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Ontario Northland Transportation Commission ECONOMIC AND SOCIAL IMPACT OF ONTARIO NORTHLAND Final Report Prepared by HDR CORPORATION In Association with Dr. Bakhtiar Moazzami October 13, 2009 Ontario Northland Transportation Commission ECONOMIC AND SOCIAL IMPACT OF ONTARIO NORTHLAND Final Report Prepared by HDR CORPORATION In Association with Dr. Bakhtiar Moazzami October 13, 2009 TABLE OF CONTENTS EXECUTIVE SUMMARY ........................................................................................................ III 1: INTRODUCTION................................................................................................................. 1 2: COMPANY PROFILE ......................................................................................................... 2 2.1 GENERAL COMPANY INFORMATION AND STATISTICS ....................................................... 2 2.2 ONTARIO NORTHLAND‟S ACCOMPLISHMENTS AND RECENT INVESTMENT PROJECTS ....... 5 3: STUDY APPROACH ........................................................................................................... 9 3.1 KEY CONCEPTS IN ECONOMIC IMPACT ASSESSMENT ....................................................... 9 3.1.1 Traditional Approach and Concepts in Economic Impact Analysis .............................. 9 3.1.2 Impact on Productivity and Economic Development ................................................... 10 3.1.3 Other Impacts ............................................................................................................... 12 3.2 IMPACTS EVALUATED IN THIS STUDY ............................................................................. 12 3.3 ECONOMIC IMPACTS IN NORTHEASTERN ONTARIO ......................................................... 13 3.3.1 Key Concepts and Principles in Estimation of Regional Economic Impacts .............. 13 3.3.2 General Approaches to Estimation of Local Multipliers ............................................. 14 3.4 ECONOMIC IMPACTS PROVINCE-WIDE ........................................................................... 18 3.4.1 Province-Wide Direct Effects ....................................................................................... 18 3.4.2 Province-Wide Indirect Effects .................................................................................... 19 3.4.3 Province-Wide Induced Effects .................................................................................... 20 3.5 ECONOMIC DEVELOPMENT IMPACTS .............................................................................. 22 3.6 QUALITY OF LIFE IMPACTS ............................................................................................. 24 4: DATA AND IMPLEMENTATION .................................................................................. 25 4.1 DATA ON ONTARIO NORTHLAND‟S OPERATIONS ........................................................... 25 4.2 SURVEY OF EMPLOYEES AND PENSIONERS ..................................................................... 25 4.3 SURVEY OF CUSTOMERS ................................................................................................ 26 4.4 SURVEY OF MAYORS AND ECONOMIC DEVELOPMENT OFFICERS ................................... 28 4.5 SURVEY OF TOURIST OPERATORS .................................................................................. 29 4.6 SURVEY OF ONTARIO NORTHLAND SENIOR EXECUTIVES ............................................... 31 4.7 CALCULATIONS OF IMPACTS IN NORTHEASTERN ONTARIO............................................. 31 4.8 DATA AND ASSUMPTIONS FOR CALCULATIONS OF ECONOMIC IMPACTS PROVINCE-WIDE 34 5: STUDY RESULTS .............................................................................................................. 40 5.1 RESULTS OF THE SURVEY OF EMPLOYEES ...................................................................... 40 5.2 RESULTS OF THE SURVEY OF PENSIONERS ...................................................................... 42 5.3 RESULTS OF THE SURVEY OF CUSTOMERS ...................................................................... 45 5.4 RESULTS OF THE SURVEY OF MAYORS AND ECONOMIC DEVELOPMENT OFFICERS ......... 52 5.5 RESULTS OF THE SURVEY OF TOURIST OPERATORS ........................................................ 57 5.6 SURVEY RESULTS OF ONTARIO NORTHLAND SENIOR EXECUTIVES ................................ 60 HDR|Decision Economics Page i 5.7 ECONOMIC IMPACTS WITHIN NORTHEASTERN ONTARIO ................................................ 64 5.7.1 Estimated Income Multipliers ...................................................................................... 64 5.7.2 Estimated Employment Multipliers .............................................................................. 65 5.7.3 Total Impact of Ontario Northland in Northeastern Ontario ...................................... 66 5.7.4 Relative Magnitude of Ontario Northland Multipliers ................................................ 67 5.7.5 Relative Importance of Ontario Northland in Northeastern Ontario .......................... 67 5.8 ECONOMIC IMPACTS PROVINCE-WIDE ........................................................................... 71 5.9 INDUCED ECONOMIC DEVELOPMENT IMPACTS ............................................................... 73 5.9.1 Transportation and Telecommunications Connectivity, Economic Wellbeing, and “Liveable” Communities ...................................................................................................... 74 5.9.2 Impact of Ontario Northland on the Overall Profile and Performance of the Regional Economy ................................................................................................................................ 79 5.9.3 Ontario Northland and Socio-Economic Profile of Communities Directly Affected by the Company ......................................................................................................................... 80 5.10 QUALITY OF LIFE IMPACTS ............................................................................................. 83 6: SUMMARY OF STUDY FINDINGS AND CONCLUSIONS ........................................ 87 7: OPPORTUNITIES TO MOVE FORWARD ................................................................... 91 8: ABOUT THE STUDY AUTHORS ................................................................................... 93 HDR|Decision Economics Page ii EXECUTIVE SUMMARY STUDY PURPOSE AND APPROACH The purpose of this study is to quantitatively and qualitatively inventory, measure, and evaluate the economic and social impact of Ontario Northland in its area of service. The specific impacts considered and evaluated include: 1) Jobs, income and related impacts in Northeastern Ontario and province-wide that are attributable to Ontario Northland either directly, or indirectly through supplier-purchasing relationships and re-spending of employee wages and salaries; 2) Community, business and economic development impacts in Northeastern Ontario due to Ontario Northland presence in the region and availability of its services; and, 3) Quality of life impacts in Northeastern Ontario due to Ontario Northland presence in the region and availability of its services. The first category of impacts represents the traditional metrics evaluated in economic impact studies that quantify the effects of the various rounds of expenditures and economic activity that takes place throughout the economy as a result of some initial expenditure or business activity. These metrics are commonly referred to as “direct impacts,” “indirect impacts,” and “induced impacts” and can be defined as follows: Direct impacts are the immediate economic outcomes occurring as the result of activity related to operations or project being evaluated, including business output or revenues, jobs, employment income, value added (or GDP), and tax revenues. Direct impacts are jobs at Ontario Northland, its revenues, payroll, etc. Indirect impacts are the “spin-off” economic activities that result from expenditures on purchases of production inputs, goods and services necessary for the direct activity such as expenditures by Ontario Northland on operations and maintenance and capital projects. These purchases allow for production activities and employment at the supplier firms generating further rounds of economic activity down the production chain. Induced impacts are the economic activities that result from re-spending of employment wages and salaries earned from direct and indirect employment on consumer goods and services, and are measured in similar terms as business output or revenues, jobs, employment income, value added (or GDP), and tax revenues. The sum of the direct, indirect and induced effects is referred to as the total economic impacts. Indirect and induced impacts are often referred to as “multiplier effects”, as they increase the overall economic impacts of the original activity and expenditure by some factor often expressed as output, GDP, jobs, etc. per $1 of initial expenditure or revenues. HDR|Decision Economics Page iii The second category of impacts represents the “forward linkages effects”, or effects on Ontario Northland‟s customers and the local economies where the company provide services. This category of impacts captures the effects that can be achieved by service users such as the reduction in operating business costs, improvements in productivity, efficiency, market reach, and competitiveness. All of these effects can lead to an increase in output and employment

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