Economic Study of Cimate Change Impacts and Adaptation on the St. Lawrence River

The potential impacts of climate change on the St. Lawrence River, its ecosystems and the socio-economic activities that depend on them are a source of concern for numerous stakeholders in Québec. Various studies have drawn attention to the possibility of decreases in inflow into the Great Lakes and more frequent low flow and low water level episodes along the St. Lawrence River.

The objective of this project is to conduct an economic analysis of the potential impact of low water levels and to explore adaptation options for six major economic sectors along the fluvial section of the St. Lawrence River between Cornwall and Trois-Rivières: maritime transport, cruises and pleasure boating, municipal water supplies and wastewater discharge, hydroelectric production at the Beauharnois Dam, ecological services and recreational fishing on Lac Saint-Pierre, as well as riverfront property values.

• Assess the economic costs of potential CC impacts, especially declining water levels, on the six target sectors;

• Assess the costs and benefits of various adaptation options to inform decision making;

• Conduct an integrated analysis of sectoral studies to foster development of coherent and complementary adaptation measures.

• Identify two hydroclimatic scenarios for the future used in the sectoral studies; Identify the impacts and assess the cost of declining water levels for each of the target sectors, using common assumptions (time frame and discount rate applied);

• Identify adaptation options in consultation with local experts and stakeholders and perform a cost-benefit analysis (CBA) to compare the options;

• Conduct an intersectoral analysis of the impacts and adaptation options in collaboration with the Council of the Great Lakes Region and the Mowat Centre to provide a more integrated analysis at the Great Lakes and St. Lawrence levels.

The study suggests that low water level episodes along the St. Lawrence River due to climate change could lead to economic impacts in the six sectors under study over the period 2015-2064. However, for most of these sectors, adaptation options have been identified that could mitigate the impacts, or even lead to significant benefits.

Ecosystem services

The greatest economic impacts of low water levels on the St. Lawrence would be associated with the loss of ecosystem services at Lake Saint-Pierre, evaluated at between $878 million and $2.3 billion. Various adaptation strategies such as restoring riparian areas and floodplains, modifying agricultural practices, improving wastewater treatment, protecting natural habitats and raising awareness in the general public would be economically profitable according to the cost-benefit analysis.

Maritime transport

Water levels below chart datum would limit transport capacity, particularly that of container ships. Under the assumptions of the study, the value of capacity loss would range from $38 million to $70 million. The most economically viable adaptation option would be a combination of dredging and minimizing under-keel clearance (the latter involves using real-time information to optimize ship-loading in accordance with available or predicted water depth).

The total cost of the measures is approximately $12 million. An analysis using net present values shows that the benefits outweigh the costs by $46 million and $26 million under the two scenarios, with benefit-cost ratios of 5:1 and 3:1 respectively

Hydroelectric production

As the Beauharnois and Les Cèdres power stations are run-of-the-river plants, their energy production is highly sensitive to fluctuations in water level and flow. Under the proposed scenarios, the value of lost production would be between $52 million and $89 million (however, these results are highly sensitive to the discount rate applied). Adaptation measures involve improving energy efficiency and increasing energy production elsewhere in the electricity production network.

Recreational boating and tourism

Low water levels limit access to marinas and to certain watercourses and lakes, as well as causing damage to boats and nautical equipment. The economic impact, based on the value given to lost potential boating days, is estimated at between $64 million and $77 million. Several adaptation options have been identified, including measures that are technical, organizational and communicational in nature.

Municipal water supply

The production capacity of water-treatment plants that draw their water from the St. Lawrence is also sensitive to water levels. Two of the eighteen treatment plants assessed in the study are considered vulnerable and would be expected to experience water shortages during periods of low water levels.

The economic impacts remain relatively low, amounting to less than $100,000. The cost of the adaptation measures proposed is higher than the expected economic impacts, but the marginal cost would be lower if the measures were implemented as part of other construction or renovation work.

Waterfront properties

Lower water levels would also affect the property values of waterfront properties. The economic impact is evaluated at approximately $72 million for the 4,300 properties in the study area with direct access to the St. Lawrence, representing a loss of around 2% of the total value of these properties.

Conclusion

This regional study represents an important first step in assessing the economics of adaptation to low water levels on the St. Lawrence River due to climate change. It effectively shows that these impacts may have non-negligible consequences given the concentration, scope and diversity of economic activities and the density of the population that depend on the St. Lawrence. Cost-benefit analyses indicate that certain adaptation measures, in particular for maritime transport and ecosystem services, could be economically beneficial and also have other positive benefits.

The complexity of the Great Lakes and St. Lawrence systems and the assessment of the economic impacts over a 50-year period remain important challenges to consider when conducting this kind of analysis. Regular updates to account for new scientific knowledge will, however, help in planning appropriate adaptation strategies.

• AECOM

• CIRRELT (UdeM)

• Chaire de tourisme Transat (UQAM)

• Hydro-Québec

• Ministère du Développement durable, Environnement et Lutte contre les changements climatiques (MDDELCC)

• Local municipalities

• Université de Montréal

• Université de Sherbrooke