The rebuilding effort in Fort McMurray is expected to add more GDP to Alberta’s economy than was lost in oil revenue during the wildfires.
A recent report from the Conference Board of Canada estimates lost oil revenue at $985 million or 0.33% of Alberta’s overall GDP. This equates to about 1.2 million barrels a day over 14 days, which works out to 0.06% of Canada’s GDP.
The rebuilding effort is expected to add roughly $1.3 billion to Alberta’s GDP in 2017, which works out to 0.4% growth. Pedro Antunes, the executive director of Economic Outlook and Analysis and deputy chief economist for the Conference Board of Canada said while the emotional impact for residents is obviously high, the overall economic impact will be minimal.
“The rebuilding effort will last for two or three years at least," Atunes said. "So it is a temporary impact and it will come back … the lost assets will be rebuilt, generating additional economic activity.”
Antunes added the Fort McMurray fires were an unprecedented natural disaster and will still leave a monumental financial hole.
“This does not suggest in any way that Albertans or Canadians are better off,” he added. “In fact, the funds put towards replacing lost capital will leave the provincial and federal governments with more debt, and the insurance industry with the challenge of absorbing what will most likely prove to be the costliest natural disaster in Canadian history.”
Estimates suggest that 2,400 buildings were damaged or destroyed in the fires, including 1,600 private dwellings. Most of the public buildings were saved from the fire but additional money will be required to rebuild various other infrastructure. Construction will likely remain elevated in 2018 and 2019 as rebuilding continues to completion.
