deficit are particularly apparent in transportation and trade infrastructure. Canada has fallen sharply to last place relative to the G7 and Australia in terms of infrastructure and logistics quality. The most prominent issues driving Canada’s declining reputation as a destination for investment include a sharp slide in the ease of doing business, which, in turn, is caused by perceived regulatory and bureaucratic delays (including the time required for construction permits). An inconsistency in federal infrastructure funding programs and policies (tied to federal election cycles) is similarly problematic. While most of Canada’s public infrastructure investment is made by provincial and municipal governments, their smaller and more variable shares of tax revenues do not ensure stable and sufficient levels of infrastructure investment in many regions. This pattern also serves to promote regional inequality, since regions suffering from poor infrastructure may not have the resources required to overcome local infrastructure deficits. Reliance on PPPs (public-private partnerships) to bolster infrastructure investment may well prove fruitless given the negative experiences Canada’s peers have had with PPPs and the already evident frustrations with Canada’s existing pursuits in this area. Falling tax rates have failed to attract foreign direct investment flows into Canada, suggesting that tax competitiveness is not a sufficient incentive to overcome the reputational issues associated with inconsistent federal investment policies and growing regulatory and bureaucratic delays. Addressing these issues will require a stable and long-term strategy (one not subject to Canada’s federal electoral cycles) and a serious look at the timeframes and delays for regulatory and bureaucratic processes. We suggest the federal government place a higher priority on infrastructure investments in critical areas such as trade and transportation infrastructure. These types of infrastructure play an outsized role in supporting national productivity and income. Further, attracting significant levels of private investment will likely benefit from a consistent and predictable trade and transportation infrastructure strategy. Canada requires an integrated and strategic national approach to infrastructure policy and investment. This approach must be based around a long-term focus and will require coordination among federal, provincial, municipal and First Nations governments and the private sector (including coordination with Canada’s large pension funds, which represent a significant untapped source of financial capital). Provincial governments have already expressed an interest and willingness to collaborate on a national infrastructure strategy based on the corridor concept, and the Senate Standing Committee on Banking, Trade and Commerce has similarly acknowledged the potential merits of applying the corridor concept. Given these endorsements and the evidence presented above, it is incumbent on the federal and other governments to act on formulating a stable, long-term and strategic national infrastructure strategy that pairs government investment and policies to attract private sector investment in all kinds of infrastructure, but most notably in transportation, warehousing and logistics infrastructure. As part of this, it is critical that Canada address its serious issue of regulatory and policy uncertainty, delays and burdens as these appear to be the most critical aspects of our declining reputation and the most pernicious impediments to achieving infrastructure investment goals and priorities

Constructing COMSOL Models of a Bacteriological Fuel Cell

We show very initial work on a specific bioelectrochemical system (BES), a bacteriologically driven 'fuel cell' (BFS), that is intended to process waste products, such as CO2 and brine. (1) Processing is the priority, not power generation (2) Really a Microbial Electrolysis Cell (MEC

Public-Interest Benefit Evaluation of Partial- Upgrading Technology

Approximately 60 per cent of Alberta’s oil sands production is non-upgraded bitumen which, after being mixed with a diluting agent (diluent) to allow transport, is exported. A popular view within Alberta — and particularly among Albertan politicians — is that a much larger share of oil sands bitumen should be upgraded in the province. However, without public subsidies or government underwriting, it is uneconomic to build and operate new facilities in Alberta to fully upgrade the bitumen into synthetic crude oil. But there are new partial upgrading technologies being developed that, subject to successful testing at a larger (commercial) pilot scale, can prove to be not only economic in Alberta, but also generate large social and economic benefits for the province. The advantages include a much smaller capital investment, a significant increase in the value of the product and market for the product and, even more importantly, a dramatic reduction in the need for large amounts of expensive diluent to transport the product to market. Indeed, the only diluent required will be that to move the bitumen from the production site to the partial upgrader and this can be continually recycled. The market for the synthetic crude oil produced by full upgrading is only getting tougher. Any Alberta bitumen fully upgraded here would compete closely with the rapidly expanding supply of light U.S. unconventional oil. Partial upgrading does not upgrade bitumen to a light crude, but to something resembling more of a medium or heavy crude, and at a lower cost per barrel than full upgrading. Unlike in the increasingly crowded light-crude market, the Alberta Royalty Review Advisory Panel recognized that currently there are gaps in several North American refineries that could be filled by this partially upgraded Alberta oil. A partial upgrader serving that less-competitive market not only appears to hold the potential for investors to make attractive returns in the long term, it would also provide important benefits to Alberta from a social perspective. Since partially upgraded crude can be shipped via pipeline without diluent (as bitumen requires), producing it in Alberta would free up pipeline capacity otherwise tied up by current volumes of diluted bitumen or dilbit (diluent typically represents about one-third of each barrel of dilbit). It also reduces the cost to shippers of paying tolls for diluent exported in the dilbit and recovering diluent at the U.S. pipeline terminal, where it is less valuable than if it were recovered in Alberta at the partial upgrader. The value of each barrel produced would also be higher, benefitting oil sands producers. Partial upgrading also seems to promise a lower emissions-intensity profile compared to other bitumen-processing technologies. Based on the model of a single 100,000-barrel-a-day partial upgrader, the value uplift could be $10 to$15 per bitumen barrel. Meanwhile, there could be an average annual increase to Alberta’s GDP of $505 million, and as many as 179,000 person-years of employment created (assuming a 40.5-year operating period). The increase in taxable earnings would increase provincial revenues by an average of$60 million a year, not including additional federal tax revenues. If successful, there would be many such partial upgraders with corresponding multiplication of these benefits. But there remains the critical task of proving partial upgrading technology at a higher scale than current testing. This might also depend on the province helping sustain investors through the “death-valley” between successful research and initial testing and demonstration of full commercial viability. The province has stepped into help technologies cross that “death valley” before. The promise of partial upgrading may well justify, as manager and steward of Alberta’s resources, helping bridge that valley again

Size, Role and Performance in the Oil and Gas Sector

The oil and gas sector is a key driver of the Canadian and Albertan economies. Directly and indirectly it typically accounts for roughly half of Alberta’s GDP, as well as one-third of the country’s business investment and a quarter of business profits — and rising global demand will only add to these figures. However, that energy sector is also a changeable place populated by companies of all shapes and sizes, from small Emerging Juniors to wellestablished Majors whose daily production capacities are hundreds or thousands of times greater. The sector’s assorted firms have different structures and ambitions, respond in distinct ways to market forces and have unique impacts on the economy. These differences in size, role and performance must be reflected in energy and related economic policies if they are to be effective in achieving policy goals. For example, they must recognize that the smallest firms are not always the fastest growers or the most innovative; that Intermediates are the most highly leveraged, with the highest debt-to-equity ratios; and that while Majors tend to have the lowest average cost per well drilled, they also (along with Emerging Juniors) have the highest operating costs. Despite the industry’s critical importance, relatively little hard data has been made available concerning companies’ structure, behaviour and performance, based on size. This paper goes a considerable way toward filling that gap, bringing together comprehensive datasets on 340 public oil and gas firms to chart essential patterns and trends, so policymakers and industry watchers can better understand the complexity and functioning of this important sector

The Canadian Northern Corridor Roundtable Program: Results and Lessons Learned

Key Messsages: Canada needs a long-term strategic and integrated infrastructure vision for mid- and northern Canada that focuses on long-term policy priorities of communities. Infrastructure policy development for mid- and northern Canada must focus on collaborative approaches that foster cooperation and coordination rather than competition between community rights- and stakeholders. Streamlining of regulatory frameworks is required to improve efficiency, integration and coordination in the planning and approval of hard and soft infrastructure development. Decision-makers are encouraged to adopt a holistic infrastructure approach which includes not only physical infrastructure assets but also digital and soft infrastructure supporting social goals and outcomes, such as education and healthcare. A focus on local community capacity-building should be incorporated into any type of northern infrastructure development strategy to help support communities to address their own challenges and to foster cooperation between both public and private rights- and stakeholders. While federal support is important, any national infrastructure vision for mid- and northern Canada must incorporate the priorities of local Indigenous and municipal rights- and stakeholders. This approach avoids a top-down infrastructure approach and recognizes the role these communities have in in addressing the challenges related to climate change and supply chain constraints that we are facing today. A majority of communities in mid- and northern Canada consist of Indigenous populations, including First Nations, Métis and Inuit. A connective infrastructure approach can be a tool of reconciliation but only if it supports Indigenous self-governance, participation, inclusion and facilitates Indigenous-owned initiatives. While infrastructure needs vary across mid- and northern Canada, the digital divide across Canada is a common challenge. To sustain prosperity and mitigating challenges, communities need reliable and affordable high-speed internet access. Recent disruptions in global and Canadian supply chains underlines the need for strategic and targeted infrastructure optionality, ensuring reliable transportation and access to goods and services. Infrastructure development, focused on transportation and access to services such as healthcare, is essential to safeguard the high living standards we are enjoying today for future generations. For all Canadians to benefit, infrastructure development must adhere to the principles of equity, diversity, inclusion and accessibility

The Canadian Northern Corridor Community Engagement Program: Results and Lessons Learned

The Canadian Northern Corridor (CNC) Research Program is an investigation of the feasibility, desirability, and acceptability of infrastructure corridors in advancing integrated, long-term infrastructure planning and development in Canada. The Corridor Concept involves a series of multi-modal rights-of-way across mid- and northern Canada — connecting all three coasts and linked to existing corridors in southern Canada — for the efficient, timely and integrated development of trade, transportation, and communications infrastructure. Corridors are expected to make public and private infrastructure investments more attractive by reducing the uncertainty associated with project approval processes; sharing the costs associated with establishing and administering rights-of-way; decreasing negative environmental impacts; and moving to a more strategic, integrated and long-term approach to national infrastructure planning and development. A key outcome of corridor development is decreasing the existing infrastructure gap that persists between northern and southern Canadian regions and communities. The causes of this gap are complex and will require a diverse set of tools and solutions to resolve; the CNC is a useful conceptual tool to initiate discussions on northern infrastructure and to identify feasible and lasting solutions to address Canada’s infrastructure gap

Valuing Liberty or Equality? Empathetic Personality and Political Intolerance of Harmful Speech

Political tolerance is a core democratic value, yet a long-standing research agenda suggests that citizens are unwilling to put this value into practice when confronted by groups that they dislike. One of the most disliked groups, especially in recent times, are those promoting racist ideologies. Racist speech poses a challenge to the ideal of political tolerance because it challenges another core tenet of democratic politics – the value of equality. How do citizens deal with threats to equality when making decisions about what speech they believe should be allowed in their communities? In this article, we contribute to the rich literature on political tolerance, but focus on empathy as a key, and understudied, personality trait that should be central to how – and when – citizens reject certain types of speech. Empathy as a cognitive trait relates to one’s capacity to accurately perceive the feeling state of another person. Some people are more prone to worry and care about the feelings of other people, and such empathetic people should be most likely to reject speech that causes harm. Using a comparative online survey in Canada (n = 1,555) and the United States (n = 1627) conducted in 2017, we examine whether empathetic personalities - as measured by a modified version of the Toronto Empathy Scale - predict the tolerance of political activities by “least-liked” as well as prejudicially motivated groups. Using both a standard least-liked political tolerance battery, as well as a vignette experiment that manipulates group type, we test whether higher levels of trait empathy negatively correlate with tolerance of racist speech. Our findings show that empathy powerfully moderates the ways in which citizens react to different forms of objectionable speech