A Vancouver-based researcher says the Saskatchewan government’s carbon tax impact analysis is “highly misleading” due to number errors.
Last June, the Saskatchewan government said a federal carbon tax could reduce the province’s gross domestic product (GDP) by $1.4 billion, or 2.43 per cent, annually. These numbers are based on a report the province commissioned from the University of Regina's Institute for Energy, Environment and Sustainable Communities.
Jotham Peters, a professor at Simon Fraser University and director of Navius Research, said those numbers “don’t add up.”
“They show that the total GDP changes by about 2.43 per cent in 2023 as a result of the carbon tax. But none of the individual components change by anything more than 1.1 per cent,” said Peters.
“This is a fairly large red flag that there's something significantly wrong with that study.”
Peters believes the study confused GDP growth with GDP change.
“GDP growth refers to how GDP grows on an annual basis,” said Peters. “Whereas, a change in GDP refers to some year in the future, (and) how GDP might be different from what it would have been in the absence of a policy.”
In looking at the study’s numbers, Peters said the U of R’s report should say the GDP goes down by 0.13 per cent, not 2.43 per cent.
“What the government of Saskatchewan is suggesting, is that the implementation of a carbon tax would lead to a near permanent recession in the province,” said Peters. “Which, intuitively, doesn't make any sense.”
According to Peters’ recalculations of the study, the province’s GDP, which is shown to typically grow one per cent each year, would actually grow at 0.87 per cent. Therefore, the carbon tax plan would cause a slight reduction in annual GDP growth, but nowhere near the government’s larger estimated effect.
Nic Rivers, the Canada Research Chair in Climate and Energy Policy, reviewed Peters' research, and also believes there are errors in the province's analysis.
“It certainly would be problematic if this was being used as a basis for shaping greenhouse gas policy in Saskatchewan, because it looks like pretty misleading information,” said Rivers.
CTV reached out to the Ministry of Environment for comment, but was denied an on-camera interview on Monday.
In an emailed statement, the ministry said, "We believe the institute's calculations were prepared by experts in this field and are thorough and detailed... And the Institute’s findings are presented in the same method as the federal government’s CGE models, in which GDP change is the sum of percentage change in each GDP component compared to GDP, not the weighted average.”
