Global trends and the price of Northern Ontario.

• Author: Robinson, David
• Position: ECONOMICALLY SPEAKING

If Northern Ontario were a company its stock would be shooting up. The stockholders would be getting rich.

You shouldn't get too excited though - you own a lot less than one 100,000th of one percent of 'the stock in the company. Most of the rest is owned by foreigners and the people of southern Ontario.

Even so, it is nice to see the North becoming a very hot property.

Metal prices are rising. We have metals. Wood prices are rising. We have wood. Energy prices are rising. We have energy. Water is getting scarce. We have water.

Recreational land is getting scarce everywhere. We have lots of recreational land. We even have a lot of shorelines, which are the most highly valued kind of recreational land.

Trade economists would say that the "Terms of Trade" are moving in our favour. None of this was mentioned in the background for the Northern Growth Plan, for some reason. If it had been mentioned, Northerners might have wanted a share of the benefits. That would have been silly.

Favourable terms of trade don't necessarily make us better off. Resource rents and land rents flow to the owners, not the local population. Historically the wealth of Northern Ontario flows south. The legacy of previous booms have usually been clear cuts and abandoned mines. A lot of foreign reserves will be spent buying Northern Ontario assets. Our governments will be eager to sell. Not much will stick in the North.

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In fact the changing price structure could work against us. Cold winters and great distances mean we use a lot of fuel and import most of our food. Fuel and food prices are both rising.

Food prices wobbled around the 1990 price until about 2004. They began climbing in 2004, and more than doubled by 2010. They will keep rising. Droughts and floods are likely to take more land out of production this year than last year. Global warming will continue whether Mr. Harper believes in it or not. Soaring oil prices will also boost food prices. Oil is used to produce fertilizers, to harvest, to process and to ship food. Since Northern Ontario is farther from most food producing areas we will get a bigger hit from transport costs on top of the general price increase.

The real kicker for food prices is the rising world population. New projections...