The vast, terrifying wildfire that devastated Fort McMurray and surrounding communities left 2,400 homes and other buildings destroyed – and many more damaged and uninhabitable.
Rebuilding Fort McMurray will mean an enormous amount of work, and require vast amounts of building materials and household goods.
And starting about the middle of the year, the huge project will start to refloat the regional economy, economists predict. But the scale and complexity of the effort means it will take some time to get going.
“There is a lot of work that has to be done before residents can come back, prior to any kind of reconstruction taking place. Most of that is really only going to begin in Q3, and probably last for several months, and probably into 2017,” Michael Dolega, a senior economist at TD, said.
The second quarter of 2016 will show the brutal effects of the oil slump and the wildfire on Alberta’s economy, but the picture will change after that, he says.
“The fact that there’s a fair bit of labour-intensive work that has to be done in order to make this happen will help take up some of the slack that has opened up as a result of the decline in oil prices, and lower investment.”
“A lot of these skills are obviously transferable from the oil industry to construction. The people who may have lost their jobs may now very well find themselves employed in these reconstruction efforts.”
(Measures of economic activity, like GDP, don’t measure the loss of wealth that results from a natural disaster, but do measure the stimulus effect that goes with reconstruction.)
“It’s typically what you see after these types of events, that the reconstruction and resettling efforts do tend to offset the impacts,” fellow TD economist Brian DePratto said.
Estimates of how much the wildfire will cost the insurance industry run in the $9-billion range. Earlier in May, a spokesperson for the Insurance Bureau of Canada called the disaster “one of the biggest events in Canadian property casualty history.”
Unavoidably, much of that money will go into the local economy in Fort McMurray – paying people to make things, clean things and fix things.
The resulting jobs will be much needed. Numbers released last week by Statistics Canada showed that Wood Buffalo, the region corresponding to Alberta’s oilpatch centred on Fort McMurray, had a job vacancy rate (unfilled jobs as a percentage of filled jobs) of only 1.6 per cent at the end of 2015. That’s barely above Cape Breton, and below several other regions in Atlantic Canada.
Before the fire, of course, falling oil prices were at the root of the Alberta oil patch’s depression, and the slump in Alberta’s economy more generally.
READ MORE: Fort McMurray wildfire: Will parts of city stay abandoned? Depends on oil prices
The pace of reconstruction is hostage to a certain extent to oil prices, Dolega says:
“The lower the oil price, the less incentive there would be for any sort of reconstruction for business and residential reconstruction.”
READ MORE: Fort McMurray wildfire: Search these high-resolution satellite maps of the damage
It’s been weighing on the minds of Fort McMurray evacuees since they were forced to flee the city: what’s left? Is their home still standing? And in what condition? Now, satellite images are providing some answers. Emily Mertz has more information.
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