Wrestling with the north’s rural economic development riddle

One of northern B.C.’s most challenging questions is how best to support rural economic development.

You’d think we’d have this nailed by now given that the “rural picture” has remained largely the same for the past century: small, spread-out communities that are largely reliant on one or two industries and subject to transient populations, dramatic geography and shifting weather patterns.

Trouble is, those are the things that make it difficult to answer the question.

The region’s continued reliance on resource industries means that it is more vulnerable to shifting global market conditions, commodity prices and exchange rates than are large metropolitan areas such as the Lower Mainland or Capital Regional District.

This has been the story of the north for as long as the settler population can remember and has resulted in communities that are regularly in flux and home to seasonal or transient workforces.

And it extends to the public sector.

When a one-industry town faces a major shutdown, the municipality is forced to reconcile a budget with far less industrial tax revenue and fewer residents, which translates into service reductions and staff layoffs.

These conditions create ongoing capacity and continuity challenges, and, in both the private and public sectors, make it difficult to innovate.

Layer on top of this some of the world’s most challenging geography, climate and weather conditions and the answer to the question about how to develop the rural economy quickly becomes an exercise in frustration.

If you think this sounds like a reason to move away from the resource economy – think again.

Economies are built on the lowest-hanging fruit – business ventures that capitalize on the available expertise and assets that have the best chance of generating a return at the lowest risk.

In our part of the world, those assets are our natural resources.

These are our core industries for the foreseeable future; the trick is in building communities around them that have enough diversity in their local economy to be insulated from commodity cycle volatility.

This brings us back to the notion of rural economic development, which in practice looks more like community development.

Investment in capital assets that support new jobs and new revenue growth and diversify the local area economy – projects that make communities more sustainable, more desirable places to live – is the backbone of a strong community development strategy.

In practice, this tends to look like investments in airports, marinas, recreation facilities, arts and culture facilities and the like.

This might sound like soft stuff, but in small towns these facilities are critical community assets that support service and program delivery that’s key in attracting and retaining families.

These amenities also make space available for small-business owners, artisans and craftsmen, which supports business retention and expansion.

Last year, we took a high-level look at the impact of our Community Halls and Recreation Facilities grant program, which provides $30,000 grants for small-scale projects in northern communities.

A quick look at 40 projects we had funded over the past year showed that they generated more than $1 million in new revenue collectively in the first year after the projects were completed.

That’s not a lot of money by big-city standards but, in communities of fewer than 5,000 residents, it is.

More importantly, it demonstrates that more money is being retained in small towns, which helps to address long-held concerns about economic leakages.

Ensuring that a portion of the money that’s made in rural areas continues to circulate in rural areas is an important part of the equation.

The resource sector has been B.C.’s golden goose for a long time, generating first dollars in rural and remote areas that benefit small towns and the supply chain all the way to downtown Vancouver.

Those first dollars have created an economic baseline in our communities and translated into ongoing corporate support for community amenities, training programs and, in some cases, the establishment of endowments and foundations.

Rural B.C. has a leg up on other parts of Canada through a robust system of trusts and foundations. These non-profit entities, some established by the province, others through industry, non-governmental organizations or citizen groups, keep capital flowing into projects that make our communities more resilient.

All this is a long-winded way of saying that the resource sector and community development go hand in hand in our part of B.C. – the resource sector is the economic foundation that provides the opportunity for communities to develop and implement diversification strategies that smooth out the peaks and valleys inherent to commodity cycles.

So how do we best support rural economic development?

Ensure that we continue to have an environment that allows the resource industry to operate responsibly and inclusively and generate profit, plug economic leakages where we can and develop diversification strategies.

If done correctly, non-profit foundations, endowments and trusts such as ours can continue to sustainably disburse funding into community projects that make those strategies a reality.

It’s not a silver bullet; it’s the long game, but it’s one that will work. •

Joel McKay (joel@northern development.bc.ca) is the chief executive officer of Northern Development Initiative Trust, a non-profit organization that stimulates economic growth throughout northern B.C. He is also a Jack Webster Award-winning journalist and a former Business in Vancouver editor.