Local economy impacts of a planned ultra-deep-water quay development in the Scottish Shetland Islands

Abstract

Creating new port infrastructure is essential in unlocking energy and net-zero transition pathways globally. In addition to standard business planning, it is increasingly important to build an understanding of how investment that extends port infrastructure to increase operating capacity may be expected to impact local economies and jobs, both to empower required public policy decision-making and build ‘social licence’ for new infrastructure creation. Here, we consider the case of planned investment in a new ultra-deep-water quay in the remote Scottish regional economy of Shetland to support both decommissioning of North Sea oil and gas extraction capacity and deployment of planned offshore windfarms. We adapt a scenario simulation approach commonly applied at national and international levels to investigate how expanding regional port operating capacity is likely to impact local economic performance and employment. We find for the case of the Dales ultra-deep-water quay planned by Lerwick Port Authority this is likely to have net positive impacts on local income generation in all time frames. However, the extent of gains depends crucially on whether labour supply constraints in this remote island setting impact in ways that simply displace jobs across sectors and add to the cost of living and doing business.