Estimating local economic impacts on remote Indigenous communities with adapted input–output models

The limited community-level data and the lack of economic models tailored to Indigenous economies present significant challenges for conducting ex-ante evaluations of investments in remote Indigenous communities. This lack of adequate modelling efforts might result in misleading government interventions that could have limited or even negative economic impacts for the communities concerned. This study develops a methodological tool to support policy and government planning through Input-Output models adapted to capture the structure of local economies in remote Indigenous communities in Canada. Adapting the Northwest Territories Supply and Use Tables (240 industries and 492 products) published by Statistics Canada, the model incorporates community-specific sectors, leakages, imports, transportation costs, inventories and commercial activities. Using Fort McPherson, Northwest Territories, as a case study, we estimate the economic impacts of community-based biomass energy production, including potential cost savings, business creation and greater income circulation. Results show positive local effects: the biomass project generates total sector output of CAD 602,021 (output multiplier of 1.023). Total household income impacts reach CAD 86,498, comprising CAD 57,618 from the disposable-income effect of lower energy costs and CAD 28,880 in wage income from project-related sectoral activity. Average output multipliers in Fort McPherson (1.03) were substantially lower than comparable territorial multipliers (1.40), highlighting the importance of community-specific modelling. Sensitivity analysis showed that total sector output varied by only 1.03% across alternative household spending retention assumptions. This methodology can be applied to other remote and marginalised communities, providing a framework to guide local investments, energy security and economic development.