3.3 Economic Benefits

3.3 - Economic Benefits

This indicator shows economic benefits in ISK created in Iceland by Fjarðaál and Landsvirkjun through the projects by salaries, taxes and domestic procurement



Results


Table 1 shows economic benefits that Alcoa Fjarðaál creates in Iceland in ISK.  The numbers reflect  simple calculation on East Iceland's gain due to Alcoa and Landsvirkjun. Economic status, increased productivity of workforce, required rate of return, energy and aluminum prizes or status of economic system are not taken in to account. In reality, the numbers reflect capital the companies put into the economic system, irrespective of its state.



Table 1. Economic benefits in Iceland due to Alcoa Fjarðaál and Fljótsdalsstöð (millions of ISK)

  Alcoa Fjarðaál (millj. ISK)
Fljótsdalsstöð (millj. ISK)
 2007   5,000  113
 2008  30,000  287
 2009  29,000  328
 2010  31,000  359
 2011  33,000  537
 2012  38,000  510
 2013  33,000  542
 2014  28,400  565
 2015  33,800  672
 2016  27,500  572
Raw data in Excel

Updated: October 2017
Sources:  Alcoa Fjarðaál and Landsvirkjun (2017)



Metric, Targets and Monitoring Protocol


Metric: What is measured

Economic benefits, in ISK, that Fjarðaál and Landsvirkjun create domestically through the projects by salaries, payments to public authorities and supplies procured in Iceland (Project effects: direct)

Monitoring Protocol

Financial departments of Landsvirkjun and Fjarðaál in cooperation with an independent consultant collect information annually.

Target

Results depend on several macro factors that companies can not influence and targets are therefore not set.

Countermeasures

None, just monitoring.

Changes to indicator and metrics

It was decided in the forth phase of the initiative to change the numbers of the sustainability indicators.  This indicator war originally number 14.1 and is referenced as 14.1 in early documents of the project.

This indicator was initially called „Retained value added“ and the metric: „ISK retained in Iceland through Alcoa and Landsvirkjun salaries, payments to public authorities, supplies procured in Iceland and profits that remain in Iceland„  During data collection for the year 2005, which is the first year in Phase 4 the name was changed to „Economic benefits“ and the metric to „Economic benefits in ISK, that Fjarðaál and Landsvirkjun create domestically through the projects by salaries, payments to public authorities and supplies procured in Iceland“.  The reason was that is was not considered realistic to provide information about profits that stay domestically and are specifically tied to the projects.  The indicator and metric was changed accordingly.

Baseline


 

Not applicable.

Rationale for Indicator Selection


Long-term economic benefits from the projects are important for sustainability.

This does not only apply to economic benefits for the private companies involved in the projects, but also for East Iceland and for Iceland as a whole.

The economic benefits added from the smelter and dam will include salaries, payments to public authorities, supplies procured in Iceland and profits that remain in Iceland.