Key points

• A University of Calgary study on the economic and fiscal implications of Alberta separating from Canada was released yesterday, alongside the conclusions of an independent advisory panel.  
• The report includes two scenarios: a smooth transition scenario and a difficult transition scenario. 
• In both scenarios, there are short-term setup costs and a reduction in economic output. Over the longer run, the smooth scenario provides a moderate lift to GDP, while the difficult scenario leads to a significant decline.

On October 19, 2026, the Alberta referendum will ask, as one of ten questions, whether Albertans want to remain in Canada or begin the legal process toward a binding vote on separation.

To inform the decision, the Government of Alberta commissioned an independent study from the University of Calgary on the economic and fiscal implications of separation.

The report was released yesterday, alongside the conclusions of an independent advisory panel.

Today’s Twenty-Four summarizes the report’s findings.

The study’s approach

The report’s authors acknowledge that there is a high degree of uncertainty over how a transition to a separate Alberta would unfold and how this would translate into economic outcomes. With no precedent for a Canadian province separating, the authors drew from the experiences of other international jurisdictions.

Though the study's mandate centered primarily on economic and fiscal consequences, the authors briefly considered legal and political factors to the extent that they bear on economic results.

According to the authors: "No amount of analysis can easily predict what the impact of Alberta separation might be. Partly, this is because many of the factors that are material to the short- and long-term outcomes of separation…are not easily predictable."

To deal with the uncertainty, the authors considered a “smooth” and a “difficult” transition scenario.

• Under the smooth transition scenario, Canada and other trading partners are accommodating, the transition to a sovereign Alberta happens relatively quickly, and Alberta is able to expand its energy production.
• In the difficult transition scenario, Canada is not accommodating, leading to a long and challenging process, and international investors are wary. Alberta’s lack of energy export options weighs on the value of its main export.

An important distinction is made between short-term and long-term impacts:

• The short-term impacts are those experienced up to five years after separation.
• Long-term impacts are those felt over 20 years after separation, after the initial transition phase concludes. 

In evaluating the impacts, the authors accounted for a variety of factors, including:

• The length and complexity of negotiations with Canada and other provinces. 
• Alberta’s estimated share of the federal debt.
• Division of federal assets such as national parks, military bases, and other infrastructure.
• Trade arrangements with other provinces and countries.
• Costs associated with setting up federal programs such as Old Age Security, Employment Insurance, defence, and border and immigration services.
• Labour mobility between Alberta and Canada.
• Currency, the exchange rate, and monetary policy considerations of a separate Alberta.
• Interest rates and borrowing costs without the Bank of Canada as lender of last resort or Canada’s credit rating.

To quantify the economic impacts, a large economic model (called a Computable General Equilibrium (CGE) model) calibrated for Alberta was used to capture economic linkages between industries, governments, and provinces/countries.

The findings

The authors estimate the impacts relative to a “status quo” base case where Alberta remains in Canada. 

Smooth separation (Quick and favourable negotiation)

• Short term: Real GDP drops relative to the base case by 2.2%, while average wages fall by $1,241.

Key drivers: Higher interest rates, market uncertainty and administrative friction as legal, tax, and regulatory frameworks decouple from the federal system. 

• Long term: Real GDP rises 3.4% above base case, and average wages increase by $1,851 annually.

Key drivers: Lower regulatory burden and provincial autonomy to pursue growth policies generate increased energy investment and growth, while access to Canadian and international markets is maintained. 

Difficult separation (Protracted and unfavourable negotiation)

• Short term: Real GDP falls by 10.1% below the base case and average annual wages decline by $5,496. 

Key drivers: Higher interest rates, market uncertainty, legal disputes, and large outlays for previously federal services. 

• Long term: Real GDP falls 16.2% and wages fall nearly $12,000 below the base case.

Key drivers: Persistent trade barriers, lost market access, restricted trade agreements, and regulatory/legal ambiguity.  

In both scenarios, the authors also find there is a decline in economic activity in the rest of Canada in the short and long term. This stems from the loss of Alberta’s fiscal and economic contribution (primarily via the energy sector), increased trade friction, and domestic policy instability. 

The report estimates large setup costs in the first five years, which includes military spending, border security and immigration, and social security. The smooth scenario estimates transition costs of $50.5 billion, while the difficult scenario estimates these costs at $168.6 billion.

Report conclusions

The overarching conclusion from the report is that there are economic and fiscal costs in the short-term from separation, but highly uncertain long-term outcomes. According to the authors:

"There is certainly a scenario where Alberta's economy and finances could be better after separation, once a transition period is over. However, there is also a scenario where Alberta's economy could be weaker and its finances much worse, not just immediately but for many years to come."

The independent advisory panel tasked with reviewing the report acknowledge the high degree uncertainty with the outcomes, but supports the overall conclusion:

“One might suggest alternative assumptions and data that would impact the cited numbers above, but in our view, the overall conclusion would remain – short-term costs and uncertain long-run gains at best, if at all.”

The advisory panel also noted that there would be economic costs to the rest of Canada,  exacerbating the strain the Canadian economy is already facing from ongoing trade tensions with the U.S.

Implications for the outlook

Analyzing the impacts of such a major shift is not an easy task, especially given the lack of historic precedent in Canada.

The report attempts to capture the complexity through scenarios and detailed modeling.  However, the true impact relies on factors that are hard to predict. As such, the value of the exercise comes from the illustration of a range of potential impacts as opposed to point estimates.

The study has considered a range of factors, and undertaken detailed modeling. The advisory panel provided oversight, strengthening the independence and credibility of the report.

The short-term impacts are more clear, reflecting a period of heightened uncertainty over what a separate Alberta would look like. This uncertainty is expected to hold back investment and hiring, similar to how tariffs and trade uncertainty with the U.S. is weighing on economic activity across Canada.

ATB Economics’ latest forecast for the Alberta economy is based on the status quo (i.e., Alberta’s present status as a province within Canada). The University of Calgary report points to downside risk to our short-term (five-year) forecast if separation were to occur.

The long-run impacts (after 5 years) are far less clear, with the report pointing to moderately positive to large negative impacts, depending on the ultimate arrangement with Ottawa, trade arrangements with other provinces and other countries, and Alberta’s ability to access markets.

Answer to the previous trivia question: Kevin Warsh became the Chair of the U.S. Federal Reserve on May 22, 2026.

Today’s trivia question: What Pulitzer-winning novel by William Golding was published on this day in 1954?