Western Economic Diversification Canada
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Executive Summary

Introduction

The mountain pine beetle epidemic decimating British Columbia’s pine timber stands began in the mid-1990’s and has since grown to one of the largest insect infestations on record in North America. In January 2007, the federal government announced the $200 million Federal Mountain Pine Beetle Program designed to address both the short-term and long-term impacts of the beetle infestation. 

The Federal Mountain Pine Beetle Program comprised three key components delivered by different federal departments. Western Economic Diversification delivered the $56M communities component aimed at developing and diversifying the economies of affected communities. The $56M allotted to Western Economic Diversification was divided between the Community Economic Diversification Initiative ($36.6M) and the Airport Improvements Initiative ($19.4M).  

The Community Economic Diversification Initiative (CEDI) was a two-year contribution program addressing the long-term impacts of the mountain pine beetle on approximately 180 communities in interior British Columbia.The department delivered the Community Economic Diversification Initiative in partnership with 19 Community Futures Organizations and other community stakeholders. CEDI addressed four programming objectives:

  • community capacity building;
  • economic diversification;
  • economic infrastructure; and
  • value-added forestry. 

Based on recommendations of the Mountain Pine Beetle Program Advisory Board, CEDI funding was allocated to those communities deemed most at risk to biological and socio-economic impacts from the mountain pine beetle. Communities most at risk were identified by the as:

  • having timber supply impacts and economic dependency on pine;
  • small and remote communities, particularly First Nations communities, with economic and sustenance dependency on the affected forests;
  • most immediately at risk due to current impacts of mountain pine beetle.

These metrics defined two impact zones. Zone 1, communities at risk and a sub-set Zone 2, communities at immediate risk. It was recommended that seventy percent of CEDI funding be allocated to Zone 2 communities. In terms of program delivery, a pre-marketing effort promoted the program and prepared potential proponents for the Request for Proposal process.

The mountain pine beetle affected approximately 100 First Nations communities, prompting the department’s development of an “Aboriginal Engagement Strategy” raise awareness of the program in First Nation communities and to support these communities in securing funding.  The CEDI application process involved two steps: 1) submission of an Expression of Interest; and 2) proposal submission. This application process spanned approximately nine weeks in the fall of 2007. To expedite the proposal development and approval process, proposal applications were submitted electronically and, following due diligence, batched for ministerial approval. In total, 144 projects were funded. Because many projects were incomplete as of the March 2009 deadline, the initiative was initially extended to March 31, 2010. To facilitate successful project completion, the initiative was granted a final extension to March 31, 2011.

The Airport Improvements Initiative (AII) was a two-year $19.4 million contribution program funding airport expansion projects in three communities affected by the mountain pine beetle: Prince George, Kamloops and Kelowna.

Using the existing Western Diversification Program authority, the Community Economic Diversification Initiative and the Airport Improvements Initiative were evaluated based on the Performance Measurement Strategy of the WDP. The evaluation covered the fiscal years 2007-08 to 2009-10 and assessed program relevance and performance.  Since these one-time initiatives will not be renewed, the evaluation focused on the initial, rather than ongoing, relevance of the initiatives. The evaluation methodology included document/literature review, file and database review, analysis of comparable programs, 49 key informant interviews, 118 project proponent interviews, nine case studies, an outcome assessment of comparator communities and two focus groups

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Community Economic Diversification Initiative

Relevance

There was a major need for this type of programming. Many of the affected communities were small, rural, forest-dependent and lacking sufficient resources to cope with the economic, social and environmental effects of the mountain pine beetle infestation. Most projects would not have proceeded in the absence of CEDI funding; CEDI funding was the primary funding source for the CEDI projects and attracted funding from other programs. The initiative’s objectives supported one of the department’s strategic outcomes at the time, Community Economic Development, and aligned with the federal priority of Strong Economic Growth.

The initiative was consistent with federal roles and responsibilities related to supporting prosperity in all regions in Canada. A 2004 survey found that residents of areas affected by the mountain pine beetle believed the federal government should be involved although they had little trust in the federal government to properly manage for mountain pine beetle activity.

Performance - Achievement of Expected Outcomes

Although many of the CEDI projects were incomplete at the time of the evaluation, the completed projects were somewhat successful in realizing short-term objectives and generated a wide range of impacts including enhanced economic capacity and infrastructure,  improved business climate, economic stability, creation of economic opportunities, development of new businesses/industries, and diversification of local economies. However, some key informants questioned CEDI’s ability to realize its long-term goals of sustainable development and adjustment.

Success factors included staffing a dedicated Mountain Pine Beetle Unit within the WD-BC Regional Office, the two-step application process, building solid partnerships and the Aboriginal Engagement Strategy. On the negative side, the CEDI faced some implementation issues which contributed to several projects not finishing on time. The first issue was the long approval time for most projects, ranging from six months to more than one year, leaving proponents with very little time for implementation. The long approval time combined with the tight application deadlines lead to a sense of mismanaged expectations and disillusionment in the communities, adversely affecting the image of the department and the Community Futures Organizations. The second issue was the nature of follow-up monitoring as the dedicated departmental staff were reassigned after the administrative funding for CEDI ended, leaving some project proponents without the guidance and support they needed to complete their projects.

Performance - Demonstration of Efficiency and Economy

Project outputs and outcomes were moderately cost-effective and the CEDI  obtained good value with respect to the use of public funds. CEDI followed a top down program approach and the positive aspects of the initiative included its reasonable delivery costs and leveraging and its partnerships with various community-based organizations. The negative features related to the lack of advanced funding to some proponents, its appearance of being rushed into implementation and its two-year time frame which was too short to process the very large volume of project proposals and allow projects to complete on time. Designing CEDI as a time limited program overlooked one of the recommendations emerging from the evaluation of a previous time limited program, the Softwood Industry and Community Economic Adjustment Initiative. Specifically, the previous evaluation recommended to “set a longer program duration from the beginning”.

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Airport Improvements Initiative

The evaluation of this initiative was hindered by the general lack of information on this initiative. All but one of the key informants had very limited knowledge of the AII.

Relevance

There was, and continues to be, a major need for funding and support from an initiative such as AII that acts  in concert with other infrastructure programs. Federal government policy precludes capital investments in airport infrastructure without explicit approval; AII was granted specific approval because of the significant impacts of the mountain pine beetle infestation and the opportunity for diversification. The initiative aligned with the federal government’s responsibility of ensuring all areas of Canada are prosperous. The AII complemented other government and private sector programs.

Performance - Achievement of Expected Outcomes

The projects funded under the AII achieved their objectives in terms of extending runways and expanding airport capacity and ability to operate year-round. One airport study found the runway extension improved operational and safety conditions for incoming air carriers. The projects are likely to be very successful in increasing airport activity levels in the long run as well.  Community and departmental support were identified as the most important success factors; Departmental involvement with First Nations bands was also critical. 

Performance - Demonstration of Efficiency and Economy

AII was cost-effective and generally well-structured. Some respondents had cash-flow issues that rendered pre-payment very difficult. Respondents also said that although the departmental staff were careful to minimize delays, there were red tape issues that ended up resulting in several months of delays. Respondents said that intended results would have been achieved more effectively with additional funding during the project; instead, the community had to invest more funding. 

Infrastructure projects like airports need to incorporate best practices in strategic planning, information management, asset management systems, consultation, priority setting and business case approaches. They should also include cost and benefit analysis of the project and account for social and environmental impacts. Overall, AII successfully leveraged 71% of its funding from other sources. Negative features of AII included its lack of advanced funding to some proponents and its tight deadlines. Most infrastructure programs are of longer duration.

Recommendation

The evidence gathered in the evaluation suggests the following recommendation:

  1. The department should develop a template for the design and delivery of economic diversification programs that is built on past lessons learned and best practices but is flexible in accommodating the unique needs of each issue, region and program.