The Alberta oil sands reserves represent a very valuable energy resource for Canadians. In 2007, Statistics Canada valued the oil sands at $342.1 billion, or 5 per cent Canada's total tangible wealth of $6.9 trillion. Given the oil sands' importance, it is essential to value them appropriately. In this report, we critically review the methods used by Statistics Canada in their valuation of the Alberta oil sands. We find that the official Statistics Canada estimates of the reserves (22.0 billion barrels) of Alberta's oil sands are very small compared to those obtained using more appropriate definitions, which results in an underestimation of the true value of the oil sands. Moreover, the failure to take into account the projected growth of the industry significantly magnifies this underestimation. We provide new estimates of the present value of oil sands reserves based on a set of alternative assumptions that are, we argue, more appropriate than those used by Statistics Canada. We find that the use of more reasonable measures of the total oil sands reserves (172.7 billion barrels), extraction rate (a linear increase from 482 million barrels per year in 2007 to 1,350 million barrels in 2015, and constant thereafter) and price ($70 per barrel, 2007 CAD) increases the estimated present value of the oil sands to $1,482.7 billion (2007 CAD), 4.3 times larger than the official estimate of $342.1 billion. Using our preferred estimate, Canada’s total tangible wealth increases by $1.1 trillion (17 per cent), and reaches $8.0 trillion with oil sands now accounting for 18 per cent of Canada’s tangible wealth. The importance of these revisions is also demonstrated by their impact on the per-capita wealth of Canadians, which increases from $209,359 to $243,950, or by $34,591 (or 17 per cent). Given the importance of the oil sands for Canada, Statistics Canada should undertake a review of its methodology. In light of the growing body of climatologic literature supporting an association between anthropogenic GHG emissions and global climate change, no analysis of the „true value? of the oil sands would be complete without an accounting of the social costs of the GHG emissions that arise from oil sands development. According to our baseline estimates, the oil sands impose a total social cost related to GHG emissions of $69.4 billion. In making this estimate, we assume that each barrel of oil sands output imposes a social cost of $2.25 (based on a cost of $30/tCO2-e and an intensity of 0.075 tCO2-e/bbl). Our preferred estimate of the net present value of oil sands wealth net of GHG cost is thus $1,413.3 billion, 4.1 times greater than the Statistics Canada estimate which does not account for any environmental costs. This report does not account for non-GHG related environmental and social costs. A comprehensive valuation of all environmental costs are needed to assess whether future benefits derived from oil sands development are outweighed by even larger environmental costs.
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