A number of changes have already occurred in the valley economy. Mining has declined and the cedar mill has closed while the population has increased, and outdoor-based tourism has grown. These changes, as well as the implications of the land-use planning process, affect the valley econmomy today, and in the future.
The natural resources of the valley- the forest, lakes, rivers and mountains- create much of the foundation for our economy. We need to take a close look at the recent and forecast changes, and identify natural resource-based opportunities to build a stronger, more self-sufficient valley economy. This project is a first step in that process.
2. What area is included?For this project, the Slocan valley was defined as the area included in Area H East of the Regional District of the Central Kootenays . This includes the communities and rural areas from Crescent Valley and Crestova north to Summit Lake.
3. How was the project done?The project has been directed by a Steering Committee of local citizens. These individuals selected the consulting team, defined the public consultation process and provided support and advice as needed. They will also approve the final report.
A team of regional consultants reviewed the many reports about the economy of the Slocan valley to prepare a Preliminary Situation Analysis that was reviewed by the public in June 1998. Fifty valley citizens were then interviewed personally, or in industry focus groups, to refine the preliminary information, define a vision for the valley economy, identify the strengths and weaknesses of the current economy and brainstorm opportunities and obstacles. Three community workshops attended by 60 people were also held to broaden public input. Individuals provided 16 written submissions.
The public input as well as analysis conducted by the team of consultants was used to prepare a draft final report which is now available for public review. This is a summary of the final report.
Input from this public review will be used to refine and finalize the report and this summary. The final report and a summary will be available to the public in January.
The 1996 Canada Census provides information on the workforce living in the valley. The total valley workforce (including individuals 15 and older excepting seniors, students or individuals in an institution) has grown substantially in recent years - by 29% since 1991 - to 2,760 individuals in 1996, based on Canada Census data. This is more than double the increase in population, an interesting reality.
It is useful to take a moment to contemplate how employment (and income) are generated and distributed in most western economies. Three distinct but interlinked components exist:
Minimizing ‘leakage’ of income from the first two components (the ‘basic’ economy), and ‘imports’ of goods and services are primary objectives for an economy. This is especially true in rural economies which are usually resource based, and sell low value, unmanufactured products to outside markets, with low levels of goods and service industries in their economy.
The figures below illustrates how many people work in each employment sector of the valley economy.
Forestry 11% Wood Manuf. 10% Mining 2% Agriculture 3% Tourism 10% Public Sector 12% Construction 8% Other 16% Non-Basic 28%
These increases are primarily in the tourism and non-basic service sector, which indicates an encouraging diversification and increased ‘circling of income’ in the local economy.
Construction employment also increased by 50%. While there was an increase of 65% in forestry employment between 1991 and 1996, more recent information indicates a decline as the newly required resource inventories are completed and the ongoing market slump dampens logging and silviculture activity.
Conversely, the mining and government services have seen employment reductions of 65% and 36% respectively.
Unemployment in the valley is relatively high at 16% compared to the regional district average of 12% and the regional average of 9%. Youth unemployment is particularly high at 24%, which is much higher than the regional district (18.5%). This must be a source of concern in the valley.
b) IncomeTotal income to the valley economy is estimated at $105 million annually. The figures below illustrates the distribution of income in each economic sector, including the non-employment sector. Pensions, income from investments, employment Insurance, social assistance and other transfer payments are included in the non-employment sector.
Forestry 11% Wood Manuf. 10% Mining 2% Agriculture 2% Toursim 3% Public Sector 10% Construction 7% Other 13% Non-Employment 27% Non-Basic 16%
Based on this data, the valley economy is primarily dependent on non-employment income, forestry and wood processing, the public sector, and construction. It is important to note that investment and pension incomes together exceed any other single sector at 15% of the total economy - though forestry and wood manufacturing combined account for 21% of the valley income.
In addition to the recorded income, there is a substantial industry in the valley growing and marketing illegal substances, mainly marijuana. While this activity has been a traditional element of the economy for some time, there has been a recent boom, particularly in indoor grow operations. One estimate suggests this industry generates 5-10% of the valley income, or roughly $5-10 million annually. The public input consistently indicates even the high end of this estimate is likely low and suggests income generation in the range of $15 million annually.
c) Economic leakage and importsAs outlined earlier, minimizing ‘leakage’ and ‘imports’ are strategies to achieve a thriving economy. Unfortunately the valley economy currently has a high level of economic leakage and imports.
The total income from sources outside the valley economy is estimated to be $86.8 million. In contrast, the income resulting from spending within the valley is only $18.2 million. This indicates $68.6 million or 79% of the valley income ‘leaks’ from the valley economy through spending outside the valley. This is high but rather typical for relatively isolated, hardly diversified rural economies. It also demonstrates the theoretically huge potential for import substitution or ‘circling of money within the valley.
There was almost unanimous agreement that big, commercial developments were not part of the economic vision for the valley. Some wonder what is wrong with the way the valley is developing now, and there are those who want the population and development in the valley to stay much the way it is today. These comments are often followed by the realization of the limited employment opportunities, especially for youth, and then puzzlement as to what economic activities would have the least negative impacts.
Citizens used the following phrases to describe their economic vision:The authors would also add the abundance of low cost hydroelectric power, and the heritage infrastructure and ambiance of the Silverton/New Denver area as economic strengths.
3. ChallengesThe authors would also add that initiating collective action amongst the three distinct municipalities and the regional district may be a challenge.
4. OutlookIt may be comforting to know the economic situation in the Slocan valley is shared with most rural areas in the world. Globalization of traditional industries and the expanding role of technology and services in our economy have favored urban settings in the recent past. There are signs that these same factors, as well as increased focus on quality of life issues, will lead to a large segment of the population seeking rural life.
Predicting the winds of economic change is difficult at best and perhaps foolish at worst, however a brief outlook is provided here. For the largest economic sector in the valley - forestry and wood processing - the expectations for the next year are not positive. The current slump in markets and related harvesting is expected to continue through 1999 and possibly into early 2000. Harvesting reductions have also prompted reduced work for the growing number of specialized resource consultants, at the same time that opportunities were leveling off after implementation of the Forest Practices Code. Reductions in operational and Forest Renewal BC programs have reduced investment in silviculture and employment for the large silviculture workforce living in the valley. Downtime, layoffs and reduced employment insurance income are real possibilities affecting the 21% of the valley workforce directly and indirectly employed in these sectors.
In the longer term, the forecast reduction in timber supply resulting from the Forest Practices Code and the Kootenay-Boundary Land Use Plan are not expected to impact either logging or mill workers. This unusual situation exists because historically both Slocan Forest Products and the Ministry of Forests have cut less than their allowable annual cuts. As a result, current harvesting is at approximately the level projected after the Forest Practices Code and Kootenay Boundary Land Use Plan adjustments. Consequently, no change in employment is expected. If the watershed and viewscape practices that are implemented in the valley are more restrictive to timber harvesting than outlined in the Kootenay Boundary Land Use Plan, employment losses may occur. This will depend on the amount of logging employment that is created through any new practices, and the impact of a reduced fibre supply on the financial position of the sawmill. If new harvesting practices are more restrictive to timber harvesting, this analysis should be redone to define employment and economic impacts.
Public sector employment and income is a substantial portion of the valley economy, though lower than in more central communities. Further reductions in this sector may occur as government agencies adjust to reduced operating budgets.
For tourism, the third largest single component of the valley economy, the outlook is positive if the current trend in the value of the Canadian dollar continues. Targeted marketing and expanded facilities and services would greatly enhance the potential of this sector. While growth in this industry will create employment and diversify the economy, income cannot be expected to be great.
Although the agriculture sector is relatively small, there is excellent potential for organic agriculture to take advantage of local markets as well as those farther afield. Though opportunities are positive, relatively low employment and modest incomes can be expected.
The sectors of the economy which depend on local spending, including retail, food, beverage, construction, financial services, etc., have grown steadily in past years, primarily in response to the increasing population. Continued population increase is difficult to predict, however it is likely that the valley will continue to benefit from the in-migration of retirees, urban dwellers, and home-based businesspeople seeking the quality of life available in the valley. This in-migration should continue to fuel growth in these sectors, as well as the already prominent income from investments and pensions.
It is clear that much can be done to build a healthy economy in the Slocan valley - the ingredients exist to achieve the economic vision of valley citizens. However, no short-term, quick fixes were unearthed. What is needed now is a focus, commitment, a ‘sparkplug’ and cooperation. However, expectations must be realistic. The existing opportunities do not create a large number of jobs immediately. However, real potential exists for a large number of small, sound business enterprises to achieve the economic vision of the valley. The collective focus of committed citizens, local governments and the private sector is needed to see these opportunities through to success over the longer term.
These recommended actions are based on analysis of the economic opportunities and obstacles identified by the public and the consulting team. The full analysis is included in the draft final report which is also available for public review.
a) Highest priority – results possible in the first yearCreate a committed economic focus
Focused attention on the state of the economy of the valley will, by itself, do much to foster the appropriate climate for change. Local government commitment and a volunteer Citizens Board are recommended to fit the existing circumstances in the valley.
Citizens are looking to local government leaders for indications that they recognize the economic difficulties that exist in the valley, and they are committed to working to overcome these difficulties. As the limited resources of each municipality, and the regional district, make it difficult for any one entity to mount an effective economic strategy alone, there is hope that local governments will search for ways to work together to the benefit of the collective economy of the valley.
In as many ways as possible, local governments need to illustrate their commitment to building a healthy valley economy by providing funding and in-kind support to the economic initiatives that are broadly supported by valley citizens.
Ideally the local governments should create a small ‘Healthy Economy Citizens Board’ of volunteers from within the economic sectors in the valley. This group of no more than 10 valley residents would collectively have knowledge of the agriculture, arts, forestry, tourism and wood processing sectors, as well as the trust of local governments and citizens. Members of the Steering Committee for this action plan may be ideal candidates for this Board given the knowledge and understanding of the valley economy they have gained from this process. The primary responsibility of this Board would be to work on solutions to the economic issues facing the valley.
It is recommended the Board focus on the following items immediately:Facilitate entrepreneurial enterprisesThe business opportunities which best fit the economic vision for the valley and have real potential given the economic strengths and challenges include:
Most of these enterprises are small, and best suited to entrepreneurial leadership. Expansion of existing businesses, or development of successful new businesses in these sectors are possible. While a volunteer Citizens Board may be effective in promoting small business development in the valley, given the range of entrepreneurial opportunities and the inherent entrepreneurial spirit in valley residents, it is recommended that the Board hire an Enterprise Facilitator to coach existing and new businesses. The responsibilities of this facilitator would include accessing expertise and resources so the entrepreneur can develop strong processing, marketing and financial teams for their business, and assisting the business through the government ‘red tape’ maze, particularly during the start-up phase. Though initially expensive, the Scirolli Institute model of intensive training and apprenticeship is recommended based on its extensive, international track record and fit with the situation in the valley.
The Enterprise Facilitator should establish a Business Resource Center that becomes the physical focus of economic activity for the valley, with photocopying, FAX and computer access for businesses, as well as extensive business reference information. While a physical focus is necessary, equitable distribution of effort to the three municipal ‘pearls’ on the interwoven ‘string of the regional district is vital to the success of this endeavor.
Approximately $75,000 is required to implement this economic focus, including the Resource Centre, and should be accessed from a range of partners such as the municipalities, regional district, Columbia Basin Trust, provincial government and other sources.
Expand financial options
While the Enterprise Facilitator will work to improve the quality of business plans which will increase the probability that small businesses will successfully access the existing financial options, some enterprises will still not fit the traditional criteria. Community Futures is encouraged to expand its presence in the valley to improve local knowledge of its services. If an Enterprise Facilitator is hired, this individual will work closely with Community Futures, the Credit Unions and Business Development Bank of Canada to refer businesses which meet their criteria.
The current initiative to establish ‘giving tree’ - a community loan fund should be solidly supported to provide small loans to enterprises that fall outside the traditional lending requirements.
Agriculture cooperation
The Kootenay Organic Growers are encouraged to expand their already successful certification efforts to create a marketing cooperative, storage facilities and expanded farmers markets in the valley and neighbouring communities. This sector has a substantial potential for growth by supplying nearby organic markets, though the employment and income opportunities are modest. Organizational support may be needed for this group to extend itself into these areas.
Enhanced silviculture projects
Slocan Forest Products and the Ministry of Forests have plans in place for enhanced silviculture projects such as spacing, pruning and forest health treatments. These projects await funding approval from Forest Renewal BC. There are many local silviculture contractors and workers with the skills and experience to take on this work, and many of these individuals will be available because funding reductions in other areas of the province has substantially reduced the silviculture season. If funding is allocated, local hire requirements will be needed to ensure local workers have the first opportunity to complete this work. The amount of work available will depend on the funding level.
Tourism cooperation
Increased tourism traffic will greatly benefit valley businesses, particularly those located in New Denver and Silverton where the heritage infrastructure attracts tourism. Two cooperative initiatives are recommended to increase tourist visits and expenditures.
A cooperative marketing effort is required to advertise the existing tourism opportunities within the valley. Targeted marketing should begin with a ‘lure’ brochure highlighting the natural beauty of the area and identifying the services, facilities, local recreation sites and eco/adventure experiences in the area.
A second component is improved signage at both ends of the valley and at tourism entrances to communities. This will take some time to develop in conjunction with the Ministry of Transportation, and possibly in cooperation with Nakusp and Kaslo.
Tourism operators have indicated a willingness to work together with local governments on this initiative. Funding will be required to implement these projects.
One or two festivals or events should be initiated as soon as possible to attract tourists to the valley, and provide marketplaces for the many local products such as agriculture, arts, designed wood products and wildcrafting/botanicals. Successful events build on the unique qualities of an area, which the valley has several to choose from - the arts, alternative health, or the valley’s mining heritage are a few. Almost any individual or group with imagination and organizational skills can organize these activities. The benefits of these activities will be seen in a few years when attendance numbers grow and the local economy feels the injection of substantial tourism dollars - estimated at $50-150 per day per tourist.
Wood supply opportunitiesStable, high quality wood supply is a necessary element for a successful secondary or designed wood product business. Several existing businesses are not thriving because they do not have a suitable wood supply, which limits their activity and access to financing. Economic and employment gains can be expected with improved wood supply to smaller operators. Two opportunities exist in the valley to address this obstacle:
Slocan Forest Products has indicated a willingness to initiate log and lumber sales from their mill yard, provided market prices are met, thus the opportunity exists for discussion on options to access these wood supplies. In addition, the Ministry of Forests currently offers timber sales for bid that do not match the requirements of the local small operators and are often awarded to out-of-town mills or indirectly to the large primary sawmills. In other communities, discussions with the Ministry of Forests have resulted in adjustments to these sales to better meet the needs of local operators.
A ‘wood transfer facilitator’ may be needed to coordinate the requirements of the small operators to minimize the inconvenience for the mill yard and to identify feasible options for the Ministry of Forests to consider. If the smaller operators were to act on an interest to organize into a value added wood producers association, this may also facilitate improved communications.
There is broad support from the community, the Ministry of Forests, Slocan Forest Products and value-added wood producers for a log sort yard in the valley - a central location where logs are sorted into small lots and sold to the highest bidder. A feasibility study is needed to examine possible sites, define the wood volumes and sources and outline financial requirements for a successful operation.
Designed wood products marketing
Expanded marketing is needed to strengthen the businesses of the large number of existing designed wood producers. These businesses should become actively involved in the resort/hospitality marketing and giftware catalogue initiatives of WOODVINE, the regional wood producers network. Opportunities to work with the Forest Economic Development Officer currently working out of Nakusp to expand market options should be examined.
As energy and resources permit, and the need arises, the Citizens Board should work with local organizations, the local and provincial governments and others to address the following infrastructure issues. These issues limit economic development in the valley, but they are not critical to act on immediately. Conditions may at any time change however, making it necessary for actions to be taken, or, opportunities may arise which, if acted upon, effectively address an issue.
Several opportunities offer potential to improve the valley economy, however key elements must fall into place before benefits can be realized. Individual and community wide actions should be taken to support these opportunities when their viability becomes clear.
Alternative harvesting practices
Slocan Forest Products has committed to implementing alternative harvesting practices in their recent Innovative Forest Practices Agreement. These practices include a broader range of silvicultural systems so more trees are left standing after harvesting (i.e. smaller patch cuts and selection), and innovative harvesting techniques using cable systems and helicopters. Forest Renewal BC funding support for training forest managers and logging crews in these new practices will be needed to implement these new practices. Mechanisms to finance the new logging equipment required will also be needed. The benefits of this approach include the potential for increased employment as well as options to access timber currently unavailable because of concerns about the suitability of traditional harvesting practices.
Capital intensive projects
Mining projects, secondary value-added wood processing and an alternative wellness resort offer great potential for economic gain and employment in the valley, however, they require actions beyond what can likely be mustered by valley citizens alone. The Citizens Board should stay informed, ‘keep their ears to the wall’ and stay open to these opportunities, but there is little that can be done without an interested business enterprise. If a business operation with adequate capital and management expertise comes forward with an interest in locating in the valley, and the approach is consistent with the economic vision of the valley, the enterprise should be supported.
Tenure reform
Timber tenure reform is widely supported in the valley. All opportunities to express this view should continue to be exercised. If the provincial government decides to take action on the growing calls for reform, valley residents should marshal their collective expertise to contribute to this initiative.