BC’s Dependence on Alberta

This article highlights research on the dependence of BC’s economy and housing market on Alberta and the potential implications of the on-going economic turndown.

Summary

• Of all the regions in Canada, BC is the most dependant on Alberta for trade. Exports to Alberta account for almost 17% of all exports of goods and services from BC
• Employment in other provinces accounted for around 2.6% of all the wages earned by BC residents in 2011, 60% of which came from Alberta
• Residents of BC’s interior are the most dependant on income earned outside of BC
• Around 2,500 British Columbians have moved to Alberta, on net, over the last 20 years. This could reverse in the near-term

How is BC connected to Alberta?

So just how connected is BC to Alberta? What does the slowdown in the oil & gas sector matter to BC? Let’s look at the numbers.

Trade

While we do not produce much in the way of oil in BC, we are not immune to a slowdown in the oil & gas sector. Companies in BC provide a number of products and services to individuals and firms in Alberta. In fact, over the 2007-2011 period, BC was the most heavily reliant on exports to Alberta of any region in Canada:

• 18% of our services were exported to Alberta
• Just over 15% of our goods were exported to Alberta
• 17% of our total exports went to Alberta

Employment and Income

A number of BC residents are employed outside of the province. These persons work in Alberta or elsewhere, but maintain their primary residence in BC:

• The proportion of employed persons in BC that work outside of the province has been growing
• The proportion of total wages earned by BC residents that were earned outside of the province is around 2.6%
• 60% of these wages were earned in Alberta, meaning
• Around 1.6% of all the earnings of BC residents in 2011 was earned through employment in Alberta

Employment and Income by Region

Research from Central1 Credit Union Sheds some additional light on the importance of interprovincial employment within BC:

• BC’s interior is the most dependent on income earned outside of the province with 5.6% of income earned by residents of Thompson-Okanogan earned outside of BC
• The Lower Mainland is the least dependant, at just 1.4%
• All regions have seen rising shares of income earned outside of the province in the last decade.

Migration

• On average over the past 20 years, around 2,500 British Columbians have moved to Alberta, on net
• This conceals large flows in both directions, however, with around 45,000 persons moving across the BC Alberta border every year, on average
• Since the latest interprovincial migration flow data was released, net interprovincial migration to BC (including all province) has risen substantially

The increased flow on Canadian to BC is lending significant support to housing markets across the province.

Conclusion

All-in-all, BC is not expected to suffer a significant impact from the on-going downturn in the oil & gas sector.

• Net interprovincial migration should increase, supporting housing demand
• On the flip-side, interprovincial trade might suffer
• Earnings from residents that work outside of BC will also dip. However, these represent a minor portion of total income in the province.