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R/TRA/EC0/1#7 r VOLUME 1 of 2 I RESOURCES AND DEVELOPMENT POTENTIAL 0 i ■ , > ci Presented to the Secretary of State — for Foreign and Commonwealth Affairs i > Price £8.00 net. ■ . 1 -4 & ’ . ECONOMIC SURVEY OF / "-i THE FALKLAND ISLANDS f ' , I "T* —■=. Chairman: The Rt. Hon. Lord Shackleton kg pc obe ' ~~Tf ■ • VOLUME 1 of 2 RESOURCES AND DEVELOPMENT POTENTIAL - JULY 1976 ) ■J 1 J 1 1 - Presented to the Secretary of State 1 for Foreign and Commonwealth Affairs J Prepared by The Economist Intelligence Unit Ltd © Crown Copyright -J ■ i ] j 1 / r ' r. r: / 1 1 Copies of this publication may be purchased only from the Government Bookshop, 49 High Holbom, London WC1. Price £8.00. i I l '] nJ The Members of the Falkland Islands Survey Team LORD SHACKLETON KG PC OBE Chairman =4 D.S.KEELING Foreign and Commonwealth Office Secretary T ra. P.S.MOULD The Economist Intelligence Unit 1 R.H. JOHNSON The Economist Intelligence Unit P.J0WILLIAMS The Economist Intelligence Unit G.C.EDDIE former Technical Director of the White Fish Authority H.L1. WILLIAMS Royal Veterinary College R.J. STOREY Highlands and Islands Development Board I -J Secretarial Assistants Miss G. Bodilly MBE -J Miss M.A. Howl "1 i 3 i sJ FOREWORD Ni To guide the reader through what is a lengthy report, the following remarks may be of assistance. Volume One contains an introduction by the Chairman and under various chapter headings: a. an analysis of the overall economy of the Falkland Islands; b. description of the resources of the Islands and their surrounding waters; C. an assessment of their development potential, pointing out 1 opportunities, constraints and the impact of any development. ' ra. Volume Two begins by summarising the findings of Volume One, then goes on to discuss and propose a development strategy, and finally presents recommendations for a policy and programme of economic development, —■* together with the financial implications and implementation arrangements which we judge to be necessary for them to be carried out. : 1 i FALKLAND ISLANDS SURVEY - VOLUME ONE 'I CONTENTS ! ' ** Page TERMS OF REFERENCE i INTRODUCTION BY LORD SHACKLETON 11 1 GLOSSARY viii CHAPTER 1 - GEOGRAPHICAL AND HISTORICAL BACKGROUND 1 INTRODUCTION 1 FALKLAND ISLANDS - GEOGRAPHY 2 FALKLAND ISLANDS - HISTORY 4 1 FALKLAND ISLANDS DEPENDENCIES - GEOGRAPHY 7 rai FALKLAND ISLANDS DEPENDENCIES - HISTORY 8 CHAPTER 2 - POPULATION 9 Population changes 9 Natural change 10 Migration 11 Age and sex structure 13 Marriage and divorce 15 CHAPTER 3 - THE ECONOMY 17 ■ ■ MB STRUCTURE OF THE ECONOMY 17 Main characteristics 17 Distribution of economic activity 20 National income 21 External flow of funds 25 31 -- EXTERNAL TRADE Exports 31 Imports 34 INCOMES AND CONSUMPTION 38 Incomes 38 Consumption patterns and the standard of living 43 --rr^Sf SAVINGS 45 Propensity to save 45 Institutional means for saving 46 INVESTMENT 49 Private sector investment 49 Obstacles to private sector investment 52 Investment incentives 54 * / Government investment 55 UK exchange control regulations 56 (continued) \ 3 ■ CONTENTS (continued) Page 59 CHAPTER 4 - MANPOWER 59 General situation 61 Labour demand 62 Labour supply , . 66 Wages and salaries and cost of living 69 Employee and employer organisations 73 CHAPTER 5 - SOCIAL ASPECTS 73 SOCIETY 75 The Camp 79 Stanley 80 Dependence 82 WELFARE 85 CHAPTER 6 - AGRICULTURE 85 RESOURCES 85 Climate 86 Terrain 86 Soils and vegetation 89 Farms Livestock 92 AGRICULTURAL PRODUCTION AND PERFORMANCE 97 Development and system of agriculture 97 Agricultural performance 105 Financial performance 114 CONCLUSIONS AND SCOPE FOR IMPROVEMENT 118 Scope for improvement 119 Wilder ownership of agricultural land 127 WOOL MARKETING 132 Transport of wool to the market 132 Sale of wool 132 Future market prospects 137 CHAPTER 7 - AQUATIC RESOURCES OF THE FALKLAND ISLANDS AND DEPENDENCIES 139 INTRODUCTION 139 OCEANOGRAPHY 140 (continued) CONTENTS (continued) 1 ^ Page BIOLOGICAL CHARACTERISTICS OF THE FRESH 1 AND MARINE WATERS IN THE FALKLAND ISLANDS AND THE ADJACENT SEAS 142 Freshwaters 142 Coastal Zones 142 Offshore waters 145 Oceanic waters north of the Convergence 146 South Georgia and its coastal and inshore areas 146 Open oceans south of the Antarctic Convergence 147 RESEARCH AND EXPLORATORY FISHING 149 Falkland Islands freshwaters 149 Seaweeds 150 ■ Tail Oceanographic and fisheries research 152 REQUIREMENTS FOR DEVELOPMENT 155 General considerations 155 Constraints 157 Possible benefits of development 163 Stages of development 164 Finance for pilot scale development 167 South Georgia 169 CHAPTER 8 - MINERAL RESOURCES 171 INTRODUCTION 171 ONSHORE 172 Metals 172 Mineral oil 172 Peat 173 —:1 OFFSHORE 174 Hydrocarbon prospects 174 Weather/Oceanographic environment 177 Commercial potential 181 OFFSHORE OIL DEVELOPMENT - OPERATION AND IMPACT 185 1 Offshore exploration 185 Offshore oil production/transportation 188 CHAPTER 9 ~ INDUSTRY AND CRAFTS 195 -rr-l INTRODUCTION 195 Crafts 195 Future possibilities 197 Meat freezing 197 Canning 200 Wool scouring 200 Sheepskin processing 201 n Knitwear 202 (continued) n r .1 r I ■m CONTENTS (continued) Page 204 Wool spinning 205 r" Weaving 206 Conclusions : rr 208 CHAPTER 10 - TRANSPORT AND COMMUNICATIONS i—•' 208 TRANSPORT 208 +r Existing network 208 External air service External sea freight service 2154 <r Ports and jetties 215 Internal air service 216 Coastal shipping 218 Roads 220 Camp travel 221 Future development of transport 222 TELECOMMUNICATIONS AND BROADCASTING 235 Internal telecommunications 235 The broadcasting service 238 External telecommunications 240 CHAPTER I 1 - DISTRIBUTION AND SERVICES 242 WHOLESALE TRADE 242 RETAIL TRADE 243 FUEL SUPPLIES 246 Domestic sector 246 Transport/commercial/agricultural sectors 249 YPF agreement 253 SERVICE INDUSTRIES 258 Accommodation 258 Banking 259 'jtn------- CHAPTER 12 - TOURISM 262 EXISTING SITUATION 262 U-i Tourist visitors 262 DEVELOPMENT POTENTIAL I 266 Tourist attractions Constraints 266 Potential demand 269 Possible locations 269 Development 272 Costs and benefits 272 274 (continued) f A i *ir ( >*)■ { i 1 "vi CONTENTS (continued) Page CONCLUSIONS 276 Methods of control 276 CHAPTER 13 - PUBLIC UTILITIES 278 ] POWER SUPPLIES 278 ■ "-4 Stanley 278 Camp settlements 281 Scope for wind power 283 WATER SUPPLY 288 CHAPTER 14 - SOCIAL INFRASTRUCTURE 293 1: MEDICAL SERVICES 293 STANLEY 295 1 i CAMP 295 CONCLUSIONS 296 HOUSING 298 Ownership/standards ■298 Construction 299 Supply 300 Conclusions 301 EDUCATION 302 Camp 302 Stanley 303 Overseas 303 Finance 304 Comments 305 SOCIAL SECURITY 308 RECREATIONAL FACILITIES AND ACTIVITIES 309 CHAPTER 15 - GOVERNMENT FINANCES AND PUBLIC SERVICES 314 I Ordinary revenue and expenditure 314 • -J Development revenue and expenditure 322 Outlook 325 CHAPTER 16 ~ FALKLAND ISLANDS COMPANY AND THE ECONOMY 333 i BACKGROUND 333 POSITION IN THE ECONOMY 334 Financial results 335 Role of FIC 336 APPENDIX 1 ~ LOW COST ROAD CONSTRUCTION METHODS 338 APPENDIX 2 - ECONOMICS OF WIND POWER 337 APPENDIX 3 - ECONOMICS OF WIND POWER 342 l r1 i ,gi. ' -fir LIST OF FIGURES 'Si ’ Wf CONTENTS following page 2 1 Map of Falkland Islands and Settlements rn- 2 Map of Comparative Sizes of Falkland Islands, Shetland Islands and Wales 2 <T" 3 Map of Falkland Islands in the South Atlantic 2 4 Population Trends 10 l 5 National Income 24 6 Probable Sedimentary Basins and Bathymetry of South West Atlantic 176 7 Town Map of Stanley 216 8 Recurrent Revenue and Expenditure of the Falkland Islands Government 316 9 Diagram of Falkland Islands Company*s Activities 334 «rr- rr~ ter- —' ■ «T" ‘ r ter - f I ter- ( 1 1 i TERMS OF REFERENCE “T-- In the light of the weakening of the colony’s economy and the decline in population, and taking into consideration previous reports including those of Theophilus, Armstrong, Comben/Waller and Davies "T5I 1 . To examine the resources of the colony and the dependencies and the 1 prospects for economic development with particular reference to agriculture, 4 the wool industry, the need for diversification and possible developments in oil, minerals, fisheries, and alginates and to make recommendations. J 2. In this context to examine the present fiscal structure and the provision of government services in the colony and dependencies in the T-! light of the present uncertain economic climate and to make recommendations. 1 To advise on priorities for capital expenditure over the next five years with particular reference to the need for improved infrastructure and to programmes for public utility development and housing. ~1 T 3. To assess the financial, manpower and social obligations of any 1 recommended economic strategy, with particular reference to the encouragement -r-4 of small scale enterprise and scope for local investment, and the extent to which all these needs can be met from local resources and to the degree - • which recourse to all potential external resources may be necessary. 1 <3 l 3 1 :i 3 1 ■ •» ».r i W INTRODUCTION BY LORD SHACKLETON draw attention to certain of the I would like in this introduction to of the Falkland Islands issues that confronted us in our Economic Survey and constraints which we have had cnr and to identify the major considerations for the future economic development to bear in mind in arriving at a strategy of a group of islands half the size of Wales, with a population of less It is than two thousand, about 7,500 miles away from the United Kingdom. also right, at the outset, to dispel any reputation of the Falkland Bleak they may Islands, dating back to Dr Johnson, as 'bleak' or ’barren'. be to some people, but they possess a charm for those who enjoy the wide vistas of sea and landscape, typical of Shetland or the Outer Hebrides, windy hills and sunshine, a fascinating wild life, and a friendly, hardworking and hospitable people. Almost from the day that my fellow team members and I embarked upon our task, we have been made very aware of the degree of interest on the part of many people who are concerned for the future of the Islands, Indeed, we tn— have received much valuable advice.

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