{"id":4666,"date":"2023-05-27T13:31:11","date_gmt":"2023-05-27T17:31:11","guid":{"rendered":"https:\/\/www.cancea.ca\/?p=4666"},"modified":"2025-09-18T09:39:26","modified_gmt":"2025-09-18T13:39:26","slug":"surety-bonding-in-alberta-economic-and-social-benefits","status":"publish","type":"post","link":"https:\/\/www.cancea.ca\/index.php\/2023\/05\/27\/surety-bonding-in-alberta-economic-and-social-benefits\/","title":{"rendered":"Surety Bonding in Alberta – Economic and Social Benefits"},"content":{"rendered":"

Our analysis shows how the use of surety bonding provides considerable protection and support to Alberta’s economy and the well-being of its residents.\u00a0 In total value terms, the lower end value of the use of performance and payment bonds for public infrastructure projects averages more than a four-fold payback on the premiums paid for protection<\/strong>, with 80% representing the avoided economic activity loss and 20% representing protecting the well-being of people who could be affected by construction financial distress and insolvency.<\/p>\n\n\n\n\n\n\n\n
Reduced risk of insolvency<\/strong><\/td>\nA non-bonded construction enterprise is 10 times more likely to become insolvent than bonded companies.<\/td>\n<\/tr>\n
Protection of economic activity (GDP)<\/strong><\/td>\nLow-risk scenario:<\/strong> Under a forward-looking scenario of historically low construction insolvencies (status quo risk scenario), performance and payment bonds protect on average $4.13 million of GDP for every $1 million<\/strong> of premium paid on public infrastructure projects.<\/p>\n

High-risk scenario:<\/strong> Under the scenario of increased future risk, the relative value of surety bonds is magnified.\u00a0 A return to persistently higher risk when the rate of construction insolvencies were 5 times their current levels, performance and payment bonds protected $29.10 million of GDP for every $1 million<\/strong> in premium paid on public infrastructure projects.<\/td>\n<\/tr>\n

Protection of people\u2019s well-being<\/strong><\/td>\nLow-risk scenario:<\/strong> Protecting jobs and financial security for employees in the economy helps maintain their well-being resulting in a social value benefit of $1.02 per $1 of premiums<\/strong> paid on public infrastructure projects. 24.4 jobs per $1M of premiums are protected annually.<\/p>\n

High-risk scenario:<\/strong> Under the scenario of increased future risk, performance and payment bonds protected well-being resulting in a social value benefit of $7.20 per $1 of premiums<\/strong> paid on public infrastructure projects. 172.3 jobs per $1M of premiums are protected annually.<\/td>\n<\/tr>\n

Fiscally responsible<\/strong><\/td>\nIn the High-risk scenario, <\/strong>governments show a net gain, protecting $2.52 of broader economic tax revenue for every $1 premium spent, while in the status quo case, $0.36 is protected for every $1 premium spent.<\/td>\n<\/tr>\n
Extent of industry coverage is important<\/strong><\/td>\nThe size and significance of the surety bond benefits vary depending upon the level of risk in the economy (e.g., increasing interest rates, debt levels, recession, and global shocks).\u00a0 The highest economic and fiscal benefits versus the premium costs required comes from a policy that requires a combination of performance and payment bonds \u2013 with public infrastructure projects bonded.<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
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Download the Full Report<\/span><\/span><\/a><\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Our analysis shows how the use of surety bonding provides considerable protection and support to Alberta’s economy and the well-being of its residents.\u00a0 In total value terms, the lower end value of the use of performance and payment bonds for public infrastructure projects averages more than a four-fold payback on the premiums paid for protection, …<\/p>\n

Surety Bonding in Alberta – Economic and Social Benefits<\/span> Read More »<\/a><\/p>\n","protected":false},"author":7,"featured_media":4668,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-global-header-display":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":""},"categories":[110,112,109,166,164,106,133,136,115,154,135,167,163,165,127,108,117,134,111,107,186,137],"tags":[],"acf":[],"yoast_head":"\nSurety Bonding in Alberta - Economic and Social Benefits - Canadian Centre for Economic Analysis<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.cancea.ca\/index.php\/2023\/05\/27\/surety-bonding-in-alberta-economic-and-social-benefits\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Surety Bonding in Alberta - 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