The Ongoing Muskrat Falls Debacle: How not to Develop the North

The massive hydro-electric project on the lower Churchill River in Labrador is expected to go online in 2019. Described as a “boondoggle” by policy makers and at 12.7 billion dollars–over double the anticipated budget–the Muskrat Falls project emerged into international attention in the fall of 2016 when protesters occupied the Labrador premises of the Newfoundland and Labrador energy corporation, Nalcor. The protesters demanded that the company and the government of Newfoundland heed a joint MUN/Harvard study that proved that if the flood basin was not cleaned of vegetation prior to flooding, the surrounding lands would be poisoned with methylmercury for years to come, endangering the lives of Innu and Inuit who depended upon the fish and game to survive. At the zero hour, and with an unprecedented hunger strike threatening the lives of protesters, the government relented and agreed to clear the basin. But problems continue to this day, with Nalcor refusing to produce documentation to satisfy local concerns that the builders of the dam have reckoned with the seasonal instability of the river bank (particularly the north spur), and also denying, against local knowledge, that spawning salmon populations are at risk due to low water levels. The protest has never in fact stopped, as this writer learned recently on a visit to the site.

Economically, no one denies that Muskrat is a fiscal disaster. Nalcor CEO, Stan Marshall, sees little prospects for the province to recoup its losses. “I think this project is a hell of a lot worse … deal than the Upper Churchill,” Marshall said in  recent interview (http://www.cbc.ca/news/canada/newfoundland-labrador/stan-marshall-muskrat-falls-nupdate-1.4174569). MUN economist Dr. James Feehan has proven that it is virtually impossible for the project to break even. Moreover, by flooding the economy of Newfoundland and Labrador with hydro-electric energy for generations, Muskrat Falls has doomed the development of other sustainable energy in the province, such as wind and solar. The project is called “green” but when one considers the transformation of the Churchill river, the flooding of indigenous ancestral lands, and the adverse effect on human and non-human communities, the descriptor is dubious at best.

Historian Dr. Jerry Bannister at Dalhousie University has argued that the 20th century political history of Newfoundland is key to understanding why the project goes ahead, despite its unprofitability. In the early 2000, former NL premier Danny Williams’ promised to make right the infamous bad deal signed by Premier Joey Smallwood in the late 60s to export hydro-electric power through Quebec from the dam on the upper Churchill river in Labrador. The Churchill Falls dam is an infamous economic failure for the province. According to the original deal, Newfoundland and Labrador must sell the power to Quebec at 1969 rates, while Quebec resells the energy at current rates. According to conservative estimates, Newfoundland and Labrador has lost billions of dollars on Churchill Falls. Muskrat Falls, according to Bannister, is driven not so much by neo-Liberal economic as by Newfoundland nationalism.

Sean J. McGrath