AIDC project number:
Dr. Paul A. Metz
Peter Wallis Consulting Limited
Construction of the 1,740 km Alaska-Canada Rail Link (ACRL) between Fort Nelson, BC and Delta Junction, Alaska to join the North American rail system to the Alaska Railroad will result in tremendous economic benefits for Canada and the US. The ACRL will provide valuable additional east-west rail capacity and tidewater access to the Pacific, hugely benefitting not only the Yukon and Eastern Alaska regions, into which it will introduce rail transport for the first time, but throughout both countries. The economic benefits of ACRL construction are consistent with Canadian government’s desire to promote Northern development and comparable in significance to those of Canadian Pacific Railway in the 1880’s and the St. Lawrence Seaway in the 1950’s.
Benefits of ACRL Construction
Construction of the ACRL alone will bring unprecedented economic stimulus to the region in terms of job creation, wages and income tax revenue over multiple years. Table 7-1 below summarizes the benefits from ACRL construction for the Yukon, BC and Canada as a whole. However, these estimates are conservative as they exclude benefits associated with pre-construction activities, railway operation post-construction, sales taxes and corporate taxes as well as all such benefits that will accrue to Alaska and the US. The sheer size of project’s labour requirements and anticipated duration of construction supports the attraction of not only temporary workers but also the opportunity to draw workers willing to relocate and take up permanent residency with their families, if complementary policies, such as housing construction, and incentives are put in place.
Benefits to Mining
The mining industry, which is the main underpinning and catalyst of the Yukon’s economy and a major contributor to Alaska’s economy, will be a primary beneficiary of the ACRL’s construction. The rail line will reduce the cost of mining exploration, development, operation, imports and exports, fundamentally changing mining cost structures that will result in economic viability of deposits at lower mineral price levels. In so doing, it will both encourage new mining investment and development and extend the economic life of existing and new mines in the region. It will also have the added benefit of reducing the Canadian government’s remediation cost for the Faro mine. The Yukon and Eastern Alaska in turn will enjoy higher royalty income, taxes as well as population and employment growth.
Increasing mining activity in this minerally rich region, ranked #1 and #2 in potential in the world, is providential given the expected exponential growth in demand for metals and minerals in the development of low-carbon energy technologies. This upsurge in mining activity will also inevitably result in the discovery and extraction of critical and strategic minerals with important manufacturing, technological and military uses, for which there are no viable substitutes, that are often a by-product of primary mineral production. Developing and securing a reliable supply of these critical and strategic minerals addresses the US Presidential Executive Order signed in 2017 with the specific purpose of increasing discovery, access, extraction and production of these key resources.
Benefits to Communities and Residents
By opening access and providing lower transport cost to/from the Yukon, Northeast BC and Alaska for both import and export of goods and supplies, the ACRL will have a dramatic positive economic impact on resource industries within these regions, including mining, forestry and oil and gas, that will inevitably result in job creation. This, in turn, will open employment opportunities and assist in lowering unemployment and retaining existing residents, particularly in First Nations’ communities and among youth.
The addition of high paying jobs in resources industries will serve to improve the income and economic well-being of residents and communities, including First Nations, through wage spending. It will also likely attract new or returning permanent and temporary residents, expanding the population base and stimulating the need for new housing, construction employment and demand for goods and services. Higher demand for goods and services by both industry and residents will open entrepreneurial opportunities for existing and new residents, especially First Nations and in small communities, given resource industries’ practice of proactive local procurement.Cost of living for Yukon and Alaska residents should also be reduced, assuming the lower cost of transport for goods and equipment is passed onto consumers. Savings will be most noticeable in industries like construction, which are dependent on large volumes of heavy materials and equipment. The ACRL may also add transport options for workers travelling to/from mine sites and communities or existing airports in the region if regular passenger service was implemented.
Benefits to Other Regions and Industries
While the Yukon, Northeast BC and Alaska will be the primary beneficiaries of the ACRL, other regions in Canada and the US Midwest and Eastern States will also gain new opportunities and benefit from this new rail connection to Pacific tidewater.
The Ports of Anchorage and Port MacKenzie will offer the most cost-effective export location for mineral ores and forest products from the Yukon and Eastern Alaska as a result of the ACRL. Since these exports represent new tonnage, this will not negatively impact other West Coast ports. In addition, the two to three-day sailing time advantage to Asia from these two ports over other Northwest Coast ports combined with the lower cost of direct rail transport to Central Canada and the US will make them attractive for container freight. This will add capacity and promote greater competition for this traffic as well as contribute back-haul freight demand for the ACRL.
By stimulating mining, the ACRL will also increase demand for fuel and LNG, broadening the market for these products from Northeast BC and Alberta. If shipment of LNG by rail receives regulatory approval, it could also offer a pipeline alternative to transport LNG both for consumption in the Yukon and Alaska as well as for export to Asia. In addition, the ACRL would reduce the cost for an Alberta rail extension that would enable transport of crude oil to tidewater for export to Asia.
Development of Alaska’s North Slope will also benefit from the ACRL providing a lower cost for shipment of equipment, machinery, construction materials and supplies required for both construction of a rail extension to this region and oil and gas production facilities. Similarly, the ACRL would lower the cost of imports and exports, thus improving the economic viability of developing the Crest iron ore deposit in the northeast Yukon. It would also encourage the construction of rail rather than road access between the Crest site and ACRL, which would reduce environmental impact of the mine’s development on its surrounding area.
The economic stimulus and lower transport cost created by the ACRL to the Yukon and Alaska will create new demand and open markets for manufacturers and suppliers in both Canada and the Midwest and Eastern US. At the same time, Yukon and Alaska residents and industries will benefit from the lower cost for numerous goods delivered to the region. The ACRL would also encourage increased Alaskan seafood exports into both Canada and the Midwest and Eastern US.
In addition to the many other benefits described in this report, the ACRL offers an opportunity to develop a new rail-tourism experience – a niche that has proven appeal in the fast-growing travel market. In so doing, it could also encourage additional overnight stays in the Yukon and incubate other attractions, highlighting the region’s gold rush history, First Nations’ culture and environmental features.
While the ACRL will stimulate economic, industrial and population growth, it has the added benefit of neutralizing the GHG impacts of this growth because rail generates lower GHG emissions for the transport of both inbound and outbound goods compared to currently used transport modes. The ACRL also offers the opportunity to minimize intrusion and disruption into previously undeveloped areas because of its reduced footprint and controlled access that deters public trespass and preserves the territorial sovereignty and environmental values of these virgin territories.
Construction of the ACRL would also contribute a valuable transportation contingency in the event of a natural disaster and bolster national security by providing an alternative supply route in the case that the Port of Anchorage, which is the primary entry point for most of the Alaska’s supplies, and other ports were unavailable.