Why Canada Chose a Road Instead of a Reserve

Today, we start with the Haisla. The place is British Columbia.

Beginning with a dilemma, we wind up with Canada’s economy.

The Dilemma

The Haisla are an indigenous people. With other groups that include the Gitxsan, Wet’suwet’en, and Nisga’a, they have an aboriginal title to land near the Pacific Coast in British Columbia. Described by the NY Times, the land is home to a sumptuous combination of forests and wildlife. Grizzly bears, otters, and countless bird species live near waters occupied by humpback whales, orcas, tiger prawn, and fur seals. The local rivers, the Nass and Skeena, are “a kaleidoscope of mist, moss and frost, rinsed by near-constant rain and snow and drained by topaz-blue streams.”

For millennia, the people that live there have depended on the forest and rivers for their sustenance. Recently though, they have had to decide whether to move onward to a Western world through the billions they could receive from developing their liquified natural gas reserves. They knew it would mean pipelines and roads and an influx of people. And also lots of money.

An LNG terminal:

While the Haisla said yes and development has begun, the people are divided. Some agree that the $31 billion deal with Shell made sense. One woman, interviewed by the Times said she sees a constant flare from her window that makes her think of the money it brings her. Another though reminds us that “… clear-cuts, thousand-man camps and construction equipment on the banks of our streams is environmentally OK? There’s no amount of money we’d take to allow that.”

With Canada in the news, let’s conclude with why it wants the LNG project.

Our Bottom Line: Canada’s Comparative Advantage

The Tradeoff

Since “choosing is refusing,” more of one item means less of another one. Below you can see that as you move along the curve, Canada’s economy sacrifices more wilderness for more minerals.

An economist might graph the tradeoff:

Comparative Advantage Tradeoffs

Nineteenth century economist David Ricardo would have told us that comparative advantage makes it worth the tradeoff. As he explained, comparative advantage is all about opportunity cost and the sacrifice (tradeoff) created by a decision. Ricardo told us that we have a comparative advantage doing those activities that require the least sacrifice. (So, it makes sense for me to write this blog and not wash my dishes.)

Rich in natural resources, Canada has a comparative advantage for producing LNG. It also has cobalt, lithium, potash, nickel, and gold. It exports vast amounts of oil to the U.S. and also produces 60% of the world’s canola.

In this graphic from the Observatory of Economic Complexity, we can see where Canada has a comparative advantage:

Canada’s comparative advantage takes us to its tradeoffs and its indigenous people’s choices. Thinking LNG or conservation, they chose more of a road and less of a reserve.

My sources and more: Today’s post began with this NY Times article. Initially about a dilemma, it also took us to the Canadian economy, here and here and this past econlife post. And finally, for the best podcast I have ever heard, do listen to a reporter’s journey through the empty quiet (no roads, no trails) of the Gates of the Arctic National Park.

Please note that several of today’s sentences were in a past econlife post.