Government Hedges its Bet Against Global Warming

Churchill, Manitoba (population 923) is a small town in Northern Manitoba known for polar bears, beluga whales, permafrost, and the small and somewhat controversial Port of Churchill. Currently only operating from July through November, Churchill is Canada’s only arctic port, located on the west coast of Hudson’s Bay. Being the only arctic port in Canada has significant advantages, which the Churchill Gateway Development Corporation (CGDC, established in 2003) is trying to utilize.

Operating out of Churchill cuts the distance (port to port) between Canada and Murmansk, Oslo, Liverpool, and Rotterdam. The distance saved between Churchill and Oslo is approximately 1,998 nautical miles (around 130 hours of shipping time), and between Churchill and Rotterdam the distance saved is 981 nautical miles (65 hours shipping time). Additionally, Churchill is the closest port to the central Canadian wheat market in Manitoba and Saskatchewan, making wheat the port’s number one commodity (with the support of the Canadian Wheat Board).

While these figures present a rosy image the reality seems to be an obvious contradiction. Since its inception in 2003 the CGDC, with a mandate to “market the Port of Churchill through diversifying the traffic base and building two-way traffic”, has only made modest gains. A telephone interview with the marketing analyst for the CGDC confirms that, six years after the creation of the board, their priorities and challenges remain the same as when they started. 2007 marked the first and last time an inbound ship (that had just offloaded cargo to the Hudson’s Bay) was brought in to the port and subsequently reloaded with an outbound shipment of wheat, as well as the first inbound shipment of anything to the Port of Churchill (fertilizer from Russia), in seven years. Immediately following this shipment, an optimistic Mike Spence, Mayor of Churchill, was quoted as saying, “the Russian shipment will be the first of many… Denmark, Sweden, and Iceland have also expressed interest in future trade through the port”.

Two years later, however, and the lone Russian shipment remains the most illustrious moment in the Port’s shipping career. Perhaps the second most illustrious moment occurred just a few months ago. The chairs of the Halifax Gateway Council and the CGDC signed a Memorandum of Understanding to establish a recurrent transfer of grain between the two ports. To understand the scale of operations at the Port of Churchill it is useful to compare it with another relatively small Canadian port, the Nanaimo Port Authority. In the period ending 31 December 2008 Nanaimo’s total volume of import and export cargo amounted to 1,425, 453 tons. In comparison, the biggest year in Churchill’s history (2007), amounted to just over 620,000 tons, which is considerably more than the average of around 400,000, with some years seeing as little as 280,000.

One has to wonder whether this lack of progress is due to poor management at the CGDC, to the global recession, or to a more fundamental issue: the port’s relative inaccessibility. Railway access to the port is limited, in poor condition, and in constant need of costly maintenance due to the recurring effects of permafrost, while the waters are un-navigable for the majority of every year. Furthermore, even when shipping lanes are open, many international shipping companies are not equipped or not willing to risk shipping through icy waters. Another problem with seasonal shipping is that many agricultural products (wheat, for example) have to be harvested at a certain time every year, and to avoid storage costs it is most advantageous to get them into the international market as soon as possible.

To offset this negative effect on local farmers the Canadian Wheat Board announced an initiative in 2008 to pay premiums and storage payments to farmers in the catchment Churchill area for wheat stored on-farm for shipment through Churchill Port. Yet the lack of two-way shipping illustrates that, despite incentives offered by the Canadian Wheat Board and $88 million in investment in infrastructure by the Canadian government, the port is destined to remain a relatively minor player in Canada’s vast transportation network – dashing Manitoba’s hopes of being an international transport hub. As Peter Timonin of Transport Canada notes, “the insurance industry is extremely conservative in terms of assessing risk, and this cost plus the potential of losing a vessel in a remote part of the world is incentive enough to drive most ship operators to choose a more southerly route.”

For the Port of Churchill to become economically viable and efficient, Manitobans have to hope that global warming does not slow down. Considering the clear lack of commercial interest in the port’s activities, one must believe that Manitoba and the Federal government are hedging their bets against global warming. Manitoba has direct economic interest in the fight against climate change, as global warming is proving to negatively affect regulated agricultural cycles. It is a fight that Manitoba cannot win on its own however, and one whose outcome is largely out of their control. If global warming keeps accelerating the Port of Churchill will benefit from an increasingly longer shipping season and more navigable passage for international shipping companies, while the costs of maintaining the railway should drop to a fraction of its current cost. In other words, global warming could turn what is currently an unviable business into a profitable one, all the while positioning Churchill, Manitoba, and Canada ahead of the race in terms of artic shipping infrastructure. Anyway, who needs polar bears when you have the potential to become an international shipping hub?

Looking back on Manitoba’s last general election in 2007, where environmentalism was a major priority of every party, it seems the politicians have worked out a flawless plan. Push for environmental conservation as much as possible (it’s politics after all, and environmentalism is in), but in the meantime surreptitiously pour money and resources into an initiative that will undeniably benefit if the former fails. It is clear, however, that any potential beneficiaries of the Port of Churchill’s success do not believe in global warming – they believe in climate change, or at least that is what they’ll tell you on the record.