Alberta Separation Scenarios Paint Divergent Economic Pictures

A report commissioned by the Alberta government ahead of the Oct. 19 referendum on separation models the economic impact of a split from Canada. The School's The Economic and Fiscal Implications of Alberta Separation highlights two scenarios: smooth and difficult. Under the smooth scenario, real GDP is estimated to be 2.2 percent lower in the short term than if Alberta remained in Canada but 3.4 percent higher over the long term. In contrast, under the difficult scenario, GDP is estimated to be 10.1 percent lower in the short term and 16.2 percent lower over the long term.

The smooth case assumes improved productivity in Alberta's resource sector, temporary higher borrowing costs associated with separation, and a smaller share of existing federal debt based on historical fiscal contributions rather than population-based approach used in the difficult case.

Energy is central to the stronger long-term result under the smooth scenario. The report estimates that oil prices remain in line with current expectations, and productivity in the resource sector improves.