Economic and Social Reports
Estimates of the economic activity in and around flooded areas in British Columbia

DOI: https://doi.org/10.25318/36280001202101200003-eng

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Abstract

This article reports experimental estimates for the economic activity in and around flooded areas of British Columbia. The paper uses a firm level dataset to geographically determine firm locations that are likely to have been affected by flooding due to heavy rains during November 13th to November 15th 2021. The estimates focus on economic activity in the Fraser River Valley (particularly in Sumas Prairie), in Merritt and in Princeton. Across these three areas, the firm locations most likely to have been directly affected by flooding accounted for 0.9% of British Columbia’s gross domestic product (GDP) in 2018. Additionally, the flooding in the Sumas Prairie affected areas that constitute an important share of animal herds and avian flocks in B.C.

Authors

Robby Bemrose and Ryan Macdonald are with the Economic Analysis Division, Analytical Studies and Modelling Branch, at Statistics Canada.

Introduction

This article discusses the amount of economic activity in and around recently flooded areas in British Columbia. It focusses on activity most likely to be directly affected by flooding around Abbotsford-Chilliwack and in Merritt and Princeton. Around Abbotsford-Chilliwack, the major effects occurred in the Sumas Prairie where farms and livestock were inundated by flood waters, while in the towns of Merritt and Princeton flooding led to the near total cessation of economic activity and the destruction of physical capital.

To provide an indication of the size of the economic activity in these economies, experimental estimates of the value of output (GDP) for firm locations (operating units) in these areas are used. Across these three areas, the firm locations most likely to have been directly affected by flooding accounted for 0.9% of BC’s GDP in 2018. While accounting for a small share of the BC economy, on a regional basis the impacted areas account for 15.0% of the economy of Fraser River Valley, 4.6% of the economy of Thompson-Nicola and 6.2% of the economy of Okanagan-Similkameen. Additionally, the flooding in the Sumas Prairie affected areas that constitute an important share of animal herds and avian flocks in British Columbia.

The rain event and affected regions

Between November 13th and 15th, a major rain event occurred in British Columbia. Rainfall totals were between 150mm and 200mm (6-8 inches) for wide swaths of the south-western part of the province with Squamish, Chilliwack, Agassiz, Coquihalla Summit and Hope recording more than 200mm of precipitation during the storm (Accuweather 2021). The metropolitan Vancouver area, which includes Canada’s largest port, received more than 125mm of precipitation (CBC 2021a). As a result of this heavy rainfall and resulting flooding, there was widespread interruption of economic activity, including disruptions to major transportation routes.

The 5 regions of BC that were the most affected by the rain event are Metro Vancouver, Fraser River Valley, Squamish/Lillooet, Thompson-Nicola and Okanagan-Similkeen. Fraser River Valley, Thompson-Nicola and Okanagan-Similkeen were the regions where the largest extent of the flooding occurred in British Columbia (Map 1), and these regions contain the cities and towns that were subject to the most extensive flood warnings and evacuation orders.

This article provides estimates of economic activity in and around these flooded area. It reports on the GDP of firms and employment in and around these flooded areas. These estimates do not represent the total impact that the floods will have on the BC economy. For example, washed out transport infrastructure will have an impact on economic activity beyond the flooded areas.

Economic activity in flooded areas

Heavy rainfall led to extensive flooding in the area around Abbotsford-Chilliwack in Fraser Valley, evacuation orders for Merritt in Thompson-Nicola and flooding of the town of Princeton in Okanagan-Similkameem. In total, economic activity in these areas accounted for approximately 0.9% of BC’s GDP in 2018 (Table 1). The activity was produced by 7,452 business locations and is associated with 7,940 jobs based on the 2016 Census.^Note 

The area around Abbotsford-Chilliwack had extensive flooding that occurred primarily on farmland, and which largely avoided locations that produce higher levels of GDP. This can be seen when the production values for the area around Abbotsford-Chilliwack are plotted using 1 square kilometer grid squares. To do so, the value of GDP for each firm location is summed within the grid square where it occurs. The grid squares are then ranked by quintile across the region. The grid squares are shaded based on which quintile a grid falls into, and the grid squares with the largest amount of GDP (those in the top quintile) are shaded the darkest colour. Across the Abbotsford-Chilliwack region, the darkest squares tend not to coincide with flooded areas, and they do not appear in the Sumas Prairie (Map 2). Flooded locations, particularly in the Sumas Prairie, tend to be in the bottom quintile (the lightest shading) or do not have a reportable value. This would occur, for example, when the gird square is comprised of farmers’ fields.^Note  The fact that flooding around Abbotsford-Chilliwack tended to occur in locations that are used less intensively for GDP creation helps explain why, despite the extensive flooding and damage to farms, the amount of economic activity affected is only 0.7% of British Columbia’s 2018 GDP.

Although the amount of GDP around Abbotsford-Chilliwack that is likely directly affected by flooding is limited for the overall B.C. economy, it still represents an important part of the regional economy, and an important shock for B.C.’s agriculture industry. Estimates suggest that flooding directly affected 15.0% of the economy of the Fraser Valley, and much of the flooding affected agricultural areas. The Abbotsford-Chilliwack area is an important location for livestock in B.C. It generates a nearly a fourth of farm revenue and accounts for a fifth of farm capital (Table 2). Dairy cattle, poultry and pig production for B.C. is centered in this region, which represents an important food source for the province, and provides inputs for food manufacturing industries.

Outside of Fraser Valley, Merritt and Princeton experienced significant flooding. Merritt was subject to an evacuation order, while half of Princeton was reported to be flooded after dikes were breached (CBC 2021b, 2021c). In total, 4.6% of the economy of Thompson-Nicola and 6.2% of the economy of Okanagan-Similkameem appear to have been directly affected by the disruptions in these towns. This represents 0.2% of British Columbia’s economy in 2018.

Measuring the economic activity in the flooded regions

While experimental measures of economic activity can be compiled, it is not straightforward to do so, and the estimates come with a degree of uncertainty. To determine the size of the economic activity that was potentially affected by the rain event, it is necessary to determine which businesses were affected, and what value of production this represents. Here, an estimate is provided for firm locations that are in and within 500 meters flooded areas. These are assumed to be the firm locations most likely to be directly affected by flood waters. Locations that are indirectly affected, such as the Port of Vancouver or trucking companies in the lower mainland that may have had to delay shipments due to road closures in the Fraser Valley are not included. It is not clear to what extent firms and farms outside of flooded areas have ceased or scaled back operations. As a result, the estimate here pertains only to those locations where there is the greatest likelihood of direct disruption. To determine the value of production that is potentially disrupted, the starting point are the firm level data used to measure GDP by firm size.^Note  These data directly measure GDP for small firm locations and estimate production values of the locations of larger, multi-location firms. As the data used to create the file is only available with a lag, the most recent year available is 2018 and values from that year are reported here.

To determine the value of economic activity that may have been impacted, the firm-level information is combined with geographic coordinates from Statistics Canada’s Business Register to geographically identify firm locations. Information on the extent of flooding from satellite images is then used to determine which business locations were within 500 meters of flooded areas and, therefore, how much GDP may have been directly affected.

This approach provides a method to estimate the percentage of GDP and number of business locations that are potentially affected by flooding. However, a note of caution is warranted. The firm-level GDP estimates were not constructed for the purpose of making fine level geographic comparisons. They have a number of features which may produce errors for fine geographies.^Note  The estimates should, therefore, be viewed as indicative of the size of the disruption rather than as an exact accounting of its effects.

Conclusion

The experimental estimates demonstrate the utility of geo-locating production activities. In the case of the BC floods, the flooding appears to have directly affected areas that accounted for around 0.9% of BC’s GDP in 2018, and this effect appears to be concentrated in a select number of places. The flooding around Abbotsford-Chilliwack accounted for about 0.7 percentage points of GDP, while flooding in and around the towns of Merritt and Princeton each accounted for 0.1 percentage points of GDP. While these estimates do not present the entire impact of the flooding, they are a basis from which the impacts can begin to be calculated. 

References

Accuweather 2021. Available at: https://www.accuweather.com/en/severe-weather/death-toll-climbs-following-catastrophic-flooding-in-british-columbia/1049096 Accessed November 25, 2021.

Brown, M. and R. Rispoli. 2014. Metropolitan Gross Domestic Product: Experimental Estimates, 2001 to 2009. Economic Insights paper series. Statistics Canada Catalogue no. 11-626-X. No. 042.

CBC 2021a. These graphics show just how much record-breaking rain hit southern B.C. recently. Available at: https://www.cbc.ca/news/canada/british-columbia/bc-record-rainfall-graphics-1.6254271. Accessed November 25, 2021.

CBC 2021b. City of Merritt releases return-home plan for flooded-out residents. Available at: https://www.cbc.ca/news/canada/british-columbia/merritt-residents-returning-1.6258088. Accessed November 26, 2021.

CBC 2021c. Town of Princeton swamped after floodwaters breach dike. Available at: https://www.cbc.ca/news/canada/british-columbia/princeton-flooding-2021-1.6249710. Accessed November 26, 2021.

Innovation, Science and Economic Development Canada. 2021. Key small business statistics. Available at: https://www.ic.gc.ca/eic/site/061.nsf/eng/h_03126.html Accessed November 26, 2021.

Leung, D., Rispoli, L. and R. Chan. 2012. Small, Medium-sized, and Large Businesses in the Canadian Economy: Measuring Their Contribution to Gross Domestic Product from 2001 to 2008. Economic Analysis Research Paper Series. Statistics Canada Catalogue no. 11F0027M — No. 082.