The geopolitics of regional development: climate and commodities

Canada’s regions are global

Local and regional development, to the extent urbanites thinks about them, are usually considered minor affairs, principally driven by forests, farmers, fish, free-range chickens, and the occasional oil-well or mine.

Indeed, in an “urban era“, it is easy to forget that, in Canada, about 18% of the population still lives in a settlement of fewer than 10 000 people, and over 30% of people live more 90 minutes’ drive from a metropolitan area.

Share of Canadian population living within a 90 minute or 2 hour radius of a Major metropolitan area (over 500 000 people). Source Desjardins, Polèse & Shearmur, 2013

It is also easy to forget that non-metropolitan regions are intimately linked to global networks and markets – particularly commodities and associated expertise.

Current geopolitical shifts could have major impacts upon these regions: demand for many Canadian commodities could rise fast.

Unless this is accompanied by strict, enforceable, and enforced environmental regulations, this may be a curse in disguise.

Peripheral regions (were) in decline

A rise in demand for commodities and related expertise seems like a good thing for Canada’s peripheral regions. They have been in decline (relative, if not always absolute) for the last thirty years.

This decline has been driven by two factors.

  1. In the late 1980s, world commodity supply drastically increased as the iron curtain came down. Eastern European and Russian resources flooded world markets. This extra supply, coupled with lower production costs (linked with low wages and fewer environmental regulations), undercut Canada’s commodity suppliers, mainly based in peripheral regions.
  2. The automation of many mining, forestry and agricultural activities has eaten away at employment in these sectors. Whilst certain resource regions (such as the oil sands) have boomed as demand outstripped rising supply, in many regions population has declined despite a rise in agricultural and resource production.

Mario Polèse and I, in an extensive study of peripheral regions completed almost exactly twenty years ago, analyzed these processes in depth.

Russia’s share of global commodity production. Source: Russia Economic Report, 2021, World Bank (p 18)

Can Canada seize the opportunity?

As we watch the terrible events in Ukraine, a slow realization is dawning. It may not be COVID, but the tectonic geopolitical shifts we are witnessing, that will alter the world for the next decades.

This is in addition to global warming: warming is already having huge and long-term impacts, despite attempts by some to pretend it isn’t happening.

The question is: can Canada seize the opportunity of increased commodity demand without further contributing to pollution and global warming?

Why peripheral regions may not benefit

Many Canadian resource and agricultural regions, that have suffered over the last 30 years, will see a rise in demand for their products.

However, a shift towards Canadian resources will not lead to major revival of local communities, because fewer and fewer workers are required to extract resources.

The main effect of a revival in commodity demand will be a boost to Toronto’s resource-based stocks (at least those not too exposed to Russia).

Thus, a revival in demand may not benefit Canada’s periphery: it may see a small (and unstable) rise in jobs, but will suffer the direct effects of pollution.

Can any good come from revival of commodity demand?

Unless Canada and its provinces gets serious about their environmental regulations then the long-term consequences of a commodity-fueled financial bonanza will be to accelerate Canada’s (already substantial) contribution to climate crisis and further pollute its outlying regions (whilst enriching stock-holders and assorted speculators).

But couldn’t Canada use its resource windfall to accelerate a green transition by, for example, levying increased royalties or imposing stringent extraction standards?

Maybe pigs will fly…

“While Canada has decoupled a number of environmental pressures from economic growth, it remains one of the most energy- and resource- intensive economies in the OECD.

Canada is the fourth largest emitter of greenhouse gases in the OECD and emissions show no sign of falling yet. Fossil fuels remain the dominant energy source.

The emission of local air pollutants decreased, but outdoor air pollution continues to harm Canadians. Waste is predominantly landfilled and recycling rates are low in most provinces and territories. Pressures on biodiversity and water bodies remain high in certain areas.”

(OECD, Environmental Performance Review, Canada, 2017)

Published by Richard Shearmur

I am a professor at McGill's School of Urban Planning. I perform research on innovation, on how we locate work activities (in a world where people often work from many places), and on urban and regional economic geography. I used to work in real-estate, and teach a course on this. I am an urban planner, member of the Ordre des Urbanistes du Québec and of the Canadian institute of Planners.

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